00:00 Speaker A
Simeon always good to see you. So, uh wrapping up a big week. Let let’s start with the big tech earnings because you saw the reports, Simeon, you were listening to those calls. Um, you know, tech has been leading this market. Would you expect that to continue?
00:15 Simeon
Look, the earnings were very well received, all but one. Everybody knows Meta was the one that wasn’t well received. Let’s just look at the season so far. We’re about two-thirds of the way through earning season. S&P 500 earnings up year-over-year about 10%. Tech sector up about 20. Now, I don’t think there’s anywhere else we can look to to get the equity market rally to sustain. But that’s pretty good. That should be enough to keep things going particularly at this time of year because we know what folks do towards the end of the year. They want to get those Mag 7 names in the portfolio in those statements. So when clients and and asset managers look them up, they say, oh yeah, that was in there.
00:53 Speaker A
Let me ask you, if if tech did cool, Simeon, do you look around and say, okay, there’s certain sectors that would be well positioned to play catchup?
01:00 Simeon
Look, almost everything else is positioned for catchup. The funny thing that I find uh these days is that folks will look to other parts of the market and say, it’s at a discount to the S&P 500. Well, that’s tautological because the tech sector is so expensive that it’s pushed up uh valuations for the S&P 500. So everything on a relative basis looks like it’s cheap. So it’s good to look a little bit past that to see what’s actually cheap relative to its own history. But there are clearly opportunities. Certainly, you know, we like some of the cyclical places where the value sectors and really quality value like dividend growth stocks that have been left far behind. But there’s almost anything that’s been left behind in this rally is open to participation very importantly because quality overall is pretty good. Net debt to EBIDA for the S&P 500 is at one and a half times. That is all-time low. So we can talk about cockroaches and private credit, but the quality of all the large cap stocks including the 493 is pretty high. So the opportunity for rotation across the board is a decent one.
