Earnings growth is likely to continue for some time, says Hightower's Stephanie Link

Let’s bring in Stephanie Link. She is Chief Investment Strategist and portfolio manager at Hightower and a CNBC contributor. She owns both GE and Boeing. One good, one not so good. Stephanie, it’s been that kind of quarter, I suppose. I mean generally the market is higher, but there have been pockets of disappointment as there always are and that’s that speaks to you always want to have a diversified portfolio because not everything at the same time is going to work or not work, right. So I think the encouraging thing this past quarter was that we grew more than expected in the economy. We just learned we grew three 3.4% in the fourth quarter. Inflation is coming down South. You have decent top line numbers, decent margin numbers, even margin expansion in some cases and that led to 10% earnings growth. And I think that’s probably likely to continue for some time. I think you could do about 810% earnings growth for the full year. But the most encouraging thing underneath the surface, and I know a lot of people are talking about it, but it’s encouraging to see, is this broadening out not only in sectors but also style. So if February 9th, the Russell 1000 growth was outperforming the Russell 1000 value by 8.7%, that was huge. But Fast forward to today, Russell 1000 growth is still leading value. However that narrow, that gap narrow to 3.7%. So that’s encouraging. So it’s telling you that people aren’t just chasing the growth names, they are looking for value And oh, by the way the XLE, the XLF, the XLI, all value sectors are actually beating technology year to date in terms of performance. And so I’m not saying abandoned tech, I think you want to have some tech. I’ve been adding to some actually on the weakness, but I do think there are other areas in the in the market states that are getting more attention and and I think that’s just healthier. Tyler and and Stephanie before we talk specific names, you’re overweight and energy, industrials, financials and discretionary and housing is your favorite subcategory. Explain why you’re focused on these specific areas. Yeah. So housing first and foremost, I think the consumer is a lot stronger than people give them credit. A lot of that has to do with jobs and wages as well. Confidence is high. Savings is at about 4%. We have $6 trillion on on the sidelines and money market funds, people feel good getting about 5% just to you know park money in cash. So I I think the consumer is doing well and I think that is translating into housing. Housing had their recession last year and so we are starting to see a recovery. Great housing starts numbers this week up 10% sequentially. We had single family permits on a year over year basis we’re up almost 30% year over year and permits are a leading indicator. We’re 5 million homes short in the country. We have 5 million millennials that are first time buyers and if you talk to any of the home builders, they’re telling you that they haven’t over produced, they’re actually under producing for the last 14 years. So the supply demand, demand dynamics are pretty attractive to me and and the home builders are super cheap. Walk us through your thinking on Boeing now let’s go right to the loser. I think it’s going to, I think we’re, we’re buying time. Honestly, it’s disappointing clearly. But I think the management changes that were announced this week are very encouraging. We’re going to have to wait until we have we figure out who they hire. I think they’re going to go outside. My personal favorite would be Dave Cody, the former Honeywell CEO, and I’m not sure he’s ever even interested. But I do think of going to go outside to find someone and I think that will be great. But I do think stepping back, looking longer term, this company is in a duopoly with Airbus. They have 13,000 planes in their backlog. Boeing has nine years worth of backlog. So it’s not that there’s not demand. Obviously, they’ve got to control the safety part and the quality and I think eventually they will. And by the way, they already lowered guidance for free cash flow for the first quarter -4, four and a half billion dollars. I think you’re probably going to see that actually creep higher as you go through the year and they can start to produce more planes.