Bank of America's Chris Hyzy expects yields to fall, says buy on weakness

Nvidia's post earnings rally failing to give the overall market a bigger lift. Let's bring in Chris Heisey now. He's the CIO of Maryland Bank of America private bank. He's here with us again at post nine. It's good to have you. Thanks Scott. I mean NVIDIA, you know blows the doors off and then here we are in the midst of a big sell off What's up? Well, I think it's a little bit of get ahead of tomorrow type of situation with the three day holiday itself. We can't really use that as the full excuse, but any little headline that pops up where someone might not want to go into tomorrow fully loaded, you might see some of that, but also, you know, pop up and yields, right? That that's the big story here, but that's the story of the day, not the trend. How do you know that? Well, you actually don't, but you could actually look at all the data and say, OK, the consumer is getting tired. They're getting selective, they're using base effects. Now you're starting to see some of the retailers discount prices small data point right now, but we expect some of that to continue. So we expect yields to kind of Crest once again, come back down and provide that invitation once again to buy on weakness. What if Jamie Dimon's right, people are dramatically underestimating the broader effects of everything that's been done by the Fed. It's not a foregone conclusion in in any way that we're going to have a so-called soft landing and we need to be more aware of it then perhaps the market would suggest we are. I think that's right. I think at the end of the day, it's forget about the landing for a second. We all talk about soft, hard or no landing. I mean it's going to come back and forth like a ping pong match. What about this concept of a bridge cycle, which is we are just trying to normalize. We got way ahead of ourselves with all the stimulus and now we're normalizing. And I would say that we might be in this bridge cycle for quite a few years. Not necessarily always waiting for either recession. We're waiting for the last mile of inflation to come down. It's simply we're normalizing. What if we're normalizing an environment in which inflation is going to remain more elevated than we're used to for a longer period of time that that could be part of the normalization process too. And then we need to reassess sort of what the multiple of the market should be, what earnings are really going to be, right? I think that's right. I think. But if that happens, you actually have a little bit more of an acceleration or at least a little bit better base for profits to rise because you get better nominal growth. As long as it's not a sharp increase. Once again, in inflation, you get that consistency level. Well, there's nothing wrong with 3%. I mean, when you're talking about market measure based inflation, it's tough for those who are struggling for sure. When we're talking about corporate profits at 3% inflation rate actually worked really well in the 1990s. What about areas of the market you want to lean into and, and ones you want to avoid? I mean, I we bring it full circle to where we started 50 minutes ago. We asked the question like do you lean in? Does NVIDIA give you confidence to lean in to tech or does it make you rethink and lean out a little bit that maybe that's what's happening a little today is some profit taking is just in order because the stocks have gone up a lot. Yeah, that's natural, that's healthy. We should be seeing that from time to time because when they do get overextended, it's nice to pull back some of your exposure. But the trend is still very early in CapEx, very early in this mismatch between supply and demand, whether that's assets or simply just generative, you know artificial intelligence. I think the last time you were on, I try to remember exactly how you put it was something to the effect of we're in the early stages of a decade long bull market or something like that. But that represent that. OK, I think you're right that your view, that's the view. You know, it's again, we said it back then, we'll say it again. It's easy to say that when things are going up and it's easy to say that perhaps on a day like today because we're living in the moment and we're projecting forward. But if you just think of wealth transfer, you think of supply. The economy is asset light. People need assets to grow well. The supply of assets are low. The demand for assets are high. That begets climbing the wall of worry for a longer extended period of time than people want to believe. How much more upside do you think we can legitimately do between now and the end of the year for the S&P? We're 5300 today, 5300 today. The bull case will tell you we can we can rise six, 7% from here. The bull case, the base case is literally just about 100 points higher from here. But the key is not necessarily what the market can give us, it's what the market internals can give us. And there's a lot of opportunities. We said this before, we all talk about that narrow segment of the market. Yes, it's still helping lead the market, but there's 180 plus companies that have outperformed the S&P through the first week of May. Yeah, Chris Heisey, thanks for being here. Thanks, Scott. Good to see you.