Market Overview - Markets initially reacted to concerns about overvaluation and dual risks of inflation and weakening labor, but the uptrend may persist [1][2] - AI trade remains strong with continued beats across the street, suggesting it's still in early innings [2][3] - Market participants should tune out noise and focus on fundamentals and technicals during the earnings lull [4][5][6] Investment Strategy - The firm favors tech, industrials, financials, and select energy and power companies [7] - The firm is focusing on companies with dominant pricing power and strong EBIDA growth [12] - The firm likes Vulcan Materials due to its dominant position in aggregates and potential tailwinds from infrastructure projects and Space Force in Alabama [7][8][9][15] Vulcan Materials Analysis - Vulcan Materials has underperformed peers this year but has potential due to its dominant position in aggregates [11][15] - Vulcan Materials has increased the price per ton on aggregate by 55% over the last 5 years, leading to increased free cash flow [13] - Vulcan Materials has a high award-winning rate, especially from municipalities, increasing faster than its peers [14]

All right. So, JP Pal says the market seems uh a little frothy. I'm going to just translate what he's trying to say.I think everybody's saying that, but people keep putting their money into the markets and it keeps moving to highs. Do you think that this is sustainable, specifically with so much money pouring into the AI trade. Look, I think Jay is clearly trying to manage expectation around how many rate cuts we should be expecting, not only for the balance of this year, but as we move through 2026.The Fed ...

Core Viewpoint - The market is experiencing a shift in leadership from US equities to international equities, with a notable movement of capital towards dividend-paying companies and a change in China's policy to support growth rather than control [1]. Group 1: Market Trends - There is significant momentum in the AI and tech sectors, leading investors to engage in higher beta stocks, which are considered riskier investments [2]. - The macroeconomic environment is favorable, characterized by low interest rates and reduced regulation, which is expected to support dividend stock investments [3]. - International markets have outperformed US markets year-to-date, with a 25% increase compared to the S&P's 14% [4]. Group 2: Investment Strategies - A pivot is anticipated in market leadership, as the US markets have outperformed for over 14 years, suggesting a potential catch-up trade in the US, particularly in AI investments [5]. - Investing in international markets offers diversification benefits, as gains in the US are concentrated in a few tech companies, while international investments provide broader exposure and attractive valuations [6]. Group 3: Bond Market Insights - Expectations indicate that interest rates will continue to decline, which could positively impact the housing market due to its high GDP multiplier effect [8]. - Investors are likely to shift focus from the $7.7 trillion currently in money markets towards quality companies that offer solid dividends [8].

Let's start with your word of the day. Your word of the day today is inflection. What inflection are you seeing.>> So inflection in terms of market leadership shifting from US equities more towards international equities. Inflection also when it comes to movement of capital more away from cash more towards dividend paying companies and inflection also when it comes to China where their policy is changing more from control more towards supporting growth. >> Okay.I know you gave us these notes yesterday. I do ...

And that's how bringing another voice to this conversation. Bartlett's Holly Mazaka and also Wells Fargo's Scott Ren as well. Uh you guys both heard what we just spoke about with Lauren here.So I'm going to go with you Holly first on this one as you talk about the markets at or near record highs. Again, Lauren laid out the case for that broadening out trade. Also this idea that we're watching those certain key parts of the market.Is this still a trade that is contingent upon names like Nvidia, Microsoft, Ap ...

Group 1 - The market has experienced a significant rally, up 35% since April, raising questions about the sustainability of this growth and the potential for future rate cuts [1][4][5] - There is ambiguity regarding whether the market anticipates a rate cut due to the Federal Reserve's ability or necessity, influenced by uneven labor market data [2][3] - Projections suggest a trough in growth towards the end of the year, with GDP expected to stabilize around 1.5% by 2026, alongside a peak in inflation [3][5] Group 2 - The AI trade is highlighted as a dominant factor in market performance, potentially overshadowing macroeconomic and interest rate influences [4] - There is a notable presence of skeptics regarding the near-term durability of the market rally, which could be beneficial for long-term stability [5] - If the market were to ignore a potential rate cut announcement, it could indicate overconfidence and increase the likelihood of a market pullback in October [6]

For more, let's bring in Julian Emanuel. He is Evercore ISI's senior managing director and strategist there. Julian, it's great to great to see you.Um, I guess it's hard to argue with that point, right. This is a a kind of insurance or good news or normalization rate cut program from here on out if we get a full program. Um, to what degree is that enough at this point now that the market's up, you know, 35% since April.>> So, actually, when we think about it, there's two ways of looking at it. In the here a ...

Core Insights - The upcoming earnings season for S&P 500 firms is expected to be strong, with analysts increasing earnings per share (EPS) forecasts significantly [1][4] Group 1: Earnings Season Expectations - Analysts have boosted EPS forecasts for S&P 500 member firms, indicating a potentially strong earnings season [1] - July and August marked the first time since Q2 2024 that analysts raised aggregate EPS forecasts in the initial two months of a quarter [4] Group 2: ETF Opportunities - Investors may consider Invesco QQQ Trust (QQQ) and Invesco NASDAQ 100 ETF (QQQM) as potential beneficiaries of the upcoming earnings season, particularly due to strong performances from Nvidia and Broadcom [2][4] - Nvidia and Broadcom together account for nearly 15% of the holdings in QQQ and QQQM, suggesting these ETFs could be poised for success during earnings updates [2] Group 3: Sector Performance - Five out of eleven sectors saw an increase in their bottom-up EPS estimates for Q3 2025, with Information Technology (+4.4%), Energy (+4.0%), and Communication Services (+2.6%) leading the way [5] - Conversely, the Health Care sector experienced a significant decrease in EPS estimates (-7.2%), while Utilities showed no change [5] - The technology and communication services sectors, which make up about 79% of QQQ and QQQM, are expected to contribute positively to EPS growth [5] Group 4: Full-Year Earnings Revisions - Positive signs for full-year earnings revisions are noted in sectors like communication services and consumer discretionary, which together represent over 29% of the ETFs' portfolios [6][7] - Seven sectors increased their bottom-up EPS estimates for CY 2025, with Communication Services (+4.0%), Financials (+3.3%), and Consumer Discretionary (+3.0%) leading the increases [7]

Group 1 - The market is anticipating a 25 basis point rate cut from the Federal Reserve, with a possibility of a 50 basis point cut being viewed as a "sell the news" event [2][12][5] - The current economic indicators show a weakening job market, with high claims and low job growth, which may influence the Fed's decision [3][5] - Sectors such as real estate and private equity are expected to benefit from a lower rate environment, while small caps may face challenges if economic conditions worsen [6][21][20] Group 2 - The Russell 2000 index is experiencing significant gains, indicating a potential catch-up trade for small caps, despite concerns about economic slowdown [9][15][19] - The performance of small caps is closely tied to capital market conditions, and lower rates could provide necessary support for refinancing [19][20] - The overall sentiment suggests that while there may not be a recession, small caps could struggle if consumer fundamentals deteriorate further [22][21]

Core Insights - The discussion revolves around the upcoming Federal Reserve meeting and its implications for interest rates and market performance, particularly in the context of AI-related stocks and overall economic sentiment [3][4][6]. Federal Reserve Outlook - The Federal Reserve's September meeting is critical, as it will provide insights into future interest rate cuts, with expectations of at least one cut unless retail sales data is significantly weak [3][4]. - There is speculation about potential dissent within the Fed regarding the decision to cut rates, indicating differing views on the economic outlook [4][6]. - The market is currently pricing in expectations for rate cuts, with discussions around whether a 50 basis point cut would be perceived positively or negatively [6][8]. Market Performance and Trends - Year-to-date winners like Micron, Oracle, and Tesla are highlighted, with a suggestion that instead of tax loss selling, there may be a chase for performance as year-end approaches [9][10]. - AI and AI-related stocks are expected to remain strong, driven by market sentiment and performance concerns as the year closes [10][11]. - Small-cap stocks, which are sensitive to interest rate expectations, are also anticipated to perform well if the Fed continues to signal cuts [11]. Economic Sentiment - Concerns about stagflation are mentioned, with a focus on the balance between inflation and economic growth [11][12]. - The impact of tariffs on inflation is debated, with some arguing that the effects are overstated and should not lead to tighter monetary policy [13][14]. - Recent consumer sentiment data is not seen as a major concern for the market, suggesting a divergence between consumer expectations and broader economic indicators [12][14].