All right, so I want to start off. What do you make of what we're seeing in the futures. Futures lower across the board as we await for uh JPAL over at Jackson Hole.What's your take on just the market sentiment right now. I >> I think you hit the nail on the head that that we've had a powerful 34% rally in the S&P over the last 4 and 1/2 months on the basis of the fact that first quarter, second quarter revenues and earnings much stronger than expected and an expectation that the Fed's going to start cuttin ...

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Should your clients be buying the dip in tech after the sell off we saw yesterday and the ongoing dip we're seeing in European defence names. Yeah. So we leaned still in on the bullish side when it comes to I am not going to lie on on that growth is long duration assets they tend to like fed cutting interest rates.We think they're going to do the same this time around. When we look at technology is still the sector that we expect to see very close to a 20% earnings growth from this year, outpacing by five. ...

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Market Trends & Expectations - Traders are betting on the Federal Reserve cutting interest rates by more than 0.25% next month [1]

Core Viewpoint - The second-quarter earnings season is concluding, with over 90% of S&P 500 companies reporting results, and the retail sector is prominently featured this week [1] Company Performance: Home Depot - Home Depot reported its second consecutive earnings miss, with adjusted EPS of $4.68 compared to expectations of $4.71, reflecting a 0.64% miss, and total revenues of $45.28 billion versus $45.51 billion, a 0.5% miss [6] - The company experienced a 0.86% increase in net income year-over-year and a 4.9% increase in revenues compared to the second quarter of 2024 [6] - Comparable sales increased by 1.0%, with U.S. comparable sales rising by 1.4%, although foreign exchange rates negatively impacted total comparable sales by approximately 40 basis points [7] - Home Depot reaffirmed its guidance for total sales growth of approximately 2.8% for the fiscal year, with comparable sales growth of 1.0% and an expected adjusted EPS decline of 2% to $15.24 [9] - The company is facing challenges from elevated interest rates and a slowdown in the home improvement sector, which has seen reduced demand due to high mortgage rates and rising home prices [4][10] Industry Context: Home Improvement Sector - The home improvement sector is currently ranked in the bottom 16% of approximately 250 Zacks Ranked Industries, with most stocks considered overvalued and expected to experience below-average earnings growth [3] - The sector has been adversely affected by a broader operating environment characterized by high interest rates and weak discretionary spending, leading to a slowdown in large-scale home remodeling projects [4] - Despite the challenges, the aging housing stock and rising home equity levels are expected to support long-term demand in the home improvement market [18] Upcoming Performance: Lowe's - Lowe's is expected to report second-quarter earnings of $4.24 per share, a 3.41% improvement year-over-year, with revenues anticipated to climb 1.47% to $23.93 billion [12][15] - The company has not missed earnings estimates since 2019 and has a trailing four-quarter average earnings surprise of 3.22% [13] - Lowe's has expanded its reach to larger professional customers through the acquisition of Artisan Design Group, which is expected to enhance its capabilities in new home construction and large-scale renovation projects [16]

Interest Rate Policy - Roth Capital Partners' chief economist believes a 25 basis point rate cut in September is fully priced in [1] - A year ago, there was a stronger case for rate cuts due to rising unemployment and lower inflation expectations (50 basis points lower at the 5-year horizon) [2] - The Fed needs to be wary of fueling expectations for over 100 basis points of cuts in the next year [3] Economic Outlook - Q3 macro data appears okay, with consumer spending and real GDP growth both tracking above 2% [4] - Q3 inflation, measured by the GDP price deflator, is running just below 3%, resulting in approximately 5% nominal growth [5] - The Fed Chair is expected to be tight-lipped and emphasize data dependency [5]

Fed Policy & Market Commentary - Scott Besson's claim that the Fed funds rate should be 150 basis points (1.5%) lower is considered inaccurate and potentially misleading [2][4] - The industry expresses concern over suggestions of a "rogue" Fed, emphasizing the importance of calm and reasoned communication [3] - Upcoming Jackson Hole meeting may reveal a potential shift away from average index inflation targeting, a move considered ill-timed in retrospect [5] - Core inflation is above 3% and rising, requiring strong justification for policy adjustments [5] Central Bank Dissent & Rate Expectations - The Bank of England's visible dissent and split votes on interest rates have surprisingly led to smoother rate expectations compared to the US [8] - Open and honest arguments among economists, as seen in the Bank of England, can be beneficial in navigating rate expectations [9] Potential Policy Shifts - The administration might focus on recent Fed mistakes, potentially influencing future policy decisions [5] - There is a discussion on whether the Fed should adopt a more argumentative approach, similar to the Bank of England, to foster transparency and debate [6]

Economic Outlook - The analysis considers scenarios reminiscent of the 1990s with low inflationary growth or President Trump's first term [1] - Higher interest rates are creating distributional issues, especially in housing and for lower-income households with high credit card debt [1] - A significant capex boom is underway, driven by AI and tax policies [1] Housing Market - Home building is currently struggling [2] - Constraining home building could lead to inflation in the future [2] - A rate cut could stimulate a boom or pickup in home building, potentially lowering prices in the future [3]

Consumer & Market Trends - Home Depot's primary consumers are homeowners, typically dual-income households with higher earnings, experiencing strong employment and wage growth [1] - Consumers are still spending, but a shift is observed towards smaller ticket categories, while larger ticket discretionary categories are experiencing weakness [2] - High interest rates are causing consumers to delay larger, finance-dependent projects like kitchen and bath renovations [3] Impact of Interest Rates - The industry is trying to determine if project activity is delayed or permanently derailed due to high rates [4] - Anticipation of Federal Reserve rate cuts is expected to unlock pent-up demand for larger projects [5] - Lower rates and increased housing market activity are projected to boost demand for big-ticket projects [6] Home Depot's Strategy - Home Depot is positioning itself to capitalize on the re-emergence of demand for large projects, particularly through professional contractors [6]