0:05 spk_0

Welcome to Stocks and Translation, Yahoo Finance’s video podcast that cuts through the market mayhem and noisy numbers to give you the information you need to make the right trade for your portfolio. I’m your host Ali Cannell in for Jared Blickery, and with me today is the fabulous Sydney Freed, AKA the voice of the people. Kindly like, subscribe, and comment on stocks and translation on Spotify, Apple Music, Amazon, or YouTube. Kicking off today’s show with our phrase of the day, which isretail investors, otherwise known as non-professional traders who buy and sell securities, ETFs, or mutual funds for their own personal accounts. And our number of the day, $4 trillion. That’s a milestone Nvidia just hit in market cap, becoming the first publicly traded company ever to reach that level. Retail traders love this name, but the big question now, is it sustainable? To help break this down and so much more is Ryan.Shrek, he’s the chief market strategist at the Carson Group. Welcome back to Stocks and Translation, Ryan. It’s so nice to have you.

1:00 spk_1

It’s been a while, but I’m excited to be here. We were talking. I was here last August, and that was the carry trade. A lot. It was hot in your city back then, a lot different. Now we’ve got markets up a lot, little better things to talk about. Look at

1:13 spk_0

that. I want to start there because we have. We have a lot of developments.You to come out over the past couple of days. I’m sure there’s more to come there. I know you’re bullish, but is there anything out there that concerns you?

1:28 spk_1

Sure. I mean, the obvious ones are, yes, if there’s some wild thing with trade that can upset the apple cart, really, when you look at yesterday’s numbers, they were saying, you know, some of the tariffs are about the same as what we heard back on liberation Day, and the market took in stride. So I think it’s probably taco once again is what the market’s saying. But the one thingBut maybe worries us a little bit here. We are bullish overall, we get into that. What if the Fed doesn’t cut? Or, you know, we don’t think they will. I mean, I know that’s not the base case. The the market. Fed fund Futures says two cuts. So we’re looking at things the economy to us is pretty good shape. You know, could they cut? Sure. Wages are 3.3.1% year over year. They were 3.1% back in 2019. We had Fed’s funds back then, 1.5%. Now.It’s 4.5%. So you could argue the Fed should be cutting, and honestly, we thought they should have been cutting earlier this year, and they said because of tariffs they didn’t. But we think you know there’s, there’s possibility that maybe they don’t cut and maybe the market doesn’t like that that much.

2:21 spk_0

I think President Trump is certainly not going to like that. He posted on TrueSocial today calling for 300 basis points worth of cuts. So you, you were just talking about how there are reasons to cut. There’s reasons not to cut.And when we think about the good cut versus bad cut debate, if we see cuts down the line for bad news, whether it be a deterioration in growth, the labor market, how do you think markets will react? Do you think they’ll rise because we’re finally getting these cuts, or is that actually maybe a near termrisk?

2:49 spk_1

I think near term risk is probably a better way to put it because again, the economy is slowing, you know, earnings have been strong. Forward S&P guidance.12 months on S&P 500 earnings. It’s at 281, I believe, just on Friday. That’s an all-time high, right? Profit margins, this cycle hitting new highs. Uh, there are some positive things, but if, if it’s because the economy’s slowing, then yeah, that’s a worry. And clearly we all know this, every guest has probably mentioned this, the housing market. I mean, the housing market is really, really struggling because of what’s going on with simply the higher interest rates. So if they were to cut 300 basis points andMake President Trump happy. That’ll also make the housing market awfully happy. But again, you know, it’s not our base case. We don’t see a recession, but those are things that kind of, I don’t want to say keep us up at night, but the things we think about, I guess, when we’re talking about constructing a portfolio to be kind of ready for what do we not know, what could mess this uh bullish thesis up. And again, maybe, um, you know, no cuts and a little stronger economy could do it actually.

3:40 spk_2

So we’re at record highs. You’re a bull. How does a bull prepare for a possible downside risk? Like, are there any mitigation efforts you’re thinkingof?

3:50 spk_1

Sure. So we manage almost $5 billion on the Carson team for our advisor andWe, we use the phrase this year a lot. When in doubt, diversify it out, right? So when I came on Yahoo and with you guys last August and many times last several years, we were very bullish in 23 and 24 wasn’t popular, people didn’t like that. We were in the US pretty heavy.On March 3rd, we actually went, we’re still over at equities, yes, but we actually took out some of our US exposure, went into developed international, so we’re more evenweight US and developed international here. So that’s one way that, you know, maybe this, um, that’s a big question we were talking about before we went live. For 6 months, Europe’s done great. We’ve seen this before, you know, is this Lucy in the football, pull it back, Charlie Brown misses again, or can it continue? Honestly, we think this strength, uh, we’re seeing develop international. Europe, maybe Japan starts to play along in the second half of the year.That can continue and that’s one way we’re kind of, you know, potentially protecting ourselves if there’s trouble in the US. We think the rest of the world’s gonna do pretty good. I mean last comment, what happened this year, right? I mean, most global markets are up double digits. Most in Europe are up 20% or more. US up, you know, 56, 7%, depending on how you’re looking at it. And it, it’s lagged, but after two years of leading, we think it’s perfectly normal. We are optimistic. The second half of this year, US is gonna kind of take the lead back. Um, but the rest of the globe should do pretty well too.

5:05 spk_0

And that’s something we’ve been.from a few strategists even on this program how there are opportunities overseas when it comes to the S&P 500, where do you see that index ending the year? And recently we saw upgrades to the forecasts from Bank of America, Goldman Sachs, but Bank of America just sees very limited upside, around 6300, and they say that there aren’t any near term catalysts. So what’s your call and what catalyst doyou see?

5:29 spk_1

Yeah, we came into the S&P 500 gain.15% of the day people listen to this and this comes out, our mid-year outlets coming out, we’ve left it there. Now I want to be very clear, we didn’t cut our guidance. We didn’t remove our overweight equities, the money we run back in early April when everybody else was. We, we thought it didn’t make sense. We looked at the credit markets, we looked at the economy, we thought we’d snap back. No, I didn’t think we’d snap back this far or this quickly, not complaining. So we are still overweight, so we still think there’s some upside to this. You know, one little, I’m known for these little stats and things, we’re calling this the sweet spot.Right? Someone plays golf when you hit the ball in a sweet spot, it just feels perfect. The market, when you look at the S&P 500 at the middle of the year, and it’s up between 5 and 10%, so a good year, but not a bad year. Some of the worst second halves ever have taken place after the worst first halfs ever, like 2022, 2008, some other examples, ’87, markets up a ton. Some other years market’s up a ton, and then the second half wasn’t that good. So this is kind of like, uh, you know, not too hot, not too cold. When you’re up between 5 to 10% middle of the year, like we are right now.The rest of the year has been higher, 13 out of 15 times for the S&P and slightly above average returns. One more on this. When you’re up in May and June on the S&P 500 like we were this year, those normally aren’t that strong a month, to be honest, but they were this year.The rest of the year has been higher, 15 out of 16 times. These are just two examples I’m aware, but when you stack these on top of each other, I’m a message of the markets, uh, type of market strategist, what’s the market telling us? To me, it’s still telling us. It likely wants to go higher second half of this year.

6:56 spk_2

So you’re seeing, you want 1 between 12 and 15% by the end of theyear.

7:00 spk_1

OK, I want

7:00 spk_2

100%. I think when I checked this morning, S&P was a 6%.Gains so far you’re to date. So what gets us the rest of the way? Is it still AI optimism, big tech overall? What is

7:14 spk_1

it? Yeah, I think it’s just continuation of the economy is stronger and people give it credit for. I, I think really, you know, earnings, we’re gonna have earnings season starting next week, right? Uh, I think it’s gonna come in better than expected again. The consumer, there’s so much worry about the consumer, and there are clearly cracks. We’ve seen a little bit of a jump in initial jobless claims. We know consumer confidence has been low. It’s been low for 3 years though.Uh, you know, but then you look at what people are doing, they’re still spending money. The labor market is still averaging 150,000 jobs the last three months. The unemployment rate did just tick lower, so we’re optimistic that the economy can hang in there, and that can continue to justify where we are with this, uh, with this global bull market. And then I, I say I’m not the smartest person in the room by any means. I think the credit markets are. The credit markets continue to show very little worry about the economy. Back in April 8th and 9th when the world was ending andYou know, everyone said how bad it was going to be. The credit markets were not freaking out back then, and that’s something we stressed then. So the credit markets are still calm, earnings are strong, profit margins are solid. Those are things again that suggest to us that, you know, there’s still a good amount of upside in the second half of thisyear.

8:12 spk_0

Now we haven’t had tariffs hit the consumer quite yet, and there’s a variety of reasons for that. We had front loading, delayed implementation, etc. but we have heard from economists say that.We should see that impact in the second half of the year, maybe even into 2026. So what do you say when it comes to that and the cracks that could form down the horizon? Are you taking this approach of let’s just wait and see?

8:37 spk_1

I guess, yeah, I guess technically we are. I mean, we have a diversified portfolio. We have some bonds, we have some gold, we have to managed futures. So if things really get bad, hopefully those those other parts hang in there for the uh for the portfolio.When you talk about inflation. I mean, our tariffs are taxed, we know that, and they’re probably a one-time jump in pricing, we know that. Um, but at the same time, you think about it, what’s the other part of inflation that’s really improving right now? Well, shelter, right? Shelter has been this big part of inflation that’s been stubbornly high. The last two months, shelter’s been improving. So I guess you could say I’m a glass half full type of mentality, but maybe you got shelter and rent prices starting to come down. Maybe some of these other prices go up and they in a way offset themselves. I mean, Jerome Powell himself has said, you know, 2 weeks ago, I believe 2 weeks almost today.I would have cut 2 times if it wasn’t for the tariffs. I mean, we know that this is his legacy, right? He’s done in May of next year. I guess he can stay on at the Fed, but he’s not the main guy at the Fed anymore. And the reality is he doesn’t want inflation to come soaring back because it’s not going to look good because honestly, he was kind of late the first time, uh, you know, raising rates. Now honestly, I think he’s probably been late this time. He probably should have been cutting early this year. He didn’t, but those are kind of some of the things we see there. Well,

9:39 spk_0

the Fed says they’re dependent. If they’re saying that they’re not because of tariffs, but the data is good.What’s that argument?

9:47 spk_1

Well, they’re not supposed to be political either. And obviously after November they they fully aware of some of President Trump’s obviously things he ran on, specifically the one big beautiful bill which we just had. They know that was going to increase spending, that potentially going to keep interest rates higher, you know, that’s something again that that that that is just being um.You’re priced in, I guess we’ll say, but also why we remain over equities relative to bonds, because we wouldn’t be surprised if interest rates stayed a little bit higher here with all the spending. I mean, deficits, deficits are a dirty word, I guess it feels like when you point it out, but at the same time, our deficits as a percent of GDP in the US is about 6.5% right now. Probably gonna go to 7.5%, maybe even upwards of 8% if you include interest over the next several years due to the one big beautiful bill, and that is an extremely high amount of deficits relative to GDP.In an expansionary environment, we’ll be very clear, but the other side of this, you look back in history, when you have big deficits, you know what you also didn’t have better profits and a strong economy. One quick example on this for the listeners who remember the tech bubble in the early 2000s. When did the market bottom? March of 2003. What happened then? The war in Iraq started. All of a sudden we started spending a lot of money on that war. Our deficits exploded in 2003, 4,2005, and that actually marked the bottom, so the market sniffed out higher deficits, which I know maybe.Higher rates and maybe some problems down the road, but historically markets do OK with with big deficits. So there’s something to think about.

11:06 spk_2

I’m curious in terms of the markets, like what is the difference between getting no cut this year, getting a 25 basis point cut this year? Like how much does it matter either way? Yeah,

11:18 spk_1

I mean, listen, 25, 150 basis point cut probably doesn’t matter that much. I mean, like, honestly, if the Fed cut 300 basis points and made President Trump happy.He might not be so happy because I bet the economy is not doing very well and we probably are really in pain. So that’s where this is interesting. But I mean, to be blunt, we think they should probably cut 50 basis points the rest of this year. We’re just not so sure they’re going to.

11:39 spk_0

All right, well, a lot more to discuss, but we’re going to take a quick break. We’ll be right back.Welcome back to Stocks and Translation. We’re here with Ryan Dietrich and Ryan. We were just talking about the Fed as certain risks catalyst to the market. Certainly one catalyst right now is Nvidia. We have a $4 trillion market cap, a historic moment for the stock market, beating out Microsoft here. What does this say about where we’re at in the AIwars?

12:11 spk_1

So many ways to look at this, I guess one was. It was February, right, when all that started and tech just was crushed and everyone said, oh, this is the end.And very few people said maybe not, buddy Dan Ives, you know, Dan said no, and now here we are, right? We’ve come all the way back. So I think it’s important to remember that first off. But it’s just a reminder, this is like the earlier segment, kind of a global bull market. Well, now, at least in the US we’ve got a lot of participation, right? Finally, technology’s come back just last week. We had technology, communication services, um, industrials and financials all hit all-time highs, right? That’s a broadening bull market. That’s that’s a strong.Signs, so to see Nvidia doing what it’s doing, bringing tech along with it. Honestly, tech’s following along. Those are just signs that this is a healthy bull market. I mean, honestly, the 1st 6 months this year, tech didn’t do well. Now we know that relative didn’t, it did great for 2 years, maybe that’s just how it goes. We’re more neutral technology. We obviously have a lot of it in the portfolios we run because tech’s such a large part of the market. Um, so if it does well, we’re not gonna complain, um, but it is pricier, quote unquote, because that’s where the earnings growth is coming from, so that’s where the risks are a little bit higher.But honestly, to see Nvidia doing this, it’s it’s a great sign and hopefully a sign this, this, um, you know, global bull market and broad base bull market is alive and well.

13:20 spk_2

What does this milestone mean to an Nvidia investor though, like, should they double down right now? Do you sell high? Like, I know you’re not going to say to sell necessarily for bulls, but what do you do with this information, or is it just something you say congrats, $4 trillion?

13:34 spk_1

I’mnot gonna say double down.No, I think it’s, yeah, I have to be, I can’t give individual equity advice. We’ll just say broadly if you had a stock that was $4 trillion broadly, not named Nvidia, um, you know, the truth is, again, maybe during the cash register a little bit. There’s nothing wrong with that, right? I mean, people have made incredible amounts of money. Um, there are some under-loved, underappreciated areas. Honestly, I think financials, I mean financially.All-time highs, no one’s talking about it. I don’t think. I mean, banks, banks had an incredible, incredible earning season 3 months ago. We’ll see what they have to say this recent earnings season. So we call it, you know, the shiny object. Don’t chase. I work with, uh, clients all the time. They always want to be in the hottest thing. They always want to be in the strongest thing, and you can have some exposure to that, don’t get me wrong, but again,Who in the world seven months ago said at the beginning or the middle of the year, uh, developing a national EFA would be up like over, you know, ballpark 20%. I don’t think anybody had that on their bingo cards. So again, it’s important to stay diversified, continue to, um, not chase that shiny object right now on video is a shiny object, but if you’ve been in it for a while, congratulations. And

14:30 spk_0

chasing shiny objects, I feel like that’s the MO of retail investors. So far this year, we seem to be in this FOMO driven rally, this moment.driven rally. But at the same time, as you were mentioning, we have seen this broadening out. Are there any concerns when you look at market frothiness or speculative trades or do we think we’re at a solidpoint?

14:49 spk_1

Yeah, well, I think we’re at a solid point. I mean, I travel the country, get to talk to people all the time. I never get present for a room full of people. I never have someone say, Hey, this is really good out there. How high can it go? Yeah, I’ve never gotten that question lately. It’s usually what can go wrong.But there are some, I know the AAII sentiment poll had the most polls recently all year. Uh, let’s see, the NAAIM, which I always forget what that stands for, but it’s active managers, it’s up over 100. That’s about the highest it’s been this year. So you’re seeing now we’re not seeing too much froth when it comes to the options markets. Um, you know, we know hedge funds are net short still, hedge funds are still quite, um, you know, dour, that Bank of America global fund manager survey recently, so it came out right about a month ago actually. The most recentSo the most underweight the big money has been on the US relative to Europe like ever, and how’s that treated you in the last month, you know, so, so again, it’s kind of a mixed bag, and I like that. And honestly, when we look at sentiment and we do the studies on it, sentiment tends to work really well at bottoms, right? You get the extreme negative sentiment, that’s where lows come. You can have bulls in a bull market. In fact, you want to have bulls in a bull market, so we’re not, we’re not seeing the over the top stuff that worries us, you know, big picture, but you know, listen.July is up the last 10 years in a row. If it’s up this year, that’d be 11. If my math is right, that would tie the all-time record. But as we were talking about before we came on, August, September are out there for whatever reason, those months always seem to have some little hiccup. I wouldn’t be shocked at all if we saw something like that, um, in in the coming fall months, which would be perfectly normal after the rally, you know, up 25% approximately of those April 8th lows, and that’d be OK.

16:23 spk_2

You don’t want to chase shiny objects, you say, how do you find a not

16:28 spk_0

shiny object that’s that’s a

16:32 spk_2

winner. That’s an undercover winner because everybody wants to find the next Nvidia, right? But maybe let’s set our eyes a little lower. Like what if we just want to find a solid stock? What is your advice?

16:42 spk_1

Yeah, well, listen, I mean, caps and midcaps, they’re fine. I mean, that does not make much excitement there. Um, the evaluations are historically cheap and you think about Europe, historically Europe and small caps.Midcaps, they kind of value trade. They’ve kind of traded together. Well, we know Europe’s done great and we haven’t really had the outperformance with small midcaps. So potentially those can be some areas that, um, you know, not gonna, you know, who knows, maybe one of those stocks go to $4 trillion. I’m not saying that, but just in general by a bucket of those ETFs and small or midcaps, those can be a nice area that are cheap for a reason, but potentially going to be a value down the line. You

17:12 spk_0

thinkwe’ve been waiting for small caps. I mean, every year it feels like we’re waiting for the small cap rally and it just hasn’t materialized.

17:20 spk_1

I would be clear.We’re a little bit underweight small caps to large caps. I’m just giving an example. We do think large caps will still do a little bit better, but I’ll tell you, over the last 4 or 5 weeks, small caps have started to do a little better. So it’s just little baby steps and that the thing we talked about a little bit ago with the Fed, you know, small caps want small, um, not smaller, small caps want lower interest rates, right? I think they rallied a little bit last week on hopes of that. Then on Friday, the jobs, I’m sorry, it was Thursday, Jobs Thursday. It’s hard to remember that of July holiday something for long enough usually call jobs Friday, uh, you know, then, then they got hit.OK, well, now there’s they’re punting again on the cut. So those are some things. But again, that’s why you keep a diversified portfolio and just, um, you know, it’ll take care of itself really if you if you do it thatway.

17:58 spk_0

And we are seeing long term treasury yields come down from some of those highs, which is a good thing for small caps. But going back to large caps, it’s interesting because we have seen some dispersion when it comes to the returns for these mega cap names. So Microsoft, Nvidia, Meta, they’ve all done really well. Amazon and Apple, not so much. So it feels like.Is it a stock picker market within the Mach 7 right now?

18:22 spk_1

Yes, I was gonna say it’s not so much a stock pickers when you look at the sectors in general, there’s a lot of strength out there, but the Mach 7, it is, and of course Tesla has been in a lot of different things I didn’t even mention you know but um but it is from that point of view, I guess. But um I think

18:39 spk_0

it’s specific.

18:44 spk_1

I mean, Apple, their growth is, I don’t know the top of my head, but Apple.really slowing down and, and, and Amazon, well, they’re they’re still a good company. Every time I walk in my house, I trip over something, so I think they’re still doing OK. I know it’s, it’s what prime prime day, prime days as we speak, so we’ll see how that, how that goes. But the reality that’s more company specific. But that’s the beauty of that. You can, you know, buy a basket of Mag 7, buy them in general, and and, you know, hopefully over the course of time, maybe a couple lag, but some of the other ones do well.

19:12 spk_2

You’ve brought up a few times in our conversation. I’m curious, what is theallocation to international investments. Let’s say for someone who has a long runway.

19:23 spk_1

Yeah, no, if you think about 100% basket for stocks, right, as we’re doing. We have about 70%. We’ve got about 20% in developed international and about 10% in EM and that’s a little that’s more even weight if you will, US and international or a little bit underweight emerging markets there. So that’s kind of how how we look at it again, we don’t necessarily like EM emerging markets.There’s still some potential issues with China that are out there, but we still have that exposure and the money that we run because, you know, that that it’s OK and they can still do well. So that’s how we see it now when it comes to developing our international, we do like Europe and I know well, everybody likes Europe now because it’s done so well. We were adding European exposure for a pretty big, big amount back in March because right around February is when Germany came out that they’re really going to start to do some new stimulus things uh to really get their economy um you know, going again like the largest they’ve ever done potentially outside of like a real.And those are reasons we think those areas are going to continue to do pretty well, and they have, and we think it can. All right, Ryan,

20:22 spk_0

now time for a segment we like to call lost in translation where we get our guests takes on what the market might be misunderstanding. And something you find people are completely misunderstanding at this current moment is that markets are not something to fear. Why is that make your case?

20:37 spk_1

Yeah, I call it the fear of heights, right? People have all the big skyscrapers in New York sometimes you have a fear of heights when you look since 1990.I found 738 new all-time highs are made on the S&P 500. And if you pick any random day about a year later, the S&P is up about 9%, right? But after those all-time highs, the S&P is up actually double digits, and it’s up a median of 13.5%. And you look at this, these new highs happen in clusters that last for a while, and yes, and you can have a period like from 2000 to 2013 where you didn’t have many, but once you start making them, these clusters.Last a lot longer than you think. And, and if you have reasons to be optimistic like like we talked about during this podcast, if the economy does a little better, economy does the economy does better, earnings do better, um, you know, maybe the Fed actually cuts a couple of times for the right reasons. Simply inflation’s coming back down and the economy’s OK. Well, that, that those are some of the right reasons to cut those all could be reasons this bull market continues and those new highs continue as well.

21:35 spk_0

the story. If you’re not on the market yet, it’s still OK to get in at these records. Oh,

21:39 spk_1

yeah, we think so. Now people always say, let’s say you have a million dollars, you know, what do I do now? Well, you know, that’s a tough call. I mean, I would say maybe put 20% in every 6 weeks or so and over the course that way you don’t, you know, nail a top or you maybe get a pull back and you know what Eisenhower said plans are useless, but planning is everything. The reality is whatever you’re going to do.Set a plan and make sure you stick with it because there’s nothing worse when the TV is red and everybody on TV telling you how bad it all is. You’re not going to make a good investment decision. That’s why you really have to make these decisions very clear cut, write them down and say I’m gonna stick to it and do it. And the reality again is this, this has been a global bull market. I think it’s gonnaContinue in the second half should be pretty good. Ryan Dietrich,

22:17 spk_0

thank you so much for joining us today, and we’re winding things down here at Stocks and Translation, but make sure you check out our other episodes on the Yahoo Finance site and mobile app. We’re also on all of your favorite podcast platforms, so be sure to like, leave a comment, and subscribe wherever you get your podcasts.