US stocks are in the red butparing earlier losses on this Wednesday morning and this does come on the heels of the latest consumer price inflation figures.
The S&P 500 fell in the previous session.
9 of its 11 sectors still managed to trade in the green.
Now we saw real estate consumer staples, as well as health care, all posting gains showing some resilience even as the broader index checked lower.
Now to massive forces are driving the price action, mounting geopolitical fears as the US.
Military launches fresh air strikes against Iran in response to a down helicopter.
Also a historic liquidity drain.
Investors do appear to be offloading some means to free up some cash ahead of mega IPO SpaceX.
Well joining me live here at the New York Stock Exchange is Jonathan Corpina, Senior Managing Partner at Meridian Equity Partners.
Jonathan, good morning.
Thank you so much for joining us.
Good morning.
Thanks for having me.
Well, we are looking at the major stock averages still in negative.
Territory, but there are so many things going on.
First and foremost, I do want to get your take on what we're seeing at the intersection of data, in particular this morning's inflation figures, as well as geopolitics.
Yes, so like watching the economic calendar and watching this data brings us back to the fundamentals of the market and forces us to focus on what we really should be focusing on the data that we've seen in the past and the data that we're continuing to see.
Shows us a couple of different pictures.
One, yes, our economy is getting stronger and people are becoming much more comfortable with it.
Inflationary data is showing that inflation is still running rampant in our markets, and we're going to have to continue to monitor that.
And we're seeing energy costs that is really driving everything, right?
It's driving our overall inflationary numbers.
It's driving spending.
It's driving consumer discretion.
So if we continue to keep Oil prices where they are and our energy prices higher, it is going to have a negative impact across the board for the consumer, but I think overall the expectation is that energy prices will come down at some point as we get through our geopolitical issues that we're dealing.
Right now in the Middle East and when those come back down, everything else will get more in line, right?
Spending will get more in line, inflation will get more in line.
So unfortunately we're in an odd period right now of high energy costs, but patience will play out in time.
Yes, and of course what's unfolding here on Wall Street when it comes to the major US stock averages, we've continued to see record highs, but I think last Friday when we saw that sell-off was a reminder that we could be seeing some lofty evaluations here.
But given the fact that we are awaiting the SpaceX IPO at the end of this week, what are you seeing happening below the surface, right?
So you use the keyword.
It's a reminder, right, when the market, like we get so rat. in the markets going up every single day, right, and we question it.
We have all these different headwinds our geopolitical headwinds, our economic headwinds, our random headlines that add headwinds to our markets.
Yet the market was going higher and higher, right?
So we need a reminder that markets can't just keep going up, and there are other things, there are other undercurrents that are going on that's going to take some wind out of the sails that's here.
What's going on. is not a major shift in our market.
I think it's just it's our markets are anticipating some of these headlines that we're getting out of the Middle East, these uncertainty headlines that we're getting out of the Middle East.
And when you have the market move as much as it did, any reason to take some profits off the table is going to occur.
It might not be a legitimate reason, but it's going to be a reason.
And then we start to get a little bit of a snowball effect.
The volatility that we're seeing in our market, the swings that we saw.
And the swings that we're seeing so far this morning are forcing people to stay away from the market, to get out of the way and let the market do its thing, because if you're on the wrong side of this, you're going to get in a lot of trouble.
S&P futures were down 88 when I walked into the building this morning, right, and you can see where they're trading now.
VIX is still trading above 20, but it was 2 points higher than where it is right now.
We're seeing a lot of volatility here.
Unfortunately, again.
It's going to scare people away from this market because they don't want to be on the wrong side of it.
But take a big step back and see where we've been and where we are right now.
Overall performance has been good.
Our indices are trading near record highs.
We have a lot of wiggle room in there to take some of those profits off the table.
23, 4% coming out of this market wouldn't be such a terrible thing.
I think we just have to get through this uncertainty that's going on.
Middle East right now.
The headlines from overnight, the headlines this morning are very concerning that we're moving away from some sort of resolution and we're escalating.
It is escalating to a point that we don't want it to get to.
Yes, and unfortunately you and I, we do not have a crystal ball, so we still don't know how all of this is going to unfold.
But one thing is for sure, as you mentioned, concentration risk when we're talking about all-time record.
Highs we know after the closing bell today we will be getting earnings out from Oracle and sometimes when it comes to earnings expectations, we have seen double digit percentage moves to the upside as well as the downside.
So I think caution is the name of the game here.
And finally, before I let you go, of course we're counting down to that SpaceX IPO.
Other mega IPOs coming down the pike this year include anthropic as well as OpenAI.
You've been on the street for many, many years.
So how is.
SpaceX different from other IPOs.
I think each one of these is different, and as time goes on, these companies get larger and larger.
They're able to change the rules of the IPO process and dictate a little more.
So this one is quite different.
The amount of shares that's going to the retail market is welcoming to see, right?
The retail investors aren't getting shut out.
And then the rules as far as being included into different indices is certainly a change we Never seen that before in such a tight period of time.
It's going to be interesting to see the impact of stock price, but the hype that we're seeing for this one, sometimes, sometimes there's too much hype when something like this occurs.
I think we're going to continue to see the same thing that we've seen before, a lot of volatility, the pricing that's involved here, the amount of shares, the amount of money that first day of trading on Friday, and I'm glad they're doing it on a Friday to let the weekend kind of calm things down, but we are going to see a tremendous amount.
Volatility.
If you have any interest in investing in SpaceX, my advice would be wait, wait for the dust to settle.
You're going to get your opportunity to buy it once again.
Just let it all settle in and let it find its price point and then get into it.
And as you said, we've got a couple of other large IPOs coming down the pike too.
I'm hoping that we will see them here behind us on the New York Stock Exchange, which I think would be the best decision that they would make because you won't see as much volatility and you'll have a lot more certainty.
Yes, absolutely, Jonathan.
So finally, before I let you go, I know that we continue to mention the word volatility, but when it comes to the everyday American investor out there who is watching, what do safe haven investments actually look like right now?
Yes, I think investors have to remain patient, right?
Take a very big step back, look at a 10 year chart, a 20 year chart, and think of all the global events that have happened.
I'll just point Out our COVID and our global shutdown that occurred, that's a very small blip in a long-term chart.
So I think investors need to continue investing in companies they feel comfortable with, companies that they're familiar with.
Try not to take these flyers that you think you're going to make a million dollars overnight.
Some of them work, most of them don't, and stay comfortable within your.
Portfolio, spread it out a little bit between tech sector, energy, financial, some high dividends.
Give yourself some small cap exposure, some international exposure, but if you're patient and let the waves just take, take their motion and their momentum, you will ride it with it all along.
Well, Jonathan, always great talking to you.
Thank you so much for joining us this morning and thank you so much for sharing your perspective.
Thank you.
Have a great day.
