Jerome Powell’s Final Press Conference Highlights Energy Strain on Economy

I don't know what gas prices are going to do for the rest of the year.

And it will depend on how long the straight remains closed and how quickly it can be reopened and that kind of thing.

But remember, when gas prices go up, that's disposable income coming out of people's pockets.

So they're going to spend less on other things.

So there will be a hit to GDP.

That was Jay Powell at his final press conference as Fetcher commenting on gas prices hitting a four-year high.

Now Powell says he won't be a shadow chair after the next Fetcher takes over.

He also plans to maintain a low profile while he remains on the board for the time being.

Now, after Powell wrapped up his press conference yesterday, all eyes turned to MAC7 earnings.

Meadows CapEx disappointed investors, but Alphabet hitting all-time highs as it expects 2027 CapEx to significantly increase from 2026.

Well, joining me live here at the New York Stock Exchange is Alex Guiliano, Chief Investment Officer at Resonate Wealth Partners.

Alex, great to have you back.

Thank you so much for joining me.

Great to be here.

Well, it's been a whirlwind in the past 24 hours with the Fed Reserve announcement as well as Powell's presser, and we're continuing to monitor earnings as well as price action here on Wall Street.

So what do you make of what's transpiring?

Yeah, you know, investors out there are navigating a ton of different narratives, hitting them all at once at the moment.

You know, we still have the backdrop of the military conflict in Iran, the existential threat to jobs for consumers weighing on consumer sentiment.

But I think the big thing right now consumers are trying to parse through is that we're in the middle of a perception market, right?

And so despite the data that we received this morning, markets are trying to figure out where are we headed and who might be the winners and losers in that environment.

And so today's news on the earnings of the major Mag 7 tech names, investors are trying to figure out which names may be the ones that they want to lean into and ones that they may want to pull back on.

Yeah, and you really speak to what we're seeing, the difference between Wall Street versus Main Street, because we have to keep in mind that the U.S. stock market does not reflect the U.S. economy.

And as you mentioned, we continue to monitor the conflict in the Middle East, and that does continue to push energy prices higher in terms of oil.

New York Morning Trade, we're looking at WTI as well as Brent still elevated above that $100 barrel.

So consumers out there are wondering, why are we seeing this rally on Wall Street?

And when it comes to the big tech names, what really matters?

Yeah, you know, in this perceptions market with so many narratives going on, consumers oftentimes find themselves confused on where they should be positioned and what's really going to be driving the markets movement.

And I think the biggest thing investors need to focus on is taking a look at their own positioning and where they're comfortable being exposed to, because this may be an opportunity where people are under-appreciating the risks to the upside on markets and finding themselves in a place now with the market having recovered after the initial drop with the military conflict.

Investors have the opportunity to reposition themselves in ways where they believe they may have a margin of safety in leaning into the areas that they want exposure to.

Yeah and of course yesterday we paid attention to those earnings reports from four of the MAG7 names and of course it was about the CapEx, the spending and the return.

And of course after the close today we hear from Apple.

But what did you make of the data from the earnings reports?

Yeah, I think the biggest thing is the amount of CapEx spending that these companies have been doing.

Investors are taking a trust but verify process, right?

And so they're trying to parse out, with all the CapEx spending that's been done, who may be leading the way and may continue to lead the way.

And if companies have the impression that the spending is going to continue but they're not leading the way, they're being punished in the market right now.

And when we're talking about investing in AI, we know it's a big ecosystem.

So what areas are you focused on?

What are going to be the winners versus the losers?

Yeah, I think the biggest thing is who's going to drive the picks and shovels, if you will, of that ecosystem, right?

Investors have spent a lot of time parsing out some of the big tech names and the CapEx spending that's been done to develop those rails.

But really taking a look at the AI trade more from the perspective of who may be able to take advantage of the opportunity once those rails are built. rather than having to follow necessarily the rail buildings themselves.

And of course, we're here on the heels of the April Fed meeting, and all of us were focused on what Powell had to say.

But given the fact that we can expect a higher for longer environment for the time being, how does this change your asset allocation, not just heading into the end of this year, but also 2027?

Yeah, I like to tell investors, you know, make your positioning based on the rates that we have, not the rates you wish you had, right?

So this is a great opportunity for investors to take a look at the exposure that they have And if rates were to continue to stay the way they were, are they comfortable owning those positions in that environment?

If rates were to fall unexpectedly, that may be an opportunity to have more of a risk on trade.

And if rates were to go to the upside, if inflation expectations were to continue, you want to be able to weather that based on the positioning that you're in.

I think for investors' purposes right now, this is a great opportunity to be risk-off in areas where the price you're paying may not be worth the trade, and leaning into opportunities where you think the market is underappreciating that can grow with the market environment that we're in.

Yeah.

And earlier this morning, we got economic data.

So we got PCE figures as well as core PCE and first quarter GDP.

So we did see mostly a line with the PCE figures, but a slight pullback in terms of expectations.

But we still got a 2% Q1 GDP figure.

So where do you think is the biggest blind spot for investors right now?

And why do you think that is?

I think the biggest blind side, like I said, is the risk to the upside on the market, right?

We've dealt through a lot of different challenges and narratives that investors have been able to digest over the last few months.

And now they find themselves in a potential opportunity to reset where we are.

I think with the numbers coming in this morning, basically meeting expectations, the market has taken advantage of The reaction this morning has been forward looking and not backward looking, right?

And so I think investors have the opportunity now to be comfortable with the environment that we're in and continue to have the market grow with the position that we're in.

Well, Alex, always great having you on the show.

Thank you so much for joining us and thank you so much for sharing all of your insights.

Thank you.

Thank you.