Well, let's get to the big story.
Breakdown in New York morning trade.
We are looking at the major US stock averages trading mix, but keep in mind that Wall Street has overall continued its historic run with the Dow crossing the 50,600 mark and the S&P 500 eking out yet another close record close that is beneath the surface.
Traders are weighing a fierce geopolitical tug of war as for the AI chips.
No doubt we are looking at a seismic shift.
The benchmark semiconductor index, the PHLX, known as so or a staggering nearly 80% so far in 2026, and this does mark the index's best ever performance for the 1st 100 trading days of the year since its launch in 1993.
But the leaders have slipped in terms of the makeup of that index.
Now keep in mind that we continue to see.
Some key names including Micron crossing the $1 trillion mark for the first time ever.
And of course as we count down to the SpaceX launch of its unprecedented multi-billion dollar IPO, we are joined this morning to connect all the dots by Steven Schoenfeld, CEO at Market Vector Indexes.
Stephen, great to have you back.
Great to be here.
Well, of course we have a lot to cover, so let's take a look at the.
Economic data that we got this morning, we got a revision in terms of 1st quarter growth here in the US and also that PCE figure.
So what does all of this mean for the economy?
So the way the market is reacting, it seems relatively, relatively benign.
The stock futures dropped a little, but they've recovered since we sat down.
I think it doesn't dramatically change the Fed's trajectory.
What we have in macro terms is sort of a real tension between the geopolitics of negotiations with Iran, and there was some more shooting overnight between the US and the Iranian navy, and Iran retaliated against Kuwait.
So that's clearly a negative and it pushed oil up a little.
And then we have the very positive news flow of AI, the IPOs coming, AI trend broadening, um, and they're, they're kind of in balance.
I think if we have a little positive headline out of the Gulf, the bids are in, and I think the excitement going toward, uh, the SpaceX IPO and the other big IPOs coming like anthropic, um, are really going to be undergirding the market.
Yes, and as you mentioned, geopolitical tensions in the Middle East, that is something we continue to monitor and of course the oil prices.
So this morning we're looking at both crude prices as well as rent below the $100 level, but we know about the effects this has on not just the US economy but also the global economy and of course central banks in effect.
So given the fact that we have a new in the Federal Reserve.
What does this mean for the path ahead for the Fed?
So the Fed and the new Chairman Warsh was approved with hopes by the Trump administration that he would move toward easing, but as we've seen, the vast majority of Fed governors indicating that the next move would be a tightening.
So I think there'll be a tension.
I think Chairman Warsh will not do anything right away to see how the data goes.
What's very significant is that oil really kind of peaked early last week.
It dropped a lot, and any little upticks in the last few days have been relatively minor.
So my guess is that the next leg is going to be down, but of course Iran gets a vote as well.
And here in the US we're keeping an eye on costs, costs for gas, paint at the pump, as well as at the store.
So given what we're seeing in the US economy, what does this mean for Americans out there who are noticing borrowing costs climbing as spending costs are increasing and especially what we're seeing from the retailers?
What does this tell you about fiscal policy?
So the Fed Well, fiscal policy, the government wants to reduce spending, but it takes a huge risk if it does.
Just today in the Wall Street Journal, the automakers are seeing that a whole slew of previous buyers of automobiles are gone.
They can't afford a new car and so.
The public feels the pain.
We have midterms coming up, so the pressure on the Trump administration would be not to cut expenditures.
The pressure from the Fed and the markets would be that it should, because we are running record budget deficits, and I do want to shine a spotlight on the positive areas of the equity markets, and that is the tax.
Base in particular chips.
So we did get some earnings out from software companies overnight.
But given what we're seeing in terms of gains in the tech sector, how are you looking at this growth and what does it mean going forward?
So before I touch on the tech sector, I think we're almost done with the earnings season for the whole quarter, and it really has been a fantastic.
Earnings season across US companies and that is a positive foundation for the market.
On top of that, you see very dramatic growth in chips.
Nvidia, even though the stock fell, delivered fantastic earnings and is broadening out its revenue.
Chip companies are going from very narrow.
Um, just selling chips to now memory, which is also broadening out.
We've seen the memory stocks grow and you saw just as you mentioned in the last week, Micron suddenly went to 1 trillion.
Um, so we definitely have a revaluation.
My fear is if you look at the charts, it's getting very parabolic, so we need to have earnings and more fundamental stories to support it.
And as we mentioned, the upcoming IPOs are going to demand a lot of capital out of the market.
The way they're treated by the indexes is also going to have an effect.
So I see it continuing.
The trend is positive, but I see risk factors coming in in June and July.
I'm happy to discuss them.
Yes, and while I have you here.
I do have to ask you about the IPO market.
So on the top of the show you mentioned SpaceX as well as OpenAI and Anthropic.
So these are some mega deals that are coming down the pike.
So what are your expectations for these public listings?
And of course we've also been hearing about the pros and cons of fast tracking.
So what do you make of this?
So the The sellers are doing everything they can to ensure that there's demand.
It's going to be very limited supply relative to the size of these companies, and they've been pressuring some exchanges and index providers to do what you just mentioned, fast track them into the index.
What many of your viewers may not know is if these big companies are fast tracked in.
Other companies in the indexes will have to be sold to accommodate them, so our view at Market vector is a little bit more conservative.
We think these big companies should be phased in slowly.
They should not be going in all at once in broad indexes.
We do thematic.
Indexes we have a space theme index.
We have AI indexes.
In those narrow indexes they could fast track, but there is some danger going into broad indexes like the S&P 500, especially the NASDAQ 100, that they will suck up liquidity from other companies.
And I hate to put it in these words, but basically the buyers are going to be index investors, and it's not certain that that'll be a good long term outcome.
Yeah, and finally, before I let you go, what is the impact on retail investors?
So retail investors who want to get exposure to any of these IPOs will probably get access.
You have Robinhood and eToro providing access, other brokers, but I would say caveat em, the buyer should beware.
These are companies that are not young.
They've they've got, they've raised a lot of private capital.
And as far as retirement investors and other broad-based investors, whether you want to or not.
You're going to get it in your index funds, so you might want to diversify if you're, if you have 30 or 40% in US equity indexes, you might, as this happens, want to reduce that a little and go into international and emerging, for example.
Well, Steven, we will have to leave it there for today, but thank you so much for joining us and thank you so much for sharing all of your insights on a broad issue and also a variety of topics today.
My pleasure.
Thank you, Steven.
