It's not a bull market outside of AI-related chips, says Ritholtz's Josh Brown

Takes us to our talk of the tape. What will continue to power stocks higher. Let’s ask Josh Brown. He’s the Co founder and CEO of Ritholtz Wealth Management and a CNBC contributor. He is with me here at post nine. It’s good to see you feel like it’s good to see you, Scott. Growth is the story of the day today. Mostly ones that are getting wrecked, which is like Shopify and Uber. What do you, what do you make of that and that that trade in general. So my take is we probably are just retracing some of the enthusiasm that we came into the start of the year with markets had almost gone parabolic from the fall into the early spring and then April was the worst month that we’ve seen in in quite a while. And I think that was really a precursor to some of the reactions that we’re now getting after earnings reports, actually technology stocks, even the beats the average company after reporting is negative. I don’t think there’s anything to do with whether or not the growth trade can, can survive. I think it’s a very short term phenomenon and I think most of it has more to do with where we are versus what’s actually being reported. That’s actually the good news. The number one thing, Scott, that I want you and the viewers to keep in mind is this on Wall Street. There’s no such thing in our language as good or bad. These two things don’t exist. There’s only better than expected or worse than expected. That’s that’s the bottom line. So you’ve got companies right now that are doing the number, quote UN quote the number, they’re seeing a sell off because it wasn’t materially better and that’s perfectly fine. If that’s the way we’re going to consolidate and catch up to that huge rally that we’ve seen, I think it’s the least bad way for that to take place. How much of this is due to the fact, like a Brad Gerstner suggested yesterday on halftime with us that we’ve had a year’s worth of gains in a reasonably short term time. He’s taken his exposure down by 10 to 20%. Druckenmiller taking exposure down and NVIDIA a little bit. Adam Parker talking about growth managers protecting capital. You know what the story is of late, it’s just like semis up 60% since the October bottom software up 23 now From the beginning of the year till now. Those numbers may even look a little more extreme if you throw some of the stocks that have carried the load in those areas into the mix. Is that what’s at play here too? Is that what you what you mean like where we are? Maybe it’s more like where we’ve come from right now. The S&P 500 pullback is somewhere between 5 and 6% from the high. It’s nothing. It’s nothing. Now that’s less than that. It’s nothing, right. It was 5%. Now we rallied all the way back. We were like 2% away. So is my point. So if this is the way that we’re going to correct through a consolidation rather than something more sinister, I think like 99% of the people watching this would say, OK, let’s do that. So you had overbought conditions in areas like semiconductors. You don’t have those anymore. You have huge dispersion in that sector. The only stocks that have held up pre and post earnings are AI related chips, chips for anything else. There’s there’s not enough demand out there to justify what those stocks have done. We heard it from the auto chip companies, we heard it from the cell phone chip companies. It’s not a bull market for anything other than training and inferencing AI related chips. You think that some stocks got too much of A Halo off of thinking. You know they mentioned the word AI over the last six months and you’re off to the races. Maybe we’re correcting a little bit of the froth that got into that area. I think investors appropriately got very bullish as we came into the year because earnings were going to be better than expected. And now that was the rumor. This is the news. They actually are. We’ve had 80% of the S&P 500 names in going into today. Earnings are now 88.7 percent above what the expectations were. We’re actually seeing earnings estimates go higher, which infrequently happens from the start of 1/4. Usually it’s the other way around and earnings going to be up over last year. And by the way, CapEx is going up, revenue numbers are hitting where they’re supposed to hit. You’ve got dividends being raised. Yeah. And it’s an overseas phenomenon as well. Got bull markets happening all over the world. European banks are rallying, international, small caps. I mean, I am, I want to point something out though. I want to go back to what I started with. It’s not good or bad. The news is unequivocally good. It’s better or worse than expected. Consider this phenomenon. S&P 500 healthcare has the most S&P companies with earnings beats. This quarter, 90% of them came in ahead of the estimates. That’s really good for sector wide earnings performance. And yet Healthcare is tied with discretionary for having the least amount of stocks above the 50 day. So you’ve got stocks not doing well despite the fact that sector wide they’re coming in and crushing. Look at energy, it’s the reverse. Energy has been the worst sector. Only 57% of S&P energy names are beating estimates, 10% are in line, 33% are missing and energy stocks look better than healthcare right now. So remember this, it’s better or worse than expected and we should expect that next quarter to it ain’t going to change.