With big tech earnings and a Fed decision, Jessica Inskip, Director Of Investor Research, Stockbrokers.com explains the biggest market catalyst this week.
Transcript:
Caroline Woods: Joining me now, Jessica Inskip, Director of Investor Research at Stockbrokers.com and Host of the Market Makeher podcast. Jessica, great to have you here at the desk with me.
Jessica Inskip: I’m so happy to be here.
Caroline Woods: So we have a huge week on tap. We have the Trump-Xi meeting. We have a potential trade deal with China. We have the Fed rate decision tech earnings mag five five of the mag 7 on deck. What’s the most important thing you’re watching this week. What’s going to move the market most?
Jessica Inskip: Well I think it’s a combination of things. And we certainly can’t concentrate on one thing, but the market is at all time highs. But we have this euphoric state that really is three major things. One, we are counting on the Fed easing. It seems like we’re still going to be in that cutting cycle. So that’s going to be extremely important to maintain that. And also listening to the Q&A is very important. But earnings earnings is what moves the market more than anything. So I will argue actually we can put importance on earnings because if the Fed for some reason becomes more restrictive, that’s an impact on earnings. And that’s what we’re trying to understand. And then of course, an easing or a growing economic environment that’s very important. Those three things create this Goldilocks scenario. But anytime we’re in a Goldilocks scenario, I get a little concerned because we have to consider where we are. We are near all time highs, so anything that can derail one of those three pillars will cause volatility within the market.
Caroline Woods: And I want to break down all of those things. But before I do, I do just want to get your general sense of the market. Do you trust this rally? Is this a market that seems sustainable?
Jessica Inskip: I do trust the rally for a couple of reasons. I think the market is disconnected from the economy. So and the economy is also becoming more artificial intelligence. It’s very funny. Any type of report that I try to write, it always comes back to artificial intelligence, no matter how hard I challenge myself not to do that. But it is a k-shaped recovery. We have these different cohorts in the low income consumer. Unfortunately, they’re being constrained. And you can see that with consumer staples, even. But I do think it’s a sustained rally because we’re looking at the markets, the S&P 500 that is largely AI oriented. And those are B2B businesses, not direct to consumer. And anything that is direct to consumer is that higher end consumer. And that’s doing well.
Caroline Woods: So to your point, it’s been all about AI. Even though we have seen other areas of the market participate. Do you expect AI to continue to drive this market higher, or do you expect that to eventually Peter out and other areas to make up for it?
Jessica Inskip: I do expect AI to drive it higher, and I believe it’s going to show up in places that we actually can’t see it. So it’s very difficult to measure the impact of AI outside of direct revenue streams from that of the Magnificent Seven or those that are directly exposed to artificial intelligence. And I’ve been trying to find a way, and one is revenue per employee. So we can look at metrics that tell us, our company is doing more with less. And then, of course, anecdotal conversations. So actually, last week I met with all of the retail brokerage firms, and one of the conversations and topics of discussions was, how are you utilizing artificial intelligence. And the productivity increases that I could see from those conversations are not surfaced in the data. And that, to me is very interesting as in writing more research reports, the volume of research reports is all because of AI or compliance agents, all because of AI, things that humans would normally do is, is being replaced by, by AI in some sort. But there is human oversight. So that leads me to this. No hiring, no firing. It actually makes sense if we think about it in the context of these were 14 companies I talked to, but very, very big companies in how they’re utilizing AI. And I’m considering how I’m personally using it and probably how you are too. You can do so much more with less, but we can’t actually measure that.
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