원문 보기
With me now is the president and chief investment strategist of Yardeni Research. And you know, there's something to discuss here, right? Yes. Certainly. So, it's clear that inflation, oil prices, and Iran have overtaken earnings this week. This has clouded revenues. You know, today's session on Wall Street suggests that the market believes it is on the verge of where the White House has previously backed down.
What do you think? Well, I think if you look at the market objectively, we have been in summer stagnation since May 14th. That's when we hit the 7,500 mark. And here we are still hovering around 7,500. So, I think what's really happening is this: we have a very bullish earnings environment. On the other hand, people focus on some problems that may threaten this in the future.
And one of them, as you said, is the hyperscalers spending so much money. Will this help profits in the future? But here and now the profits are very strong. But events in the Middle East, higher inflation, and tightening Fed policy are all deterrents. So I think we'll just stall until the end of the summer and then look at things objectively again, and I think everything will be pretty good.
So, part of this is just a seasonal scenario? Well, I, I, I don't think... the so-called summer slump or, you know, lazy summer days? Yes, I think it's the lazy summer days right now . But from a fundamental perspective, there's an important tug-of-war going on between the bulls and the bears , and the bullish story on earnings is very compelling, and the bearish story, you know, makes sense when you look at events in the Middle East, oil, and the potential tightening of Fed policy.
You know, what I'm curious about is what you mentioned. I saw a great headline today. I was looking for something different, but that was when the Dow fell 508 points, a loss of $500. It was the San Francisco Chronicle. But at the top, the biggest headline in that newspaper that day was: "US ship destroys Iranian outpost." So this interconnected issue with Iran is not new.
And it seems to keep impacting our markets over and over again . Yes, well, that's true . Again, I think the market is behaving quite rationally and is simply waiting to assess the situation. And while he's waiting, investors, I think, are getting rid of companies they do n't really understand, like hyperscalers, and moving into ones they do understand—like transportation stocks or biotech companies.
They don't necessarily understand them, but at least they know what these companies do. That's right. And they know that there is a patent gap there and that they will soon be absorbed. Famous things. And with hyperscalers you're dealing with a lot of known unknowns. By the way, on this: when I focused on Google this week, Alphabet—it was cloud services revenue.
Profitability is 82%, the margin has increased from 20 to 36% - in my opinion, this should , if not completely calm the anxiety in the market, then at least reduce it a little. You know, some of these hyperscalers, like Google, are like Rodney Dangerfield. Remember that comedian? He kept saying, "I'm not being shown any respect." They are not respected because they only focus on negative free cash flow, which is not such a big problem.
I mean, if they decide to slow down capital spending, for some reason everyone thinks it's going to be a bear market. This is just madness. actually grow. there is a winner here, not a loser. By the way, there was a great commercial when I was a kid, Rodney Dangerfield advertised beer, something like "tastes great, less filling." He was on both sides.
I...you know, they did it like this. I want to ask you about the financial side, because that's another problem when it comes to building AI. Adam Tagert wrote today that “ bond vigilantes” are starting to rise up in the AI corporate lending market. You coined this term, do you see it now? Yes, I think it is to some extent.
The bond market is feeling the pressure from the huge demand for funding from these hyperscalers, and it seems the market is starting to resist, saying that perhaps it is better to look elsewhere for funding. It may be worth raising more capital through equities, but I think it's a valid concern. So, next week is important.
Earnings reports will be even more important than this week. Is there any particular company you would single out for next week that could change the rhetoric? Well, I think we've already dealt with Google. Google has set the tone, so we'll likely see more reports from other hyperscalers . So, more spending, and that shouldn't be the case , right?
Yes, but again, this should already be taken into account by the market. As you said, we are currently seeing a rotation: a return to software and an exit from semiconductors. I think in many ways this is just trading activity that ultimately won't affect the overall market. The overall market remains bullish .
So you have the highest reading on Wall Street for 8,250. You're still pretty confident about that. Yes, you know, I wasn't optimistic enough about the profits . I think what analysts and the market are taking into account is not my expectations for earnings. This is what analysts think. I mean, that's what we pay them for.
And the analyst consensus is over $400 per share next year. So if that number remains until the end of the year, multiply by 20, and you get 8,000. But profits continue to grow, despite all the worries about the finer details of hyperscaler costs. This is amazing. We exceeded expectations in the first quarter.
We are on the verge of surpassing them in the second. And as you pointed out, it's still the sword of Damocles. Like, when will this end? But eventually, markets somehow find a way to trade despite this. And if you don't watch, one day you'll look up and say, "Oh my God, we're at a new high." As long as it doesn't cause a recession, I think the market will continue to grow.
Wonderful things. Yes. Thank you. Have a nice weekend, Net. You too. I appreciate it, friend. OK.
Comments 0