00:00Julian Emanuel of Evercore writing,
00:01The brave new world of higher tech stock volatility does not mean the bull market is ending.
00:06Expect positive price reaction from large cap tech earnings to catalyze the next leg higher.
00:11Julian joins us now for more.
00:12Julian, good morning.
00:13Good to see you.
00:14Good morning.
00:14That is confident.
00:16It's almost bold given the reaction we've seen to some of the tech earnings so far.
00:20Well, look, so the first thing is that earnings reactions have been all over the place in general.
00:27And that's actually typical for an environment where stock correlations are as low as they are.
00:32But coming into this season, we just felt that there was this cohort of large cap tech stocks,
00:38short interest extremely high, earnings you know are going to be fantastic, sentiment really terrible.
00:46And frankly, what we're going to probably find out at the end of this earnings season
00:51is that the free cash flow amongst the hyperscalers will cross that zero line.
00:57But the market's discounted that already.
01:00And so from our point of view, the unloved has upsized.
01:04So you're expecting positive reactions to Google, to NVIDIA.
01:07Let's start with Alphabet.
01:08Alphabet reports later this week, tomorrow I believe.
01:11If they come out and raise CapEx intentions, how does the market respond to that?
01:15So that has been one of the key questions.
01:18We think that the market, again, because these large numbers, you know,
01:24we're looking for a trillion one next year, have been discounted.
01:29But the market wants to see the confidence in the CapEx because if nothing else,
01:36you're going to stabilize the chip trade, which has, you know, certainly had the mid-cycle.
01:41It's stumbled.
01:41It's stumbled.
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