logo
ENع
#

Latest news with #MartaNorton

Markets have 'stepped back from the brink' of tariff volatility
Markets have 'stepped back from the brink' of tariff volatility

Yahoo

time5 days ago

  • Business
  • Yahoo

Markets have 'stepped back from the brink' of tariff volatility

Marta Norton, Empower chief investment strategist, joins Market Domination Overtime with Josh Lipton and Julie Hyman to discuss the US economy, the "Magnificent Seven," and how the markets have been responding to shifting tariff headlines. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Well, for more on the market action, we're joined now by Empower chief investment strategist, Marta Norton. Marta, it's good to see you. So, I think, Marta, we gotta start on the, on the bouncing ball of tariff headlines. We have a court step in, they block a wide swathe of Trump tariffs, market rallies, right? But now, throughout the day, we then saw them give some of that up. Now we're in appeals court temporarily pausing this decision to invalidate the levies. I think investors are trying, Marta, to make sense of this. How are you, as a strategist, trying to make sense of this and what it means for the market? I love the analogy of a bouncing ball. That's absolutely what we saw today and really what we've seen since April 2nd. We, of course, saw these massive reciprocal tariffs go into effect, and then we've seen pauses, we've seen delays and everyone's kind of on pins and needles waiting for what the actuality of the trade deals look like. And I think we can get that sense from the market that we've stepped back from the brink, and we see the market recovery go alongside that. And now we're at a point where we're trying to ascertain where exactly does that tariff level fall out. And I think the reality is we look at today is there could be a longer tail and even determining what the rules of the ground are as we work through these appeals processes and the different functions that the Trump administration is relying upon to put the tariffs in place that it wants to see. Hey Marta, it's Julie here. All of that said, it doesn't seem like there is a huge amount of fear or concern or worry built in about tariff outcomes at this point. What is your sort of, I mean, do you even have a base case, I guess, at this stage because things are still kind of up in the air? Well, you have to acknowledge a wide range of outcomes when you have these kind of variables that are so hard to predict. Certainly, that's the case. And I would also acknowledge that the market doesn't show a lot of fear. I mean, if you take a look at the recovery that we've seen since the initial sell-off, we've essentially done a round trip. So most of the market now is back up to the more extreme valuations that we saw heading into April 2nd. And so you could argue that the market is really focusing on the positive range of outcomes and not really accounting for anything that could go wrong on the tariff front or really any other area in particular. So I guess as I take a look at the market today, I would argue that there's just not as much margin of safety as I would like to see in this environment. Marta, I'm curious to get your take on the economy as well today. We got, you know, GDP data today, another look at Q1. I know, you know, it's old news, but another, you know, a negative print, personal spending revised lower, your take on the economy, Marta, and where we are and where you think we're headed. Well, a few things here to call out. First of all, just that hard data narrative has remained largely positive. So to the point, yes, GDP is showing some softening and especially, you know, reflecting the import surge that we saw, but we are seeing inflation prove a little bit more stable than folks had anticipated. We're seeing the labor market continue to show signs of resilience, and of course, we're coming out of this very strong Q1 earning season. But I think the reality is that the trend, regardless of which one of those variables that you're looking at, the trend is largely to the downside here. So we have a nice buffer from where we're starting from on the economic side, on the earning side, but we do expect the uncertainty that we're in and the concerns around a more protectionist policy broadly to have an effect on the economy. Obviously, we saw those strong numbers from Nvidia that helped buoy those shares, and there's been a lot of attention on the Magnificent Seven more broadly, maybe excluding Tesla for the moment, right? We have seen valuations on those stocks really come down, particularly for Nvidia itself. Is that an area where you think investors should be, you know, hiding out, perhaps, in this market? Yeah, it's such an interesting contrast when you look at the start of the year. The market looked overvalued, and a lot of that overvaluation was concentrated in those MAG 7 names. In fact, they looked historically expensive. Not as expensive as they were in late 2021, but still very pricey. And then you roll the clock forward to today, and the market generally looks expensive, and yet the MAG 7 are more reasonably priced. And when you think about the case for the MAG 7, the fundamental appeal that they have, whether it's from, you know, the earnings, the profitability, the balance sheet robustness, the AI theme that they're tied to, that's a lot of appeal from a fundamental perspective, and the valuations now are more approachable. So if we're looking for where the silver lining is in today's market price action, or in this year's price action, I would say it's a decent time to be a MAG 7 investor. Are you as excited, Marta, as opportunities overseas as some of the other strategists we have on the show? Well, certainly the valuation argument has favored markets overseas and continues to favor market overseas. I think the one consideration that I have there is just kind of where growth prospects stand overseas relative to the US. I think that the US has borne the brunt of the trade war, and I think at some point, there will be some pain borne by markets overseas. I also think that when you get excited about the AI narrative, you can get excited for opportunities in China certainly, and in the US, but it's harder to get excited about an AI narrative for Europe broadly. So I think that the valuation argument means that it makes some sense to lean overseas, but I think I would put a cap on that exposure. Marta, always great to see and to have you on the show. Thank you. My pleasure.

There's a 'weird dichotomy' between the Magnificent Seven and the rest of the market
There's a 'weird dichotomy' between the Magnificent Seven and the rest of the market

CNBC

time5 days ago

  • Business
  • CNBC

There's a 'weird dichotomy' between the Magnificent Seven and the rest of the market

Stocks appear to have come full circle since the start of the year, but with one key difference: the "Magnificent Seven" stocks are not as expensive as they were coming into 2025. The S & P 500 is virtually unchanged on the year, following an extraordinary selloff and recovery over the past two months. In that time, the index slumped 20% from its February peak following the April 2 tariff announcement, then made back all those losses. The broader index is now a little more than 3% off its record high. For all off of 2025, the broad market index has eked out a 0.8% gain, not including reinvested dividends. .SPX YTD mountain S & P 500 in 2025 This time, however, there's a different nuance in the market, according to Marta Norton, chief investment strategist at Empower Investments. She pointed out that while the overall market is more expensive than it was at the start of the year, the Magnificent Seven stocks are cheaper than they were. "At the start of the year, the Mag Seven were very expensive, and you felt like that was going to lead the market down. But at this point in the year, Mag Seven is, you know, certainly rallied back a bit, but it's cheaper than it looked at the start of the year, and it's the rest of the market around the Mag Seven that looks expensive," said Norton. "So, there's this weird dichotomy where the area of greatest risk doesn't look to be quite as big a risk, at least from a valuation standpoint, that it had [at] the start of the year," Norton added. Take Nvidia , which started 2025 with a forward P/E of 31.3, is now trading at 29.6 forward earnings, according to FactSet data. Apple , which was at 33.0, now sells for 26.6 times the coming year's profits. Google-parent Alphabet , which was trading at 21.1, is now at 17.7. Amazon , previously at 35.2, now changes hads at 31.3. Only two of the megacaps stocks trade above their Dec. 31 forward valuations. Meta Platforms , which was at 23.0, is now at 24.3. Microsoft , once at 29.9, is now 30.6. Meanwhile, the broader market looks more expensive. The S & P 500, at 21.3 currently, is trading about where it was in December. But consumer staples companies were at 18.6 times at the end of last year, and are now at 19.9. The cheaper Mag Seven valuations suggest there could be some momentum left in the market even after its huge upswing since early April, since the elite group combined accounts for roughly 30% of the S & P 500 market value. Norton, however, is skeptical the market will rally meaningfully higher in 2025. She thinks the S & P 500 will be rangebound for the rest of the year as expensive valuations in the rest of the market, as well as the impact of tariffs on corporate earnings, will offset any benefits from deregulation later this year. "Should we see the Mag Seven continue to recover, that would certainly be a force for strength in the market, but we still have to watch that remaining 70%," Norton said. Other Wall Street firms are sounding similar concerns. In fact, a note from UBS said that "MAG-7 dominance risk has yet again returned" following Nvidia's latest earnings beat, a development that suggests the market is "now priced for perfection and is vulnerable to even slightly disappointing news."

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store