Stock market's earnings backdrop upholds positive outlook, says Fundstrat's Tom Lee

Let’s get now reaction and maybe what to do Tom Lee and Joe. Tom, I’ll start with you. Honestly, I don’t think enough is attentions to this capital gains proposal we got last night. I think that might be sprinkled in here. But anyway GDP is getting all the attention. Steve laid it out nicely. What is your take? Well, I, I agree with Steve’s point. You know, the GDP number did catch people off guard, the core price index being basically a hot number 29 year over year. But it is going to come down to the revisions which everyone expects. I I think there’s also now a disconnect between the CPI numbers we’re seeing and like what we hear from companies or even, you know, consumer surveys. I mean for instance in just this first quarter earnings season that mentions of inflation as a problem is now at the lowest level since the first quarter of 2021. So it makes me wonder how how is inflation accelerating when fewer companies are even mentioning it as a problem in the first quarter. And I think that there are catalysts you know in the next couple of weeks, I mean the first one of course is tomorrow to see really what March inflation looks like. But I think the earnings backdrop has actually been very supportive and 80% of companies are beating. So as painful as the last couple of days have been in really the last couple of weeks, I actually think it’s the risk awards positive here. So the firm landing is here in my opinion. We did hear, we did hear from Whirlpool, we did hear from Harley-Davidson that they are having difficulty passing through rising input costs to the consumer and that’s not a bad thing. In fact, if you look at the price action today, right now where we are in the market, we have recovered everything that we lost after the GDP print and after the inflation figures were released. So we’ve recovered it all. This is really where we sit in the marketplace right now off of meta and the spending that’s attributed to meta. I think that the rest of the world is experiencing A disinflationary trend that ultimately is going to get exported here to the United States. Brian, you look at Europe, you’re talking about inflation readings that are in the twos, whether it’s it’s France or Germany, Italy’s at 1.2. Asia is in outright deflation that’s coming here and I just don’t think that’s a bad thing. And the premise for buying equities in 2024 never was about the Fed has to cut rates because if it was at the beginning of the year when there was seven rate cuts priced in now we’re pricing in one rate cut maybe in December. Well the equity market would be lower from the starting point. We’re actually on Joe and John, John jumping on this tick we just like remember the Super Bowl with the Falcons and the Patriots and the Falcons drop like 100 and nothing at half 28 three whatever and and the Brady comes back and wins. Can we all just acknowledge that the stock market is up this week even with today we’re still higher for the week we’re we’re only like a percent or two off all time highs. Market has one big down day profit. Profit margins are strong. You know everyone wants to focus on the economic recession that never happened. The real recession that happened that matters most is the earnings recession and we’ve come out of the earnings recession in the second-half of 2023 for the S&P and the NASDAQ. We’re waiting on the Russell and that’s a catalyst. Yeah Tom though we’ve got a couple big names tonight and we’ll get Dan’s take on that in just a second Dan eyes. But what I mean what if Microsoft and Alphabet soil the sheets I think is is that the is that the family friendly term with the with the numbers tonight. I mean then what because Meta meta kinda did, yeah, I mean Meadow was up 40% into the earnings report. So I think expectations were high. I think there has been sort of a reset. So I think there’s a, hey, if it’s a beat we could see stocks rewarded. And overall it has been a good earnings season. You know 80% of companies are beating and if you really exclude energy, you’re really pushing up against double digit earnings growth year over year. So it’s exactly what Joe was saying. It’s it’s been a pretty nice earnings recovery and I think in as you get into the second-half of this year, healthcare no longer has negative year over year comp. So you know you could be back into mid teens earnings growth. So I think the earnings backdrops really supportive and they’re still 6 trying to cash on the sidelines.