美股上涨，AI 融资担忧缓解，科技股反弹

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we begin this hour with stocks climbing with upbeat tech easing some of the AI jitters. Keith Learner of Truist writing, "Earnings remain our north star. We remain long-term tech bulls continuing to see AI as the dominant secular theme driving this market cycle." Keith joins us now for more. Keith, great to see you. How much did Cororeweave and Super Micro tip the needle to optimism from skepticism about financing?

Well, I guess for one day it it has, but I really think the um the broader story is going back during this whole earning season. Uh you know what happened a few weeks ago is what we saw this really strong rebound after tech had corrected double digits. And the big story to me was that we were seeing revenue growth of 20% plus from a lot of these hyperscalers and especially in the cloud business. So that was I think eased as far as um you know the question around are we going to monetize all this spending and a lot of the bigger companies were saying yes we are seeing that transformation and then I think as you said overnight this is you know another positive saying that there is some monetization but I would also just be clear that I I do think we're in this stage where there there is going to be you know much more winners than losers.

We have a gauge of uh of correlations for the S&P and that's the lowest we've seen in 30 years. So I think that's likely to continue.

When does cash flow matter? I mean it sort of mattered vaguely for Alphabet and then when you see what happened with Core Weef. On one hand they beat expectations on sales but their cash flow was much more negative than people had expected given some of their borrowing and spending plans. I mean it just sort of highlights how it depends on the day how much this actually matters.

Yeah. We we talk about the kind of lovehate relationship uh with tech uh with investors in tech and I think a lot of times it matters where you're at in the cycle and you know back off the March lows until June you know the market or tech was up 47% semis were up 90%. And so then you come out with earnings, there's negative cash flow that, you know, that that puts some initial um, you know, selling pressure. But I think, listen, zooming back out, I mean, we have this once in a generation buildout and you would expect that there's going to be a lot of spending and then uh, you know, there's almost a little bit of, you know, faith that these companies will will figure it out in turn of profit.

So that's why I think you're just going to see this kind of really high volatility back and forth over not over the next couple of months this year, but probably over the next few years because that cash flow for some companies that have other businesses is likely come sooner than others. Um, but we ultimately think and again given the AI bull market the benefit of the doubt that these big players will figure it out.

They have a history of doing so. Keith, when you say that the potential is going to be some of these cash flow concerns and questions swirling around cash flow, is that why you think the second half of the year is going to be bumpy or are there other risks on the horizon that could potentially be annoying for the bull market run?

Yeah, I think there's a lot of the things that we've been talking about. I want to be focused that the primary trend is in place supported by fundamentals. Valuations this year for the S&P are down about 10% because we've had these earnings overwhelm the PE contraction and these higher rates. But I think there's things we're talking about. Um, you know, oil prices bouncing around each and every day. Um, we still have uncertainty around the new Fed chair and we often talk about how the a new Fed chair gets tested.

There's uncertainty around inflation. Uh, we had the midterm elections historically just seasonally that tends to be, you know, a bumpier path overall. But again, even though we think it's going to be a bumpier path, we still think the the destination is still higher based on the weight of the evidence as far as an economy that still is relatively resilient. Even in the face of all these things I just discussed, we have earning estimates continue to move higher.

This earning season, every earning season beats estimates. We know that. But this one, we have 85% of companies beating estimates. We have revenue beats at 75% and the forward earning estimates for the S&P for small caps for midcaps emerging markets keep moving higher going back to that north star phrase that I I mentioned earlier

earnings earnings earnings. So when you look at today and the inflation print how important is it is it to you?

Uh it's important for the next 24 hours. Um, I mean, right now, uh, I think you mentioned at the front of the show that the the Fed funds futures for September is pricing in basically a 50/50 chance of a of a rate hike or staying pat. But I'd also remind investors that we have um, you know, Jackson Hole in August. We have another PCE report. We have another CPI report before the next Fed meeting as well. And then another employment report.

What's also unusual is, you know, the the employment report, you know, was negative on the headline. And again, there's there's a lot of factors behind that. It's probably was overstated, but it would be very unusual for the Fed to raise rates historically when we've seen a negative print within two months of a Fed meeting. But again, there was some distortion. So, I think that next employment report will be saying like this is the most important employment report of all time, right?

So again to your question, it will be very important in the near term where rates do and the reaction to it, but there's a long way to go between now and the actual Fed meeting.

This is an increasingly data dependent market given the fact that there's not a lot of forward guidance coming from this Federal Reserve. Chair, I'm curious whether you think the pendulum has shifted back to fixed income. For a while, it seemed like equities were very much in the driver's seat with respect to returns. At this point though, yields have gone up significantly and there are more questions about perhaps being surprised to the dovish when it comes to both the Federal Reserve as well as some of the economic data.

Are you leaning into bonds a little bit more?

Uh so we're still overweight equities overall, but we would be leaning into to bonds here as well for fixed income investors. And I think maybe just as a starting point, you know, with that higher income or that carry that we're seeing really provides quite a buffer for investors, we kind of stress test it and say, okay, let's just say that yields move up another 50 basis points on a one-year forward basis on a total return basis.

If a fixed income investors say buying the 10ear US Treasury, you would still have a positive return. It would be somewhat small. But if instead the the market or the interest rates are flatted down, then the upside becomes a lot more attractive. So in our mind the riskreward is actually improving for fixed income here. We still think listen if we have a dovish number that would probably be better for equities as far as the overall return but I think we would be leaning into fixed income um you know at these levels.

Really quickly here, Keith, how much are you walking watching Japan to understand just how disruptive things could get in the bond market