We are watching tech 'really closely' into the second quarter, says NewEdge Wealth's Cameron Dawson

What’s in store for this rally in the quarter ahead? Let’s ask Cameron Dawson, new Edge Wealth Chief Investment Officer with me once again at post. Nice. Nice to see you again. All right, so we’re the curtain as I said earlier is coming down. We’re going to turn the page to a new quarter. Do we still have momentum to keep this going? The market certainly does have momentum, but the catches, some of the momentum stocks have started to stall out a little bit and that’s what you mentioned in talking about tech. Tech has certainly started to lose a little bit of its momentum. Now it’s not outright weakening, which means that the market is still able to go up because you’re getting the benefit from things like energy, financials, industrials, materials all doing better. So we’re watching tech really closely into the second quarter because if that goes to weakening, that would be something that could be an issue for the market. It could be an issue even as you suggest and and rightly so, The broadening that we’ve seen lately as tech has weakened, other sectors have picked up the slack over the last month alone. 1234 technology is the 7th best performer. Energy is the best. Materials, utilities, com services, industrials, financials. Isn’t that what we want? It is what we want. And the important thing here is that tech is still in an uptrend on an absolute basis. The weakness in tech has been more relative. It just means it’s not doing as well as the other parts of the market. And so if tech actually flips into outright weakness, it’s such a large part of the index. That’s where the index could have challenges. But the breadth is, is really powerful. 85% of names are trading above their 200 day. That’s not something that you typically see at market tops breath weakens going into a top. You don’t have a top and a top and breath at the same time. How should we feel about earnings which are going to get hot and heavy real quick? Expectations have come down. I mean, the numbers have for the first quarter, they’re about half in terms of earnings growth from where they were at when this rally started in October. Yeah, I think your point on halftime was really interesting is that you’ve seen this all be about multiple expansion as you’ve been cutting earnings and earnings estimates have gone up slightly for the full year, mostly for 2025. But this has been all multiple expansion even in those cyclical parts of the economy or the parts of the market, multiples have gone up by 30% plus for industrials and materials. So you really do have to see earnings deliver in order to sense of a lot of these multiples you think we will, I mean there’s a thought that we will, you know Wolf had a positive note out today says outperformance is going to going to continue. I think that you’re set up for better cyclical activity most certainly. So PMI, we think are bottoming early indicators and Pmis are telling you that you’re seeing a cyclical recovery, which suggests that earnings can do better, mostly now that you’ve lowered the bar for earnings. But if we’re continuously seeing that trims in the out years on earnings, I think that’s something we’ll have to watch closely. Are you skeptical that the sectors that have led over the last couple three weeks can continue to do it? Are these like one off anomalies or is this the start of what you think could be a new and positive and more broadening trend? I think we have three to six months on this cyclical trade cyclicals typically do well as you’re starting to see activity bottom. The risk you have is once activity bottoms, earnings estimates go up, then you’re trading at a peak valuation on peak earnings and that’s when you have a challenge. So there is still air left for this cyclical run to happen. I think you’ll have to watch once Pmis get into the 5354 territory, that’s when you might want to take some chips off the table. How reliant are we in this quarter about the Fed? I don’t think we’ve been that reliant because we’ve gone from 6 1/2 cuts to now three. And if three becomes 2, will the market really see an issue with that? We think the reason, the key reason why the market continues to do well is because GDP, GDP forecasts continue to go up. They’ve gone from 1.2% for 2024 to start this year to 2.2%. Risk assets love that. So the key thing to watch may not be the Fed. It may be GDP forecasts and the expectations about the economy which would drive the market up or down.