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Steve Weiss Jim Lebenthal. We
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will check the markets here. We
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do have some red across the
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board today. We're saying that
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the second half officially
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starts today. It's the end of
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the holiday weekend. The tax
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bill is done. The tariffs are
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still looming. Earnings about to
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start and stocks are at record
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highs. That's how the table is
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set. So Joe how does the table
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look okay.
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>> So the table in the near term
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still looks good. Momentum names
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still holding serve acts on
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Palantir higher today mag seven
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I know we're going to talk a lot
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about Tesla but how about Amazon
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which to me looks like it's
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breaking out. It looks like it's
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going to go above two and a
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quarter. Meta remains strong.
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That's the moment. That's where
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we are right now. However my
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expectation for the third
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quarter is at best we're flat to
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lower. And I think one of the
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reasons why is going to be about
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July 15th. What is July 15th,
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the start of the earnings
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season, July 15th. We're going
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to hear about earnings. We've
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been lowering the estimates for
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earnings. I think we are going
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to learn that corporations have
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absorbed the tariff cost, and
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that is going to see significant
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margin compression, the
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inflation from tariffs. It's not
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showing up in the inflation
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report. So it's going to show up
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somewhere. And I think it's
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going to show up in margin
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compression. It'll be okay if
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you get the revenue growth. But
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consumer discretionary consumer
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staple I think you're going to
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see earnings growth year on
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year. That's going to be down. I
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think the biggest challenge we
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have in front of us is going to
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be earnings. You know what else
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is July 15th. This is to
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buttress your point is June CPI.
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And we have not seen the tariffs
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show up in the inflation numbers
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yet. I mean if it's going to
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show up it's got to show up.
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Then I'm just I'm just accenting
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your point Joe okay.
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>> The commentary this morning
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Pasquarello at Goldman is still
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a bull market yet one that is
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delivering less convexity and
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less consistency than before.
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Core positions that I believe in
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and would marry as a composite
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US technology and US power.
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Steeper global yield curves a
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somewhat weaker dollar and don't
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fight the primary trend in gold.
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Morgan Stanley's Mike Wilson
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Weiss a tougher first half. Well
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we just went through better
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second half. Better 26. Could be
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some consolidation. He says
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during Q3, they're bullish on a
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6 to 12 month horizon. He thinks
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that earnings tailwinds are
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going to expand, not contract.
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>> Yeah I'm going to disagree
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with him. So I agree with Joe
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that up until and Jim makes a
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great point from CPI because I
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don't think you have to see it
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in July 15th. And I know that's
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not what you meant, but I think
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it's likely you start to see it,
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and not only from a cost input
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affecting margins with
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companies, but also from a
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demand input. So you've seen a
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lot of pre-tariff buying by
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consumer, by corporations, pre
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supply chain stocking. And
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that's going to run out at some
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point. If you go to buy a car.
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They say despite tariffs being
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announced on cars and in place
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already they say you can get pre
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tariff prices now. So they're
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trying to drive demand. That's
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going to run out eventually. The
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reason why I disagree in the
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second half is because I do
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think inflation takes a
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foothold. I do think that we're
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going to run out of time on
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delays. And thaall the good
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news on tariffs, like with the
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tax bill or, you know, whatever
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he calls the bill being pulled
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through into the market, which
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is the reason for the sell off
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today. That would hardly cause a
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sell off how we've gone. But I
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think that all the good news
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from Trump administration has
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already been seen and discounted
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in the market. And now I believe
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so. I'm saying in terms of
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stocks, for example.
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>> I know what you're saying. I
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mean, what else would you be
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saying in terms of whatever.
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>> Else in terms of, for
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example, the deduction of
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capital expenditures up to I
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think they raised to 4 million,
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that if it's put into use in the
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year you buy it, that will cease
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up in some of the companies. And
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there when they report, not this
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quarter, but going forward.
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>> How can stronger economic
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growth that they think is going
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to happen as a result of the
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bill and deregulation and
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tariffs not being as bad as once
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feared? How can that all be in
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the market already?
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>> Because the market's trading
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at record highs. It's trading
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above what we viewed as a
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troubled valuation area a year
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ago before this. And the
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fundamentals don't support it.
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We are starting to see a slowing
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in the economy. If you work
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through all the you know,
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basically what what they're
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saying is this can drive
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tremendous growth. You can't get
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away from the fact that prices
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are higher, that they still
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don't have tariff deals. And
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while they don't have tariff
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deals, at some point he's going
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to have to not extend the
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tariffs but actually deploy the
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tariffs, which will affect
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pricing and demand.
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>> They're betting they're
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making a big bet on classic
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supply side economics.
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>> That's exactly right.
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>> You flood the zone with the
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opportunity to spend more, make
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more, reinvest more. And thus
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earnings grow more, the economy
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grows more, and that what looks
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relatively expensive today to
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some in terms of the multiple of
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the market, like Weiss, actually
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isn't, because you are at the
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beginning of this more prolonged
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growth period than not. That's
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that's the that's the argument.
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>> You just used the term supply
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side. And I've got to say, in
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the last several months, that's
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the first time I've heard
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somebody say it. And that's
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exactly what it is. This is
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supply side economics. Now we
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can debunk it based on history.
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But here's what I think is going
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to happen. First off, in the
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short term Joe's right. We got
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the Treasury about to refill its
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coffers with the debt ceiling
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lifted. You've got seasonality
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coming in August and September.
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I wouldn't be surprised if third
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quarter is lousy, but and that's
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healthy. Fine, fine. But I think
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we're going to end up the year
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higher by meaningful amounts
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than we are now because of what
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Scott, you just mentioned, which
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is that this is a pro-growth
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growth budget bill. Now, Steve,
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you're right. We've got some
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serious questions about that.
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No, no, no, hang on, hang on.
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We've got some serious questions
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about what the tariff deals are
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going to be. And if this extends
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this question, this uncertainty
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past August 1st, we're going to
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have problems because companies
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have hesitated on hiring,
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they've hesitated on CapEx, even
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giving the extra CapEx
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expenditure. That is a huge
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benefit. But if we don't have
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the deals in place by August
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1st, they're just not going to
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know what to do. I think they
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will. I'm just going to finish
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really quickly. I think they
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will get these deals in place.
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They know they need them. And
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after that, this CapEx
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expenditure is very pro growth.
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Next year, earnings are
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estimated to grow 14% year over
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year. I think they will. Okay.
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>> Let me clarify my position.
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I'm still fully invested. I
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haven't taken anything off
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whatsoever. I still think that's
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the path of least resistance.
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All I'm saying is that I think
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we will have a softer earnings
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period. To Joe's point, earnings
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estimates typically get cut 3%
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going into every period. I mean,
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they've already.
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>> They've already come down now
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the bar is.
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>> Lower right now.
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>> You don't have to jump so
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high.
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>> But that's for this quarter.
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Guidance for next quarter I
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think is going to be somewhat
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muted because you can't guide.
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You don't know what tariffs are
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going to be. You can't take the
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word of the administration. How
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many times have we heard that
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I've got 20 deals this week that
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are going to sign. So until you
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see the whites of their eyes, so
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to speak, you're not going to
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take that out of the market. So
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my point is that we're going to
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see because of higher prices.
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And we see we'll talk about the
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airlines later. We see we could
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see it in other goods as well.
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And services. Keep in mind
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you're taking a lot of the
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population, the immigrant
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population out of the workforce.
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You know, the deportation
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numbers aren't as large as we
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saw under Obama or Biden so far.
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But they will exceed it. But
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they're scared. They're hiding.
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So that's going to weigh that's
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going to be wage inflation. So
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there are all these knock on
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effects. Yes. The bill is
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pro-business. Without a doubt.
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It's pro growth. And the
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continuing threats on Powell. If
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he does fire, he doesn't have
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the right to. I think that that
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could lead to something
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positive. But the point is I
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think that everything right now
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is being seen through rose
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colored glasses. And I don't
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believe that's the right stance.
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>> But the people wearing the
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rose colored glasses are saying,
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I've heard that could have,
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would have, should have for
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months.
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>> The rose.
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>> Colored. And it hasn't
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happened. At some point today.
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The glass is now for CEOs have
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gotten a little more clear than
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they were before. They were
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these big thick ones before.
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They couldn't really see through
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the lenses very well, and now
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they feel like they've got a
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little more clarity. Heck, I
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don't think we got more. We got
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more guidance. I think they feel
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like they got a lot more today
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than they did three months ago.
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They could barely they could
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barely give. Well, you you're
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talking to you know, you're not
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talking to the biggest CEOs in
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America.
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>> Pretty big CEOs.
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>> We're not going to like get
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in a match. You brought up the
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CEOs we're talking about. But I,
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I, I know for a fact that
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guidance last quarter was way
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better than people thought. Way
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better. Most people expected no
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guidance whatsoever. Now, some
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gave two the things that
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guidance just to cover
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themselves. But I feel like
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there's a lot more clarity today
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than there was three months ago.
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How can there not be? You can
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argue that.
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>> I can. We're tariffs.
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>> Well, I mean.
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>> Your CEO, you can make $1
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billion investment unless you're
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a semiconductor CEO and bringing
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it into the US. And that's going
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to be a long tail right to get
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those up and running. Do you do
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you have greater clarity in
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terms of what the tariffs will
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be where your supply chain.
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>> Should be? I feel like you
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have certainly much better
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clarity than you did.
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>> Well, you know, you don't
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want no.
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>> Question about that.
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>> But we saw some back, you
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know, back then.
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>> You know what the rules of
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the road are with Vietnam,
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right. That, that that covers a
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large swath of American business
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there. You figure something
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positive is going to come out of
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China because it has to for both
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parties. So the worst is off the
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table.
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>> They're betting on China.
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Everybody's pulling there I
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think.
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>> The worst.
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>> Is already been negotiated.
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>> Away from the actions from
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this presidential administration
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show that they do not want the
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reciprocal tariffs that were put
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in place on April 2nd to go
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through, i
