Energy Stocks Just Got Upgraded - Here's Why Smart Money is Buying » Market Movers - Apr 8, 2026

Welcome back to opening day always good to see you- something at the markets here it's been a wild few weeks- this week has also been wild. Give us a state of play. Well first of all good morning Brian glad to be on- the state of play it's it's it's a little bit gut wrenching so- you know forty days ago whenever was- we start to bomb Iran. That's clearly going to be a problem we did we actually what we did our show we took a look at our portfolio and this is the same thing I would recommend that I have to to your listeners- take a look at your portfolio and what is it you own. That you know is going to be a problem that you we know. We've got geopolitical tension is as serious as it's ever been. We know that's very much centered around energy. So what the portfolio is going to be a problem as time goes on. So anything oil if you don't have energy in your portfolio it might be a good time to add something. If you have things that need energy. If you need. Travel airlines cruises it's an agenda you probably don't want them in your portfolio. But then if you haven't really done anything already you probably want to sit back and see what's going on number one thing. You've got to be able to do is not panic. The concern that everybody has the other night course twenty four hours ago. Is that this is going to be really really bad I think the market is going to go at 10% my opinion overnight. Or really going to strike a deal and we'll probably have a 10% rally. Well that didn't happen we got good news we thought. Until we woke up yesterday morning we found out that. You know. Israel and we are not necessarily in sync. Iran still telling us we're not going to get through this straight unless they say it's okay. You know Trump saying that's not going to be acceptable. So the confidence that we seem to have. Twenty four hours ago. Doesn't seem to exist right now. And we still have two weeks to be able to figure it out. But right now the number one thing you can't do is panic. I would look at your portfolio you know you've got something that's. Really shouldn't be in there because what's going on right now in the world. Probably would make sense to get rid of that. Maybe make sense to own some energy that type of thing but- you don't panic now. Joe what do you what do you say to those folks because I've gotten these questions the past forty hours they- they come to me and they say well Brian this a thousand point move. On the Dow what do I do now and they're panicking in the sense Joe that. Their fear or they are afraid of missing the next thousand point move but they're also. They're not willing to take the risk of the Dow going down a thousand if the ceasefire comes and goes. Yeah okay now Brian that's the point you can't panic. And the are panicking as you pointed out they're being emotional. You cannot be emotional with your investments. Anything that really really matters I'm a pretty emotional guy I'm a pretty passionate guy. But if it's critical critically important you got to use your intellect with regard to that. You can't panic with regard to the markets. You got on this day and age is always going to have tremendous volatility. If you already missed the big point the market is probably because you made a big decision. To get all in or out all out on something. You're not you can't be all in or all out right now. You just have to be thoughtful I think you got to be gradual. You can dog dollar cost average. I think on weakness if there are names that you like. They're not going to be really truly negatively effected impacted by what's going on now. I would dollar cost average into them. If you have names that have done well I wouldn't mind trimming some of those. Into strength. So you know what you need long term portfolio you set your portfolio up that way you try to make it diversified. But then you trim it into strength. You don't forget about it. You trim it to strength and you add to it by dollar cost averaging on weakness. That would be a reasonably thoughtful way to be able to process. You've already messed up. Well just be calm and wait a while until you're comfortable that you know what's going on. And that's still dollar cost averaging. What's your you've had an uncanny ability when you come on me Joe of really nailing the sentiment around the MAC 7. So ahead of this segment the MAC 7 sentiment has been been weak. I mean they're spending a lot. Valuations still high. And folks I would argue not expecting much from these companies or as much from these companies for this coming earnings season as they were. Let's say six months ago. Like what is your thought on these stocks. Do they represent a good value here. I think they do represent good value. Having said that you hit the nail on the head Brian. The reason why people are concerned is because they've been so much money spent on the capital expenditures with you. And it's all AI related data center related data power et cetera et cetera. That's a lot of money. Now I think the people that run the MAC 7. Know what they're doing. I think they're really pretty good. It's not an accident. Those companies are called the magnificent seven. They're the biggest companies in the world. They have tremendous balance sheets. They've been incredibly successful. I'd rather bet on them that they're right in the event the amount of investment they're putting in. Then then analysts that are observing this and getting nervous about it. I think what with with the way they've come off. I think they are worth buying. I think they are worth owning. If you own them I certainly wouldn't get rid of them. And here's where I think you could put in that dollar cost average concept. If the video and all the respective names are significantly below their highest. To be able to dollar cost average this month and next month. Maybe you buy buy a little more. The month after that you buy a little more. But I think long long term these are names that I know I definitely want to want to own. AI is going to have the greatest impact on productivity that the world has ever seen. I think the people that run these companies know what they're doing and I would make a bet on them rather than my anxiety about the fact that they come down because they're spending too much money. They can always back off the spending if they want to. Since we last talked Joe there's been I would say an intensification of all things AI on Wall Street. I look at a further intensification on all things robo advisors. There was a company this week that is coming out with the ability that robo or that AI creates stock research reports as a former stock analyst. I mean I can't believe it but I guess I have to believe we're at that moment. How is AI changing the business of investing and are you down with it? I mean do you think it's a good thing? I think it is a good thing. I think it's again it's going to make us much more productive. Research that you would do to be able to kind of get ready for your program or that you would have your team do. AI can really help with regard to that. When I want to know what happened the last 12 hours of the war, the war I'll check with chat GBT or perplexity or something along those lines. It's going to make us more productive than we've ever been. Now with that, with growth, there's always growing pains. The growing pain I think in this case is the anxiety about people losing their jobs. There's going to be a- that's going to happen but there's also going to be a reallocation of skill sets. So as you think about what kind of career path you want, that does some of the things you got to think about. All right, we're gonna leave it there. Joe, always so nice to see you. I appreciate the thoughts and I suspect you're gonna be right again on the mag seven like you always are. Joe Moglia, appreciate it. We'll talk to you soon. All the best, Brian. Thank you. Mike, it's great to see you. You heard what we were talking about in terms of trying to figure out what's going on here. The market kind of like yesterday was kind of like, okay, we're done with this. We're going to move on. How much do you think that investors are still going to be headline focused now? Or do you think they kind of are done with the conflict? Well, they're certainly not done with the conflict. And I think this morning's reaction to some of that fragile piece or fragile ceasefire continues to reflect that. So I think the markets throughout this conflict have the belief that it will be short lived. And I still believe that markets feel that way. But it has continued to be driven by headline risk. So I think we're moving critically importantly, from kind of the threat of escalation to more structured negotiations. But Julie, I still think that the market will be on edge, headline risk will remain high, and kind of tail risk will remain skewed to the downside. But overall, markets believe that a resolution is in sight. And I think that they continue to kind of, you know, market action reflects that belief, that conviction. And you know, you know how these things go like this thing is over. And now investors want to know, okay, what's next, right? What's the next sort of catalyst that you think folks are going to be turning to to figure out where things go from here? Well, I think the big question is that there was a significant leadership rotation underway, kind of towards the end of last year and early this year prior to the to the war breaking out. And we saw that transition or kind of kind of transition from AI tech leadership to a broadening where international emerging markets, small cap stocks, industrials and other parts of the economy, were actually closing that gap and were big became leadership. So I think the real question is, is if in fact, a resolution is in sight, what takes its place going forward, and I do believe that there continues to be significant ingredients to suggest that that rotation will kind of continue to unfold post whatever we get here from this ceasefire and potential resolution in the US Iran war. So I think that will be the biggest question is, does that leadership rotation kind of going to re exert itself? Or do we get something different? And we think that that rotation and leadership has a lot of strong underlying kind of structural underpinnings, and will likely come back once this resolution is potentially reached on the war front. And just before we do, I want to dig into the rotation sectors a little bit more. But first, I'm curious, sort of from a backdrop perspective, how you're feeling about the economic underpinnings of all of this, right, we did get some economic data today, it's a little bit dated. But I was struck, especially by the fact that that GDP was only a half a percent in the fourth quarter, that was that final read, we got some February numbers, PCE, still coming in headline at 3%, right. And that was before the effects or any feed through from higher gasoline prices. So you know, what does that look like? What does that picture look like for stocks? Well, I do think that kind of at the end of last year, you could see, of course, we have the longest government shutdown in history, we had debates about kind of the private equity picture, you had a number of things, you had fears about the AI bubble, all of this contributed to a slowdown in the economy. And I think that's reflected in this backward looking data or rear view looking data. Now, I think expectations were that the one big beautiful bill act easier monetary policy, solid earnings growth would all stimulate the economy going forward. Now, Julie, I think what's happened is, is that the US-Iran war is thrown a little bit of a kind of a wrench into that assessment. So the longer the straight remains constrained, I think the fears of both inflation, and a slowdown on the economy coexisting, kind of instead of offsetting each other exists, and those stagflationary fears kind of fuel themselves. So I think that that kind of again, as we look forward, I think investors and market participants will be looking into the data to see if inflation is rising, while growth is stagnating. Now, I expect kind of that, when we look at this, when you talk about, hey, what's the next big catalyst? What should we look at going forward? Lost in all this discussion, Julie, is the fact that earnings are starting to trickle in and next week, on Tuesday, when we get JP Morgan and Citigroup and Wells Fargo, that'll kind of start earning season in earnest. And Julie, the numbers are expected to be outstanding earnings growth for S&P more than 13% on revenue growth of close to 10%. And those earnings expectations have been rising, and analysts haven't adjusted their full year forecast yet. So I think that one of the things that's kind of interesting here is that it's difficult to envision a stagflationary environment or an economic contraction with earnings growth at these levels and business fixed investment at these levels. So I think that'll be key going forward. Should the earnings come in as expected? Boy, that's a big tailwind for the stock market. We shall see if that's how it plays out. And I want to do dig into the sectors for just a minute here, because I know that you like energy, which is really interesting to me, because it's already outperformed so much. So what's I mean, especially if oil prices kind of come off the boil here, what's going to keep those stocks performing? So Julie, what's really interesting is that investors actually are overlooking the fact that energy shares were rising before the conflict broke out at the end of February. So a lot of this was kind of viewed as a potential cyclical upswing in the economy, lighter regulation, the companies have demonstrated capital discipline in terms of their spending. And they've had a fair amount of innovation when it comes to exploration and production. So that was already happening. And the shares were responding. Now, all of a sudden, after years of focusing on their efficiency, and doing more with less, now given the higher oil prices, their revenue outlook has improved. So we were expecting virtually no earnings growth from energy companies. Now it's close to 10% at a time where I can buy them for a far lower multiple than than the market from that perspective. So those kind of items were already driving energy shares higher prior to the conflict. And now all of a sudden, their revenue outlook looks a lot better. And I think that that's kind of the primary catalyst for why we've upgraded the sector. And then quickly, Mike, the other area I wanted to ask you about is tech, because the you know, the sort of sentiment around tech going into the war was not great, right? We had seen a lot of we'd obviously seen a big software sell off, we had seen a lot of questions about AI spending, and a lot of questions about AI sentiment overall. So why do you think that the tech is? Do you think that any of those factors have changed or just they've been priced in? So what's been interesting here now is we're expecting 45% year over year earnings growth on technology at an on 27% revenue growth year over year technology due to that multiple compression now trades for just 23 times forward earnings, the market itself is trading at 21. So I can buy incredible earnings and revenue growth at a time when when economic growth may be slowing, and inflation may be rising for roughly a market multiple. And when we think about all of the things that are going on from a geopolitical and economic perspective, we think in many ways, the technology sector is insulated from a lot of them. Now, I get it, right, you'll ask me about the capital infrastructure build on AI. And doesn't that require a lot of energy and things like that, of course, there is those components. But overall, we think the business fixed investment there, the earnings growth, the revenue growth, and the fact that I can buy this for roughly a market multiple makes technology really attractive right now. Mike, thanks so much. Good to see you. Thanks, Julie. Well, a report in the New York Times claims to have uncovered the creator of Bitcoin Satoshi Nakamoto, saying it's Adam Bach, Blockstream, co founder and CEO and Adam is joining me now. Adam, this is not the first time that someone has said that you are Satoshi. This person was John Carey, who is a well known journalist who wrote a broke the Theranos story about Elizabeth Holmes wrote a book about her. And I'm curious about the experience this time of having him dig in, he looked at your language, he met with you several times, what did you make of his methodology in this investigation? It was really kind of science based, right? They looked through a lot of old posts and tried to find similarities in writing styles or topics of interest between people working on Bitcoin like things before Bitcoin and Satoshi. So I think there's an element of confirmation bias in that because you are inherently reselecting people who are interested in similar things. They're programmers, they're interested in privacy, in cryptography. And so they're going to have similar language, backgrounds and things like that. So of course, they're going to sound similar superficially, right? So I think there's a lot of, you know, sort of circumstantial and common grammatical mistakes and things like that. I mean, you know, as I said, you yesterday after this came out, you tweeted that you are not in fact, Satoshi, you have said this in the past in interviews. Also, why should folks believe you that you're not because, you know, it's for this long, Satoshi has retained his or her anonymity. Yeah, I mean, I think it's probable, you know, so I think I was the first person to receive an email from Satoshi in August 2008, because he was citing hashcash, the proof of work system I designed, you know, decade or so before Bitcoin. And I think that, you know, you're gonna have sort of people are going to be interested to try to guess who this is. It's a fascinating kind of backstory. But Satoshi actually left the space, I think in about 2011, 2012, stopped participating in forums. So if you think about it, the, you know, the digital footprints, the breadcrumbs of the different forum posts that he had made, dried up, you know, what is it, you know, 14 years ago now, or something like that. And so a lot of people have looked over that data to try and figure something out. So as there's no new data, I think that, you know, it's very conclusive. But I think all that's really left is kind of, you know, speculating and language analysis about people involved. But I think the most probable situation is that Satoshi is somebody, you know, who's not talking to documentary film crews, to investigative journalists, and he's not participating in the forum, in the forums or at conferences with his real name. And so it seems probable that we'll never know, unless, you know, there's some inheritance event in the future, and some younger people with conspicuous spending habits, or the quantum topic, right, that maybe he will have to move his keys, move the coins, if these digital signatures need to be upgraded in the future. You know, I am curious, though, speaking of which, you know, unfortunately, within the crypto community, there have been some instances even of kidnappings of violent events. And so, you know, with a piece like this coming out, have you had to increase your own personal security? I mean, it's certainly something to consider. And, you know, I think a number of people in the industry have started to pay more attention to security for senior staff, when traveling and things like that. So yeah, it's a consideration. Adam, do you have your own theory of who Satoshi is or was? Well, um, you know, I think the starting point is not a reasonable that you would look based on the skill set, because you know, Satoshi is a programmer, he knew about cryptography, had the interest skill set. And that's a somewhat specialized skill set. But, you know, of the different people that have been speculated on, there seems to be reasonably indications that it's not them. So, you know, from what I can tell, we don't know, like nobody knows. And so as I say, I suspect that we're probably never going to know unless something changes, right? Do you think it matters who he is? Well, I think it's actually, you know, positive and fortunate for Bitcoin, for whatever reason that Satoshi stopped participating in the forums, because I think it helps Bitcoin seem more like a discovery and an asset class and less like, you know, a company or a startup with a CEO, because Bitcoin is a sort of neutral, global, digital asset, and a form of savings, which is harder to contemplate when there's a, you know, a character at the front. So if you think about like an Elon Musk, or with a Linux operating system, or Linus Torvalds, there are people at the helm of those who are opinionated vocal people. And because a lot of the world thinks hierarchically, so they would want to, you know, ask that person opinions or ask them to change the system. And I think Bitcoin benefits from being, you know, truly decentralized and chaotic, you know, there are hundreds of developers, thousands of companies, lots of different financial firms at this point with Bitcoin products and indeed sovereigns, you know, Swiss National Bank, Abu Dhabi sovereign wealth funds, El Salvador, some US states, who are building Bitcoin positions. So it's really helping it to have that kind of global neutral monetary concept. And Adam, you know, I'm curious whether or not you are Satoshi, you were you know, you are somebody who is a believer in these tenants that that underpin Bitcoin, certainly hash cash, as you talked about, that was something that you came up with early on, you know, as this decentralized system, as a way to retain privacy of the user. And as it has expanded more into this asset class, you've had, I mean, and even early on in its life, it did attract folks who were on the wrong side of the law in some cases, but also has attracted a lot of opportunists into the system. And I'm curious, as someone who is sort of a true believer in it, do you think that some of that involvement has sort of polluted the initial conception of this as an idealized financial system? Yeah, I mean, of course, you will have opportunists in everything. I mean, the early internet involved a lot of spam and nuisance uses, right. So you get that. But I think it's, you know, it's a very different asset class, somewhat decorrelated, and provides much more sort of self sovereignty to the individual, as opposed to, you know, conventional banking, or fiat currencies like the US dollar, the euro, which are subjects who kind of moral hazard in times of financial stress, where there's effectively been a big percentage of, for example, US dollars or euros that have been printed in the last decade. And that is, you know, directly eroding your spending power as an individual. So while Bitcoin is volatile, it has a much more predictable and mathematically assured rate of supply, sort of more akin to gold, in fact. But I guess then the risk would be like the risk could be in any currency as well, not necessarily designer risk, not fiat risk, but user risk, like, who's your counterparty, for example, on the other side of the transaction, right? Yeah, I mean, I think it's, it's more like a bearer asset, which is a relatively rare thing in the world. But I guess, effectively, gold is that, right. So in some countries, some cultures, people are saving physical gold, you know, they buy gold jewelry, or gold bars, gold coins, and those are pretty fungible, interchangeable. And even, you know, fiat cash is fungible by, sort of de facto by law that, you know, $100 bill is equivalent interchangeable with another one, and doesn't really bring with it, you know, history in the audit log of who held it before and what, what the purpose of the transaction was. Right. While I have you, Adam, I want to ask you about something that there was a lot of excitement about yesterday in the crypto world. And that is Morgan Stanley being the first sort of big Wall Street bank to enter the ETF space, the Bitcoin ETF space, it has a new spot ETF product that's competing with existing products out there, like iBit from BlackRock. And they're coming in at a lower fee structure. And there was a lot of excitement over this. I'm curious, how closely you were watching that? And what what the significance of that is for the for the ecosystem? Yeah, I mean, I think, you know, while the ETFs are not physical Bitcoin in a wallet, they are a form of access, it makes it easier for people who manage their savings by calling a broker or using a brokerage account. And so for Morgan Stanley users, now it became a lot easier, right. And they have their own network, their own huge client base. And you can see in the numbers, right. So by the end of yesterday, they bought about as much as the mined coins. So almost 450 coins in the first day, which is a very strong start. So, you know, I think there's a new buyer in the market, the Morgan Stanley clients, and that may in fact grow, you know, plus, of course, other institutions that might choose to allocate to the Morgan Stanley ETF. So there's also competition at the fee level with iBit and the other providers. Adam, I really appreciate appreciate you joining me here today, especially after that big story came out. So we'll definitely stay in touch on all of this. Appreciate it. Thank you. Back into today. How much did I ever spend this much time thinking about the straighter moves in my life? I don't even know if I talked about in high school, Keith, but this remains very much top of mind for the markets. And you, my friend came out upgraded the energy sector, right? That's right. Well, hey, always great to be with you. Hopefully I can cheer you up a little bit. That's why you're here. I'm a little bit. Yeah. So listen, I would say more broadly on the market. Last week, indicators got pretty oversold. So we thought we started to tell our investors that the risk reward was improving somewhat, even though there is a lot of uncertainty. But then yesterday when oil went down about, you know, sorry, the energy stocks went down about four and a half percent. We took that as an opportunity to upgrade energy for some of the reasons that were just outlined. We think energy will likely stay somewhat elevated. We still have an overweight in areas like industrials and technology. But this is where it's going to be somewhat messy. And if it does escalate, you want to have some hedge within portfolios. And we think the energy sector does that now. But I will also just remind us, this is the one year anniversary of that almost 10% pop on the tariff pause last year. I expect things to be messy. But the other thing to just keep in mind is markets tend to bottom out when when there's peak uncertainty. If you wait for clarity, full clarity, the market's already moved. Can you think the bottom is in the market for the year? I love when you test me on those type of questions. That's why you're here. I can't ask a lot of people this, but I know you get it. Yeah, well, I'm gonna I'm gonna provide a little bit of a hedge as well, since we're talking about energy. Listen, the way we're thinking about it is, at the recent lows, we said the risk reward has improved. We didn't see full capitulation. So I can say at this point with high confidence that the low is in. But I think at least the risk reward has improved at least expectations have reset at least the valuations of the market, which are in cheap have reset 15% technology value is back to the lowest is 2023. And the way we're thinking about is averaging now, if we got something that was a little bit deeper, say, you know, closer to like, you know, 6000 to 6200, we'd be more aggressive. So we're thinking more risk reward as opposed to trying to call tops and bottoms, which is cute, but really a challenge to do. Fair enough, Keith, let me just on your call with energy, what does that precisely mean the most simplest of languages when you come out, and you upgrade energy? Is it? Is it? Is it a signal that moving forward energy will outperform the S&P 500? Is that how you think about it? I think in two ways. One, we do think that it will likely over time, not necessarily the next couple of days, the next couple of weeks, but let's say over the next three to 12 months, there's a good chance it will outperform. But more broadly, too, going back to basics of diversification, if we're overweight industrials, which is, you know, dependent somewhat on the global economy, if this thing escalates even more, and let's say our base case for the economy that we think is solid slows down, you know, this provides an offset. So I look at it as holistically, but to your point, energy hasn't done anything for about a decade, it's only up about 50%. It's trailed the market by a huge amount. So we think there's still upside relative to other sectors that we think about the year ahead. I have a good chart, Keith, on on the mag seven and sentiment on mag seven ahead of earnings. It is it's pessimistic. It's almost as pessimistic I've seen in some time. And look, these companies have done it themselves, Keith, they're spending billions of dollars on AI, we don't yet know the return. So I get it. Are these stocks officially at that level, though, where any semblance, you see a chart right now on the screen, any semblance of a positive news that they're generating returns from all these billions are going to be well received by the market. I look what meta came out yesterday, with just a model, and it's behind Claude, it's behind chat GPT, and the stock gained, I think the company gained about $110 billion in market cap. Yeah, I mean, Brian, we've been doing this for a long time. And it's, it's all about relative to expectations. And I would say back in October, when tech peaked, we were at a 32 forward PE. Now we hit 20. I mean, that is a, you know, 37% decrease in valuation. So there is uncertainty, there is concerns about, you know, will they be able to monetize AI or the spending, there's concerns about the debt financing. But the good news, at least the market is now reflecting some of that uncertainty in these lower valuations. At the same time, the forward earning estimates for the technology sector at RIT is a lot is much stronger than the the overall market. So to your point, I do think a little bit of good news could go a long way for tech, given how much they've already compressed as far as valuations and prices. Aren't these estimates too high? Keith, it has been amazing to me to watch over the past month and a half, as this war has played out, oil prices have gone through the roof, inflationary pressures are picked up, and earnings estimates for so many companies have either stayed the same, or believe it or not, have actually gone up. Yeah, well, there's typically also a lagged impact. And so far, you know, if this goes on, that's going back to the if that statement that you're hearing a lot of strategists say, if this is prolonged, yes, you'll see estimates come down for them. If it's a 30 or 60 day type of action, I don't think we'll have as dramatic impact. And we also have to realize, you know, what markets are we talking about? Because for the S&P 500, close to 50% is based on tech and AI. And, Brian, maybe you'll be happy over the next week or two, because we're still getting back into earnings season. I love earnings season, Keith. Earnings season makes me very happy. I love the craziness of it all, my friend. Yeah, so you have Iran, but you have something else to talk about as well. I think, listen, we have to also remember times like this, Iran certainly matters, oil prices matter. But it's not the only thing that matters when we think about the next, you know, next year, next two years, and so forth for these markets. Jake, I look at these oil markets today, I was watching yesterday, I mean, it's crazy volatility and gas prices. And they're likely to stay in no man's land for now. I think so. And you see that narrative starting to come through onto the street. You have seen some gasoline analysts say that if prices can stay at these depressed levels, if oil can stay depressed below 100, we could see those pump prices that have gotten so high for Americans crossing $4 a national average a few weeks ago, we could see that start to moderate. However, there is still such an if factor here, as we keep talking about. If this jump we're seeing this morning and oil keeps going, those gasoline prices Americans are paying aren't going anywhere. And this is coming when the inflation ticking up this morning, all of these metrics are going to come together. If oil prices do not abate, if this conflict does not abate, you could see those gasoline prices still hanging high. And that's just going to be one more pressure point for Americans. And one more thing to make the feds job just that much harder. Keith, it cost me 55 bucks to fill up my Corvette, dude. That's tough life, right? Get a new car, Brian. I do need a new car. Maybe I got a downscale to a Hyundai. Keith and Jake, you both made me happy and I needed it. It's been a long morning. I appreciate y'all. I'll talk to you soon. Thank you. Gosh, it's confusing. What's going on out there for market participants. And, you know, we've gotten into this habit over the past couple of months of this war of sort of like being very headline driven, paying attention to what's going on. And I think there's a lot of confusion after yesterday. So what are you paying the most attention to to try and get some clarity out of this Merck? Yeah, absolutely. You said it. Headlines are driving confusion. There's been whiplash back and forth. And it's easy to get lost in those very near term signals. The first thing I'd say is we see this as a ceasefire pause, not a resolution to the conflict. And that's a really important distinction. In terms of what we're watching from here, I'd say three things. The first is the traffic at the Strait of Hormuz. That's a key issue in particular, with the negotiations coming up this weekend. And that's really the clearest transmission mechanism for markets, right? That's what clients have been paying most attention to. So that's the first thing. We're still waiting on details how many ships are coming in and out of the The second thing, as I mentioned just now, negotiations, they're going to start probably on Saturday, it seems from some public reporting, any sort of indication of how those are going. They seem to be anchored to that 10 point plan that Iran introduced. But any sort of red lines that are put out there by the administration will be critical. The third thing I'm watching for on the domestic front is gasoline prices. This I think will indicate the administration's level of tolerance or appetite to engage in those negotiations or pull back, right? That's a clear source of pressure heading into the midterm elections. Gas prices were somewhere around $3 per gallon heading into this conflict. Over the past month, we've seen it increase a little bit over $4 now. So consumers are starting to feel the pinch. That's why I think those are kind of the three most important metrics to keep an eye on from here, in spite of all the headline noise. Yeah. And to from what we know right now, does it seem like indeed, this is going to be more than a pause that it is going to be more of us? I mean, and it's not even a full pause, right? As we talked about there, you know, there's still also Israel is still attacking Lebanon. Iran has said that's a condition that's stopping as a condition of it agreeing to continue to ceasefire. Like, but are you feeling optimistic that this is coming to a close? So I think it's important to have a degree of humility when it comes to predicting these sorts of outcomes, right? So much uncertainty. I will say even at the start of the conflict, we said one of the key things to watch to indicate the duration would be a clear calibration of the objectives of the conflict, right? And not just from the US side, but also with Israel, because that's the most important kind of strategic partner in this fight specifically. So looking at, you know, if we're talking about a longer term engagement versus shorter term, that can be defined if we're talking about limited military strikes and military engagement, versus something that might take a little bit longer dealing with the nuclear program, you know, limiting Iran's ability to fund proxies, those sorts of things tend to take longer. So that's really all we can look at at the moment. That's why it's so important to anchor two scenarios. And to that point, our oil strategists have laid out three different scenarios, this kind of middle point of ongoing constraints, oil somewhere around $100, $110 per barrel, that seems to be the world that we're in right now. And as long as the straight is heavily limited in terms of traffic, I think that's probably where we're going to be. And obviously, the feed through there is weaker economic growth, slightly higher inflation. We still think the Fed maintains its easing bias, but we've pushed out our expectations for cuts this year. And you talked about the goals of this administration in Iran. They've thrown a lot out there. Is it even knowable what the goal is, and which of those goals they are going to pursue sort of most fully? So they have defined, I would say, four key goals, right. So the first is limiting Iran's ability to fund proxies and engage with the rest of the region. The second has been military, you know, in focus specifically, so missile launcher capacity being destroyed. The third is focused specifically on the Navy, right, so limiting their Navy assets. And the fourth is on this nuclear point. And nuclear is really the biggest unknown at this stage. We've heard some indication that the negotiations will focus on nuclear. But again, this is an area that's been tried and tested diplomatically. For many years, Trump in his first term, pulled out of the Joint Comprehensive Plan of Action. That was the Iran nuclear deal in 2015. We saw obviously a different route taken last summer with the strikes on the nuclear facility specifically. So that's a really big unknown. But that's why, like I said before, one of the key things we're looking at to determine the duration of the conflict is which objective is most important and most paramount, because all these objectives I just laid out are tied to different time periods, right. So some will be easier to achieve than others. And so that's really going to be a key indicator. War aside, now that we at least maybe seem to be closer to the end than to the beginning, but we'll see. You know, maybe now the attention for you in public policy and politics turns to the midterms. Is that what you're now spending a lot of energy on? And then what are you watching most closely in terms of its relevance to markets and the economy? So really hard to disentangle midterms from what's happening right now, I would say. And you see that even in prediction markets, which are now ascribing a higher probability of a democratic sweep than we had even just a month ago, right. So I think when it comes to the midterm elections, the most important issue for voters will be affordability, cost of living. And if you remember just a few months ago, that was the biggest political issue. The focus on affordability vis-a-vis housing policy, health care policy, energy policy, all those things were top of mind. I do think that Congress and the president will pivot back in that direction once this conflict is largely in the rear view. But again, it's really hard to separate those two things because of the impact on gas prices, like I mentioned before. Right, because if gasoline prices remain higher, and, you know, from oil analysts we've talked to, even if the conflict ended tomorrow and the strait opens entirely, it'll take time for them to come down. I mean, how do we sort of suss out how much that will affect the midterms depending on the timing of how long it lasts, etc.? Right. It's hard to have a perfect rule if I'm here. But looking back at the past few elections, what we see is if you have an incumbent government and gasoline prices are something like $3 a gallon, that tends to be good for the incumbent. If it's somewhere around $4, it's politically more challenging. And then $5 plus, it just makes it really hard to win that election, right? So like I said before, we're in that yellow zone still, I would say, with still a little bit of room. The president has talked about measures to offset or mitigate that increase. We've seen most of those kind of employed at this point. But that's really the framework that we're using. Ariana, thank you so much for coming. I really appreciate it. Business end of Yahoo Finance's Market Madness Tournament. It's the Final Four and despite the shocks and upsets along the way the remaining companies will come, maybe no huge surprise. The Final Four, Alphabet, Walmart, Amazon and McDonald's all vying for a ticket to the final. Let's focus on the right side of the bracket and joining me is James Damert, Main Street Research's Chief Investment Officer for Market Madness, brought to you by Everpure. Those who were sad that basketball Market Madness were over, March Madness was over, we've got you. So James, so we're taking a look here at Amazon versus McDonald's. Obviously, two very different companies, both very compelling stories. Which do you find more compelling? Good to see you, Julie. You know, I have to lean way into Amazon here. These are both exceptionally great companies. But I think investors, and this is my message to investors, look at what you think the economy can do if the Strait of Hormuz is open, which we think it will be, and which of these is going to be the real leader. And without question, it's Amazon. They're both trading at the same P.E. multiple, but you're going to get a ton more growth out of the Amazon play. Yeah, that's pretty surprising that their P.E. is similar at these levels, not necessarily what you would expect here. Let's dig into Amazon a little bit more here, especially since this company's CEO, Andy Jassy, just out with his annual shareholder level, leather, excuse me, and he really dug into the business and all of the different areas that they're in. Obviously, it's a very diversified business. I was struck, James, by the section where he talks about the company's chip making, and that it's now at a $20 billion annual run rate. He talked about offering a cheaper alternative to NVIDIA chips, although he says we're still using NVIDIA chips for clients of AWS, but we're also making our own. Kind of how do you think about those different business lines and what you find most exciting there? Yeah, that's a great point. Jassy talking about expenses, that's where investors get nervous, right? How much money are they going to throw at trying to design and manufacture their own chips? It makes sense in the long run, but in the short run, it can spook investors. What I think is really important for investors, since we specialize in individual stocks at Main Street, is look at the AWS business that's part of the biggest part of Amazon. And that is growing at such an incredible rate. I think it can absorb the expense that's going to go down on trying to develop their own chips. And I love that he said, you know, we're still wedded to NVIDIA. I think that was very important for investors to hear that. But that, you know, that big deal they have with open AI, a $50 billion deal tells you that, you know, AWS part of the business model is extremely robust. You know, Amazon, like many of its big tech peers, has been hit. It's down now a little more than 2% this year. So it's not a huge drawdown, but it's more of a drawdown from its highs. And sentiment around big tech, even before the Iran war, was not great, right? There were a lot of concerns about software, concerns about spending, concerns about AI adoption generally. Where do you think we are on that? And how do you think Amazon and some of its peers, for that matter, sort of come back from that? Yeah, it's, you know, the stocks, the whole AI trade has been asleep. And what happened to the AI bubble that we were all worried about? The air has slowly come out over the last four months. And at MainStreet, we think that is a tremendous value play. It's so unusual. And you might remember the 90s, you're probably too young, the 90s big tech cycle, we had very just a handful of pauses like this, and they were all windows of opportunity. So we think that Amazon here is a value play in the non-infrastructure AI play, meaning you're getting away from the chips like the NVIDIAs and the ASMLs and the Taiwan. If you go to that next generation, I think Amazon's great position here. The PEs contracted over four months, nobody seems to be interested, that's when you want to go. Just one final here on McDonald's to take the other side of it and dig into that a little bit more. I mean, McDonald's has gotten a lot of attention lately after its CEO ate that burger on camera. And, you know, it feels like that there is some enthusiasm around the stock that, you know, if people are looking for value, maybe they're turning to customers, that is, or turning to a place like McDonald's. So how are you thinking about that thesis around that company? The CEO eating that stuff every day is so amazing for the brand what a CEO will do. I just, that's just fantastic. And I think McDonald's, as I said, it's a great company. But you know, again, this is a world of choice. And if you think the economy is going to have a tough road over the next three or four quarters, this is a company that has tremendously consistent growth and profitability. That's why it trades at a relatively high multiple to its growth rate. So I can see why investors would say, well, you know, this is a safer play. I know those earnings are going to stay consistent no matter what. In our view, I just think that's a conservative stance, maybe as a part of the portfolio, but I wouldn't do a whole lot of that. So in general, James, if I'm reading between the lines here, it sounds like in general, you are sort of more growth oriented right now than you would be looking sort of defensively positioned. Yeah, we think the economy going into the war was in great shape. We had great productivity growth. We still do. And we think earnings over the next few weeks here, here they come, are going to be way better than expected. And, you know, we'll get past this, this big oil jolt and the market goes to new highs by the end of the year. It's going to be led by the real growth stories, not necessarily the McDonald's, but more of the Amazons. We'll talk to you again soon to see how that's going. James, thanks so much.