Let's get to the big story breakdown ahead of the market open on this Tuesday.
We are looking at US stock futures in positive territory, but in the previous session, frustrators over trade and AI spooked investors.
Now software companies took a hit following a report from Citrini Research.
The firm is sparking new worries about the potential economic fallout from artificial intelligence and trade sensitive stocks also slumped yesterday.
Of course over the weekend Trump stating that he would increase his new global tariffs to 15%.
Well joining me on this Tuesday morning ahead of the market open is Eric Chris who is market strategist for the New York Stock Exchange.
Eric, good morning.
Thank you so much for joining me.
Good morning, Remy happy to be here as always.
Well, we are looking at stock futures higher this morning, but this does come after that massive sell-off we saw yesterday.
So what's going on here?
You nailed it.
I mean, we're seeing this rolling wave of AI disruption or fears of disruption just kind of crash across markets, across industries, across subindustries.
It's just once it hits one thing, it just moves on to the next.
So it really isn't isolated anymore.
It's just, you know, software was feeling the brunt of it for a while, but it has moved into so many different parts of the economy, and now it's not only Triggering fears of disruption within specific verticals, specific companies, but with the Citrini research piece that you mentioned before, you know, now the question is, well, if all these companies come under pressure and they start laying off people, now the unemployment rate spikes and that's going to hit private credit names that have all these loans tied to consumer. or consumer loans and so you know not to be a doomer or saying that these things are going to happen, but the report that's kind of what it focused on and that obviously I don't know if it triggered the selloff but it was definitely noted as part of the selloff so it's just feeding into that whole negative narrative that all All these names are kind of feeling right now and you bring up an important point because we have been seeing a lot of volatility when it comes to single name stocks or sectors on concerns about AI disruption but you also brought up private credit and given what we saw from Blue Owl last week how concerned are you about what's happening when it comes to that sector.
I mean, obviously there are very smart people that have been running those funds for a long time and are much better, know a heck of a lot more than I do about how to structure the loans, how to buy the loans, how to construct the portfolio, but I think just what you're seeing is there's just a lot of, there's a lot of just unknowns right now, whether it's retail investors who maybe are in a product that now they look at and say, wait, do I really know what I own?
Maybe it's just the big hedge funds or the big institutions.
Investors that are just de-risking right now because they just don't have visibility into the 5235 years down the road.
So I just think that there's a little bit of a risk off coming on right now or going on right now and you know I don't, I don't know if there's something that's about to happen.
I don't really, I don't think so, but I just think that there's just a cloud right now over everything and that's just weighing on multiple industries, multiple asset classes, and in other regards.
Helping other asset classes as well.
And Eric, of course when we look at the calendar for this week, we have to keep in mind that the State of the Union address is taking place later on tonight.
But of course in video earnings, that is something that we're all paying attention to.
So given everything that's happening and the uncertainty over tariffs and where we're going, how are you digesting all of these headlines?
Yes, the tariff situation obviously does not help the overall narrative I just mentioned the uncertainty, right?
Well, we just got another round of uncertainty.
With the tariffs, don't know how that's going to play out.
You mentioned FedEx before, you know, looking to claw back the tariffs that they paid.
I'm sure many others will follow.
That's a huge if or a huge unknown as far as the Treasury market goes.
How how would the Treasury actually refund those?
Do they have to issue more paper to refund those those tariffs that were paid?
It's just so much, you know, questioning about, you know, across markets across.
Like I said, but then moving on to the earnings Nvidia, Salesforce, HP, you know they are going to be big earnings reports.
You know, everyone expects a blowout number from Nvidia or just insanely strong numbers from Nvidia.
Expectations are high and of course for the other names as well.
So what do they say?
Does it continue the narrative that this spend is going to continue, that people are going to be buying these chips for a long time, that the hyper scales are still going to Be putting up huge data centers, buying equipment from deer, buying equipment from the electrical suppliers, buying more power from the utilities like all this this is all this is a very circular as far as there's a lot of groups that are benefiting from the AI trade and it's expanded out just from the chip sector now it's into a bunch of others now, many others now.
So how does that narrative continue?
Is it enough to just at least prop markets up?
I don't know if it.
Makes markets go higher, but if it can kind of prop markets up, give it the support that it needs, that would be positive too.
And finally, Eric, before I let you go, I do want to ask you about technical levels, especially since you mentioned yields.
Of course we're paying attention to the S&P 500 as well.
So what are some key levels you're watching?
Yeah, we're kind of right between the 50 and 100 day right now.
We kind of tagged the 100 day, move up to the 50 day.
We're kind of bouncing around.
We've been in a range from 6750 to 7.
For a while we've kind of hit our head on.
This is the S&P.
We've hit our head on 7000.
We haven't broken below the technical ranges, the 50 or 100 days, so that's acted as a strong level of support.
Got to keep those numbers in mind if we a meaningful break below and you're going to probably see some more downside.
But then again.
If things can stabilize, if the scare narrative kind of dissipates a little bit, if people get a little more comfortable, we could make another run back to 7000 and try to break above that.
So we're kind of, you know, I don't want to say which way we're going to go, but there's definitely narratives for both directions that you can make very easily.
And what about the tenure?
The tenure, so you know it's come down a lot.
It's about 4% right now, right?
So and that's a psychological level as well as like a technical level, you know, it's obviously feeding into mortgage markets.
You're seeing 30 year mortgage rates are now, I think they just broke below 6% for the first time in a long time, so the mortgage market.
The home buying market may thaw as we just went through another blizzard yesterday, but you know that whole home builder real estate market has been in the doldrums for a while.
So you know, as mortgages come in, maybe that spurs more buying, recycles money through the economy again.
Home Depot just reported in lineish numbers, but that would you know.
Obviously help those home retailers.
So but the tenure is definitely something to think about, not just with real estate though, but also because of what we just said with the Treasury refunds, but also a new Fed chair coming in.
You know what is the trade policy look like after the State of the Union as we go into the, you know, kind of second half of Trump's administration.
There's just a lot of uncertainty right now that we're dealing with and that markets are just trying to digest as best they can.
Well, Eric, I appreciate your time.
Thank you so much for simplifying a lot of complicated headlines here.
I appreciate your time as well as your perspective.
Always great to be here, Remy.
Thank you so much.
