Go to the markets. Join us now.
Anastasio Amoroso, Chief investment strategist
at I Capital.
What? Where have you? I can't remember the last time
you were on Anastasia,
but we've had a lot of data points a lot
of feds speak,
a lot of we've had inflation numbers and we've ratcheted
back how many cuts we're going to get.
How you feeling about the prospects for,
for stocks and bonds for the rest of the year?
Yeah, well, good morning, Joe.
I'm feeling pretty good about the prospects for stocks.
And I think the last time I was on with
you was actually in December.
And we talked about looking to this year as being
the year of a greater opportunity set for investors and
a year of broadening out.
And we clearly have been seeing some broadening out even
though tech is still leading the way.
But you do have sectors like energy and financials and
industrials that are starting to participate more and more in
the rally.
So feel good about that.
And then generally speaking, Joe,
I think despite you know the near term overbought conditions
that we've actually had since December
and despite you know us hitting new record highs,
I think stocks do have staying power.
And I think the big development the last few months
has been not only do we have the prospect of
the Fed cutting interest rates,
but we now have growth that's once again surprising to
the upside and is remarkably resilient.
So that's why stocks have been in such a sweet
spot because multiples are supporting by the prospect of rate
cuts and revenues and margins and earnings are supported by
better than expected economic data.
So I think that's the status quo that can continue
for a bit.
It's the opposite of what we were worried about.
And and it's the greatest
situation you can have. I mean
stagflation's the worse where you have high inflation and and
stagnant growth.
And if you have strong growth and declining inflation,
I guess we shouldn't be surprised by that's happening.
Why? Can you explain Gold's breakout?
Yeah, well, I think there's a number of reasons for
that.
You know, first of all of the Fed does actually
cut interest rates.
Then, you know, the time of high real interest rates
that the US dollar investors have been enjoying that time
might be behind us.
So that's why investors have been turning to gold,
that's why they've been turning to Bitcoin,
because if real rates fall,
that bodes well for those sort of alternative assets.
You know, that's one point.
And then you know, as calm as things are,
Joe, in the equity markets in the US economy,
we know that things are not calm in places around
the world.
And once again, I think that's why investors are seeking
out some of these havens from geopolitical instability.
And that's why I see some of the upside move
in gold and Bitcoin as well.
What's what's more concerning that
that we have that we don't have inflation under control,
I mean that that could be
why gold is moving to all the debt that the
debt overhang the the interest payments that that that we're
facing.
You'd like to bring rates,
they'd like to bring rates down so that the debt
service is over.
But a lot of times if you have a lot
of debt in,
you know, inflation helps, what you're paying back is not
quite as much as what you borrowed.
So I mean policy makers and central bankers
have a lot, lot to deal with and it's a
it's a difficult period I would think for them,
look they do have a lot to deal with.
You know first of all,
I want to make two points on that.
You know, first of all with core PCE expected at
2.8% that's to be reported on Friday,
You know that gives a lot of wiggle room for
the Fed to cut interest rates.
And so you know while there might be some concern
that inflation stays sticky around these levels,
I do think we are on that downward trajectory.
So that gives the monetary policymakers will go room.
But you know, there is a big concern that we
sort of haven't talked about since August through October period
of last year,
which is the $26 trillion
of the US government debt that needs to be refinanced
over the coming years and it's being refinanced at much
higher interest rates.
We just had an update for the from the Congressional
Budget Office about sort of this unsustainable trajectory of the
US government debt.
And look, Joe, if we were talking about this,
you know, 10 years ago and a lot of clients
were asking about how concerned we should be about the
debt,
you don't have to have a concern if interest rates
are 0.
But if interest rates stay at
5 1/2 percent or maybe they fall to
4 1/2%, that's still a mountain of debt that needs
to be refinanced.
So I do think that as as as a nation
of the government we need to address that trajectory and
you know perhaps that comes from different levers that we
can pull raising revenues but also cutting expenses.
But the key thing is we need to have the
willingness to fix that
before the market start to push us in that direction.
The the tech trade is tired or not at this
point,
well near term, right. If you look at the,
again, overbought conditions, we've been there since December.
But I am still a big tech bowl and you
know,
look the artificial intelligence high,
people say that it's maybe it's hype and maybe it's
tired.
But The thing is if you take a step back
and if you think about the massive amount of data
that we have in the world today that we're not
doing anything with.
I think some of the numbers from Google from years
ago,
we're analyzing 1% of the data that we have today.
We can't possibly humanly process the rest of it.
So if you think about it from that perspective,
the possibility to make use of our data using artificial
intelligence is not a multi quarter,
it's a multi year, maybe multi decade opportunity.
So when I when I look at it from that
perspective that's a trade that's certainly not tired.
And then the other thing Joe,
that's really notable, we had some updates from NVIDIA and
Broadcom and and and Microsoft and a few others.
And what's evident is that hyperscalers right now are hyper
focused on investing in the entire AI ecosystem.
And that's not just you know one data center here
is there,
but it's everything that goes along with it.
So it means you need the compute and the likes
of NVIDIA benefit,
you need, you know some of the network networking,
connectivity chips, you need some of the stories,
age and memory and so forth.
So what's really interesting to me is I don't
even think the tech trade is tire,
but I think the AI trade is actually broadening out
and it's a tie that's lifting a lot of boats,
right. You don't, you don't even have to pick the
AI winners because it it's going to be used by
all.
Almost all of technology is going to in some way
could benefit directly from from AI.
So you can just maybe well the tech companies are
going to enable it and that's why,
you know, you stick with us.