Expect a broadening out in markets once earnings come about, says Hightower's Stephanie Link

Joining us right now to talk about this and much more is Stephanie Wing. She's Chief Investment Strategist and Portfolio Manager at Hightower Advisors. She's also a CNBC contributor and staff. What we saw last week, those lower yields saw the NASDAQ hitting a new high every day. I guess that's kind of Nirvana from the tech stocks perspective to think that you could see lower rates while they continue to power how higher from AI spending and such. Yeah, I mean, look, we have a really great environment right now. The data in the US is very favorable. The Atlanta tracker for GDP is running at 3.1%. Inflation is making progress. Initial claims to the job market remains pretty strong. And actually the credit spreads are super tight. So all of this, you would think because the financial conditions are fairly easy, you would think that you'd see a broadening out in the market. You're not really seeing it as you mentioned and you're seeing it more focused on technology. That's the exciting part of the economy. But I do think you're going to start to see a broadening out once earnings come about, which we have to wait another couple of weeks. So, you know, we're a little hostage here to the macro in the in the short term, but I do think earnings are going to support other parts of this market doing a little bit better. It seems some statistics that that suggests that a third of all capital inflows have gone into the US markets since the pandemic, that it has taken more than its share of the gains. But you wonder how quickly things could change. And if you look for an example, go to France, a 5% pullback on concerns with that snap election, you've got not just the far right candidate who's outpost pacing Macron, but the far left too. Macrons party. Macrons party in 3rd place, at least in the polling that they're seeing right now. And it's got a lot of questions about what happens and how politics really can have an impact on the markets too. Right now. France has lost all of its gains for the year in its markets. Do you worry that we are prone to potential problems here with politics front and center or do you think we're the beneficiary of any chaos that plays out in Europe? Yeah, I think politics are always going to be creating a volatility in any markets because it's the unknown. The outcome is unknown. I do think though, that sometimes when we do see this volatility, especially here in the States, I think it's an opportunity. I mean, I think that we have to step back and whoever gets in as president, the more important thing in my mind is really the the mix of Congress. And so we'll have to see how that shapes up if if you have, you know, what an entire party that has the presidency then as well as the two houses of Congress, that could be something that creates a lot more volatility. But I do think overall, Becky, it's really it comes down to fundamentals and companies, what they're doing and how they're executing. And we have some amazing companies here in the United States with great transparency, which I think is super important. And so looking for opportunities if we, we do get a pullback on, on kind of the political front, I think that's where, when you want to step in and, and add to positions, what, what, what are you kind of chasing after do you see as potential opportunities these days stuff? Well, I have one name that is so obvious when that's Broadcom, but I have other two other names that may not be so obvious, and that's Seagate and, and Dr. Horton. I mean Broadcom, Becky, they're going to do 70 to $75 a share in earnings by 2026. And it's not only driven by AI, which is going to grow 35%, it's their non AI businesses that are at a through right now. And so I do think you're going to see upside maybe three 5% growth there. And the VM Ware is completely changing this company into much more of a software company and that will help recurring revenues as well as margins. Seagate, I think is a little bit off the radar screen, but we're starting to see from companies that the PC refresh cycle is starting to get some legs or green shoots, if you will. If you listen to what Dell had to say, HP Q saw growth in PCs for the first time in two years. We also had AMD talk about their AI chips being five times as fast as their prior chips. And so you are going to see a whole refresh cycle, which I think is underappreciated. And, and Seagate is the leader and they've got pricing power and margin expansion. And then finally housing. I know everybody's really down and out on housing, but look what mortgage applications did last week alone when rates fell 5 basis points. Mortgage applications last week rose 15.4%. Can you imagine what we're going to see this week when rates are down 20 basis points last week? So to me, a super cheap stock. That's a play though on the assumption that the Fed is going to cut rates at least once this year, right? I mean, I think that the bond markets doing the job for the Fed, right, because because we have seen rates come down, I don't think you need rates to come. I mean, I don't think you need the Fed to cut for the housing stocks to do well as long as rates are coming down. I'm, I'm in the camp of the Fed doesn't do anything this year. I don't think they have to because the growth in the economy has been so much stronger than expected. I'll take it if they, if they cut rates. But I do think though, that, I mean, look, last week, you know, as rates came down, the housing stocks did quite well. And as I say, they're out of favor and super cheap. So there's been more volatility in yields and treasury yields than there has been in stocks lately. I mean the the VIX is, is really tame, but the moves that we see in yields have been completely data dependent. Every time you get a good inflation reading, those yields come down. If you get bad inflation yielding readings that come back up. So that would that would be my only question. You're right, the bond market is doing the work for them, but I think it's data dependent too. Absolutely, 100%. But I think we're a little bit more sensitive to the macro at this point in time because we don't have companies reporting earnings. And so as a result, we're kind of hyper focused on on the macro. We should be to, to some extent. But I think we have to step back and look at the economy as a whole. And we are doing pretty well in terms of growth. Inflation is certainly making some progress, maybe not what the Fed wants, but certainly making progress. And that's a good combination. And for earnings, I mean, that's what I care about as a portfolio manager.