Tech stocks pulled back on Tuesday, dragging the S&P 500 lower after three straight days of gains.
Some analysts are still bullish on US equities despite talks of an AI bubble, high valuations, and investor exuberance.
At the same time, economic risks are building.
Tariff impacts are still unfolding, and the Fed's shift toward easing brings new uncertainty.
And investors are looking beyond this year's strong earnings expectations through the year are part of it, but forecasts for 2026 are driving the long-term growth story.
Joining me this morning is Jonathan Corpina, senior managing partner at Meridian Equity Partners.
Good morning, Jonathan.
Thank you for joining me.
Well, first and foremost, let's take a look at where stock futures are this morning.
They are taking higher after the S&P 500 ended lower, but we're talking quite elevated level here.
So what are we looking forward to?
Yeah, we continue to see the market trade higher and higher.
It seems to me that on a day by day basis for now it's really headline driven as we're waiting for some other big.
Data or information to come out.
So we did see pressure on the market yesterday, as you said, after 3 straight days of gains and now positive headlines coming in today are clearly helping our markets continue and move towards these all-time highs that we've been seeing recently.
Overall, the sentiment is that this market is strong, this economy is strong.
We're getting to the end of the 3rd quarter, so we're going to probably see this run up in the market as we get towards the end of the 3rd quarter, a little window dressing as portfolio managers do to make their statements look very good.
At the end of the quarter and then historically the 4th quarter has always been profitable for our markets.
So we'll get through kind of a little bit of a choppy period as we continue to navigate through the interest rates conversation and what the Fed is going to do next, and the markets will then to, you know, trend higher.
If you go back a year we were dealing with elections last year during this time and leading into that, we had a lot of market activity going for that.
Now it's going to be what is the Fed doing next, so we're going to wait and see what happens there.
Yeah, and yesterday we heard from Fed Chair Powell earlier this week we heard from Myron, so we'll continue to hear from Fed officials this week, but as we look ahead to the rest of the year, as you mentioned, Q4 is right around the corner.
So we have more Fed meetings and we have earnings coming out, and we'll keep an eye on the economic data.
But when it comes to sectors, what do you make of where we are and what can we expect going forward?
So when we spoke last time was pre Fed announcement, which we knew they were going to do.
I did say that I felt like we were going to have a little bit of a pressure on our markets, which I was completely wrong about, and I did speak about a rotation out of tech.
That rotation never occurred.
It's still in tech.
Money continues to go in tech.
We continue to see these headlines with Nvidia and Oracle and all these other companies, and we're talking AI and infrastructure.
That's going to continue.
We're going to continue to see that there's a lot of money that companies have been holding on to that have been waiting to to to spend, right, waiting to allocate out.
They can invest in their own infrastructure, they can buy other companies, they can invest in their personnel.
We're seeing a lot of that momentum occurring as we're getting towards the end of the year again, as this money has been sitting on their balance sheets and looking, looking to.
Be spent.
So we're going to continue to see that in the tech sector there, which is clearly a hot one.
As interest rates come down and they're not going to move quickly, but as interest rates do come down, we're going to start to see a pickup in housing activity that will take a little time, right?
That's going to be at the lagging end of interest rate movements, but I think from that sector we'll start to see an uptick there.
Yeah, and Jonathan, we're keeping an eye not just on equities but also commodities as well, given the run up in gold prices as well.
So what do you make of what we're seeing when it comes to commodities?
Yeah, a little bit of a disconnect, right?
People use gold as kind of a safe haven, right?
And when they feel like there's fear or Volatility in our markets, they'll shift it to gold.
We're not seeing that, right?
We're seeing both the markets and gold trade higher and higher continuously and we're going to, I think we're going to continue to see that.
I think gold has shifted away from an overall safe haven and more of a core investment in people's portfolio as we continue to see a trade higher.
And over at Meridian Equity Partners this year you celebrated a key anniversary.
So you've been through a different market cycle.
So whether we're talking about monetary policy cycles or economic cycles.
So for those out there who are comparing what we're seeing in AI to what we might have seen decades ago in terms of the tech bubble, what would you actually say to them, given the balance sheets we're seeing on the.
7 names.
Yeah, so it's quite similar, right, because there is that euphoria that's there.
There's also that unknown of what is this product and how is it going to reshape our businesses and our and our lives, right?
So we're kind of running that same model.
I think there's a lot of money again that's out there willing to be spent and I think people want to make sure that they get on board instead of missing.
A bubble like maybe potentially you did miss the beginning of the 2000s.
So we're going to continue to see money flowing into this area at some point we are going to have pressure on our markets.
Keep it all in perspective, right?
Look at where we started the year, look at where we were in April on those April lows.
Look at where we've come now.
If we get a 23, 4% pullback in the market, it's OK.
It's kind of keeping things healthy.
And finally, before I let you go, when it comes to opportunities in the marketplace, what are you watching?
Yeah, I think there's two areas again, real estate, I think that's going to be one, but it's going to take time to get there a long runway.
I think the financials we've spoke about this before as interest rates move lower, we're going to see more transactional activity.
We're going to see more M&A activity, more syndicate activity.
The financials will benefit directly from that.
OK, Jonathan, always great talking to you.
Thank you so much for joining me today.
Thank you.
