SNAP BACK IN THE SECOND HALF. GOLDMAN'S HEAD OF HEALTH CARE WILL JOIN US TO REVEAL THE NAME. LET'S GET STRAIGHT TO THE MARKET PANEL NOW. JOINING US FROM 314 RESEARCH, WELCOME TO YOU BOTH, HAPPY FRIDAY. SCOTT, WHAT WAS THE MARQUEE EVENT OF THE WEEK, AND DID IT CHANGE YOUR PERSPECTIVE WHERE THE MARKET MIGHT GO FOR THE REST OF THE YEAR? >> JON, IT LOOKS LIKE INFLATION, WE HAD SOME GOOD NUMBERS THERE. THAT WAS REALLY THE MARQUEE NEWS OF THE WEEK, AND I THINK THE MARKET -- YOU KNOW, THIS IS A MOMENTUM MARKET, AND IT CERTAINLY LIKES LESS INFLATIONARY PRESSURES. I DON'T THINK THE FED CHANGED THEIR TUNE WHATSOEVER. THEY WANT IT CUT, SHAVING IT BY A CUT OR TWO HERE OR THERE I DON'T THINK IS ANY BIG DEAL. THE MARKET'S ONBOARD WITH THAT. I WOULD SAY, AND YOU MENTIONED THIS IN YOUR OPENER, THERE ARE SOME CONSUMER CRACKS GOING ON, AND I THINK WE'LL SEE SPENDING SLOW. I THINK WE'RE GOING TO GET A COUPLE MORE QUARTERS, AND SO, YOU KNOW, THIS RUN, WHILE IT'S BEEN VERY STRONG, I DON'T THINK THIS IS JUST SOMETHING YOU WANT TO JUMP ON AND CHASE. >> AT THE SAME TIME, WARREN, LISTEN TO WHAT SCOTT IS SAYING ABOUT A MOMENTUM MARKET. NOBODY TOLD THE SMALL CAPS, RIGHT? THE RUSSELL ENDED UP DOWN TODAY, 1.5%. WHAT DOES THAT TELL YOU ABOUT THE BREADTH OF THIS RALLY OR LACK THEREOF? WELL, THANKS FOR HAVING ME, NUMBER ONE, AND I WOULD SAY WITH SMALL CAPS WE'VE BEEN NEGATIVE ALL YEAR. I THINK THAT YOU HAVE TO PUT THAT IN A SEPARATE BUCKET. SO COMING INTO THE YEAR I THINK THERE WERE A LOT OF PEOPLE WHO WERE BULLISH. THEY SAID JUST KIND OF A NAIVE TYPE OF BULL PLAN WAS TO BUY THE HIGH BETA SMALL CAPS, AND IT HASN'T WORKED OUT. I DON'T THINK THAT'S THE POINT OR THE CYCLE, SMALL CAPS OR EARLY CYCLE PLAY. THE BREADTH CONCERN I WOULD SEIZE ON TO IS IN THE EQUAL WEIGHT S&P 500. SO WE HAD S&P 500 MAKE A NEW HIGH BACK ON MAY 15th, AND EQUAL WEIGHTED HAS BEEN UNABLE TO RALLY. SO IT HASN'T CONFIRMED AND HISTORICALLY IF YOU DON'T GET THAT CONFIRMATION OF THE EQUAL WEIGHT IN THE 90-DAY WINDOW, IT'S PRETTY BAD FOR THE MARKET. WE STILL HAVE SOME TIME THERE, BUT THE REAL CONCERN TO ME, IF YOU'RE THINKING ABOUT EQUAL WEIGHTED, WE'VE GONE FROM 4.7 TO 4.2 ON THE 10 YEAR. YOU SEE IT IN SMALL CAPS. SMALL CAPS HAVE BEEN REALLY TRASH FOR A YEAR. IT'S REALLY ABOUT THE EQUAL WEIGHTED. THEY MADE ALL-TIME HIGHS END OF MARCH AND STILL JUST CHOPPING AROUND HERE. WE'LL TAKE OUR SIGNAL WHETHER THE RALLY CAN BROADEN. WE'RE MAINTAINING OUR EQUITY POSITIONS, RIDING THE RALLY SINCE THE BEGINNING OF THE YEAR, BUT, YEAH, I THINK IT'S GETTING STRETCHED AND YOU WANT TO SEE PARTICIPATION TO KEEP THIS THING GOING. >> SO SCOTT WREN, SENIOR MARKET STRATEGIST, GLOBAL MARKET STRATEGIST AT WELLS FARGO, HELP US WITH SOME STRATEGY HERE IF YOU'RE CONCERNED ABOUT MARKET BREADTH, IF YOU HAVE ONE EYE ON THE CONSUMER HERE. HOW DO YOU PROTECT UP SELF AS AN INVESTOR? WHAT ADJUSTMENTS DO YOU CONSIDER MAKING TO YOUR PORTFOLIO GIVEN THOSE MAYBE YELLOW LIGHTS? >> WELL, JON, I DON'T THINK WE'LL JUMP UP AND BUY S&P 57 HERE. WE'VE BEEN TRYING TO TRIM FROM TECH, A LITTLE BIT FROM COMMUNICATION SERVICES, THOSE TWO SECTORS. AS THE ECONOMY SLOWS, WE STILL THINK THERE WILL BE SOME GOOD ACTION AND LET'S SAY DATA CENTER BUILDING INFRASTRUCTURE BUILDING, SO WE'VE BEEN TAKING THOSE FUNDS, BUYING SOME INDUSTRIALS BECAUSE CLEARLY THE COMPANIES THAT ARE GOING TO BUILD ALL THESE DATA CENTERS AND DO THE ELECTRICAL UPGRADES ARE GOING TO NEED MATERIALS, USE COPPER, ALUMINUM, ALL THOSE SORTS OF THINGS. WE'VE BEEN BUYING SOME INDUSTRIALS, SOME MATERIALS, HEALTH CARE IS KIND OF A VALUE PLAY HERE. WE DON'T THINK OIL IS GOING TO GO MUCH LOWER. ENERGY STOCKS HAVE GOTTEN HIT LATELY. SO WE'VE LIKED ENERGY AS WELL. WE'RE TRYING TO BUY SOME STOCKS THAT HAVE LAGGED HERE BECAUSE REALLY IF YOU LOOK AT IT YEAR TO DATE ONLY TWO SECTORS HAVE OUTPERFORMED AND WE THINK THOSE VALUATIONS ARE PRETTY STRETCHED. WE'RE LOOKING MORE UNDER THE HOOD. CERTAINLY AS WARREN MENTIONED WE'VE BEEN UNDERWEIGHT BIG TIME, IT'S WAY TOO EARLY FOR THAT AND IT MIGHT BE DIFFERENT WHENEVER WE PULL OUT OF THIS NEXT YEAR AND HAVE A LITTLE BIT BETTER ECONOMY. WE'RE U.S. OVER INTERNATIONAL. AND WE'RE TRYING TO WORK UNDER THE HOOD IN TERMS OF THESE SECTORS. >> WARREN, WHAT ARE YOUR UPDATED THOUGHTS ON OIL GIVEN WHAT WE'RE SEEING WITH THE CONSUMER AND THE OVERALL LOOK OF THE ECONOMY? >> YEAH, MY -- I'VE BEEN PRETTY DOWNBEAT ON OIL HERE FOR A LITTLE BIT, AND WHAT WE'VE GOTTEN HERE RECENTLY, WE DID UPGRADE COMMODITIES EARLY IN THE WEEK. WE GOT THE POSITIONS DATA AND SHOWS THERE'S JUST EXTREME PESSIMISM FOR OIL, AND THAT'S BEEN REALLY A GOOD BOTTOM SETTING TYPE OF INDICATOR. I STILL DON'T EXPECT MUCH OF A RALLY OUT OF OIL HERE. I THINK YOU SHOULD SEE UPSIDE IN THE NEAR TERM. IF I LOOK OUT THROUGH THE YEAR, THOUGH, WE PROBABLY SAW THE HIGHS FOR OIL THIS YEAR. WE'VE SEEN THE HIGHS FOR THE YIELD, TEN-YEAR YIELDS. THOSE TWO THINGS DO SUPPORT STOCKS. WE JUST ZOOM OUT AS THINGS WE CAN LOOK AT AS POSITIVES. WE GO TO Q4, OPEC WILL START ADDING OIL BACK AND THAT PERSISTS THROUGH 2025. I KNOW IT'S A POPULAR TRADE TO GET LONG ENERGY. I STILL LIKE IT FOR DIVERSIFICATION
