00:00 Speaker A
Well, let's talk about that risk on rally underway on Wall Street as investors cheer a court's ruling to block Trump's tariffs. And as Nvidia offers an upbeat forecast sending shares higher. The big question, can the gains last? Joining us now, we've got Mark Hackett. He's nationwide's chief market strategist. Mark, it's great to speak with you this morning. Talk to me about what's making you more bullish this morning. The wrap up of these tariffs potentially off the back of this ruling or Nvidia earnings?
00:42 Mark Hackett
Well, I think both of them are fairly reactive. And you know, we've seen just this week the intense scrutiny that investors are placing on tariff headlines. Um, we've seen this move back and forth quite a bit over the past two months. So obviously, that's the bigger macro story if it ends up being what it is. But we also have to keep in mind, there's been a lot of moving parts in this story. Uh, every time we think there's a definitive conclusion, some other news item comes out and changes the story. So if this ends up being what the ruling is, that will be very much of a tailwind for markets. But again, I'm a little skeptical and I think most of us should be until we see the whites of the eyes. So we're telling investors to remain informed, but don't be reactive to these types of news. The Nvidia news, I think is just a reminder of just how much the mag 7 story remains in our minds. Uh, the fact that we talk about tariffs and Nvidia, yet the Fed minutes last yesterday had almost no reaction. I think is a sign of just how much the market focus has shifted.
02:57 Speaker A
How much of the upside that you were mentioning a moment ago on the the tariff front that the markets could potentially continue to see as a result of this. How much of that do you think we could still potentially see come to fruition here, especially knowing we're just about 120 points off from that 6,000 level right now?
03:34 Mark Hackett
I think we're probably close to running out of steam with tariff tailwinds. Remember, the math that got us to the almost 20% drawdown earlier in the year was no more precise than the math that we've seen since, causing a rally back back almost, you know, to where over where we started the year. So I think we are going to have to start transitioning to a fundamental catalyst. The technical catalyst has been great. It's been nice to see, but at some point, we're sitting at a fairly elevated valuation for the S&P 500, and estimate revisions have been slightly negative, resilient, but negative. So I think we're going to start needing to see those revisions stabilize and start moving higher before we can see a next step higher in the bull market.
04:45 Speaker A
And what gives you confidence in the ability for that to happen going forward? What do you think is the potential catalyst for that?
04:59 Mark Hackett
I think the number one uh issue is the the lack of uh confidence in the consumer. So the consumer spending has been quite strong. We saw credit card data this morning that was strong. Really the retail sales numbers have been resilient. So there's been this strange uh lack of correlation between what consumers are saying with the soft data, obviously, and what they're doing with the hard data. So if the consumer continues to spend, and some of these worst case scenarios, which I think likely some of the the tariff-based worst case scenarios were cleared up last night, that does set the table for an acceleration in, you know, consumer spending and corporate earnings. That I think is going to be necessary to for the next move higher, probably in the second half of the year.
06:02 Speaker A
Mark, that's continuously perplexing to me because as I think about more people tapping credit card or swiping credit card in order to spend, then that would also suggest that maybe they're doing that from a point of necessity just to perhaps be able to give themselves a little bit of a bridge to pay things off over time. You talk about people, or at least we've talked about people paying off for their burrito and multiple payments on Klarna. So all of these things considered, what is the true health of the consumer through your assessment and through the lens of corporate America as they're trying to understand where consumers do actually maintain some semblance of strength on the higher income scale versus the mid to lower income groups that are clearly seeing some and feeling some pressure.
07:12 Mark Hackett
Yeah, I I think you nailed it. The the dichotomy between higher income consumers and lower income consumers is wide. For example, we're seeing credit card delinquencies at very elevated levels at this point, which you would say would be a bad sign for the consumer. But from a human interest perspective, that's absolutely the case, but unfortunately, that's not the way the math works for GDP. Higher end consumers and the higher end of the middle income consumers account for the overwhelming majority of spending. So if that group's spending, it's going to be a tailwind for the economy. Again, that doesn't necessarily mean from a human interest perspective that, you know, for example, inflation and some of the uncertainties that we're seeing is a struggle for the average consumer. That doesn't necessarily work the work that way with the math.
08:28 Speaker A
Mark, good to have you here with us this morning. Mark Hackett of Nationwide. We appreciate the time.
08:36 Mark Hackett
Thank you.
