Nvidia earnings closed out earnings season, says Virtus' Joe Terranova

Take some chips off the table in mega cap tech. That space continued to rally. It's the only reason we got to where we did. Well, not the only, but one of the major reasons we got off the April lows and the the way we did. What do I do now? So look, I mean, you know, I, I don't like I I don't know if I've ever victory lapped on your show because I don't like that. You know, this week has been probably our best week ever because our two main calls have basically with microcosms been short targeted long NVIDIA for the last 18 months. So that has worked this week. What do I do now? I I, my call was market weight not underway. I've never been underweight. The tech stuff. Oh, my bad. I market weight. You went from overweight. Yeah, I've been breaking consistently. Yeah. I like the market. I've been bullish on the market because of easy financial conditions and margins expanding. That's been the thesis. I think 2-3 weeks ago when it came on halftime. I'm like, it's getting closer to 5050 now in terms of 10% up, 10% down. And I think that's sort of where my head still is. I think the AI thing is in the early phases. So I don't want to be a portfolio manager and say, oh, I, I, I couldn't own AI because it was too expensive. Not about owning it, it's about lightening up. I mean, yeah. And that was my view. Like the, the high quality stuff has gotten high beta. It's a little rich. And I think you trim a little and you add somewhere. People hate it. I don't like romanticizing, I'm a contrarian. But I think if you want to go where people hate it, it's probably healthcare. OK. People think it doesn't work in election year. They don't like services. The costs are high. And I think 252025 could set up pretty good. So I see trimming a little. I don't say it's a game over and never own, you know, you know, Google and medic. No, but you said you, you said that NVIDIA like leading up to the earnings, you said that this was the biggest moment for the market by far Nvidia's earnings, right? OK, But but now that they knocked the cover off the ball, right, stock is, is, is ripping. Does that give you more confidence that there's more room to go than you maybe you thought in, in the market or or not 'cause if they would have disappointed? No, I mean, we're seeing a sell off now, but you know what I mean. I, I think it just all depends on your horizon, right? If you're investing out, you know, six 1218 months, we're might think the risk award is good. If you're, you know, to, to owning tech, to owning AI, to owning the guys who have big moats and have margin expansion. If you're saying tactically, like I told you, I'm not very good at that. And I think making one month calls is hard. Yeah, Kristen. So what do we do with with today that right now this as we, you know, get the final stretch underway 5 minutes in looks far different than it did this morning. Certainly, I think though we shouldn't read too much into this. We're going into a long weekend and I think a lot of it is profit taking in terms of positioning ahead of the weekend. I do think the good economic data that we received this morning, we should treat that as good news. Just a couple of weeks ago we were talking about stagflation, maybe even last week people were talking about stagflation. So if you see economic data like that, that's positive in terms of growth. So our positioning right now is playing a broadening out of the market. So to answer your question about in these large names, we certainly have exposure, but I think it's more of an S&P 500 equal weight as opposed to the market capitalization weighted index. You know who's still talking about stagflation? People like Jamie Dimon, who spoke exclusively with C and we see Asia today. And look, I mean, he's been more cautious, I think, publicly than most. I want you to listen to what he said about where he thinks all of this, you know, is going. Do I think the rates can go up a little bit? Yes, I do. And if they do, is the world prepared for it? Not really. I look at the range of outcomes. And again, the worst outcome for all of us is what I call stagflation, higher rates of recession. You know, that means corporate profits will go down and we'll we'll get through all of that. I mean, the world will survive that. But I just think the odds a little bit higher than other people think, Joe. That's been his consistent message. Some people say, oh, that's just Jamie being Jamie. But the Fed minutes were hawkish. They were more hawkish now. They were backward looking because they happened at a time where the reads on inflation had been hot for, you know, three months in a row time of the last meeting. Things felt a little more hawkish going in. Powell sort of changed that with his commentary because he wasn't as hawkish as some feared that he might be. But this does raise the issue, though, that the market itself is not prepared for a big backup in rates again, nor is it prepared for the what? Too many is unthinkable. And that is a hike by the Fed. Yeah, I am listening and I'm not ready to go there on on the Federal Reserve actually presenting a hike for us. I like what Kristen said just in terms of putting today in perspective, it's ahead of a summer holiday weekend. Liquidity is not as strong as it might have been, you know, six weeks or eight weeks ago. And I think what we can say about today is today officially closes out the earnings season. Like what's what's next after NVIDIA? This is it. And I think to stay that you believe that higher rate environment, economic recession and Jamie's last thing was you know corporate profits to begin to contract. I think you're forgetting what we just witnessed here, a 5% gain in the S&P 500 over the last month. Why attributable to the resiliency of corporate profitability in particular in the technology sector mostly I just don't agree with that, mostly in the tech sector, mostly in the tech sector. And I think now the visibility that you have as a portfolio manager looking at the market is, OK, what do I have in front of me? And I like what Adam said, where he said, look, we're not trying to predict the next two months. And longer term, we've got a bullish thesis. I completely agree with that. Longer term, I think markets are in a great place. But now as you move into the summer, you say to yourself, OK, what next do I have to look towards for a catalyst? Is it going to be the Worldwide Developers Conference from Apple? We have already had a significant bump up in sentiment positioning for Apple. So I'm not sure what there is to get excited about. And in that environment, we go back to this awful place where we're the Monday morning quarterback on what the economy is going to be. And I don't like being in that position. And I think that's the vulnerability of the market over the next several weeks.

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