00:00 Speaker A
US stock futures sliding this morning after snapping six days of gains. Rising bond yields weighing on risk appetite as traders focus on risks in Washington with fiscal and deficit concerns mounting. Joining us now, we've got Yahoo! Finances Josh Schafer here. Josh, some slippage here in the pre-market. What are a lot of the kind of street analysis and commentary telling us back?
00:26 Josh Schafer
Yeah, Brad. So you're starting to see a little bit of a pause in that six day rally that you mentioned, right? Really, the rally that we've seen over the past month. I don't think you've seen much of a break really since probably April 9th, right? When we had that big move higher. And what strategists have pointed out at this point is you're now back to the S&P 500 being within 3% of a new record high, right? Like we have come essentially almost all the way back from that record high that we fell from in February. And so now you're starting to see some folks warn, okay, we've priced in a lot of good news here. So EY's chief economist, Greg Daco, is saying equity markets have reacted with unwarranted optimism. Of course, Greg referring to the economy there and essentially saying, we still have the data that needs to come, right? So, yes, I understand the tariff rate has come down from maybe an estimate of 24% to about 14% now, and maybe that's better for the recession calls that were out there. Maybe it's better for the overall economic growth story. But someone like Daco at EY sees GDP hitting increasing year over year in the fourth quarter at 0.6%. I mean, that's not a great number, right? And that slowing economic growth, he sees inflation higher. So essentially saying the risks, if we're thinking upside or downside risks, the risks are probably still tilted to the downside. So that's perhaps where your concerns should be. And then overall, if you think about what that means for the equity market, we might not see a resurgence in economic growth, right? I don't think that's the narrative right now. So at some point, has the rally perhaps gone? I don't know if it's too far or gone as far as it's going until we get some sort of confirmation from the data in the next couple of months, realistically.
03:05 Speaker A
And Gina Martin Adams with Bloomberg Intelligence citing the earnings estimates for the next quarter here is still too high based on all of those risks that you laid out, Josh. Where are investors seeking safety in this moment, given the volatility that we're seeing in the bond market, given those risks that you talk about?
03:24 Josh Schafer
Yeah, it's not in the bond market, right? It seems like investors, you're still seeing some flows into some of that overseas trade, right? But really, what you've seen over the past two days is a little bit more of that sell America trade as it's sort of been dubbed when you've seen the dollar weakening, you've seen bond yields higher, you've seen a little bit of weight coming out of US equities. But I was talking to one strategist yesterday who sort of pointed out, so this was Victor Fewer over at BNP Paribas, and he pointed out to me that really it makes sense that you would see the market take a breather at this point when you think about how quickly the market moved back up higher. So essentially, he was looking at sort of the technical side of this rally and said you had a lot of people just move instantly bearish on April 2nd, you had a lot of short covering come after that. Gives you this large move higher on simply one catalyst, which was really just different things the president has been saying. Now you get to a point where the market is perhaps more equally valued, you have investors in more equal weightings, and then that puts you in a place where you can sort of go either way from here again, depending on how those earnings and data turn out. But you're in more of an equal footing area, 3% from your record high, and now you're kind of waiting for more information again. Maybe we get that with what we're starting to talk about more and more with Nvidia earnings next week. Maybe that's your catalyst.
05:22 Speaker A
Exactly, maybe that's the catalyst, and maybe there's not any bad news that pulls people away from their Memorial Day vacations coming up here.
05:31 Speaker B
I'm going to try to cook some burgers, guys. You know, it's Memorial Day.
05:36 Speaker A
Right, we want to be off, too.
05:38 Speaker B
Brad wants to do a real barbecue. I can see it on his face.
05:42 Speaker C
Look, man, I thought you would have a ribeye setup. You already show us all of your spaghetti cooking every Sunday.
05:48 Josh Schafer
We'll work on it, Brad. We'll work on it.
05:52 Speaker C
Surely maybe in your future. Thank you, Josh. Appreciate it as always.
