Nasdaq hits another record close

Let's get straight to the market panel now. Joining us are Warren Pies from 314 Research and Scott Wren from Wells Fargo Investment Institute. Welcome to you both. Happy Friday. Scott, what was the marquee event of the week and did it change your perspective on where the market might go for the rest of the year? Well, I'll tell you, John, it looks like you know, inflation we've we had some good numbers there. I think that was that was really the marquee news of the week. And I think the market, you know, this is a momentum market and it certainly likes less inflationary pressures. I don't think the Fed changed their tune whatsoever. They want to cut, you know, shaving it by you know, a cut or two here or there I don't think is any big deal. So you know the markets on board with that. But I would say, and you mentioned this in your opener, you know there's some there's some consumer cracks going on. And I think that we're going to see spending slow. I think we're going to get a couple more quarters at least a sub 2% GDP growth. And so, you know, this run, while it's been very strong, I don't think this is something you want to just jump on and try to chase. Yeah. At the same time, Warren, listen to what Scott saying about a momentum market. Nobody told the small caps, right? Look at the Russell ended up down today 1 1/2 percent. What does that tell you about the breadth of this rally or lack thereof? Well, thanks for having me, number one. And I'd say with small caps, we've been pretty negative on small caps all year. I think that it you have to put that in a separate bucket. So come into the year, I think there were a lot of people who are bullish. They said just kind of a naive type of bull plan was to buy the high beta small caps and it hasn't worked out. I just don't think that's the point in the cycle or in relate cycle small caps, an early cycle play. The breadth concern that I would really seize on to is in the equal weight S&P 500. So we had S&P 500 make a new high back on May 15th and equal weight has has been unable to rally it. So it hasn't confirmed. And really historically if you don't get that confirmation out of equal weight in a 90 day window, it's pretty bad for the market. So it's something we're watching. We still have some time there. But the, the real concern to me if you're thinking about equal weighted is we've gone from 4, seven to four, two on the 10 year and the rally can't broaden. So yeah, you do see it in things like small caps, but small caps have been really trash for a year. It's it's really about the equal weighted. You know, they made all time highs back at the end of March and still just kind of chopping around here. So we're going to really take our signal from that and whether the, the the rally can broaden. We're we're maintaining our equity positions. We've been riding this rally since the beginning of the year. But yeah, I think it's it's getting stretched and you want to see participation to keep this thing going. So Scott Wren, senior market strategist, global market strategist at Wells Fargo. Help us with some strategy here. If you're concerned about market breadth, if you've got one eye on the consumer here, how do you protect yourself as an investor? What investor what what adjusted do you consider making to your portfolio given those maybe yellow lights? Well, I tell John, you know, as I said, I don't think we're going to jump up and buy the S&P 500 here. But what we've been doing over the last few months is we've been trying to trim a little bit from tech, a little bit from communication services, from those two particular sectors. And as the economy slows, we still think there's going to be some good action and let's say daters, data center building, infrastructure building. So we've been taking those funds. We've been buying some industrials because clearly the companies that are going to build all these data centers and do the electrical upgrades are in the industrial sector. They're going to need materials. They're going to use copper, aluminum, all those sorts of things. So we've been buying some industrials, some materials. You know, Healthcare is kind of a value play here. We don't think oil is going to go much lower. Energy stocks have gotten hit here a little bit lately. So, so we've liked energy as well. So we're trying to buy some stocks that have lagged here because really if you look at it year to date, only two sectors have outperformed and we think those valuations are pretty stretched there. So we're, we're looking more under the hood. We're certainly, you know, as Warren mentioned, I mean, we've been underweight big time, small caps for a long time. It's way too early for that, I think. And it might be a little different whenever we pull out of this next year and have a little bit better economy. So we're, we're large over small, we're US over international and we're trying to work under the hood in terms of these sectors. Warren, what are your updated thoughts on oil given what we're seeing with the consumer and the, the overall look of the economy? Yeah, my, you know, I've been pretty downbeat on oil here for a little bit. And but what we've gotten here recently, we did upgrade commodities this week, earlier in the week because we got the positioning date out of the futures market and it showed that there's just extreme pessimism out of hedge funds and Ctas for oil. And that's been really a good bottom setting type of indicator. I still don't expect much of A rally out of oil here. I think you should see a little bit of upside in the near term. If I lookout through the year though, I, I still think we probably saw the highs for oil for this year and we've seen the highs for the yield for 10 year yields for this year. I those two things do support stocks, you know, as we just zoom out as things that we can look at as positives. You go to Q4, OPEC is going to start adding oil back to the market and that persists through 2025. So I know it's a popular trade to get long energy. I still like it for diversification purposes, but you need to have a quick trigger. Everyone needs to understand you can't get too comfortable in these energy stocks at this point in the cycle in my opinion.