Market Broadening Actually in the Works: Subramanian

Bloomberg

3 days ago

00:00
Savita Subramanian of Bank of America, writing Sentiment is far from euphoric. The consensus Wall Street broker is recommending an average allocation of just 56% to US stocks. This is not euphoria. Savita joins us now. Thank you so much. Good morning. Thanks so much. Thanks for joining us. So it's not euphoria. What are we in right now? What is this world? Yeah, this world feels weird, but I think we're we're in that sort of wall of worry stage where there are certain themes that are getting a lot of credence and credibility. Like I other themes are kind of falling out of bed like GLP one, and then you've got this potential broadening of the market that we've all been waiting for with bated breath that I think is at a moment where it's, it's actually in the works. So if you if you read the transcripts and I love Lori's quote, but I think that when you read the transcripts, companies are worried, but they're also talking about the fact that they've delayed a lot of projects. They haven't canceled them. They've delayed them. That means there's a lot of pent up activity, business activity in the pipes that is likely to be unfurled over the next couple of quarters. And I think what really stymied that pickup in broadening and, you know, kind of other companies actually moving from, you know, their very low, low multiples and low, low levels is the idea that we're past a lot of the tariff uncertainty. I mean, granted, there are curveballs that are thrown at us every day, but we do know what's going on with Europe. You know, we've got a better handle on how companies can actually plan and do business. We're also starting to see, I think, the beginnings of this M & A cycle, even cross-border M & A. So I think those are other animal spirits that could unleash a broader pick up in economic activity. And then when we look at things like, you know, companies reporting, I think what's really noteworthy is that at this point, about 80% of companies have beat on revenue. That's new. We haven't seen this revenue surprise in a while. So what that means is that analyst markdown expectations very low for sales and demand and they're beating those lowered expectations. So I think this all bodes well for a broader market. I would stick with large cap value stocks, companies that are, you know, really in the penalty box but could actually start to work in an environment where, you know, we do see earnings broaden in a bigger pickup.