And now the markets are starting the week with a massive injection of optimism on multiple fronts on this side Tuesday morning.
We are looking at Dow industrials hitting new record highs.
Now the US and Iran did reach an interim deal to reopen the Strait of Horn moves, triggering an immediate rush to the credit markets as companies look to raise billions in capital while geopolitical tensions you show signs of easing the AI trade is on fire once again after weeks of yo yo volatility and tech giants are ripping higher with the video leading the S&P.
500 now meanwhile SpaceX just completed its second day of trading and in free-market trade as well as with the stock open now we are looking at shares higher and looming over all of this is the Federal Reserve with newly appointed Fer Kevin was set to navigate his first major policy meeting this week.
Well joining us to tie all these threads together live at the New York Stock Exchanges is Kevin Mahn, President and CIO at Hennion & Walsh Asset Management.
Kevin, good morning.
Joining me.
It's always my pleasure.
Well, here we are.
We are looking at the Dow opening at new record highs above that 52,000 level.
But we have a lot of competing headlines here.
So first and foremost, tell us about the AI trade, especially on the heels of SpaceX announcing that cursor acquisition.
Yes, I'm not saying anything shocking here, but the AI revolution is indeed alive and well, and I think we learned that through this earnings season.
We learned that through the SpaceX IPO, and we learned it from.
Video just yesterday when they announced that they were actually going to the debt markets to raise $25 billion to help further the development of their next generation ships and digital infrastructure.
So there remain plenty of opportunities, I believe, Remy, as it relates to the AI trade, but you have to look at the surrounding ecosystem to find those opportunities.
In other words, don't just focus on the companies spending the money, but rather focus on the companies that are receiving the money.
Yes, so speaking of which, that's quite A hefty sum when we're talking about some of these capital raises as well as that historic IPO for SpaceX.
So I understand you have a strategy that is known as the Air 7 strategy, and each time I hear that name, I think about sneakers, but this is not about sneakers, is it?
It is not about sneakers.
It's a different way to look at investing in technology.
Obviously the mag 7 has gained tremendous notoriety in recent years and perhaps rightly so.
I think back to 2023 when those mag.
7 names accounted for 62% of the total return of the stock market in 2024.
That went down to 54%.
Last year, 43%.
And guess what, this year it's actually detracting from the S&P 500.
So what if there's a better way?
And I think I've devised that with the concept that I call the Air 7 or the AI Revolution 7, and I draw those seven names from the entire ecosystem based upon two UIT strategies that we have at Smart Trust.
I'd love to go over those names with you.
Yes, OK, so why don't you highlight some of the names?
Sure, obviously I borrowed two of them from the Mag 71 being Nvidia.
No surprise they're at the hub of the AI ecosystem.
The second being Alphabet.
I think that's the best software play that exists within the AI ecosystem.
But then I lean into a chip manufacturer, Taiwan Semiconductor, the largest dedicated chip foundry in the world with a 70% market share, who boasts Nvidia as their largest client.
And how about Micron?
When I think about the AI revolution, it starts and stops without power and memory, memory, that's micron because they're involved in a high bandwidth memory, which is exactly what Nvidia needs to power their next generation of chips.
Lean into the data centers like digital Realty, the cooling solutions like Avertive, and then on the power front, I look at the utility sector and for now I picked American Electric Power.
Why did I pick AEP?
They actually supply electricity today to 5 million customers in 11 different states, including the state of Virginia, which is the data center capital of the world.
So those are my A 7.
Yes, and Kevin, you mentioned energy and when we take a step back and look at the sectors that are driving the S&P 500 higher this year, of course it's the IT as well as energy.
But given the geopolitical situation right now and the Middle East and expectations for the Strait of Hormuz to reopen.
What do you make of the geopolitical situation and what are the implications not just for energy prices, but also for rates?
Sure, I mean a deal has been reached.
We believe the strait is going to be open, we believe, and as a result, oil prices have come down.
Just this morning we saw Brenton WTI trading below $80 a barrel and the market. has rallied.
So if that continues and if this deal holds, you'll see less inflationary pressures.
That's good for the economy as a whole because it gives consumers more money to spend in the stores and in the economy as opposed to at the gas tank and the Federal Reserve realizes that.
But we're also in a situation where the economy continues to grow, albeit relatively modestly, and the labor market remains relatively stable.
With a no hire, no fire type of economy, so that being the case, I wouldn't expect too much from the Federal Reserve anytime soon, but I'm really interested to see what Kevin Warsh says in his press conference tomorrow.
Yes, absolutely.
All of us are waiting for that press conference tomorrow afternoon after the central bank announces their rate announcement.
So this is Kevin Warsh's debut as he takes the podium at that presser.
So What will you be paying attention to from that press conference?
I mean, Kevin Worsch has promised a lot, right?
He's going to change the manner in which the Fed operates.
He's going to reexamine how transparent the Fed needs to be.
He's going to look into the way that inflation is calculated, but one thing that he hasn't promised, at least that I've heard, is to lower interest rates.
In fact, he wants to shrink the size of the balance sheet, and he wants to help fight inflation.
So will that mean lower interest rates right now?
I don't think it does.
I also don't think it means raising interest rates.
So I'm really interested to see coming out of that meeting tomorrow no changes to interest rates, but do they update the dot plot chart?
What does that show for the balance of this year into next?
What are their updates for economic growth, inflation, and unemployment, and where does the Fed lead going forward?
Yes, and Kevin, while you were speaking, is taking a glance at the major US stock averages.
We are looking at the Dow up by nearly 400 points again, and the other indexes, the Nasdaq and S&P 500 also in positive territory.
So Americans looking at their 401ks, they're happy.
But at the same time when we're talking about wage growth as well as the cost of living and borrowing rates, they may not be too happy.
So what do you say to them as we head into the second half of 2026?
Obviously continue to save your money wisely.
Invest it accordingly, because we've been on a tremendous bull market run now over the last 3.5 years, but that doesn't mean that that run is going to last forever.
So build a portfolio that's consistent with your risk tolerance.
In other words, just because the market is running as much as it is doesn't mean you should get more risky just as much as when it pulls back, you shouldn't necessarily get more conservative.
Stay invested and stay true to.
Your risk tolerance, but remember, at the end of the day, the market provides a mechanism for you to grow your nest eggs so that one day you can retire comfortably and you have to avoid the temptation to try and time the market and rush to the sideline when the market does pull back because it will pull back again.
Well, Kevin, some sage words of advice as we look at these record highs for the Dow Industrial.
So thank you so much for joining us today and thank you so much for your insights.
My pleasure.
