Why the Bull Case Holds Up
What started with Trump's "reciprocal" tariffs announcement on “Liberation Day” evolved into a broader market reset. Writing this post might well turn out to be a contrarian signal itself as I write it well off the April 7th lows. But the reality is this: we are trending higher. And despite a tonne of noise, not a lot has changed beneath the surface. So I thought I’d write a post on why it could happen and some stocks I like. So here’s a post on my thoughts here and a few names I like.
Perhaps It Was The Correction We Needed to Have
As I am sure all 13,000 of you know, markets don't move in straight lines. The run that took us to record highs in February had left many stocks, particularly in tech, stretched on valuation, sentiment and positioning. The recent correction, while painful, was necessary. Froth came out of the market, people got stopped out, and momentum was blunted. If anything, the recent correction has actually created a healthier foundation for another leg up.
What we witnessed wasn’t a fundamental breakdown in the economy; it was just political noise. It was a recalibration of expectations and valuations as stocks had moved too far from equilibrium.
Follow the Earnings, Not the Noise
The current earnings season is revealing an important truth that the market is slowly re-learning: corporate America remains strong. Mega caps like AMZN 0.00%↑ MSFT 0.00%↑ , and META 0.00%↑ are not only beating analyst estimates but putting out solid guidance. Importantly, it’s not just about tech. The resilience is broadening across sectors (apart from the names that have pulled guidance, lol).
Just shy of 80% of SPX companies that have reported have beaten EPS estimates. EPS growth for these names is +14% YoY. When prices fall while earnings rise or hold steady, something has to give. Eventually, valuations become too compelling for investors to ignore, bringing fresh capital back into equities. Positioning remains clean, so we are likely to see this.
The AI Revolution Is Just Beginning
Despite the recent crushing of AI-related stocks, we're still in the early stages of this theme, the second leg to be precise. The selloff has been particularly harsh for names that had gotten ahead of themselves, but the underlying drivers remain intact.
The first phase of the AI trade was pricing in the future. The second phase is a bit harder to trade but a healthier phase; it’s about delivery. The recent shakeout for equities will soon prove who the AI winners and losers are and what exactly creates an opportunity here.
Retail Still Matters
As long as the economy holds, and more specifically, as long as employment remains strong, retail will remain a persistent buyer of equities. Sure, this isn’t 2021, but the dynamic still matters. In thin liquidity regimes, where volumes are patchy and trend-following flows exaggerate moves, even ants can move mountains. And retail keeps showing up. They may not drive every rally, but they provide a baseline bid that underpins the tape, especially in mega-cap tech and high-beta/heavily-shorted names.
Nine Stocks I Like Right Now
CRM 0.00%↑ - Salesforce - $272.97 - PT $330