Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Busy week.
We know when it comes to the treasury trade this week all so very busy. When it comes to earnings, about one hundred and eighty I think S and P five hundred companies, John said, representing around thirty percent, but I think it's more than forty percent of the indexes market cap. But we have the expert who's going to tell I'm not going.
To argue with either of you.
Low's that all right?
So let's get to it because some of who are reporting, we know are among the magnificent seven names, a big of the some of the big megacap tech companies.
Yeah, we're talking about Alphabet, Meta, Microsoft and Tesla for more. Let's bring in Bloomberg Intelligence is Director of Equity Strategy and Chief Equity Strategist, Gina Martin Adams, who's here in our studio. Gina, you and the team have a note out that talks about so far it's early, but so far the earning season is giving us a pretty good backdrop for stocks. Bring us up to speed here.
Yeah, so I think it's a it's been an interesting earning season so far because we've had some really big charges from healthcare companies Bristol Myers Club and now Gilad, who have both taken down estimates for the S and P five.
They're so interesting.
Yeah, that one tiny.
Yeah, just those two companies, which really kind of escape our under our our notice because we're so captivated by tech, have actually made the bigger impact on earnings. Nonetheless, when you exclude those two charges, you're tracking about five percent earnings growth for the S and P five hundred, including analyst estimates for what's to come. That's a bit better than the analysts we're forecasting at the start of the season, which was just under four percent growth, so better than expected.
But all the big companies have yet to report. We've got thirty seven percent of the market porting this week, including the biggest names of Microsoft, Alphabet and Meta. TMT is really where all the growth is expected to come from. So I'm a little old school. TMT is no longer the way we describe it, it's tech and communications, but those two sectors are tmt for those of us that
have lived, you know, through the nineties and beyond. Yeah, exactly. Nonetheless, those groups are basically driving all of the growth on the index this quarter. So that's where all of the optimism lies and certainly where most of the risk lies as well. Well.
It's interesting, and you know, when we get to things like margins and different ways of kind of looking at the quarter, I mean, is there anything of note that you're focusing on on that front?
Yeah, So margins are incredibly important because margins are where all of the analyst optimism is going forward. There's a couple of ways that earnings can be You can see top line beats, which certainly would be very very welcome, analysts are not anticipating a whole lot of top line growth to emerge this year. Or you can see margins beat expectations, where analysts are already into the painting margin
improvement coming through the year. So I think that there's a bigger risk in margins than there is in top line growth, just for this reason, given expectations that are implied by the market as well as by analysts forecasts. Margins so far are coming in pretty strongly. We see the vast majority of companies beating on net income margins. Operating margin is still a fifty to fifty where there is still a decent amount of operating risk, but net
income margins companies are beating so far. So it's something we'll watch, especially with respect to tech.
Why do you think we've seen a steeper cell off for missus so far this quarter? Like, I know, expectations are certainly high, and this is earning's driven, but why is this quarter it's ptty particularly sensitive.
It's mostly I think it's a function of we're early yet more than anything else. So I don't want to draw too much into that, but we have seen companies respond pretty negatively to misses. I think it's a couple of reasons. The first is financials didn't start us off on a great foot, even though companies generally beat expectations. In financials, there's a lot of nervousness about what's going on in face and it felt weak. Yeah, so that was a pretty weak's start. Let's see where we go
from here with respect to price performance following earnings. The other thing just to consider is some of this could be spurious, right, It could just be the market at largest selling off. And when the market at large is selling off, the misses appear to be enormous price responses, even when all it really is is everybody's just selling risk.
I always feel like your tone, and I feel like your tone is a little bit more subdued or more cautious. Has it gotten that.
Way of Uh? Yeah, so, not necessarily because of earnings. I think earnings are still a pretty solid backstop. But at the end of the first quarter, when we run through all of the different models that we use to assess the equity market, the technicals actually we're signaling a week time to come coming into the second quarter. Not necessarily that earnings are problematic, but things are more difficult now for a lot of reasons. Technicals, correlations inside the
market were flagging a great degree of risk. Industry signals, all of our leading industry cueues were turning over at the end of March, all of them. So yeah, so semiconductors, home builders, transports, all the leading indicators of what you would anticipate, we're starting to turn over again. This doesn't mean a horrible climate. But this type of risk was flagged also to us back in July of last year when we were, you know, turning over into a ten
percent correction in stock. So I want to, you know, be a little bit conscious of this. The technicals are quite weak. We started off on week footing that said, the economic strengths and the earning strengths have only improved over the last six to nine months, so there should be some offset there. But it does imply a choppier climate for Q two.
So what has come at the same time, and perhaps the reason is the FED chair actually talking last week about dialing back and resetting rate expectations. And we certainly saw some selling last week and even this quarter on the S and P five hundred, we're down four point two percent right today's recovery quote unquote recovery notwithstanding. But I'm wondering how you're thinking about that.
Yeah, I view what happened the FED is an amplifier of existing trends, not the spark. Right, we already saw markets turning over in anticipation of some greater weakness emerging over the second quarter. We saw that with the end of first quarter surge into a new high and then we started started seeing a turnover. So while the FED speech last week was important, it merely amplifies what was
already happening in the equity market. And I think if you read through to the stocks and sectors that performed poorly last week, I think what's really happening in the market is a lot of fear with respect to the Can Tech continue to hold up amidst this environment of rotation which really started to go all the way back at the beginning of March. We started noting rotation emerging in the equity market, this leadership transition. If Tech's not
the leader, who is the new leader? That creates a little moment of anxiety for the equity market at the very least, and may certainly stall the advance.
So the S and P back above five thousand today. Last week was what the worst weekend over s and P down about five and a half percent from the March twenty eighth peak to this past Friday. NDX NAZEK one hundred, down about seven percent between that March twenty second high and last Friday. That is some of the nervousness we're starting to see. But it get worse. Are you expecting more downside on these indexes.
Look, I think if the tech companies cannot satisfy expectations and keep raising forecasts going into the rest of the year, yes, it could absolutely get worse because tech has been such a big part of the market's optimism so far this year. Now, one thing is happening in the first quarter that I think is pretty notable and maybe is also behind this recent rotation in the market, and that is this is
peak earnings growth for tech. It is peak quarter. Between last quarter and this quarter, We're peaking, and we will have to see some earnings deceleration, at least according to the analyst consensus. Will the tech companies tell us it's not decelerating or not could be a key question over the course of the next few weeks.
A lot to keep us busy, all right, Gina, Thank you so much, Gina. Mark Adams, chief equity strategis at Bloomberg Intelligence.
Here in studio, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Bright Auto with a Bloomberg Business app or wants us live on youtubel.
All right, everybody, Well, last week, you might remember the IMF edging up global growth. Meantime, the Atlanta Fed GDP now Model estimate for real GDP growth in the US in the first quarter of twenty twenty fourth two point nine percent. That was on April sixteenth. It's up from two point eight percent before that. We're going to get another update from the Atlanta Fed on Wednesday. So we have seen the numbers. We've talked about this, they've been rotcheting them up higher.
Meantime, On this Earth Day, Bloomberg's Mark Gonglo reminds us that the only thing climate change is cooling is growth. Mark is Bloomberg opinion editor and columnist who covers climate change. He joins us this afternoon from New Jersey. Mark, the climate has gotten hotter, continues to get hotter. But and we know this, We knew that. What was surprising to me about the study that you cited is that it's going to actually make global income nineteen percent lower by
twenty forty nine. How do we get there? First of all, that's all there, and first of all that's also bad news.
I should yes, global income lower by nineteen percent is definitely bad news. That amounts to about thirty eight trillion dollars a year by twenty forty nine. Obviously you're ramping up to that point, so you're losing trillions and trillions of dollars, and that is coming from just heat for the most part, extreme heat. Variability in temperatures too, and variability in water, so that affects. Heat affects human health and productivity. Our brains don't work as well, we're not
as productive of when we're really hot. And the variability and water gives you huge droughts, as we're seeing already in Africa, and also gives you terrible flooding, which we're also seeing in many other parts of the developing world this week. So all of these things affect economic growth, productivity, agriculture, industry, all of that, shaving up to nineteen percents off of global income, which is not the same as GDP, but it's just about the same. It's similar by twenty forty nine.
Yeah, it's going to impact how people you know around the globe, whether or not they've got money to spend right, which is certainly creates velocity, economic velocity and growth within the economy. Having said that this study, as you note, Mark and your piece, is that it's a little bit more. I mean the cost is more than past research and
studies have shown. What's the difference. What's why are they coming out with this or finding this finding versus maybe some more subdued findings of the past.
Yeah, in fact, it's it's a lot more. There was a study, a famous study about five years ago suggested it would be more like twenty percent off of global GDP by twenty one hundred. This study says, if we don't start cooling the planet down, or if we don't stop making the problem worse, we could have a sixty percent hit to a global income by twenty one hundred. So you're talking magnitudes worse. They say that they have new models that they're looking at that incorporate the fact
that some of these impacts on economics last forever. If you have a generation of kids who don't learn as much and don't have as much economic opportunity, that affects future generations. And so they have all these different variables they're plugging into their model, and they're spitting out these huge numbers. You could argue with the numbers, and some climate scientists have kind of taken some issue with a few of the numbers here and there, I think said
the important message to me. There are two important messages to me that come out of it, no matter how you slice the numbers, which are also very difficult to forecast. Of course, One is that we are going to lose a lot more by not doing anything about climate change than we are going to lose by doing something about it. So Bnaf Bloomberg in NEF suggests it could cost two hundred trillion dollars by the middle of this century to
mitigate climate change. Two hundred trillion dollars is kind of a lot of money, but it's you spend that at about six years if you're losing thirty eight trillion dollars a year, So it's an investment to avoid many, many
more trillions of losses. And the second key thing is that much of this economic impact is landing on the people who deserve it the least, and so developing Africa, South Asia, South America, these places are going to see GDP hits of maybe thirty to thirty three percent by mid century, again according to this study, but again this is consistent with what we know that these impacts fall most heavily on places that probably deserve.
It the least.
Explain because there's something you go into in the story about this isn't degrowth, And I don't know that it's a term that I feel like I've been using much when it comes to climate change, which is why we always love reading your columns. But you note that what fossil fuels are doing to the world isn't quite degrowth. So de growth is what when you kind of slow down output to reduce the impact on environment. This isn't what you're talking about.
No, not exactly. At first blush, it kind of seems like that. And so there are climate activists who say, you know, we need to stop growing the economy so much, and so that would involve cutting growth. And I guess an example of this could be when COVID hit in twenty twenty. You saw growth just fall off the table and all of a sudden, nature was healing and emissions weren't as bad. And people said, hey, if we just
did this all the time, we'd save the planet. Well, the problem is you can't really do that all the time, because not having any economic growth it creates its own problems, especially again for developed in countries who haven't had the chance to develop and don't have the standards of living that we do. So what this is doing is not that even with climate change there the scientists are saying the economy will keep growing, it will just be stunted,
sort of the way. You know, my mom used to tell me if I smoke cigarettes, my growth would be stunted. So that's it would stunt our growth. We would still grow, but it would be stunted, and over time it would get much worse, which is the other key message to come out of this, which is that there is still time to avoid far worse outcomes.
I wonder Mark, how a message like this resonates in your opinion, because Carol and I talk about this all the time walking into work, when the skies are full of smoke from wildfires, you know, thousands of miles away. That is something there's something visceral about that. You know, your basement because of it becoming unusable because three or four times a year the weather is so extreme that it floods. You know, there's something that really hits you
about that. But I'm wondering if this type of story, this type of data hits people the way that those actual other things do.
It's really difficult because you're talking about future generations, and we seem to have a real hard time thinking about, well, you know, my grandchildren are going to suffer from this. And then also we have a really hard time putting numbers like thirty eight trillion dollars a year into context. It's like, okay, thirty eight trillion dollars a year, or you read the headlines about well, all the Arctic ice is melting and oceans are hotter than they've ever been.
I mean, some of this stuff can be so doomy, gloomy and doomy that you just say, all right, well we're doomed anyway. I might as well eat a cheeseburger and roll coal out in the parking lot. But it really is true that we still can make a difference, that we're not doomed by any stretch yet. And so I think sometimes numbers like this, we are already suffering hits to our pocketbook. Right now. We talk about thirty eight trillion by twenty fifty, people say, I don't even
know what means. I don't care, but people are losing money in Florida as we speak, and in California because they can't get their homes insured. And the next wildfire season, the next hurricane season, the next floods that come, there are going to be a lot of people who are going to be surprised to find that they're under insured and so and they're they're going to take a huge
financial and economic hit. So these economic hits are happening right now, and I think maybe that's a way to help contextualize it for people, to make it real, like wildfire smoke.
Mark to that point. There's another story on the Bloomberg and it talks about the economic impact of climate change, specifically on global tourism, broken down by some of the top countries that rely on tourism for growth. And we have a great chart for those who are watching on YouTube and are Bloomberg originals. But the whole idea is in this story. It says by the end of the century, residents of northern countries will generally see sunny spring like
bomb a pair appear excuse me earlier in the winter. Conversely, those in the south, including equatorial regions and extending into southern Europe and the US well for the most part enjoy fewer days of temperate weather year round. I mean, this is something we talk about, tourism so important to so many different either cities or countries, like this is again another economic impact. Just got forgive me about twenty five seconds. I mean this place to what you are talking about.
For sure, and even in those place so even in the places that will bear less of the brund, there still is an impact. There's an economic impact. And in some of those countries you're talking about where there will be sunnier days, but maybe your skiing industry doesn't get as much snow, and so you lose a lot of tourism that way. And then you have climate refugees leaving the places that are hit a lot to try to go to the nicer places. And then you have a whole political issue.
Yeah, changing after days though, like changing interesting, tough, but as you always say, maybe not too late. That always gives me hope. Mark Gungloff, thank you so much, editor at Bloomberg Opinion, joining us there in New York City. Check out his column. You can find it on the Bloomberg also at Bloomberg dot com Slash Opinion.
You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business Ad. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa Play Bloomberg eleven thirty.
Today, Is there a day? And an important thing to think about is where on Earth all of our food comes from?
Yeah?
And when it comes to farming in the US, well, farms are becoming fewer and farther between the number of farms in the US following by more than one hundred and forty thousand between twenty seventeen and twenty twenty two, and the number of farm acres fell by twenty million over that same period of time. This is according to USDA data cited by the American Farm Bureau of Federation as an advocacy group that represents farmers and ranchers but generally on the decline.
Well, Yeah, and the group argues Carol that there are too many challenges that just make it unsustainable for family farms to stay in business these days. That's where Elmer Mayer comes in. He's the co founder and CEO of If It's working on technology that uses sensors, AI and robotics to give farmers a granular view of their cultivation environment. The idea is that increasing copy yields and reducing costs, of course, helps with the growing environment. Alma joins us
from Santa Cruz, California. Good to have you back on the program, Almar, how are you.
Good? Thank you so much for having me. Yeah, excite, we'll be back.
Yeah, thanks for joining us again. Give us an update on where exactly you are with this spider technology and explain once again for audience exactly how it helps farmers.
Yeah, happy to do so.
So. It's basically a football stadium camera for greenhouses or indoor growing environments. It's like a cable based system which like a football stadium camera, basically moves around they cannot be and flows up off the crop and monitors the crop. It collects a lot of different data like temperature. Hu made it these two. It takes images to understand what's going on with each plant and analyzes it.
So it's basically alleviates.
That burn for cultivators to walk the crop every day and check out every plant, which is tedious and like not scalable.
Is it possible in your mind ever to use this in fields outside and outside of greenhouses.
Oh, definitely. The way how we look at it is that Neatly is based on two pillars. One is the automation the data collection, like the robotic side of things where we developed the native spider to harvest the data. But then the other part is all the data analytics, like the processing of the data, the AI which picks up on blend health, on pests, on crop properties, and
that's agnostic to where the data comes from. So we could easily either mount four pillars outside of a vineyard and have a spider collected data, or mount the same sensor box onto a drone and collect the data in an open field.
Talk to us a little bit about all of the data that you have been collecting, the quantity and kind of the diversity of that data. That helps you help your clients, right.
So they The way how we looked at it originally was like we try to understand how cultivators operate their environment that their fields like the greenhouses, and they heavily rely on the visual feed. They obviously monitor the environmentals. They try to understand what's going on in the soil and the substrate. But then they really rely on looking at the bland, assessing what's going on, reading that language of their plants and like doing that, but like moving
around the plant, walking the greenhouse, et cetera. And that was really what inspired us to create like a system which is flexible, low cost, easy to install, but at the same time provides all this information which.
Is necessary to assess what's going on in the field.
And so having image data collecting like they're assessing what's like taking it, like assessing how the blands look like, what the issues might.
Be, is just a new domain and new dimension which we can offer to the culture.
We count every yellow leaf, for example, to count every necronic leaf, every folded leaf, the pests. We count every flower of flower size, how it evolves throughout.
The growth cycle.
So now all of a sudden you have a direct feedback loop to whatever you do in the field, whatever happens, and you can say like, oh, my crop has ten percent more yellowing today, it has five percent less folding, and compare crops across different growth cycle.
That's unique.
It's kind of like the ultimate drome or spy camera. It'd be quite fair and it reminds me of if you've ever gone to a sports game er I think. But we're in the US Open covering it tennis, and it's that camera that comes down in zooms and it's on these cables and it catches people you know, that are watching in the stands. So it's really kind of interesting in terms of the technology, and those you are watching us right now on YouTube and streaming on originals
can see it. Having said that, you guys have been up and running for about I believe four years or so. Now give us an idea of what the impact if this is going to be helpful in terms of yield and growing and productivity and efficiency. I mean, tell us what the results have been from some of you, either the studies that you guys have done or some of the customers that you're working with.
Yeah, it has been an amazing journey so far. There you've started about four years ago. It took us like half a year nine months to come up with the idea of the spider, and then we executed and that idea, we quickly installed first prototypes and then iterated improved ensure
that it works reliably. It collects the data which we need and we have been running these systems now for over two years in the field, and last summer we then decided to ramp up production to really like accelerate and like produce more and more of the systems because we realize that the customers really love it and there's interest. And since the beginning of the year, we have tripled installations and we have a backlock of orders now until June, which is very exciting.
But it really seems like.
A new concept of what you get from in terms of data from the field. But once customers see that in their own field it's just a very sticky product, they quickly understand the value and the bower of this and they want more.
How do you scale this? It's I mean, I've hard time imagining the salesforce that's required to go out and sell this product across the US and across the world to farms. It's not an easy thing.
And I'm curious how much it costs because I'm thinking about smaller independent farmers which are increasingly whether it's organic or regenerative farming, which we've been doing a lot on in the last couple of weeks. You know, whether or not it's affordable, right so.
The scaling itself right now, it's a lot about like going to trade shows, presenting a system, talking to potential customers, and the word of mouth by customers themselves where we get a lot of incoming demand. They obviously like installing the systems. Right now, it's our team which still goes to the different places install the first system, but it's really designed in a way where the customers can install it by themselves.
Most of them have like facility team if they are bigger, but even like.
You know, all the cost all the cultivists are in general very handy and they have to fix a lot of the issues around their farm anyway, So we try to design it in a way which makes it very easy to install, so that we can just shift them a box, they install the system, and that removes all that overhead of installation costs, et cetera. Yeah, cost wise,
it's a very interesting. We try to alleviate that initial hurdle to kind of say like everyone can just try it out, you know, so you can rent the hardware for like three hundred dollars a month. You basically rent the hardware as long as you want. At the point where you want to commit to it. You just purchase it. It's a couple of thousand dollars to purchase the hardware and then you get a discount, so it's really worthwhile basically that that investment.
But we didn't want to have anyone.
To like really you know, think long about before trying it out, because it's really this game change of when you see your own data gathered by the device.
One thing I'm thinking, you see, you know, for it to be kind of a gay change around the industry perhaps in terms of methods, is the industrial farmers getting involved? Are any of them interested? Are they biting and signing up for the systems?
Definitely, they love it, especially the bonds which have multiple facilities across different states or countries. They always struggle that they have, you know, they're experts which they don't have to send around. They fly around, visit each facility and assess what's going on with our system. They can provide way better feedback remotely, They can guide the teams underground.
They can compare data across different facilities, which obviously allows them to like standardize it more and become more consistent. So we see a lot of very very largest excitement from exactly bigger industrial cultivators.
Really appreciate you joining us this afternoon with an update, Elmare, Thanks so much. Elmer Mayor. He's the co founder and CEO of Netleaf, the company using technology answers AI robotics to give farmers a granular view of their crops.
I think about it like either some of the vineyards right we're just talking on Friday and just doing the regenerative forming, but having that capability to kind of look around and see where there's problems in terms of leafs or you know, pick up on problems or pests would be.
Kind of cool.
I don't know, it's kind of interesting how they're doing it.
Mack journal.
How about you let me drive?
Oh no, no, no, no, who's going to honey?
Please?
How do the gravel?
Let's make I want to drive. It's a good question.
This is the drive to the globe?
Do cons think well?
By Don on Bloomberg.
Radio and Video four percent right now as we speak.
Wow, yeah, all because of soft Bank.
Yeah maybe I think that what's going on there? Yeah, it's actually one of my gainers perci of you because I was actually like I put it on my list because like an analyst making some comments too about buying maybe the pullback, but yeah, stop making a big investment. It's like a billion dollars.
Yeah, and they're buying Nvidio chips to power that Jenny. Yeah, pretty cool, that's pretty pretty cool.
That's interesting that I get a stock moving.
Meta is up about looks like about nine tens of a percent. Let me just pull it up, make sure I got the current trade. Now it's up about half a percent. It was up more than two percent earlier in the session. Apple it's a little bit higher today, up about eight tens of a percent. Netflix, Yeah, just a tinge higher in today's session. Amazon it is up just a quick check here, up about one point four
percent here. So we're seeing some of those names that have often been, you know, so much of the momentum behind the overall equity trade and gains in the S and P five hundred. Yeah, moving to the upside today.
Okay, Well, let's get an idea of what our next guest has to say about all this. Dave don A Beating is chief investment officer at cib SEE Private Wealth Management. Dave, good to have you on the program. You argue that the recent pullback in stocks that we saw today, notwithstanding, could turn into a full blown correction. What's your thinking there?
Sure good? Good to be with you.
Well, I would say we're not all that far from her.
Right.
We've had a nice rally today, but before that we had a five to six percent pullback, and if you're going to call ten percent of correction, it's not that far away. It's a you know, a seasonally challenging time for equities as you roll into into April and May. And I've got to remember that we entered the month of April with a highly valued market twenty one and a half times you know pe multiple on the S and p sky, high positive sentiment, and it was just
sort of right for some disappointment. And you know, the macro environment that was was so rosy in terms of the consensus where inflation was going to come down, the economy is going to keep chugging along, double digit earnings growth in of course, you know, very aggressive rate cuts from the Fed. Obviously it looks a little different today.
The growth story I think is going to come through, but the inflation numbers have been kind of sticky on the way down, and obviously there's been a radical downgrade in terms of expectations of how much help and when we're going to get it from from the Federal Reserve. So it was just a somewhat more challenging macro environment and the context of a somewhat highly valued market. And it wouldn't take that much to get to correction territory.
But important point is it's a correction within a bull market. It's a normal part of the process. It's just the uncomfortable part.
Well, it's interesting too the S and P. Yeah, as you said, it's down about five and a half percent from the March twenty eighth pig to this past Friday than as Deek one hundred down about seven percent between the March twenty second high and last Friday. So we definitely have seen, you know, a different trend line over the last three weeks or so. Having said that, do
you I don't know. On those pullbacks, Dave say to your clients, this is an opportunity to actually get a name that's now a little bit cheaper than it was a few weeks ago.
For some names.
Yes, I wouldn't say that about the overall market, but certainly you're always looking at these pullbacks or even they become corrections as opportunities to be able to buy stocks at the price you want to buy it at. There haven't been that many of those after market rise. So sure, on a selective basis, there are stocks today that are more attractive than they were at the beginning of the month.
Why would you why say selective, Dave? Why would you say the overall market is not even is not a good deal right now?
Well, I go back to valuation and and the fact that kind of great expectations were built into those valuations, and we still have a process here where I think the market has to adjust to a somewhat less hospitable macro backdrop.
So I am curious. Here's an interesting week, right It's said to be the most important. We have the most names reporting when it comes to first quarter earnings this week. So we're gonna get from a lot of big, well known companies, including Alphabet. We're gonna hear from Meta, We're gonna from Tesla after the close tomorrow. So I do do you have kind of thought about the big tech community and those names that have been so responsible for momentum.
Do you think it's time to see them kind of you know, continue to decline a little bit, maybe even more from where they've been. I don't know. I'm just curious if you have some thoughts on that, since our focus is so much on those names this weekday, and you hit on.
The key issue, it's it's the earnings and the guidance that goes along with those earnings. I think the challenge for the for the you know, megacap tech names is that the pattern of their earnings expectations being greatly exceeded and management guidance exceeding expectations, that the bar is pretty high. I think to get big up moves off of earnings, they'll have to be you know, I think substantial beats with very positive forward guidance to really give these stocks, ah,
you know, a major lift from here. But you know, one of the interesting things that is developing this year is one of the things we were looking for to confirm that this is in fact a bull market from a sort of a warm ROMP context, is the fact that the market this year has not been wholly dependent
on this this handful of stocks. If you look at performance here today, actually tech is a is a middling performer as a sector, and you know, the leaders of communications is one of the leaders because mostly does a meta and Google, but the other leaders are energy, financials and industrials. So we have seen a broadening out of market participation this year, and that's I think a really positive development. We're not just dependent on a handful of stocks to drive the index.
Okay, so give us an idea of what could derail your thesis this year, because I know you mentioned in your note geopolitics and it's not front and center today, but it's certainly in the back of a lot of investor's mind, just in the last thirty seconds that we have with you.
Sure, I mean geopolitics is it always out? There is a source of volatilty in the markets, and there are more issues than normal today, So any given day something could happen to jolt the market, There's no question about that. But we've gone back and looked at what happens in these geopolitical episodes even when they go bad, and the market is extremely resilient and you can't predict these geopolitical outcomes, So the focus continues to be on economic growth, inflation,
monetary policy, currencies, and valuations. To stick to those things, you'll be able to ride out the geopolitical crises, all.
Right, Dave, Gonna leave it on that note. Listen, Thank you so much, Dave Dnabedie and he's a Chief investment officer over at CIBC Private Wealth Management. Joining us from Baltimore fans.
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