00:00 Speaker A
Talk to me about how you are viewing the big tech names in this environment. Uh we’re continuing to see big big tech as the primary leader of market gains so far. How long can that last?
00:16 Speaker B
Well, thanks for having me. Well, I think it can last for a while. I think uh tech, you know, they have double-digit earnings growth. I think uh, you know, there was a lot of concern about uh some of the larger names pulling back on their AI spend, but we see that that has not come to fruition. Uh they’re still, you know, spending on things like data centers. Uh they’re going to obviously need to expand from the energy perspective. Um so I think the um the tech trade is alive and well.
00:58 Speaker A
Talk to me then about how you’re thinking about earnings growth going forward, which we have seen coming in just a bit here. And when we look at the index more broadly, we’re seeing that earnings guidance is the worst in 15 years over the course of this earning cycle. Does that apply to those big tech names or can they buck that trend?
01:18 Speaker B
I think they can buck that trend. I think uh, you know, 12 months forward earnings expectations, I think is about 12%. I think it’ll be double digits the following year. Um, so I think they’re impervious to to higher rates, uh tariffs, what’s going on geopolitically. Um, and I think if we do get the Fed to cut rates, I think that that even helps the uh, you know, valuation story even further. So as at this stage, I think US tech is is still the place to be.
02:00 Speaker A
And do you think that we will still potentially get those two cuts this year? I know that’s what you were anticipating before we even got the soft employment data from this morning.
02:10 Speaker B
Yeah, I think we do get the the two cuts. I think inflation has been uh I think tamer than than most people were were thinking. Um, and I think uh, you know, a lot of that has to do with uh, you know, the drop in energy prices. I think that has ancillary benefits as it relates to the cost of goods. Um, you know, keep in mind that uh PPI is 71% uh correlated with the price of gas, uh 24% correlated with um with CPI uh gas and CPI. So I think um, you know, inflation will be tame enough for the for the Fed to cut twice this year.
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