00:00 Brad Smith
Goldman Sachs coming out, continuing to be bullish on stocks here. They highlight an interesting chart, uh, detailing the difference between soft economic data, which would be those surveys I just mentioned, hard economic data, which would be something like that inflation release. Here’s the chart you’re looking at now, right? So hard data is that long line that comes down significantly. But what’s interesting within this chart, soft data and green, again, those surveys, that usually falls first when we are talking about an event driven recession. That would be something like the 1970s oil shock, 1970s interest rate shock, those types of things, the dot-com bubble, that’s the base case scenarios that they were sort of looking back on using for this study. And what happens is you normally have soft data start to trough sooner. It will bottom first. And what we saw earlier this month, or I guess it was really in May, consumer confidence has started to come back up, right? Does the University of Michigan Sentiment Survey on Friday also start to come back up? Have the vibes gotten so bad that the vibes are starting to get a little bit better essentially, is the question? And that would normally be when you start to see stocks recover as they have, and then data will maybe get worse from here. Maybe there’s more worse jobs reports out there, maybe a couple more worse inflation reports out there. But the market would have already priced that in and normally you would see have seen a bottom in stocks.
02:23 Seana Smith
But if the data even was to worsen and it seems like the market’s taking more of its cues from what the tariff talks are around versus how imminently we would get some type of massive fed movement to cut rates.
02:46 Brad Smith
I I think to some extent, Brad, but I think the market seems to be sick of tariff talks and maybe more interested in tariff action, right? I mean, you look at S&P 500 futures today, up minimally, right? We’re showing them on the screen. They’re up slightly, but generally speaking, the US meeting with China is not really moving the needle that much for the market at this point. It doesn’t seem, but that’s of course back near record highs, right? We’ve moved the needle plenty. We’ve had a very big rally, but I think a lot of strategists are arguing that you would have to have a significant deal, like an actual deal. Something signed, real things. And I don’t know if that’s necessarily coming. So it seems like at least for now, tariffs and sort of the back and forth is taking a little bit of a backseat to what the data is actually doing. Remember, we’re now starting to get May data, right? That jobs report was from May. That means the tariffs were in effect. We’re starting to see what those tariffs are actually doing to the economy and getting some of those answers we’ve been waiting for for about two months now.
04:44 Seana Smith
And it makes me wonder too about this idea of the market grinding higher even on perhaps lower breadth as well. We had city talking about, they are marginally more constructive. That doesn’t sound that bullish to me. Marginally maybe more constructive.
05:08 Brad Smith
Yeah. Yeah. So city moved up their S&P 500 target to 6300 today, right? I think it was from 5800. 6300 is only a 5% rally through the end of the year, right? So Scott Croner highlighting in that note that they still think things are going to be bumpy. To Brad’s point about trade policy uncertainty, we’re not done with that conversation, right? What he said though is he thinks the bottom might be in. So rather than chase a rally, right? If we keep rallying higher, they’d be buyers of dips. And so that’s how they’re thinking about sort of this range that we’re in right now. Croner also pointing out within that note, you’re starting to see GDP forecast come back up, right? Those estimates tanked in April and those are starting to come back up. So how much do those come back up and how much does this AI story take hold? That would make Croner incrementally more bullish if AI continues to lead the story here and we keep talking about the big AI names and sort of that tech trade group.
06:36 Josh Lipton
Yeah, FactSet saying that more than 40% of S&P 500 companies have cited AI on earnings calls for five or for the fifth straight quarter here.
06:52 Brad Smith
You still got to talk about it, Brad. You still got it.
06:56 Josh Lipton
Yeah, you got to. Yeah, it’s the name dropping basically, right? We got to say we’re doing something. Josh, thanks.
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