Hmm.

So I end up going to get my master's degree at University of Wisconsin-Madison.

Again, not necessarily a feeder school onto Wall Street, but they had a small program there where they let students manage money for their endowment fund.

So I get my master's there, and I'm one of the 14 students who manages this money.

And guess what? Out of that program, JP Morgan would come every year and hire one person.

And I was so fortunate.

That was 1995.

Mm-hmm.

Keep pushing on this signal versus noise.

Well, we're dealing with markets that have had a multi-week rally and the next support level is going to be earnings.

Earnings are going to be the key to move the markets higher from here.

But beyond the ceasefire, investors have been worried about three areas.

Number one, is stagflation.

The second is the impact of artificial intelligence.

And third is what is the Fed going to do in terms of rate moves? So let's go back to stagflation.

But what's your take?

What is your expectation for interest rates and the Fed's actions? And what is your overall view of the economy at this point?

Sure.

So the economy is slowing, but I don't think we're on the cliff edge of a recession.

I mentioned earlier, February payrolls were very weak at negative 92,000, but they had a strike in there.

So I think that number was larger to the negative side than it would have been.

So I do expect payrolls to settle in a low positive range going forward.

I kind of said like low five digits, so zero to 50,000, which Isn't amazing, but not completely terrible.

And Roger asks whether you can address that market and the level of risk you see, if any.

So how does that inform your view?

Well, that's been an ongoing battle for a few months now, which is tech versus the rest.

So the MAG7 versus the S&P 493.

But taking a look at the data, tech earnings should be 2x S&P 500 earnings this year.

So I follow the data.

Tech earnings still look strong.

Question mark around them, of course, is how much of this AI spend will turn into productivity? That is a question mark.

Can we properly ignore some of that stuff or do we have to take into account what the affordability push from the White House is going to mean for companies?

How does your outlook look for 2026?

Well, people are turning to 2026 now because Santa's a no-show this year for the markets.

The three things that we're concerned about next year are the Fed, the economy, and what our tech stock's going to do.

So first of all, with the Fed, I think we're going to get a zero to maybe one rate cut in the first half of the year, but it should accelerate in the second half of the year after we get that new Fed chair.

The economy has been interesting.

It's really the consumer versus the employment markets.

Employment markets have been weak.

I'm not sure it has anything to do with the calendar.

Does it change the debate for December 10th on the FOMC?

Well, we got two new data points today to help us determine whether we're going to get that rate cut in December.

This is, first of all, economic data trickling in with this employment data and also technology and consumer earnings.

So first of all, on the payrolls number for... it's September, the numbers stale.

Uh, there's something for everybody in it.

While we beat on payrolls, we have downward revisions and increasing unemployment rate.

So I think that's mixed in general.

Will tech lead because the Fed has been more reluctant to cut rates aggressively, or will it lead despite the fact (laughs) that the Fed is more reluctant to cut rates?

How should you position yourself if you do believe that AI is great for the long term, but you also want to protect for near-term downside and volatility?

Well, you can balance your portfolio.

So just looking at, first of all, Avago and Alphabet, both of these companies are positioned very well.

With Avago, they have huge demand from hyperscalers for their A6 chips, very strong management team, ability to earn, very strong earnings growth going forward.

The stock actually is not as expensive.

as one might think given its earnings growth trajectory.

Looking at Alphabet, people are worried about what will the impact of OpenAI be on Google's advertising business and genesis.

So does the market continue to broaden if that actually becomes realized? Well,

How does that feed into your market view here?

Well, markets are starting off the week on a cautious note for three reasons.

We're anticipating NVIDIA earnings, which will be big for the theme of technology going forward.

Second, of course, PCE inflation going to be an important factor for the markets.

And third, what's going on with the Fed? I think areas to watch in terms of the impact are equities, which are showing kind of a neutral response to the Fed actions this morning.

fixed income where we're seeing a little bit steeper on the long end of the yield curve and the dollar, which is a tad weaker.

But on fixed income and the dollar, with fixed income on the yield curve, we've been expecting that curve to steepen for a while now and to continue to.

How would you lean within that? What within the market looks like it's still ripe to move some from here?

What's the message, do you think, in the fact that, yes, we've had a chop, and it's the Nasdaq which has been weathering that choppiness a little better than the others? Is it a sign that you as an investor want to just stay with the tried and true AI hyperscalers? Because trying to go elsewhere is just going to be too difficult if we're going to have a more turbulent August and then certainly September.

Well, the drivers of the Nasdaq would be threefold.

One is that AI trend that should remain in place.

Second is the 10-year yield on treasuries, which has been moderating, which is positive for technology stocks.

And if you are worried about the economy slowing, that's usually positive for strong structural growers.

with their own levers to pull, and that's tech stocks.

I think the NASDAQ is the place to be.

What justifies a 50 basis point move? I mean, I hear you on the revisions of the jobs numbers, but the economy still looks pretty good to many watchers of it.

Can you trust it? Can you keep buying here?

Investors are definitely experiencing FOMO, and the market's supported by three drivers.

That's retail buying, strong earnings, and Liberation Day news.

So first, retail buying, some of those mean stocks.

We've seen $50 billion come into the market over the past month from retail buyers.

Second is the second quarter earnings setup.

Estimates coming into this quarter were for just less than 5% earnings growth year over year.

We know there had been a little bit of a rally into this name ahead of the print.

uh you know whether we can sort of be confident that the fundamentals are going to be able to carry it higher still from here

well the concern of course which was the concern at the beginning of this year is that the s p 500 is trading at a premium again so that is an issue but earnings growth has been very strong and that what is what would take the market higher going back to first quarter earnings expectations were for six percent earnings growth We came in at about 12% earnings growth.

So earnings can continue to move this market higher.

The issue and what brought the S&P 500 down, now that we can all look in the rearview mirror, was, of course, the level of tariffs around Liberation Day.

We have yet to see any impact from tariffs, but if you assume about a 10% tariff rate for the rest of the world except for China, that hurts GDP by about 1.5%.

That just gets us to skirting a recession.

We don't end up in a recession with that level of tariffs.

Does that tell you that investors ought to revisit their diversification and either sell into it or ramp up the exposure?

Can you buy consumer-oriented stocks right now, or are things just too uncertain?

With consumers in a tough space, but it did lead us out of the V-shaped recovery post the, the Liberation Day malaise that we saw.

Soft data on the consumer is not strong.

Outlooks from c- from companies about the consumer were weak.

We have not seen the impact of tariffs yet.

History tells us we will see that about three to four months after tariff implementation.

So it's very unclear not only in terms of tariffs, who's going to eat them? Is it the consumer? Is it the producers? I think it's a combination of both.

Are we getting distracted by taxes right now? Does the equity market at some point come around to the concerns of the damage done by higher prices coming in for importers?

Can you buy consumer-oriented stocks right now, or are things just too uncertain?

Consumer has been a tough space, but it did lead us out of the V-shaped recovery post the Liberation Day malaise that we saw.

Soft data on the consumer is not strong.

Outlooks from companies about the consumer were weak.

We have not seen the impact of tariffs yet.

History tells us we will see that about three to four months after tariff implementation.

So it's very unclear, not only in terms of tariffs, who's going to eat them.

Are we getting distracted by taxes right now? Does the equity market at some point come around to the concerns of the damage done by higher prices coming in for importers? I mean, taxes are

And we did see a 10-year flirting with 4.5% again, which the last time we saw that was amid all of the reciprocal tariff drama that was playing out in the market last month and was sort of seeing that level, 4.5%, as something of a trump put in the bond market.

Well, the two drivers that have been positive for the market, which is cooling trade relations and moderating CPI, have not been beneficial to yields.

I think the issue there is that this may be the calm before the storm with inflation because the data from tariffs is not showing up in inflation numbers.

That probably takes three to four months.

So I think the 10-year is telling you that it's worried.

The bond market is worried about a pickup in inflation.

And also, because the economic data has remained strong, on the other side, we're not going to get as many Fed rate cuts this year as the markets had once hoped.

Sarah, what about midsize and smaller tech and then small cap stocks as well? Are those being held in check by the 10-year?

I mean, what's your best idea here for the next quarter, now that we're facing all this uncertainty and heightened volatility in stocks?

I think, first of all, from a macro point of view, the second quarter is going to have two themes, and that's policy uncertainty and questions over the rate of the economic slowdown.

We're already seeing that since the rebound from correction territory a couple of weeks ago, where a little bit of optimism has been injected back into the markets because investors expect watered-down tariffs.

And that famous word came back transitory in terms of the inflation impact from those tariffs.

But the second side of that question is, what's going on with the economy? The consumer has been the driver of this economy, and we just saw today consumer confidence coming in at a four-year low.

So I think the economy continues to slow.

So we're still interested in defensive categories of the markets, like infrastructure.

So how does that impact the way we should think?

welcome back to overtime major averages all closing around a percent higher today but off the highs as the fed says it is leaving interest rates unchanged as expected but it's got so she is looking ahead to the next catalyst for the markets that's reciprocal tariffs sarah malik is news chief investment officer joins us now so welcome good to see you so we're about at the levels on the s and p where we were mid july about eight months ago Market ended on the highs, but should you be more defensive here based on what might happen in two weeks on April 2nd, or have we seen the worst of it?

Well, there's three reasons the markets have bounced from correction territory last Thursday, and that's because of the Fed today.

They talked firstly about no more rate hikes.

They talked more about rate pauses and rate cuts, which was positive for the markets.

They went back to the future and brought back transitory when it comes to the inflationary impact of tariffs.

And then they kept on the table two rate cuts for this year and two rate cuts for 2026.

Now, the question is, where do we go from here? I think the next catalyst is going to be the tariff plan laid out on April 2nd.

So I just wonder how much companies are already taking this into account and thus it's already pricing into the market.

So where are you looking elsewhere?

Well, Scott, there's been a lot of news thrown at investors this year, but there's been two factors driving the markets, and that is technology and tariffs.

So let's start with technology stocks.

Basically, when DeepSeat came out with their news, what it told investors was we need to be a little bit concerned about all of the spending that's happened in artificial intelligence.

whether we're going to monetize that and what is going to be the returns on that.

You know, just yesterday, NVIDIA reporting a great quarter, but not quite good enough.

Investors are used to these huge beats by these tech companies, and we're just not seeing those at this point.

And yet that's a stock, for example, that has been caught in the downdraft of the momentum trade.

What's your framework for how you filter out some of the news that you get every day to understand how to prioritize either the proposals from the White House, the earnings that we're getting, or the economic data?

Well, first we focus on fundamentals and looking at fourth quarter earnings.

We're wrapping up earnings season and they're going 12% year over year.

So the U.S. economy does remain strong.

But then you have to look at valuations.

And here's an interesting tidbit for this year that I think most investors didn't expect.

European markets are outperforming U.S. markets.

Do you still think that's possible for the rest of the year, given this potential tit-for-tat between Washington and Brussels?