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Equity markets (^GSPC, ^IXIC, ^DJI) are looking strong ahead of Friday's market close — all three US indexes on pace to close the week with serious gains — as investors gain confidence around consumer and business resilience.
US Bank Asset Management Group CIO Eric Freedman joins Market Domination to explain why he's leaning more positive on equities and sees opportunity in the financials and tech sectors.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
So you sound broadly positive here. Talking about the market, you say the time for being cautious is behind us. How come Eric? Walk us through it.
Yeah, I think it's been a certainly a litany of information Josh for us all to try to digest, but the measurables that we pay attention to for all the things going back and forth in Washington. The consumer is still in relatively good shape. We think that businesses are also in good shape. So without question, the profit cycle that we've all been accustomed to has some work left to be done, you know, we've certainly got some good information from Walmart last night in terms of pass through of price increases. But based on the data we pay attention to, so things like TSA travel and credit card swipes and restaurant openings and indeed.com job postings. It's still a decent environment. So that recalibration, I guess I I'd put it more in the sense of adaptation and adaptability by consumers seems to be intact. So that's why we're still glass half full. You know, we've oscillated between being either overweight equities or or neutral or neutral right now, but certainly with a slightly more positive bias. We think that's probably the way that investors should be positioned as well.
Eric, how would you generally characterize valuation here broadly?
Yeah, you know, I think if you look at the S&P for example, clearly, you know, 20% ago was a lot more attractive. But you know, I think that right now based on historical metrics, we're about, you know, a half a standard deviation expensive. That's not, you know, out of the realm of possibilities. Certainly in environment Josh, where you do have interest rates probably stabilizing to slightly coming down at the front end of the curve. That does give you a little more justification for equity prices to to really warrant a slight premium on a valuation standpoint. The things that we find most attractive on a pure valuation basis. Again, valuation is not a catalyst, but if you look at international developed, that's certainly an interesting spot. Uh we think that financials, specifically in the US, are certainly inexpensive. Uh we think the yield curve probably comes in in a better place for financials. So across sectors versus across broad markets, I think there's certainly pockets of opportunity and so financials are certainly one of them. I think the technology, which of course garnered a lot of investor interest, that has become much more attractive to us. We think that capex Josh has been very intact. One of the things we've been really adamant about tracking is just what are corporate commitments for things like cyber and AI spend. That continues to be a consistent message from companies. They're not giving that up. So we think that there's actually some underpinnings in tech. There are certainly parts of the technology space that got really inexpensive during the April downdraft. So we think technology deserves a place in client portfolios as well.