I

mean, this started really two years ago with the deep seek.

That was the first freight.

Right.

And we just continue to have a series of freights about it, whether it's, you know, the CapEx will be enough.

Now they're spending and borrowing and there's a circular financing.

I think we're going to continue to see this because this is such huge spending and so much depends on it.

We've seen time and time again where, you know, a company can post fantastic results, but it will be idiosyncratic to the company or it's going to take a lot for the company to move higher.

Never.

And now, if you're curious how might you use body mapping in your own work, let me walk you through a simple way to get started.

You really don't need very much at all, just a few basic materials.

And they can really be just as simple as a pen and a paper, anything.

But of course you can go more elaborate.

So you need some large sheets of paper, and large is good if you can get hold of them, but it doesn't have to be that.

It can be an A3 printout or even an A4 printout.

Never.

Are people, in general, feel locked into alternatives?

Um, in terms of alternatives, if you mean private equity, yes.

I mean, there's liquidity issues there, but there's also alternative investments include hedge funds and other things.

But I don't know if they feel locked in.

I think right now, the, the issue in the markets, you're at a 22 times PE, you're seeing incredible volatility as rotation out of some of the high flyers and then back again because their profit profile is strong, you know, is gonna continue.

And also worries about when the Fed hikes and what happens with earnings, and I think right now, even though last week for instance you saw very strong earnings from the banks, United Air was talking about, um, premium pricing.

Today you had G- uh, GM, people are holding up.

Barbara, what's the, what's the question you're getting from your clients these days? Is it that, "Boy, the market's so high so fast, and I'm, I'm concerned here," or, "I feel like I've missed out"? What, what's the question you're getting from your clients?

Mm-hmm.

But even, you know, it's just sort of being patient because there is a question about, you know, how well would the iPhone sell, what's happening with their new Mac computer, is services peaking? And there were lots of questions, but they blew away the numbers as you saw.

I mean, earnings were supposed to be up 17%, they came in 22%.

Revenues were supposed to be 14%, up 17%, but what really did it was the guidance up dramatically-

Yeah.

And that, I think, was, is a function of people believe, okay, the turnaround story may actually happen.

Um, people thought this is AI structurally dead, but clearly there's some strategic interests in having chip manufacturing onshore.

They're now manufacturing chips, et cetera, et cetera.

Um, what do you do while you wait? [laughs] Just kind of what you were, what you were sitting in before or looking for other things to, to pick up.

Well, but I think it's a good question because things have changed.

I mean, for a while there it was so volatile.

You know, the, everybody was betting that it's gonna be short-term, and I think the market still is.

And frankly, I still am, too.

I think you're hearing an increasing tone of desperation out of the White House, and even if Dan is right, that he's sensing we will escalate here, it's still, I think, considered short-term.

It's to rush to a conclusion here.

... to work that in.

... have been punished for the fear that AI could displace or dent their businesses.

Right.

Well, because there's two reasons.

One is the valuation has gotten so extreme.

I mean, you saw this.

The software's had a bounce back.

It was down 30%, which is a, a record low, you know, in terms of it, and also where it is trading in, uh, relation to consumer staples.

Uh-huh

Talk about your game plan heading into the year and what we've seen so far that's either confirmed it or caused you to rethink it.

Well, it's interesting.

I think the consensus is pretty bullish right now and also about the trade that's broadening out.

And certainly we saw that in the last quarter with small caps, you know, outperforming value, you know, financials, some health care.

And I think that's for the game plan coming in.

For me, it's keeping the core MAG7, although there's very individual stock stories at this moment because the earnings growth is real and sustainable, you know, but whether they'll have the outsized returns, you know, in the past, but I think they're still going to have good returns.

But at the same time, you are looking for a lot of individual stock picking within sectors.

I only bring that up to say, to what degree do you have to be aware of the next shoe to drop along these lines as you're figuring out what to do with your money this year?

A real question about the Fed and how much they can cut, given the dual mandate that they have of a labor market that they seem to be prioritizing right now.

Yeah, they definitely are, yeah, because the labor n- uh, numbers have been soft.

You saw that in the ADP number a few weeks ago, and of course jobs.

But what we're not seeing is any really follow-through on jobless claims.

They are still not signaling, you know, any danger there, and that obviously is a leading indicator.

But I think that's where the emphasis, because inflation seems to have stabilized, I think somewhere around here, 2.9.

I think it could creep up a little bit higher because even though the tariff impact has not has been as severe as everybody expected, including myself, you know, there's still, it's still feeding through now that there seems to be some stability in the outlook, you know, for tariffs.

Do we finally get the broadening out? Is it, you know, a substantial broadening out of the rest of the S&P rather than just these mega cap tech stocks?

Why are you picking Starbucks here and not Nike?

Yeah, I think there's a big question for both of them.

Both have sort of broken models.

And Nike, though, went really to an extreme when they tried to go direct to consumer.

They cut out their wholesalers.

They lost a lot of shelf space.

And that, in my view, brought in a lot of new competition, which has been eating share.

You're still excited about gold because you expect it to mostly hold its value or actually go much higher in 26?

Barb, given what we saw and we heard from the Fed today and from the Powell presser, is the Santa Claus rally starting early?

I think it may very well be.

I think going into this, and the market was discounting a 25 basis point cut, and the question is, would the market sell off if they were hawkish, and what would happen if they were more bullish? And I think we got some very unexpected commentary.

I mean, they talked about GDP growth next year raising at half a percentage point from 1.9% to 2.5%.

That's a big jump.

And he also went out of his way to talk about how unusual to see five to six years of productivity growth of 2%.

And this is before the expected AI productivity improvements kick in.

How much does this AI trade hinge on all of this?

And so given what we just saw with Salesforce earnings and on another day we get more tech results here in this hour, how to think about that push-pull between the labor market and the economy and AI adoption across industry?

Yeah, well, Morgan, I think it is a very interesting question that is not answerable at the moment because we've seen this in any major transition, whether it was the Industrial Revolution or any of the things, the adoption of the Internet, jobs are eliminated.

And you're certainly seeing already, you know, anecdotal stories from college graduates trying to find those lower level jobs that a lot of automation and A.I., sorts of tasks are taking over but typically what happens other jobs are created and certainly you know we're seeing this in terms of AI software and development and all the things happening there so but right now what we're seeing there's also reduced supply and that's you know widely considered because of immigration.

We have reduced immigration.

You've got the aging baby boomers who are retiring.

So you've got a market that, yes, the labor market is slow, but it seems to be in balance for now.

Even with those ADP numbers, you know, this morning, we're not great.

So where specifically would you advise going for diversification?

How much dry powder should you have? How much should you have in store for if there are buying opportunities?

Well, it's always nice to have cash on hand.

However, I've been pretty much fully invested because I also have a very bullish view on the market.

We're going to have these pullbacks.

Again, when valuation is high, we're now in an absence of earnings.

We're not having anything until the Fed expectations.

The Fed's been making some hawkish comments.

So what should investors be bracing for in the potential market reaction to what we're expecting will be some pretty strong earnings from NVIDIA?

Does it reshape the narrative about Amazon and AWS, the biggest cloud provider, and concerns about Google and Microsoft growing faster? Now, granted, this pop in Amazon is off a relatively depressed base since this was the worst performer in the Mag 7 so far this year.

Yeah, no, it's only been up about 3%.

And the reason was the last quarter when AWS disappointed because they've had leading market share.

They started way earlier than everyone else.

And so the comparison that we had at Google yesterday, we had as your, and the numbers were pretty darn good.

They were over 30% for both.

So this was the key metric for Amazon, even though obviously their e-commerce business is strong.

And Barb, what are the most important parts to listen for on the call, especially given this is a company that earlier this week announced, what was it, 14,000, 15,000 layoffs in the offing and the need to drive efficiency in the era of AI? Yeah.

Barbara, has this been something that you've been expecting? Have you been keeping your client base and the rest of your ecosystem involved in those equities that have been driving the rally for a while? Has the momentum been there and will it be there? Do you stick with the winning trade?

Well, there's a couple of questions there.

One is, yes, I'm sticking.

I've stuck with all the big tech names, you know, for a while and I will continue to.

But they do periodically get ahead of themselves.

And we have seen that the last few years where you'll have bouts of profit taking.

And you saw it as recently as a couple of weeks ago when we had President Trump's tweet of 100 percent tariff threat on China.

The international side of things, is it attractive? And are there specific markets that you think are the ones poised to outperform

Barb, I want to get your reaction to this, especially since Tesla is not necessarily a name that trades on the fundamentals here.

No, it doesn't.

I mean, 80 percent of their revenues are from autos.

And yet it's at a 250 plus P.E. on forward earnings.

And it's really in the hopes that it's this the robo taxis, it's the robots, it's this A.I. play, which, frankly, I don't see.

And the fact that they beat on revenues, it's a question of how much in the pull forward for the E.V. credit that was expiring September 30th.

And I think that's probably what the explanation is there.

Barb, I want to get your reaction to all of this, whether it's IBM, which has been a high flyer this year, or whether it's Alcoa, as we have talked about the industrial part of the economy and this big focus on things like critical minerals.

Do you see this as just kind of boilerplate consolidation for a market that's had a torrid run and is looking pretty expensive here or the start of something larger in terms of a pullback?

Morgan, I think it's boilerplate.

I mean, we've seen this before when the markets had a big run.

And certainly I would not have been surprised if we'd had a pullback a few weeks ago.

because the valuation has been stretched.

We are now at 23.6 or .7 valuation on next year's earnings.

So the market is incorporating a lot.

What does that tell you about the health of the market overall and tech?

So, Barb, how do you position out there with the labor market weakening investors coming up on a quarterly road marking pretty soon? Do you rebalance reposition in a particular way, given the numbers that you're seeing?

Yeah, I think it's a good question because things have changed.

But we've started to see the change since Jackson Hole when Powell signaled that they really were looking more at the labor market, which that's when he indicated that interest rate cut this week, this Wednesday, is likely.

And so that's when positioning into more interest rate sensitives.

You know, we've talked about that.

You stay in the mega cap growth.

Those are secular long-term stories that will, I think, continue to outperform, given a lot of their double-digit growth.

Barb, finally, how does the China trade news affect your view, not just of the U.S. economy, but the global economy here?

Second worst performing Dow stock of the year.

Yeah, I think they were very low.

And so it would not be hard to beat the bar.

But I think even though they did beat on both earnings and revenue, it's really about the guide.

And the one growth driver they have right now is their agent force.

And that's been gradual.

It has not been rolled out in rapid deployment.

Yeah,

So is this a warning sign for another well-known technology name, experienced technology name, Intel, reporting tomorrow still caught in the midst of a turnaround but has been performing well off of a low base so far this year?

Yeah, I think Intel is a case of, you know, the stock was dirt cheap.

You know, the prospects are very muddy.

I don't think there's a buy on the street because the turnaround is going to be very long.

It's very risky.

You know, they put a new CEO in place in March.

He's got big plans.

What is it going to take to turn this name around?

Your take on earnings season so far and how pivotal next week is.

Well, I think next week is going to be pivotal because of so many companies has just mentioned reporting.

And my take is that, you know, there's a lot of room for a beat and raises here because when the tariffs were imposed, the first initial big chunk of tariffs in April, a lot of companies pulled guidance or really reduced their guidance because the uncertainty.

And now as it's turning out, you know, right now we're not seeing a lot of tariff impact.

It's showing up in some areas and whether it's travel or leisure, people pulling back or some of the hard goods prices going up.

But it's really been not a big effect as yet.

And it probably will be more to come later on.

OK, so in light of all of this, what do you buy right now?

Barb, how much do you factor in the president's saber-rattling on tariffs here with the markets? Big Tech, Nvidia, all hitting these record levels and perhaps the risk rising again that maybe this time he really is going to be serious about these higher tariff levels.

Yeah, well, John, the risk is always there, but I think the market is clearly telling us that they think it's a lot of, as you said, saber rattling, you know, that he's shown that he backs off from these draconian threats.

And I think that's clearly the assumption this week.

And you saw that when he announced Canada last week and the market briefly had a swoon and then came right back.

So I think there's a big discounting, which I think is a little bit risky.

I think the rates will come down like copper at 50 percent when we import 50 percent of our copper.

And it's so important in so many industries, construction, semis, renewables, et cetera.

Barb, what do you think? Whether it's financials, which have had a big run up ahead of next week, or some of these other parts of the market, for example, mega cap tech, which we know has really pulled out into the lead again.

Barb, what's on your list?

Well, there's a number and this is all looking for names in this uncertain environment.

I mean, you heard the Fed today.

Things look good right now, but going forward, we're still not sure what the impact will be of tariffs in terms of they raised their forecasts on inflation, lowered it on GDP.

So what are the kind of names that you want to buy? On pullbacks, because the market is at a 22 plus PE right now.

We've had a big spring back from the lows in April.

And so February, excuse me, in April.

Does gold have further to go here, especially given geopolitical tensions and uncertainty for the macro outlook?

Barbara, do you see it the same way? Is the bull market alive and well? Would you be buying here?

I would not be buying here, but it's hard to argue with Ryan because things right now do look pretty good.

You just had PPI today, excuse me, and CPI yesterday.

Inflation continues to come down, but you are clearly seeing signs of a slowing economy with job growth.

And no matter where you look, whether it was the jobless claims higher than expected today, the continuing claims the highest since late 21, you look at manpower stats, job openings down, posting, the non-payroll.

So you're clearly seeing a slowdown there.

And we do know that the tariff impact has yet to be felt.

I could go down the list.

This startup they're buying hasn't really done much of anything yet, and I can't figure out whether this is bullish for the overall AI trade because it shows that money is still sloshing around out there, or if it's a kind of negative for the AI trade because of the way that the money is sloshing around out there?

It's always a good question because are we getting into meme stock territory? Is it really overdone? But I think this actually is a positive.

I mean, it shows that there is so much opportunity.

There is so much going on in this space that you will make this kind of purchase and spend that much money for a company that doesn't have revenues.

Because you're looking for any of the players, the competitors in this space are looking to compete against the best.

And the best keep making acquisitions and keep upping their game.

So I think this actually is a real positive and very encouraging sign in terms of what's going on in AI and the sustainability of this trend.

Now, Barb, now that we've had some more meat on the bone there with some of the numbers, how should investors think about these kinds of stocks that have been brought down to earth from a few years ago but are building something here?

Have things calmed down enough? Is there enough certainty for you to start changing your mind?

Yeah, no, I was very cautious, not least because of all the uncertainty with tariffs.

I mean, how much would the worst case stick there? But I think you've had a number of things happen, particularly with NVIDIA and AI.

I mean, you saw, for instance, CoreWeave today, their demand for GPUs is continuing, or Cisco, almost a doubling of their AI products, which is small for them, but it's an indication of the demand.

And plus, NVIDIA, you have the Trump administration looks intent on peeling back the restrictions on on exporting to different countries for our high-tech GPUs and things like that.

And also the order out of Saudi Arabia, because that's part of the story that we haven't seen come to fruition yet.

And that's about the sovereign demand, in addition to the hyperscalers and corporate demand.

Are those a catalyst for this market that might cut through some of these concerns we've been talking about?