Midweek trade, we are looking at the major US stock averages trading mix with the Dow industrials higher, but this has come on the heels of the Nasdaq 100 and S&P 500 seen record gains in the previous session.
While we are smack dab in the middle of the final week of May and the S&P 500 is surfing the historic 7500 milestone.
Now investors are also bracing for a data loaded Thursday featuring revised GDP as well as the Fed's preferred PC inflation index and that could.
Completely rattle equities if the numbers do come in hotter than expected.
Well, joining me live here at the New York Stock Exchange this morning is Luke Lloyd, President and CEO of Lloyd Financial Group.
Well Luke, great to have you here.
Welcome back.
Always love being here.
New York Stock Exchange is nothing like it.
Yes, and here we are on the floor.
We're continuing to monitor the macro picture as well as geopolitics.
We know that that's been moving all asset classes this year, but what do you make of what we're seeing in technology?
It's a bullish environment.
I mean this is a great time, I think, to. invested, if not take on more risk.
I, I think this environment, the liquidity remaining strong, interest rates probably coming down, oil prices coming down, so inflation expectations are coming down.
This is a risk on environment.
So we've been adding a lot of the software names that have been beaten down because you've seen that rotation.
Mag 7 was down yesterday, uh, but the whole entire technology sector was up yesterday.
So that rotation, I think, will continue and software's down like 12% year to date.
The market's up 9%.
There's about a 20% disconnect in software.
And you look back in 2021.
Software is below 2021 levels.
A lot of these names are double the revenue, basically double the profitability in some, some ways.
The revenue growth is still there.
Um, I think this is the best time to rotate into the technology sector, but not necessarily the Mag 7 stocks, the other kind of ancillary areas.
Yeah, and when we're looking at the Nasdaq 100 as well as the S&P 500 at record highs, there's a lot happening below the surface, and you mentioned software, so one word that we added to our lexicon in 2026 is SAS apocalypse.
So give us your take on what we're seeing in software as well as the overall ecosystem.
In artificial intelligence and where you see the opportunities right now, the narrative was wrong.
Back in February, everyone says software was going to be replaced by AI.
AI is only going to aid software.
All these names will be able to innovate.
I mean, my two brother-in-laws are coders, OK?
They use cloud all the time to like, what's it called, uh, vibe code overnight.
There's going to be a world in the next 10 years that basically coders going to be replaced by AI.
What does that mean?
Software is going to get written quicker.
So all these big innovative companies within software are going to be able to innovate quicker.
They're going to be able to program their entire infrastructure without having to hire $300,000 a year programmers.
So their overhead gets cut, the margins increase, and the profitability increases.
So basically this whole narrative that AI is going.
Play software was wrong.
So I think that's where the rotation, like, kind of like Intel.
Intel was uh 25 bucks a share before the government bought it.
Now it's 120 bucks, right?
There was a narrative that Intel was a dog.
Intel is going to benefit from the semiconductor play.
Same thing with software.
Software was, is a dog right now, but it's gonna benefit.
And once people realize that, you're gonna see a rip your face off rally in IGV, the software.
Index software stocks, a couple of the names that we own GuideWire, Intuit, HubSpot.
These names are great, I think at this level.
And Luke, while I have you here, we are counting down to some key economic data tomorrow morning.
So we get the PCE index.
That is something that we're watching for.
And of course we'll monitor the geopolitical situation as Trump convenes his cabinet later on.
Morning.
But given the fact that oil prices are pulling back in New York, morning trade, we are looking at oil below the $90 a barrel level, at least for WTI.
There are a lot of implications for the Federal Reserve.
So what are you looking for when it comes to the economic data that will be out in less than 24 hours?
I think most of the data is going to be pretty well good.
I think inflation is going to be coming down because of oil prices coming down.
Midterms are right around elections right around the corner in November, right?
The Republican Party right now needs something to get done.
Um, so I think that Trump's gonna be very on top of things to get a deal done to bring down gas prices.
It's not a good look right now going on there.
So they're trying to, I think, get that down for November.
Uh, but what, what I will say is Kevin Warshch provides something different.
For years, we talked about stopping quantitative easing.
The Federal Reserve just kept on expanding their balance sheet for years.
Kevin Warsh talks about caring more about the balance sheet than he cares about interest rates, which is Something that hasn't happened for a while.
Most Federal Reserve chairs just care about interest rates.
If he actually starts unloading the balance sheet, that's inherently going to bring down interest rates and inherently cool down the economy in some ways.
The question is, does it cool down too much to where we get a recession, or, you know, is it cool down enough to get interest rates lower, and we have that kind of soft landing mentality.
We'll see what happens, but basically the mentality is Kevin. to go in there, unload the balance sheet.
Interest rates go lower, inflation goes lower, the market rallies in small caps do pretty well as well because interest rates going lower benefit small caps.
Yes, and in New York morning trade, we also continue to monitor the Russell as well.
But because we're talking about artificial intelligence and economic data, what is the reality when it comes to jobs and Americans who are concerned.
Yes, so AI is going to benefit small caps, I think, more than big corporations.
It's gonna benefit everyone, but this is the best time.
I told you before, I think about a year ago.
This is the best time in the United States history to start a business because all these jobs, AI agents, agentic AI can aid you in starting the business.
The small caps are really going to benefit from that.
Uh, what I would tell people is take risk.
You know, right now, if you talk to middle-class America, where I come from, and really what I am, middle-class America always is complaining about they can't get ahead, inflationary pressure, gas prices being high.
Well, instead of complaining about it, take a risk and bet on yourself.
You know, I talked to a lot of my clients about trying to increase their income.
Everyone talks in this industry about saving money.
Sometimes it's about increasing your income.
And what I mean by that is, understand the value you bring to your job.
And once you quantify the value you bring, have a conversation with your boss.
Most people never quantify that value.
If you go through the you know, quantifying that value, being able to talk to your boss about it, you can increase your income.
Right now corporations are making a lot of money.
They have profit margins at all-time highs, basically.
They have a lot of leeway to give you a raise.
So middle class America, I have a lot of those conversations about increasing your income because now is the time to do it.
And Luke, finally, before I let you go, I do want to get your take on tax advantage long term returns.
What does that look like in this current environment?
Yes, so.
I, I, it's very interesting, the philosophy I go about.
Everyone worries about taxes when it comes to investments.
Sometimes, taxes are a price you pay for doing well.
You know, if you make a lot of money on an investment, paying taxes is not the worst thing in the world.
So for example, Dow Chemical was a good example of that.
We bought Dow Chemical before going into this Iran situation that benefited from higher oil prices, higher, higher chemical prices.
Uh, it doubled in cost basis, less than a year.
So we had to take a capital loss or gain on that, um, but we doubled our money.
We, we also sold it at a point where it's down 10, 15% from where we sold it.
So basically selling that paid for the tax consequence there.
You should never worry about taxes, um, especially when it comes to tax environment, we probably are going to go higher from here on out.
You know, we got to pay for our government. debt we got to continue going down that path.
Right now probably taxes are going to be lower than they are in 10 years.
So take it, you know, sell now while you can in a lot of ways.
Well, Luke, we will have to leave it there, but thank you so much for joining me live here at the New York Stock Exchange.
Appreciate your time as well as all of your insights.
Thank you so much.
