Lower. Stocks higher. Technology, one of the best groups today and by the way, the nasdaq right now is above a new closing high. So we need to track that over the final stretch as many of the mega cap, including nvidia, see nice gains today pretty good day, too, for discretionary stocks like decker, surging after its earnings it does take us to the talk of the tape. The road ahead for the rally lets welcome in professor Jeremy Siegel, wharton professor. Glad to have you here. Happy to be here. And we have nvidia, knocked the cover off the ball again and a turbulent day yesterday, and then a nice bounce today at least in parts of the market. Yes well, i think, you know, nvidia did so well, it almost sucked all of the oxygen out of the room so no one else could breathe yesterday. And now i think they settled down there were, i think what disturbed people yesterday was that little chatter in the fomc meeting, the minutes, about some people saying hey, are we done raising, and that, that would drive a stake into the heart of the bull market. So any talk about that brings about the fear and i dont think that is going to happen. I think a little settling down right now. I actually think the forwardlooking data that were going to be getting, and really are getting, is going to look much better on the inflation front. So it is a question of how many cuts, and not a question of whether there will be another rise when is the first cut coming . If at all this year . That remains the most sensitive debate within the market, you know if the Economic Data comes in too good, then the market thinks were getting no cuts. If it starts to look a little dicey, then the market says okay, well, maybe they will cut. What do you think . Well, you know, people say we will welcome cuts, but theres a good reason for cuts and a bad reason for cuts. I mean the good reason for cuts is we see a slowdown in inflation. And that would cause this bull market to keep on going, and going strong the bad reason for cuts is that we see a big slowdown in the economy, and despite cuts, youre going to have a declining stock market in that case. Fortunately, we had sort of weak data last week, and this week, the data looks a little bit better to me and im calmer about it. And i think that, i think that with the gdp, most of the i think atlanta, goldman sachs, all of the others are calling for the 03s for this quarter and that is certainly good enough to keep this bull market and the economy rolling. Wow, so i think thats why some make the argument that cuts dont matter, earnings matter. And earnings are good enough to continue to carry the market higher i had an interviewed with rick rieder blackrock, and he is in charge of assets and he says another 10 to 15 more this year out of this market. Absolutely. One thing, were going to get the second revision of the First Quarter gdp next week, and it is going to go down, and into the low ones now, think about it. Low ones and we have such good earnings with three gdp this quarter, earnings are going to be so much better you think earnings are going to continue to be better nvidia is sort of a perfect example, professor, where, you know, the critics would say, yes, the earnings were good, and they were better than, you know, continuously lower expectations, but all of the really good earnings are coming at the really top of the stack, right the mega cap stocks. Theres no professor, i will i got you. I will take care of you. Why dont you grab some water. Ive got other guests here that i can ask some questions to as well and you let us know when youre ready. Professor Jeremy Siegel, back with us in a minute. Christina is here of invesco and stephane link of hightower advisers as well ladies, good to see you. You want to pick up with what i was talking about with the professor . He is obviously bullish, when i said 10 to 15 that rick rieder suggested, he didnt say it sounded ridiculous what does it sound like to you it sounds like it can very well happen this year. Clearly the trajectory is up for stocks because we will see rate cuts, and its not just about the fed. We have major Central Banks around the world that are going to be cutting this year. Probably starting very soon. And so i think that that momentum is going to be a real positive for the stockmarket and well be supportive of and then of course with the yields higher, i think were going to be able to get some nice money coming from bonds as well there is an environment that i think is almost the antithesis of what i would call the difference of 2022. We learned this week that again we are still sensitive to high rates the fed minutes, while backward looking, were hawkish, right and you know, yields didnt necessarily like that. I mean we had this big selloff yesterday. So were still really sensitive to the fact that rates are elevated are we just going to brush that all off and continue to move higher as you suggest and like the professor thinks we can to well, we know its coming its just about timing if you think about college acceptances, its the difference between someone who gets an early decision and someone who is off the wait list, they will all get into the same school and all graduate, presumably im not so worried about the timing, im focused on the direction. And the good news is we have momentum coming from the rate cuts coming real soon and the bank of england, the bank of canada, that will provide some positive momentum. What if the direction, lets focus on that, what if the direction leads to you a dead end, right theres the assumption youre making, well the direction is lower for rates, because the direction for the fed seems to be cuts. What happens if were wrong . Im not suggesting hikes but what happens if the cuts dont come for longer than we think . And i mean well longer than we think . Well, then thats a time when investors should probably look to add to exposure in u. K. Equities, european equities, areas that will benefit from those rate cuts coming more quickly. Also, of course, theres quite a robust carry trade that is going on right now, because of bets around when we will start to see Central Banks start to cut steph, how do you assess this week how does it color your view in where we may go in the weeks ahead . I think yesterday, it was a couple of Different Things it was profit taking we were up 6 in the s p 500, in a month, so theres that and then it was also this fed speak, all week long, that really was more hawkish in terms of what theyre going to do on cuts and the timing and maybe get pushed out and what not. And then i think the icing on the cake was the fmp global pmi data that came in yesterday stronger than expected but also had higher prices paid index in it as well so that gave fuel to the inflation, staying stickier for longer you know i have been talking about, i dont think that we do need to do cuts and i dont expect fed cuts this year. And thats because the growth rate in the economy here is running stronger than expected, and were above trend, and the atlanta fed tracker is at 3. 5 , and we also have Global Growth thats picking up, and i do think, not only are we seeing the broadening here, in the states, and the s p 500, and other sectors, but you also are seeing other places around the world that are offering opportunities. You know we have been buying the indian etf, inda, so i think you add it all up, and 3 , and even in a 2 gdp world, in the u. N. , that kind of translates that into about mid Single Digits on the top line, but if the inflation continues to come down, which it is coming down, it is just slower than expected, then the margin story can stay intact, and you just did 10 Earnings Growth in the First Quarter. You probably are going to do 8 to 10 Earnings Growth for the full year. Thats very healthy. Earnings are going higher, not lower and stocks follow higher earnings so im pretty encouraged i do not think we will be up another 15 from here but i do think we are going to be up. Professor, you are back with us are you okay thank you im going to repeat that what stephane said, think about it, 10 Earnings Growth in the First Quarter, which is probably going to be reviseddown to about 1. 2 now this quarter is 3. 2, you know, can we have another 10 . Or 12 or 15 Earnings Growth in that environment . The answer is yes. So with this economy moving as it is, and you know, and the cash on the sidelines, as long as its not the bad cuts, because of a real slowing economy, its the good cuts because of slowing inflation, and now this bull market is absolutely still on track. It just feels like, professor, even some of the data suggested, from the likes of bank of america, you know with their flow shows and things like that where they track their private client movement, and you have had a fair amount of money come out and go into cash, what am i to make of ha some people look at what happened since the april bottom and saying you know what, maybe it is better to lean a little more out than lean more in people kept on talking about how great 5 is in cash, and take a look at the s p it is up 10 this year and were only, what, onethird of the year over, so you know, lets put it this way. Even if this stock market does nothing for the rest of the year, youre ahead in stocks twice the return that you get in the full year on treasury bills or other shortterm assets so the stock market is already down in the fixed income market. Christina, this is what i referred to, private, turning into class, the biggest since 2021, the biggest outflow since december 20623 and the fourth largest outflow of the last 20 years. It is a specific cohort obviously that theyre referring to, but nonetheless, it does speak to a little bit of nervousness that weve gotten a lot of gains in a really short period of time, right . Were talking, you know, mid, the third week of april lows, and here we are, in the third week of may, and weve come a long way well, someone probably read a meme that said sell in may, go away, and that hasnt worked. And it hasnt and i think that the reality is we are going to see skittishness especially since, as much as im very happy with earnings season, a significant portion of that Earnings Growth can be attributed to one stock. And so we need to see a broadening but i do think we will see a broadening in the market when we feel that rate cuts are imminent, when we start to get those rate cuts, i think that will certainly alter the landscape, and make it a far more a market in which many more stocks are participating. Steph, what do i want to do with some of the sectors lagging on the week . Financial stocks like goldman and jpmorgan have done well, financials down 2 on the week, utilities down more than 1 . I think were seeing some of the sectors where you saw some of the most sizable gains are the ones outside of technology obviously that are getting hit a little bit this week yeah, i mean i think theres its normal the xlf is up 12 at its highs, so taking profits makes some sort of sense to me. But the stocks are still very cheap. You are looking at an overall market that is trading at something 19, 20 times earnings and the banks are 10, 11, 12 times earnings and 1 to 1. 5 times book value with very good capital levels and very good dividends, so i skew within financials on Capital Marks because i think that is definitely on, weve seen a trough already, i think were seeing on the rise, and especially in the market, and m a, and in terms of utilities, i think they have rammed really quickly on this whole notion of the grid, right . And clean and green energy and all that which im a total fan of however, they have challenges. They are regulated theres only so much theyre going to be able to see in the bottom line. So if youre going to play that theme, i think you will play some of the industrials, you know where im at in that. So i think it is okay to see some pause here. Tech had a pretty good week. Nvidia was amazing but i do think that there are other plays, if you think nvidia was amazing, and you believe in the hyper scale cap ex numbers that are going to come this year, you can own a whole bunch of tech, too so i think it is really healthy to see a little bit of give and take in various different sectors, week in and week out, but i like the broadening out that we have seen. Professor, i just like that youve seen youve seen so many markets, and so many stocks that have carried a lot of weight over the years, and theres been a lot of hoopla about, and when you look at nvidia, and you see what that stock continues to do, and what the earnings suggest it may still be able to do, what do you think about . It is absolutely astounding and i dont even think i saw a stock like nvidia, i dont think cisco back in the late 90s has matched what nvidia has done over the last two or three years. And then by the way, what christine was saying and stephane, 10 increase in earnings but it was concentrated at the top mid and small caps did not share in that earnings in fact, earnings were down for many of them and it probably will take rate cuts to really begin to turn around the small and mid caps so they can challenge and outpace those large caps, which we want to see in the broadening out of the market. So you wouldnt lean into those areas of the market quite yet . Right now, for a long term investor, yes, because it is going to come, but right now, ive been saying since the beginning of the year, listen, im a value man, so you know, in a way, you know, ive been kind of a quiet sufferer here in terms of when is it going to turn around, but i have seen nothing to tell me that the trends of growth outdoing value are yet to turn arnz they will. But in the near term, the trends are still towards the Growth Stocks thats not what you want to hear, stephane, is it . Value investor extraordinaire . No, it is not what i want to hear. I dont want to hear it either but i think we talked, we have talked about, i look at the russell 1,000 versus the russell 1,000 value and it is february 9th, the spread was 900 basis points, growth outperforming value, and that spread narrowed up until last month to about 400 basis points, and now, its widening back up to 800. So you know, its absolutely true its being led by technology because those earnings have been coming in better than expected but i do think that there are still really good other areas to own. Many, not necessarily for long term, scott, i think you want to be diversified we talked about financials, industrials, theres a lot of places within industrials that are exciting, especially in what i was talking about before, in terms of the grid, and that sort of thing and i think some discretionary makes sense. I do think that housing is totally out of favor and hated at this moment in time and you know im a big fan, but i think were going to see a recovery so i think there are definitely places to be adding to beyond tech. But i recognize obviously in the last month that tech is certainly, and growth, has made up a comeback. I want to ask you in a second about the new positions that you have because theyre interesting but i want to get christinas view, the idea what the professor said, too soon, small, mid cap and ive gotten a lot of calls on this program that says now is the time you got to do it, now is the time you got to buy those stocks, and theyve had periods of outperformance, but very small periods of time do you agree or disagree i would say that there is a very close correlation between expectations around rate cuts and the performance of value, the performance of smaller caps. Im still in the camp that there is a chance the fed will cut in july i think there is a very good chance that the fed will cut in the third quarter, which would mean by september. So i would argue sooner rather than later, for smaller caps and value, getting into them, because i do think were going to see outperformance or at least keep up a lot better with tech, and that could be very sustainable, if we get those rate cuts. Okay. Steph, so were going to end this with you. Weve discussed yesterday, i saw this news of a dupont split and i said thats stephane link. And then i asked you about it yesterday, and you said, well, not yet, but im going to look at it. That was quick did you your Due Diligence quickly, and you bought the stock. Yes, i mean the power of your conversation with me, it got me thinking i did a lot of homework on it. I have owned dupont in the past. I know ed breen very well. As the ceo of dupont who is now exiting. But hes going to oversee this transition, into then splitting into three Different Companies and i think its not, we dont have to wait until they actually split for the stock to work, because i think youre going to see multiple expansion, as they break down these businesses, and you can use comparisons within each business to other companies, and other multiples, and these companies are really undervalued, i think, and so i like the story, i like splits, im now into another one, scott, so i think im done now. I think im tapped out with the amount that i have but they do work over the long term and i definitely think they are creating long term value. You also added to lam research and broadcom and freeport this week copper has had a rollover of sorts after being one of the hottest areas. Professor, let me end it with you and i will pick up where steph was going, right she likes splits ge, 3m, this one in dupont, says they work overtime i cant imagine you havent looked at this and studied this and taught about it. Does it work very little in the short run, it really and taking a look, make it is 10 for 1. I dont mean stock splits, i mean company splits, ge splitting into different businesses and 3m and dupont announcing that as well. Okay. I didnt understand. You know what . There was the age back in the 60s of conglomerates, thats the way to go, and then they found out that one ceo cant handle all of those Different Industries and sectors and all the rest and then we found out we can create value flew splitting up, i mean if the government ever splits up big tech, some of those Companies May be worth separately than forth. So yes, i absolutely agree get the expertise funneled in one, two, three managements and ceos, and you can outperform that sounded like the professor gave you an a, steph on that trade. Two thumbs up i appreciate everybodys time thank you. Lets send it over to Pippa Stevens for a look at the biggest names moving into the close. Work day i