AI Investment Cycle Picks Up Speed and Powers Tech Sector

Jeffrey Buchbinder (00:00):

<Silence> Hello everyone and welcome to LPL Market Signals. Jeff Buchbinder here with my friend and colleague Adam Turnquist. We're going to talk a lot more than charts this week, Adam, because there was a lot happening last week.

Adam Turnquist (00:14):

How you doing? Certainly a busy week,

Jeffrey Buchbinder (00:17):

One of the busiest you'll ever see. Absolutely. So we're going to talk about all of it, although I think it's fair to say that the biggest events were the Fed earnings and then Trump's meeting with she and maybe you could argue a couple other things in there. But those are certainly very big and market moving events that we will share our thoughts on. And that is the topic of this week's Weekly Market Commentary. It's Monday, October, or I'm sorry, Monday, November 3rd. First market signals in November, 2025. We're recording this shortly after lunchtime here on the East Coast. And markets are up a little, but not much. Bond market's selling off a little bit. So here's our agenda. The big tech passes earnings test. It's kind of the, I mean, again, there's a lot of highlights from last week, but I think the mag five or five of the mag seven reporting is probably the biggest event that most people are talking about and the whole AI trade.

Jeffrey Buchbinder (01:24):

Next, the weekly that you wrote Adam Macro to micro busy week of market moving data. Next we'll do chart check. Because We always do when you're on, you titled your section cap rally. So some things are working and some things are not. And of course, as always, we'll close with a week ahead preview another big week of earnings and the shutdown continues so we don't get the U.S. government data. Alright, market recap. Big tech passes earnings test. So I think the we'll get more into this when we get to your, your charts on CapEx, Adam, but I think the market continued to celebrate the AI trend. The AI momentum continues and that's why you saw tech have a good week. In fact, I mean the, given the modest gain in the S&P 500, it was pretty much all tech last week.

Adam Turnquist (02:23):

It was, it was very concentrated in a few names. We've seen that throughout this bull market, another positive week. But when you look at the actual breath last week, take the advancers versus declinings declining chairs out, actually outpaced advancers by somewhere around two to one even though the market was higher. We, again, that's been a big theme of this bull market where these mega cap tech names lead. If you take out six of those mega cap names, the S&P 500 would be down about 1% last week. Just to give you some context around how important those rallies were in those names. So a big driver of not just last week, but just this latest like hire in the broader market. And as we heard from a lot of the companies last week, the, the spending's going to continue the markets seemed mostly receptive with some caveats there surrounding meta, which I'm sure we'll talk about. But look, markets moving higher as the adage goes. Don't fight the tape. We also know the other adage that bull markets are not linear. And we'll look at the, the S&P chart here momentarily to go over maybe some potential cracks, we'll call it underneath the surface of this record high rally in the index. Yeah,

Jeffrey Buchbinder (03:33):

That's if you're investing in the S&P 500 this week, breadth hasn't mattered yet. But certainly if you're in an equal weight S&P or you own a lot of value names, for example certainly this market has not been as friendly. I think it's interesting to point out that the NASDAQ's up seven straight months positive October, don't have that one month look on this table. But you know, that's a nice streak going. And then the SP 500 has been up six straight months. So really strong rally, as we all know, got to be approaching 40% here. Off of the April lows. I think big tech was the biggest driver, but certainly we also had a fed meeting. And that message kind of pushed the bond market in the opposite direction that we're pushing the stock market. Because the ag was down about 0.6% over the last five trading days. I put this look on the with the one day column so you can see where yields are because we put yields, we added yields on this. Look, what do you make of the yield moves?

Adam Turnquist (04:43):

Yield moves came at this big inflection point in something we were watching. Technically you step back, we're in downtrends, whether that's the two year, the 10 year or the 30 year. So you expect downside surprises, but of course we didn't get that the market was looking for a much more dovish tone from the Fed. Clearly we didn't hear that. And there was a rerating, higher yields moved higher, the yield curve flattened out. So the front end was a little bit of a bare flattening playing out in the yield curve last week. I think that actually weighed on the, the regional banks and the banking spaces. They tend to make more money when the yield curve's steeper. But 10 year for example, holding above 4%, that's been an important level. Now 410 is the next area of resistance to the upside for yields. It's getting close to reversing this downtrend.

Adam Turnquist (05:31):

I think to really make that call though, you'd want to get through basically 4.2% and that would suggest there's some upside risk in yield. So I'm going to stick with respecting the downtrend here, at least on a shorter term basis in yields. And the same thing on the two year. 3 43 was the intraday low earlier in the year. We bounced right off that level and now we're starting to form maybe a potential bottom. Hard to call that trend, you know, a trend or a reversal quite yet, but certainly a bit of a surprise I think for the fixed income market last week.

Jeffrey Buchbinder (06:06):

Yeah, certainly yields are still a risk, but they are behaving generally speaking right now. Certainly continue to watch the potential upside moves there as we unwind fed rate cuts. Also worth noting, the dollar was up big last week, right up over 1%. That, I mean you called it Adam on the charts. It told us we were going to get a bounce off of that sort of 98 level than we did.

Adam Turnquist (06:32):

It's starting to look more and more like a double bottom. This is probably one of those bottoms that's more of a process we'll call it, versus the kind of v-shaped recovery that we witnessed in the, the equity market in April. Positioning starting to change a little bit more bullish. You're seeing institutional or speculators go into the dollar market in by upside calls. That's been a new trend change we haven't seen all year. Sentiment is starting to become a little bit less contrarian and there's a few more bulls popping up in the greenback that's weighing maybe a little bit on gold. I've had a ton of questions on gold over the last couple weeks. When is this pullback or correction in gold going to end? I'm always a little bit leery when a parabolic uptrend ends and you get a bounce. A lot of times it's just this dead cap bounce is the, the technical term holding above some, some support.

Adam Turnquist (07:23):

But I would not be surprised to see gold drift lower maybe to 38 50. There's the 50 day moving average right around there as well. That would be about a 50% retracement of this latest leg higher in gold. That's the general rule of thumb technicians use. You have these retracement of around 50%. Good news though, I think that could be a dip buying opportunity back into the precious metal space. Longer term trend is holding up and I think there's really no change to the catalysts that are driving gold, whether that's central bank buying, geopolitical risk inflation, angst over tariffs. And there's several others on that list as well that have been supportive of gold for the last year or a couple years now.

Jeffrey Buchbinder (08:06):

Yeah, I think we had a nine week wind streak. I believe that was snapped. I think it had quite a run and so yeah, some cooling of that rally. Certainly not surprising I don't think to anybody. So thanks for that, Adam. Good stuff. Let's go to the weekly market commentary, macro to micro. So of course micro, we're talking about earnings and boy was it a busy week of earnings because the MAG seven of course is where most of the earnings growth is coming from. And we got five of the seven that reported last week. So first point, I mean, this was a big, big story last week. It's not just companies reporting. It's the company's continuing to guide to massive amounts of CapEx not just this year, but also next year and beyond. And these growth rates, I mean, they're slowing, sure we're going from like 50% maybe to 25%, but these are still really strong ramps for the AI investment infrastructure.

Adam Turnquist (09:08):

And the numbers just keep going up. As we've heard, even Meta has revised their CapEx just this year, three times higher. <Laugh>, you hear some of the commentary, whether that's Amazon or Alphabet, and they're all talking about basically this demand coming from customers that they can't meet. They got to continue spending, we'll call it the ai arms race. Basically. They're not too worried about the return on investment, they just have to keep spending to keep up with their, their competitors. And, and this is the numbers that we're seeing here. I mean, 563 billion by 2027, you hear NVIDIA's, CEO, Jensen Wong talking about that being maybe 600 billion or higher. Maybe he's talking his own book, but he he's certainly even more bullish than some of these numbers would suggest. And he's got a pretty good vantage point considering a lot of this capital flows right to Nvidia.

Jeffrey Buchbinder (10:00):

Yeah, and you, you mentioned Meta. I mean the, the AI spending from virtually everybody has been well received, but Meta was the first time during this earning season that we saw the market pushback, right? Scrutinizing that spending investors are asking the question, is this going to be wasteful spending, right? Because Meta's using it, you point this out in the weekly, right? Meta's using it for their own core business. They're not selling it to customers like the rest of these names.

Adam Turnquist (10:28):

Yeah, and they're doing it with more and more debt as well. They just did a $30 billion debt offering over the last couple days, and that was five times oversubscribed in terms of how many bids came in to purchase their debt. So from the fixed income market, they don't see anything too concerned. It's been a massive amount of demand for that type of debt. And when you start putting some context around these numbers, we, we compiled the hyperscalers, so the four main ones here, you have Amazon, Meta, Microsoft, and Alphabet. We aggregate those and then we look at their CapEx spending and then we compare it to sales. So how much are they spending of their sales on CapEx? And on the top panel you can see it's almost 25% of their sales are going to CapEx. And that number arguably has gone parabolic for maybe call it 10 to 15% over the last several years to, you know, that almost 25% number.

Adam Turnquist (11:23):

How do you get there? Well, you start issuing debt, and that's what we've seen on the bottom panel net debt. When it's negative, that means there's more cash or cash-like securities on the balance sheet, more so than debt. Debt number's. Now positive meaning there's more debt than cash. That's my technical take on that. I'll let you fill in any of the, the missing details, Jeff, but that's really ramped up and I think that's a big part of this story, and maybe that's why you're seeing more scrutiny instead of just using free cash flow, which was the trend maybe a couple years ago, now that we're adding debt, we're adding risk to the balance sheet. And maybe that's why, for example, Meta is getting a little bit more scrutinized outside of just the customer base when you compare it to a Microsoft or an Alphabet. That could be part of the, the issue maybe for the market and maybe why we'll see more scrutiny, especially when you see more and more debt coming out. I think Alphabet just did a $22 billion announcement for, for debt between the U.S. and Europe coming up this week. I think,

Jeffrey Buchbinder (12:24):

Yeah, the, the numbers are so big, they're going to basically eat up all the free cash flow for big tech. There's just not going to be much left over after they do it is not just AI infrastructure, but any CapEx or any capital return to shareholders it, it's all going to be depressed. So, you know, as you get bigger and bigger, the risk gets bigger of a market disappointment, right? Right now the core businesses for these companies are supporting all this CapEx, but when we start seeing negative free cash flow numbers and we see more pushback, like what you saw with Meta last week then I think you might see some of these companies pull back. We'll see that could be several quarters out, that could be several years out, but at some point there's a high probability that, that you get more pushback than what we've seen thus far.

Jeffrey Buchbinder (13:17):

We hope it all works out, but it's, it's going to be a kind of a tight needle to thread there as, as these numbers get bigger and bigger. So big thing to watch, a big thing to watch. And by the way, the productivity enhancements for the rest of corporate America outside of tech have only really barely started to come through, right? Interestingly, margins are actually expected to be up sequentially in Q3 versus Q2. You have to adjust for the Meta tax hit, there's a big tax adjustment in Meta's earnings that actually results in margins expected to decline sequentially, but they'll probably be up, we'll call it up. Taking out that tax one-time tax hit and you got to hand it to corporate America for, for managing through the cost related AI and supporting their margins. Which frankly some have called for compression for the past couple of years. <Laugh>, right? Just hasn't happened. So hats off to corporate America, really good earnings and they've done a great job of managing the AI cost as well as tariffs. So let's switch gears to the Fed now, Adam. So this was obviously another big event last week. And I think the story here is that the Fed is just a little more hawkish than the market anticipated.

Adam Turnquist (14:39):

Certainly that was the message after chair. Powell alluded to December not being a foregone conclusion for a rate cut. I was doing another project as I was listening to the Fed meeting and I had the futures market up and things were going okay and then there was a big drop and I looked at the transcript as it was on our Bloomberg terminal. You could kind of watch it live. And I was trying to figure out what was behind that, that immediate drop. And it was that comment alone about December. And I also added to the fact that there's a lot of dissent not just on the voting, but I think among the, the policy makers on how to proceed in December, whether the labor market's cooling off to a degree where we need to continue cutting. Some are more in the pause camp it sounds like.

Adam Turnquist (15:24):

So a bit of a messy message, I would say overall in terms of what to take away from the Fed other than they're data dependent and there's no preset core course in terms of monetary policy, which we already knew. And the other, I guess not surprising factor, the Fed ended their quantitative tightening program or will end it on December 1st. I think most people expected that when you look at some of the overnight markets, some volatility that was creeping up with just liquidity in that overnight market. So those were kind of the, the big takeaways and I think it's really going to be interesting between now and year end what kind of labor market data we're going to get and how that's going to impact the Fed decision. I think Jeffrey Roach has, has been spot on in terms of the Fed really focusing on the labor market in that cooling down is likely going to be the catalyst for the Fed to continue cutting.

Jeffrey Buchbinder (16:15):

Yeah, absolutely. So this, this chart shows you three and a half cuts priced in between now and the end of next year. That seems reasonable, but it's, it's a long way off. So we'll have to continue to follow the path of the job market and inflation. And by the way, when that stimulus comes in next year from the one mg beautiful bill, you have a little more inflation risk and a little less growth risk. So that will certainly be important in the fed's calculus in 2026. So related to the bond market, Adam, here you show the move index. Frankly, I'm surprised this is saying that the bond market is just getting more and more calm.

Adam Turnquist (16:56):

I thought my chart was broke when I updated this. because Sometimes if you don't click on the latest date, it will time set back to a previous state when you looked at it and I couldn't figure out why. The move index is at 66 and this is just a measure of the 30 day implied volatility in the market. So what the market's pricing in for volatility in the treasury market on a short term basis when it's higher, more volatile, when it's moving lower, less volatility. And you think about the macro backdrop and what we just heard from the Fed, they're not really sure about a December cut. There's really not a lot of certainty on 2026 as well. We don't have a lot of economic data. Kind of a messy backdrop in terms of the, the move index at 66. I would expect it to be higher, and I think maybe that's the risk that we're witnessing right now.

Adam Turnquist (17:43):

We know volatility tends to mean revert, so I wouldn't be surprised with the, the move index here at almost a 30% discount to its 200 day moving average. It's about a two standard deviation move below its longer term average as well. This is where you start to think about mean reversion risk. So maybe the market pricing and some higher volatility. Now to push back against that idea, the deficit concerns seem to have cooled off a little bit, we'll call it. And we don't have any real or a full set of economic data, so less catalyst for potential volatility on the economic calendar. Maybe that's the reason. But certainly I do look at this chart and I think of the macro backdrop and I can't help but wonder if this is going to have some mean reversion and not saying we're going to blow out to April type levels, but even back to the, the 200 day moving average or something would be I think, completely normal here, given the macro backdrop.

Jeffrey Buchbinder (18:37):

Yeah, so maybe we get a little more bum market volatility around the Fed or around the economic growth data when eventually comes out because it looks like we're not going to get any government data this week either. Stay tuned. So, but for now, column bond market is a good thing. Alright, let's go to the, to your charts. So again, weekly market commentary, we just cover the key points. It is on lpl.com under the research tab chart check, KS shaped rally. So when I see cap, I think some good, some bad.

Adam Turnquist (19:12):

Exactly. I'm borrowing that from the economist <laugh>. It's really the same playbook cap rally it, it's really a handful of names are doing quite well. As we talked about earlier, those mega cap names, those have been power in this latest move higher. As you can see the S&P 500 in this rising price channel, we're kind of butting up against the upper end of that channel. That's typically where you see maybe a pause or a brief drawdown, maybe we're starting to see that unfold. Now. There's a lot of support though for the market. You have the 20 day right around 67, 38 and some gaps in that level. I wouldn't be surprised if you even get back to the lower end of that channel. Call it sixty six fifty or, or the 50 day around 66 40. That would be about a 3% draw down. So nothing out of the ordinary, especially when you look at the breath in the middle panel.

Adam Turnquist (20:01):

We highlight the four week highs versus four week lows. And even though the market has been moving higher, we're seeing more and more stocks make new four week lows. Those are kind of the short term cracks we're looking at first. And then on momentum, it's just simply slowing down in the RSI indicator or relative strength index on that bottom panel. Typically when you see a market rallying to new highs, you want to see that momentum indicator moving higher and being overbought. We haven't had that reading and we've actually had consecutive lower highs in RSI, we call that a divergence between price and momentum. Doesn't suggest that the bull market's over, but it does suggest maybe some buyer enthusiasm fading a little bit. And maybe this is the time where we see a little bit of a draw down here for the broader market.

Jeffrey Buchbinder (20:49):

Yeah, it doesn't take many big names to lift the index. In fact, we had one of, didn't we have the all time worst breath on a positive s we did move higher ever. That's,

Adam Turnquist (20:59):

Yeah, that was last week,

Jeffrey Buchbinder (21:00):

Middle last week. Yeah, it really it, it really reminds you how big these names are, right? <Laugh>, these, I mean the MAG seven I think is what, 35% of the s and p, something like, maybe a little bit more. Those names have so much influence that a lot of names can go down and the index can still go up. So very important color there. Thanks Adam. So let's continue that theme. I guess the underwhelming participation here. This is a divergence between price and breadth.

Adam Turnquist (21:35):

So a simple way to measure market breadth is just a cumulative measure of advancers versus declines. So the daily advancers minus declines and we call that the ad line or advanced decline line for the S&P 500. Simply you want to see that moving higher with the broader market. You want to see it making new highs as the S&P makes new highs. And over the last call it three or four weeks, we've had a deviation, meaning the S&P 500 is making new highs and that ad line is actually moving lower. Now, this isn't a big trend so far, but it's something to pay attention to, we'll call it maybe a little bit of a yellow flag. And it just speaks to the fact we have fewer and fewer stocks really participating in this rally. And as I mentioned earlier, it doesn't mean the rally's over, but it does suggest maybe there's some cracks developing shorter term and just highlights how important we are or how important those mega cap names are for this rally to continue.

Jeffrey Buchbinder (22:31):

Mm-Hmm <affirmative>. Yeah, fewer stocks are working.

Adam Turnquist (22:36):

And last measure of market breadth, and

Jeffrey Buchbinder (22:38):

That's your theme here. That's

Adam Turnquist (22:40):

theme. And just to put some highlights kind of at the extreme level that we're at in terms of the market in record high territory, how many stocks are above their 200 day moving average or their long-term, their long-term moving average here, this goes all the way back to 1990, just a histogram. So the, when you're at or near record high territory, the average is around 74% of stocks are above their two day. We actually are close to a a two standard deviation outlier here in terms of the current reading. Even today, I think we're down to 52%, still more than half, which is a good sign. But we're a long ways from the average kind of breath readings that we should have when the market's at or near record high territory. I'll be a little bit more alarmed if we start breaking below 50%.

Adam Turnquist (23:30):

And I mean, simply there's more stocks in, in downtrends than uptrends in the S&P 500, that's kind of the line in the sand before you can really call that number. Or you no longer can call that number bullish. Not there yet. Some of our trend models as well indicate we're getting very close to a crossover with more downtrends than uptrends. So this will be an important chart to watch, I think, to really assess how sustainable is this, this bull rally. We'd like to see this number expand back closer to the average.

Jeffrey Buchbinder (24:03):

Yeah, you need the soldiers and the generals as they say

Adam Turnquist (24:05):

<Laugh>, there you go.

Jeffrey Buchbinder (24:06):

And right now it's really just, just the generals doing most of the work. All right, Liz, let's switch gears more, more traditional charts. And we've talked about tech a number of times already, but here's your chart. This is where all the action is.

Adam Turnquist (24:20):

Yeah, speaking of the generals, here's the, the tech sector just to highlight where things are at for the S&P tech sector. Obviously breaking out here to all time highs on an absolute basis, but I thought it was interesting to show the relative trend as well. So we compare the tech sector divided by the S&P 500, call it a ratio chart. And that really helps us identify not only the trend direction, but also just the, the strength of the trend. And what's notable over the last few months is that tech relative to the S&P 500 is finally breaking out of this multi-year range. Technically that means we should expect tech leadership. However, maybe on a shorter term basis, I think you can certainly make the case the tech sector looking a little bit overbought here on the bottom panel, we're highlighting just the sector relative to its 200 day moving average.

Adam Turnquist (25:08):

We're at think a 24% premium, as you can see on the bottom right, that's very close to hitting the a two standard deviation level. Historically, when you've hit these kind of two standard deviation marks, you tend to get a pretty good pullback coming out of the pandemic lows or even off the bear market lows. The pullback after you hit that, that two standard deviation mark was anywhere from 10 to 15%, at least the last two kind of big recoveries. Not saying that's going to happen again, but it, it certainly suggests maybe there's some asymmetry between upside and downside risk when you hit these extremes.

Jeffrey Buchbinder (25:46):

Yeah, tech 24% above 200 day moving average sounds really high to me. I haven't studied it like you have <laugh>, but

Adam Turnquist (25:53):

It is high,

Jeffrey Buchbinder (25:54):

You know, I mean gold got didn't gold get close to 50%? Yeah,

Adam Turnquist (25:58):

Global is I think 36 to 42% depending on the intraday or closing.

Jeffrey Buchbinder (26:06):

Yeah. So this is yeah, this is this. And it, it certainly has made U.S. a little bit uncomfortable with the thought of being overweight tech here, especially since tech is 35% of the S&P being neutral. Check your portfolios if you, if you've dragged this year, you probably don't have enough tech. Being neutral still gets you 35% of equities. That is a big waiting and we think probably more than enough for most investors, but the outlook there is still pretty good. I mean, and by the way, we will talk a little bit more about earnings when we get to the week ahead, but tech earnings could grow 30% this quarter. That is a big, big number even as the overall S&P 500 potentially only grows earnings about 12, 12 to 13 is what we're tracking. All right, last chart from you Adam is seasonality and yeah, we just got through the what are supposed to be the worst six months of the year, right? And that sure wasn't too bad, was it?

Adam Turnquist (27:07):

No, it was actually the best May through October. The market's seen in 75 years. Wow. So over 20%. So that spooky sell in may period did not play out at all. And when you have a very strong sell in May period, again from May through October, that six month stretch, historically the weakest when gains on the S&P are above 10%. There's been 12 times that's happened. The average return from November through April is about 12% with 10 of those 12 periods producing positive results. So some more signs that momentum begets momentum. We know that theme. You can see it on the, the seasonal setup as well. Just these six month return windows for the s and p. November to April on average is up 7%. November the best month for the S&P 500 up nearly 2% on average as well. So if we do get some short term weakness here, there's definitely a lot of seasonal support for stocks.

Jeffrey Buchbinder (28:06):

Yeah. And I know if you're up year to date through October the odds of a positive November December period are very high as well. So, you know, even though we think this market's a little ahead of itself, maybe you got to probably bet that it's going to be up the next couple of months. I think that's the, that's my takeaway based on this not only this analysis, but what we're hearing from corporate America and the AI trend. So let's do a week ahead here. I mean, I think the economic story you could probably sum up in, in a minute because we're not going to get much data. So I mean the ISM is always interesting. It was, it was mixed today, the manufacturing, but I did notice that the prices paid was, was good and new orders picked up a little bit, which was good. It's just the headline wasn't so great, partly because of the employment picture. Any other data or thoughts on the data we've gotten today, Adam, or, or thoughts on anything else that come in the rest of the week?

Adam Turnquist (29:14):

Think you nailed it on ISM we'll call it mixed. There's some, some positives and maybe some negatives there. The other one obviously is a DP on what Wednesday? Yeah. And a DP, just as a a heads up, I, I didn't realize this until last night. They're actually doing a higher frequency data printout now starting every Tuesday. They're going to have a new weekly report similar to the jobless claims, we'll call it in a sense, well, in, in terms of the cadence, but looking at the four week moving average of employment changes. So there, there will be some new data coming, I think next, next Tuesday that's going to be a big one. And then outside of the economic calendar, we'll get the Supreme Court ruling on Trump's president. Trump's tariffs on, I think on Wednesday the, I think baseline estimate is it, it's a big question mark if, if they're going to be able to use the I-E-E-P-A, I can't remember the, all of the acronym there, so <laugh>, so

Jeffrey Buchbinder (30:14):

I won't bore you, but I know it. Yeah,

Adam Turnquist (30:16):

I'm sure. Yeah. But I think you heard from Treasury Secretary Scott Besson basically saying if, if they don't get approved they're just going to use sections from the tariff Act and Trade Act to implement tariffs no matter what. The, the rates might be different, but tariffs aren't going away is basically what he told the market. So I think it's would be interesting to see what transpires on Wednesday from the Supreme Court, otherwise probably a pretty quiet week of, of data.

Jeffrey Buchbinder (30:43):

Yeah, very quiet. The, the ruling won't come this week. That's this hearing arguments and, okay. Yeah, but, but when the ruling does come and who knows when, but hopefully in a month when the ruling does come, even if they say that the I-E-E-E-P-A tariffs are illegal the Trump administration will quickly pivot to the other implementation strategies that you highlighted, Adam. So the, what's interesting though is that you might get rebates if they have to rebate tariffs and then wait for the new legal basis to put the tariffs back on. You're going to have, you know, company earnings, you're going to basically have this profit wave come in and then later come out. And so it's, I mean, it's already been a tough year for analysts to decipher earnings from tariffs. It, it might get, it's different this time <laugh>, right? But it might get even trickier than perhaps it was a few months ago when tr people are trying to figure out is the tariff rate going to be 20 or 15 or 10?

Jeffrey Buchbinder (31:51):

So great call out there, that is certainly going to be important to markets, even if it's just a delay or if it results in slightly lower tariffs. But still we're talking about 12, 13, 14% overall tariff rates, which are still 5, 6, 7 times what they were for the past five decades, <laugh>, right? So this is still a monumental shift but it just might come in a little lower than where we thought if they are struck down. Alright, that's yeah, that's all I got other than earnings. So 130 something companies reporting this week and the S&P 500, I think the, the market's going to shift away from AI to some extent and back toward tariffs for the companies that give us anything on that subject and we're going to shift towards consumer. In other words, what do companies tell us about how the consumer is doing?

Jeffrey Buchbinder (32:49):

Because as we all know, big part of the economy. So right up, up to this point, we've only gotten some restaurants really and some companies reported last month, like Nike, it's been mostly okay, but you have seen, like Chipotle, you have seen some companies highlight a little bit of incremental softness in the consumer and certainly most of it, there's your K shape at and most of it has been in the lower end or middle to lower end income consumers. If we start hearing about softness up that income spectrum from companies that are consumer oriented, that could be a justification for a little bit of a pullback in this market. So that's what I'll be watching over the next couple weeks of earning season as we shift a little bit away from, from AI and tech. So we'll go ahead and wrap there. So thanks Adam.

Jeffrey Buchbinder (33:41):

Really great technical insights. Thanks. Some of them suggest maybe being a little bit careful here. Don't load up the boat on equities even though we think maybe it'll be choppy, but maybe there's a little bit more upside here between now and the end of the year. Again, weekly commentary on LPL.com check it out. Adam did a great job. I chipped in a little Jeff Roach, chipped in a little, but mostly you're great work Adam. So everybody have a wonderful week. Thank you Adam for joining and we'll see you next time on LPL Market Signals.