Let's bring in the man himself, the great Phil Rosen, chief market strategist at Pro Cap Financial, and a very good friend of ours here on the broadcast.
My man, thank you as always.
Thank you, thank you, JD.
No disrespect to the Dow.
A lot of people like to call it boring, but don't look now.
Basically neck and neck here with the tech-heavy NASDAQ.
What does that tell you about where this market is?
Well, the Dow has been pretty much keeping up with the tech-heavy NASDAQ, as we call it, with half the volatility.
So you have all the boring names, all these blue chip.
Old industrial stocks have been going up, pretty much keeping up with the AI trade, even though no one talks about it.
So I look at the Dow, that's been great.
The equal weight S&P 500 has also been beating the market cap weighted S&P 500, and that tells me the average stock in the index is going up higher than the index itself, which usually doesn't happen because it's led by these mega cap tech names and everyone always complains it's such a top-heavy market.
The average stock going up.
More than the index tells you otherwise.
How healthy, how broad is the bull market when you look at something like equal weight S&P?
Listen, the regular S&P is having a great year.
We talked this 8 to 15% annual return figure all the time.
It's one of our frequently, kind of most frequent go to one-liners.
But how about equal weight S&P knocking the cover off the ball.
So all the names that you were listing before I joined the show a minute ago, those are the most boring names in the stock you said Home Depot was up big.
Today, everyone's going to be focused on the semiconductors, the hyperscales, and those have been pretty strong this year as well.
But again, if you look at the equal weight, if you look at the Dow, these are all on a great trajectory this year and probably better than everyone else expected, and you see this story of rotation playing out in real time.
You have healthcare, financials, utilities, all these boring sectors, right?
Pretty much everything not AI is doing very well, and we're seeing that reflected in earnings strength as well.
So earnings across the board have been crushing it.
I think we are at 50% earnings growth for the second quarter, and I know that's a little inflated from Alphabet and Amazon, but still smashing records.
So to me, I think we're in pretty good shape in the world of investing.
I think you and I have learned after all these years boring is sometimes better.
It's the best.
It is the best.
How about small caps?
Russell 2000, the best in the bunch today, up 0.1%, up 21% on the year, new all-time high after all.
How about that outperformance?
This is another sort of hidden sector that no one seems to be talking about.
If you have small capsules doubling the S&P 500, very unusual, very rare for that to be happening, but that tells me that the AI trade is not just a top-heavy phenomenon.
You have small businesses, smaller companies across the country that are actually doing better, and sure, there might be some fraud because you have a lot of unprofitable names that have been going up like weeds, frankly, but at the same time, There's not much to be too worried about right now as far as the broadening out in rotation story.
How much of the small cap rally or any other thing that you and I have been talking about is contingent on what the FOMC does next?
A big September meeting coming up before we know it.
We have been so wishy-washy on what the Fed's going to do all year.
Kevin Warsh has his own.
Agenda he may or may not share that, but at the same time, stocks have powered through every single Fed uncertainty moment of the year, and frankly, they did the same thing last year too.
I don't know why that would suddenly change.
Sure, we might get a little inflation scare at some point and the Fed may have to respond, but generally I've still been in the camp that we're more likely to get a cut.
Year than a hike, which is pretty nonconsensus right now, but I like our odds.
Most importantly, out of everything else you and I have talked about, if I'm not mistaken, this is Phil Rosen's birthday week.
Oh boy, exposing me.
Happy birthday, dude.
How can I not?
The great Phil Rosen, good friend of mine, good friend of ours here on the show, chief market strategist at Pro Cap, all the best for the big day, dude.
Thank you as always.
Thank you very much.
