While today does mark the 47 of the war, but Wall Street for now is officially blocking out some of the noise.
Institutional investors are piling back into equities, driving a massive tandem rally.
The S&P 500 surged 1.2% on Tuesday, and we are looking at that index got a small gain of 0.2% in today's trading session, and it is now up nearly 10% since March 27th, while the tech heavy Nasdaq.
Events roughly 12% over that same period racking up its 10th straight day of gas, it's longest winning streak since 2021, and as we kick off a brand new earnings season, attention is rapidly shifting away from geopolitics and back to corporate fundamentals.
Well joining me live here at the New York Stock Exchange is Kevin Mahn, the President & CIO at Hennion & Walsh Asset Management.
Kevin, great to have you here my pleasure while you're joining me on tax day.
Tax day.
This is the time when we step back and actually look at our portfolios, but this year has been very eventful.
We've been seeing plenty of volatility across all asset classes.
Give us your take on where we stand right now.
Yes, I think 2026 should serve as a reminder to all investors, one about the dangers of trying to time the market, right, because you've got to get it right twice when to get out and when to get back in.
And it's when to get back in that most.
Investors have difficulties.
Think about the last 10 days as you highlighted during your intro there.
S&P 500 is up nearly 10% and it's within 1% of an all-time record high while the conflict in Iran continues.
But to those investors who are unnerved by all this volatility thus far, perhaps they should look at their portfolios and align it more closely with what their true risk tolerance is.
In other words, don't just load up into one hot area of the market.
Look at Diversify and international stock.
Look at sectors that are likely to outperform based upon where all the money is going to be flowing, not only over the balance of this year, but over the balance of the next 3 years, next decade if not that.
How about adding bonds to your portfolio for income potential so now is the right time to sit back, reassess where you are, what your goals are, what your income goals are, your growth goals are, what your true risk tolerance is, and make sure your portfolio is aligned with all those. and you highlighted a lot of key points there, but I want to zoom in on one thing we're seeing in terms of sectors.
So we have to keep in mind that the AI play is something that has been front and center.
So what do you think is actually driving the rally right now is an institutional buying or actual AI fundamentals.
I think it's the fact that spending on AI infrastructure hasn't slowed down over the course of Operation Eric Fury and if Jensen Wong is correct.
The CEO of Nvidia and by the end of this decade there's somewhere between 3 to $4 trillion spent on AI infrastructure.
That means there's a lot more opportunities ahead for data center construction companies like Eaton Corporation.
How about data centers themselves like digital Realty?
How about the cooling solution providers, the HVAC companies like Emoine Manufacturing Comfort Systems or even Vertive, and then of course power.
We need power and we need memory for the AI revolution.
People continue to throw money at those areas and micron technology is benefiting from that.
Utility companies are benefiting from it, and these small modular reactor companies which are now coming into existence like new scale Power are benefiting from that.
So I think that's a better way to play the AI revolution, looking at the entire ecosystem as opposed to just trying to identify the winner in the semiconductors or software side. you highlight a lot of key points there, but other areas.
That we're paying attention to our aerospace and defense.
So tell us what you're seeing and why you're bullish.
Sure, so certainly at the forefront of all investors' minds across the globe right now are aerospace companies because of the recent expedition around the moon.
Successful.
Congratulations to those astronauts and of course the military conflict that continues in Iran.
So we need to replenish, upgrade, and modernize our military capabilities here in the US, but we also know that NATO.
Countries have committed to spend up to 5% of their respective GDP on defense by 2035.
Where's all that money going to go?
Likely to some of the largest defense contractors in the world who are here in the United States.
And another area I do want to ask you about is the American consumer here because here we are, we're still digesting the headline inflation numbers from the CPI as well as PPI report, and it goes without saying that wages have not.
Especially looking at the latest employment report.
So what does that mean when it comes to the American consumer?
I've been very encouraged thus far this earnings season from some of the larger banks, suggesting that the health of the consumer is relatively strong, and they've continued to spend.
However, the longer the conflict in Iran lasts, the more of a strain it becomes on the consumer because higher gas prices takes away their ability to spend.
We haven't seen that really materially trickle into the data just yet.
And I was also encouraged that the Federal Reserve in March lifted their forecast for GDP growth this year to 2.4% while maintaining their forecast for unemployment at 4.4%.
If those things hold true, that's a pretty solid economic foundation upon which the market can run.
And we are paying attention to Fed officials speaking this week before their media blackout period on Saturday, but we are counting down to the next Fed meeting and of course we expect a changing of the guard at the central bank.
But as we stand here right now and we're continuing to keep an eye on inflation as well as oil.
Prices and other economic indicators.
What do you think the rate outlook is not just for 2026 but also 227?
Great question.
Of course, the end of this month will be Chair Powell's final meeting as chair of the Federal Reserve and all likely Kevin Warsh will become the next Fed chair.
The Fed does nothing in April.
They stand on pause once again.
And in all likelihood they may stand on pause until the end of this year where we may still get one rate cut of 25 basis points as their most recent dot plot chart actually demonstrated.
They also continue with their forecast for one rate cut of 25 basis points next year, which would bring them to their neutral rate of 3%.
So investors shouldn't be expecting any more than that unless of course.
The Economy materially starts to slow down, enters recession territory, or the labor market materially gets worse, both of which are in our base case.
So perhaps we get one rate cut this year, maybe with the Kevin Warsh influence we get both rate cuts this year, but I wouldn't expect anything more than that.
Well, Kevin, a lot of moving parts.
So thank you so much for weighing on.
I appreciate your time and all of your insights.
Thank you.
Thank you.
