The next phase of the bull market

First-quarter earnings have delivered strong results, and it's not just the Magnificent Seven hyping Wall Street. Kenny Polcari sits down with Gina Martin Adams, Chief Market Strategist at HB Wealth, and Adam Shapiro, Managing Editor of AInvest, to discuss the next evolution of this bull market.

Well, good afternoon. I'm Kenny Polcari, and this is Trader Talk at Yahoo Finance. And today, I've got two very special guests. We've got Gina Martin Adams, who's the chief market strategist at HB Wealth here in New York City, and Adam Shapiro, who is the managing editor of A Invest, a very interesting concept. We're gonna talk about that. I'll let Adam tell you a little bit about that so that you get it, but it's gonna be a very interesting conversation today. Well, thank you very much for joining me. I do appreciate it. I'm very excited to learn, uh, a little bit more aboutThe invest so and as the listeners are as well. So why don't you tell us a little bit, Adam, just about A Invest and then we'll take it from there.

Uh, invest. Think of it as two things, and it's very much like Yahoo Finance. I manage the content side where we write articles. I have human beings who are writing articles for retail investors, for day traders. Uh, in fact, our demo, I can, I can share this. Our demo is, is, is mostly men, 25 to 54. We do have women, but it's mostly men. And so we use.The content that we write, both human, video, podcast, and written articles, uh, as well as large language model written articles as top of funnel to attract people to the platform, and then you can choose to try some of our AA, uh, AI tools. Amy is our agent. Our AI agent is Amy, and Amy can, uh, you could use magic signal. You put in 10 stocks you choose, and then you set the parameters you want to watch, and you tell Amy, this is what I want you to watch for.by all of these different things and you will get notifications from Magic Signal from Amy and then you then have to execute and through the platform, you can link your to your brokerage, uh, and you can then execute trades should you choose. Gina,

let's talk HB Wealth and your role there.

Yeah, sure. HB Wealth is a fiduciary fee only RIA headquartered in Atlanta actually, but with clients all over the country, predominantly in the southeastern and mid-Atlantic United States.Uh, I'm the chief market strategist. Work inside the investments team. Also sit on the investments committee, so we provide our research and analysis of financial markets to help enable investment decision making, help tool the advisors with conversation talking points and intelligence to share with our clients. Perfect.

I love that because you and I do the same thing. I do it at an independent RRA as well, smaller than yours, but we.Design and do the same thing. I sit on the investment committee. I do all that stuff. I, I, you know, and I'm out in the media as you are, uh, kind of talking about markets. So now that we're talking about markets, let's talk about it. We just had, earnings season is about over. We've got, you know, 4 or 5 companies that are going to report this week, which really will wrap it up. It's Marvel, it's, uh, uh, Hewlett-Packard, Costco, uh, Dell, and, uh, and Salesforce.I think, and they're, I think they're very significant because those 5, those 5 names kind of represent the whole theme that we're talking about. It's AI, it's infrastructure, AI infrastructure data. So talk to us a little bit about where you both stand on how the earnings season's played out, where you think we're over, where you think we're overdone, and where you think the opportunity is.

OK, sure. So earnings season was phenomenal. I mean, it was, for a lack of a better word, a 29% year over year versus expectations.of 12%, just phenomenal. 83, I think% of companies beat expectations. So the backward look from earnings season was extraordinary. I think the trouble we face now is how do we compare to that going forward. And typically years in which earnings growth peaks tend to ultimately be actually relatively low price return years because earnings growth is peaking. You can't get much better than that. That this is the challenge for companies.going forward. That said, there still are pockets of sort of extreme earnings growth that are inside the equity market. And now it's just a matter of how much are we paying for that earnings growth and can companies continue to beat expectations at such an extraordinary pace. So, we're in this kind of, uh, waffly middle ground with respect to the markets where, yeah, things look fantastic. Will they continue to get better orWe see momentum slow a little bit in the second half of the year as we start to see the impact of higher oil prices, higher interest rates filter through to some company fundamentals. So it probably becomes a little bit more of a mixed story into the second half of this year, whereas first quarter was unabashedly fantastic growth throughout the index.

The, the oil story may in fact change, right? If we, if we get this deal thatWe're hoping is real, uh, this geopolitical deal, we may see oil come back down. It may not come back down to 60% initially because I think there's been a lot of disruption as a result, right? All those tankers sitting in the Gulf and all that stuff, but, uh, it may take some of the pressure off that. So that's gonna be an interesting part of the argument in the second half ofthe year.

It'll be really interesting, especially because.Because there's a little bit of a misunderstanding about how oil impacts earnings. Oil and earnings are positively correlated. So usually you don't see the downside impact of an escalation in oil prices until oil prices start to ease. So you could have the sentiment headwind of high oil prices removed from the market at the same time that you have the earnings headwind.To emerge on oil that creates a more volatile outlook in the very short term, just depending upon when we do ultimately see oil prices resolved. Frankly, stable oil prices are the best environment for equity, but not at 100, not at $100. And so if we can get back to $80 even lower than $80 and we can stabilize, then that's a fantastic environment.But for now it is still a risk and it's a somewhat underappreciated risk because it's been overwhelmed by extraordinary earnings in the short run.

So Adam, tell us what Amy says.

Um, well, I haven't asked Amy about this. I will tell you what the guests we've had on our platform, and I'm not going to argue with an economist and someone who actually has skin in the game as, as a portfolio manager, not portfolio manager, but as a strategist, um.One thing that people don't talk about is the fact we're in a midterm election year and that the 2nd quarter of a midterm election is always the most volatile and you can expect things to, you know, I don't, right, and then we shoot up after the election.So, so, and I've had different guests on who, who on our platform who've said that very thing. The, the one thing when you talk about earnings and where we're going is, the question I like to ask the team when we're having discussions is, how are we going to make money now? And you have juggernauts like Nvidia, OK, they're gonna make money, but then Salesforce, when they report earnings after the bell, you know, are they able to monetize what they've been doing.Can they make money off of this? And that's the question. We have anthropic is going to become profitable this quarter, right? Uh, so we'll get an IPO, great. But open AI, what's going to happen there? And the question is that our investors are asking is, where do I make money? Because the herd is following the mag 7, and the mag 7 might have some difficulty. Google doesn't even tell you exactly what they're up to. So you have to look where the herd is not looking.

Agreed.And so where's the herd not looking? Does Amy have an idea? Oh

yeah, well, Amy has an idea, absolutely. You could go on there and you could ask Amy, phrase the question very simply. Everybody is chasing the mag 7 with artificial intelligence. Where should I look if I don't want to follow the herd and see how Amy responds. I would bet you that Amy says, look at, uh, infrastructure buildout, at, uh, utilities, uh, at.That, uh, Dr. Copper has got to be, uh, in, in demand. I have not asked Amy about copper right now, but with the infrastructure buildout with AI and with data centers, the only thing that could throw a wrench into this is the NIMBY factor because there's this pushback now to

building big pushback. As a matter of fact, they had a piece on it, uh, I think Fox Business had on yesterday about, about big pushback. There's a, there's a development going on out inI think it's out in Oregon, and the, the town is pushing back on it because they don't want it at all. Uh, so that's gonna be interesting, but I'm curious where you think the opportunity is away from because all that kind of circles around tech, right? It's the utilities, it's the infrastructure building, the data centers, all around tech and AI. Let's step back for a minute and look at what other sectors though are presenting opportunities. I think there's opportunity in healthcare. I think there's opportunity in financials. I think there's opportunity in basic materials, right? I think healthcare is way underperform.And so I think if you're looking to add new money as a long-term investor, not a day trader, right? Because, because, because I think your markets are different, right? We're both long-term investors and you're talking to a market of day traders. So you naturally want to be in that space. But, you know, you and I, as you're building portfolios are talking to long-term investors that are building generational wealth. They're gonna want.To look at some of the sectors that are underperforming at the moment, not chase the names that are exciting for you, but may be too richly valued forus,

right? And I think when we