BlackRock 'Taking Chips off the Table' Ahead of Earnings

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Bloomberg Jul 11 10:14 · 62.4k Views

Russ Koesterich, Global Allocation Fund portfolio manager at BlackRock, says the firm expects a strong second-quarter earnings season and remains overweight stocks, but is moderating its position on some “high-flyer” equities.

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Transcript

  • 00:00 Let's just get into that call.
  • 00:01 What prompted the change of mind?
  • 00:02 And when we talk about the high Flyers, is there anything beyond NVIDIA?
  • 00:05 What kind of names are we thinking about?
  • 00:07 Good
  • 00:08 morning, Jonathan.
  • 00:09 So
  • 00:10 you know, look, I
  • 00:11 should say at the beginning is we were still overweight stocks and I our base case is still that
  • 00:15 equities will end of the year higher than they are today.
  • 00:18 We have taken some chips off the table and I think there are a couple simple reasons,
  • 00:22 first of which is you have a lot of good news discounted in.
  • 00:26 We expect a strong Q2 earning season including
  • 00:29 for many of those high Flyers.
  • 00:30 But the main point
  • 00:31 is that crossbars been raised
  • 00:34 and expectations have become very high.
  • 00:36 Even when you have a beat and you have strong guidance,
  • 00:39 you can still see some appointment and some of these trades around whether we're talking about semiconductors or some of the other areas that are very geared to the AI trade have just run an incredible amount.
  • 00:49 So again, I think the main opportunity getting these names, we get through the
  • 00:53 the back half of the year,
  • 00:55 but we are in a point where it's going to be a little harder to beat
  • 00:59 and to impress the market than it was six or nine months ago.
  • 01:02 So Russ, just to be super clear, this is an earnings call.
  • 01:05 It's not about the incoming data, what's happened in employment, what might happen with CPI later, how the feds going to respond, respond to
  • 01:11 it.
  • 01:11 This for you is about earnings.
  • 01:12 I think it's a sentiment called wed frame it because I do think the earnings are going to be strong.
  • 01:17 We're confident a lot of these companies are going to continue to beat and guide higher.
  • 01:21 But again, the crossbar has gotten really, really tough to go over.
  • 01:25 And we have company companies in in stocks that are up thirty, 5070% in a short period of time.
  • 01:32 What they've got to demonstrate to investors becomes very hard to beat.