The three major indexes (^DJI, ^GSPC, ^IXIC) closed lower on Thursday after another round of strong inflation. Eric Freedman, Chief Investment Officer at US Bank Asset Management Group, joins his Yahoo Finance Live to provide insight into market movements.
Referring to the AI industry, Friedman noted that “supply is extremely tight” for AI services, with producers unable to bring products to market fast enough to meet the surge in demand. said. He further emphasized that demand remains stable as companies invest in becoming “bigger, stronger and faster” through the adoption of efficiency-enhancing technologies.
Friedman expressed optimism, declaring that stocks “have room to run,” and with a Federal Reserve rate cut on the horizon, he calls this a “remaining commitment or If you are not involved, this is a good opportunity to get involved.”
Regarding the Chinese market, Friedman said the Chinese market is “very depressed” despite less favorable data, acknowledging the upward trajectory, and despite less favorable data from the region. I think the merger makes sense.”
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor's note: This article was written by angel smith
video transcript
Josh Lipton: Meanwhile, markets are under pressure today, with all three major indexes at record levels year-to-date, with S&P already beating some market expectations. Thanks to strong quarterly results and the rise of AI, there is talk that the bubble as we know it may someday burst. But our next guest believes there's still room for action.
Eric Friedman is CIO of US Bank Asset Management Group. Eric, it's great to have you on the show. That's certainly a question being raised, so maybe let's start there, Eric. Hey guys, you've been watching NVIDIA and this AI gathering and asking these questions. Maybe there's a bubble going on, but you don't think so. Things don't look good to you.
Eric Friedman: it's not. And Josh, thank you so much for joining us. As someone who lived in San Francisco during the rise and fall of the dot-com, I may be a little tired of what a real bubble looks like. Currently, the supply of AI services is considered to be extremely tight.
Specifically, if you look at core manufacturers, OEM companies, they can't get products out fast enough. Therefore, we believe that demand will remain stable. And if we look at what supports this AI movement, it is the continued capital investment by companies. Companies aim to get bigger, stronger, and faster. They're not doing it by hiring more people.
They're doing it through technology spending. Again, we think we're going to see continued bidding there because we're constraining supply even though we still have very steady demand. And we will – there's a lot to fight for in global macros. It's not something we're going to quarrel about right now.
Julie Hyman: So it's one thing to not pick a fight and it's another thing to kind of invest more in it, right? So would you put more money into the theme now?
Eric Friedman: Yes, Julie. I think once things calm down and we see reductions, there's room to do that in all the areas you talked about, whether it's equal weight or small caps, or certainly in the AI space. Masu. Therefore, in the short term, this is a story that is largely influenced by interest rates.
And now we have a really important tactical level in front of us. [? Shannon ?] We covered this nicely in the previous segment. But if you approach 435 over 10 years, that's 4 1/2%. 4% and 1/2% are very, very important levels for the Fed to issue more specific guidance. I'll be sure to get those dot plots next week. But with interest rates easing further and the Fed biased to cut rates, we think it's a good time to stay involved, or get involved if you're not already.
Josh Lipton: And Eric, I know that for all the stock investors listening right now, they prefer domestic to foreign. Eric, you sound a little nervous because a lot of people are worried about China? I've seen some strategists on China push back against it, like Eric. I know some contrarians, but they say the current valuation looks attractive. But you don't see it.
Eric Friedman: As you know, China has been a huge source of excess revenue for us for several months. And whenever you're underweight, you have to have a certain amount of tension. That's exactly where we are right now.
There is no major underlying reason other than a massive injection of liquidity from the central government. The real estate market remains sluggish. If you look at where the core demand is from a consumer perspective, it just doesn't exist.
The reason China is actually going up is actually because China is going down so much. So when she's down to 40% or 45% of her body weight, which is also great because she's underweight, she might reflexively try to gain a little weight. Again, this is an area where the information from China is not very good.
But the fact that there was such a decline, it makes sense that there was probably a little bit of consolidation. We are still underweight. We think there are other opportunities, but there is no great fundamental story in China for the time being.
