$16 Trillion Earnings Week Looms as Fed Decision and Big Tech Reports Take Center Stage

Morning we're seeing mixed trading for the major US stock averages right now we're seeing the Dow post an advance by 100 points and that is being led by Coca-Cola shares rallying by 6%.

At the same time, the Nasdaq is pulling back by over 180 points this morning and this does come on reports from the Wall Street Journal on open AI, which is fueling tech jitters.

It is a massive collision.

Catalysts this week for the markets.

First we have $16 trillion worth of mega cap tech earnings on deck ranging from Microsoft to Apple.

And then we also have half the world's economy setting interest rates, including the Fed, as well as the ECB, and all of this unfolds as Brent crude has topped $110 a barrel, and we continue to monitor the situation in the Middle East.

Well joining me live from the New York Stock Exchange this morning is Eddie Ghabour, co-founder and Managing Partner of Key Advisors Wealth Management.

Eddie, good morning.

Thank you so much for joining me.

Good morning.

Thanks for having me.

It's always great to be in the city.

Well, we have a lot to cover, so I do want to start out with what we're seeing in the Nasdaq Composite index because we are seeing that sharp pullback and we are looking at tech lower today.

So what do you make of that Wall Street Journal report on OpenAI?

Anytime you get a reaction to headlines like this when the fundamental.

Drop is strong.

It's usually a big buying opportunity.

We've looked at this morning as a gift.

We actually increased our Nvidia position at the open today.

We didn't think we would get a 3% pullback at the open, so it's going to be really interesting to see how this closes.

I have a feeling that by tomorrow these names will have reversed the losses of today and focus on the growth trajectory we're seeing in regards to earnings.

So there's a lot of people in cash.

Right now and any of these dips that you're going to see in our opinion are going to be bought up aggressively.

Yes, so walk us through this because we are looking at geopolitical tensions in the Middle East, but at the same time we have seen quite a recovery in the major stock averages since March 30th and we haven't seen the record highs for the S&P 500 and Nasdaq despite today's pullback.

So what sectors are you focused on right now?

This to me has been one of the strongest markets I've seen in my nearly 30 year career because normally an energy shock like this with geopolitical tensions would cause a much bigger selloff.

So the areas that we're focusing on are what the market is telling us where you need to be, which is in the economically sensitive areas.

We're concentrating in small caps which we think are going to benefit over the next 6 to 12 months and outperform the S&P.

You can own industrials here.

You have to own semiconductors if you've got the right risk tolerance.

We are overweight semis in regards to the tech.

They've been flat for a while and have just broken out over the last two weeks.

And normally when you get a breakout like this, there's a lot more momentum that goes into it and makes higher highs.

So that's what we think we're going to be in store for financial.

We don't have a lot of exposure to financials, but that is another area that is economically sensitive that if you needed to broaden out and diversify more, you could go there.

But we would stay away from staples and healthcare.

Your defensive areas are not going to give you the alpha generation you're going to be looking for as an investor in your portfolio.

Eddie, the next 24 hours are going to be massive from a macro perspective as well as an earnings perspective.

So what are you looking at as you head into the next 24 hours given that the Fed meeting will come to an end?

Of course we don't expect a rate change, but we're going to be listening to Powell as he speaks.

I think the Fed meeting is going to be a non-event this week because of the fact that Pao has 1 ft out the door.

The market's going to focus more on Kevin Warsh and what he's going to be doing.

The bigger story this week is going to be earnings.

So what we're going to be looking at is forward guidance.

The market wants to see strong guidance moving forward and also Cap numbers.

Big concerns in the tech space is a reduction in capE spending over the next 6 to 12 months.

So if those firms deliver, the implied moves on these big names are huge, which is, you know, not normal for such large cap names.

But if they deliver on capex and guidance, I think it's going to be a really strong finish to the week.

And of course we're paying attention to those earnings reports, but there are also concerns moving forward when it comes to artificial intelligence.

And given the runup we've seen in semiconductors, are there any concerns?

There's always concerns in the market.

You know, we're never in a risk-free environment.

You know one of the biggest things that we think the biggest risk to the market is a 10 year bond.

It has slowly been increasing and it's kind of going under the radar.

Not enough people are talking about it.

If we get the 4.5% on the. year and it goes towards 46, that's going to be a major short term headwind for markets.

So we don't think this is going to be a straight lineup.

You're going to probably have to navigate another 10% correction at some point in time this year, but if you're focusing on where we're going to be on December 31st of this year, we think significantly higher.

But the path getting there is going to be extremely choppy, and you have to be nimble and be able to move in and out of positions accordingly, or you can get whipsaw and Eddie.

Finally, before I let you go for viewers out there who are watching and wondering why are we continuing to see these record highs on Wall Street, I think the devil is in the details because when we look under the hood, we are seeing we are seeing this bread, this difference when we're talking about gainers, laggards versus leaders.

So what would you say to Americans who are watching and they're looking at borrowing costs, not budging and the cost of living still high.

You know, one of the things that this market has changed in its construction, and this is why we say now if you just focus on fundamentals, you're going to get left in the dust because there's plenty of fundamental reasons as to why this market should not go up.

But you have options flows, you have big funds that have algorithmic trading going in.

So we tell investors is don't fight the trend.

The technicals are going to tell you where the fundamentals are heading.

So that is the big story is the technicals are going to trump the fundamentals.

And if you don't trust those flows again, you're going to get left behind and just really be sitting in cash scratching your head as continuing to say why as we hit new highs.

And before I let you go right now we are looking at 71. for the S&P 500.

That's your price target for year end change?

You know, I think you could easily see 76, 7700 by the end of this year.

The earnings are that strong.

The fact that this market is making new highs in the face of one of the biggest global energy shocks we've ever seen tells you the strength now.

If this energy shock continues for 6 months, it'll be a different story.

But if oil starts to trend down over the next 2 to 3 months, this market's going to take off.

Well, Eddie, a lot to keep our eyes on as we head into the rest of this year as well as the next 24 hours.

So thank you so much for joining us.

Thank you.