Stephanie Link: 2025 Market Outlook & Sectors To Watch
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On the Tape.

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They are also the people behind the alternative investment industry's largest and most exciting in-person events. To find out more about iConnections events and members-only platform, visit iConnections.io. Welcome to the Risk Reversal Podcast. Guy Adami, always joined by Dan Nathan. Yes. I've gotten so excited about all the guests we have lined up for this year.

And why is that? Because today's guest is somebody that, again, I have said this before and I'll say it again. There are certain people that when you see them on the network, CNBC, you turn the volume up. Now, I'm doing this because I still get up and turn the volume up on the TV. Stephanie Link is one of those people. She's the chief investment strategist and portfolio manager at Hightower. You can see her on Worldwide Exchange. You can see her on the Squawk Box.

You can see her on the show, what is it, Squawk on the Street. You can see her on the Halftime Report, The Closing Bell, Overtime. You know where you don't see her, though? The Fast Money. Why is that? Because she doesn't like us. Welcome back to the program. How are you doing? Thank you so much, guys. It's so great to be here.

By the way, pretty cool. You know, Steph worked with Kramer for a while on the street.com and in his service. And he just turned 70. That guy. Tell us. Tell the listener something about Jim Kramer that they don't know that, you know. Well, we share the same birthday.

Oh, really? And that was so happy birthday. That was Monday of this past, of this week. Yeah. So happy 38th birthday to Stephanie Lee. There you go. So Steph, his show, Mad Money, just turned 20. Wow. Really?

Really amazing. Yeah. And the guy's got the stamina of what guy? No, it's amazing. And he has forgotten his wealth of knowledge in terms of markets and individual stocks. And he has reams of notes that he brings. I mean, he is as rigorous a person as I've met. So when you work with somebody like that, by definition, you're going to sort of morph into that. But the reality is Stephanie was like that long before she ever met Jim Cramer. All right. One thing that you learned from working with Jim Cramer. How's that?

First and foremost, he's not nearly as crazy as he appears on TV, right? First and foremost, that's number one. Second, he has a heart of gold. I think we talked about this story a year ago, but I have to tell your listeners because it's really amazing, your viewers.

I left the sell side after 16 years, as you guys know. I was institutional sales, I was research director and all that other stuff. And I wanted to try to see if I could run money, go to the buy side. Met Jim Cramer through a mutual friend. We hit it off. Within a half hour, he offers me the job to be his co-portfolio manager. We talked about stocks the whole time for 30 minutes straight. That was what it was, as you would expect.

Long story short, he says, when do you want to start? I said, how about tomorrow? He said, how about you just had a baby, hang out with her for a month and join us in a month? And I'm like, oh.

OK, I'll do that. A month goes by and I'm falling more and more in love with my daughter every moment, every day, as I know you both understand having children. And I decided I couldn't leave her 24-7 because I knew that's the job it was going to be with working for Kramer. And so I call on the night before and I said, Jim, I can't work for you.

And he said, well, what do you mean? And I said, I just can't. I can't leave my daughter for five days at three in the morning until nine o'clock at night. I can't do it. And like the phone was over the phone. It was like 30 seconds of silence. And I'm thinking, oh, no, I just burned a bridge. And 30 seconds later, he said, how what will it take for you to come and join me?

And he said, and I said, can I work from home a couple of days a week? This is way before people were working from home. And he said, hmm, he goes, how about this?

I said, "I would take two days." And he said, "How about you take three days and hang with your daughter and you can work two days in the city." And so heart of gold. And really, I worked harder when I was at home anyway, so it wasn't like I was slacking, but he really does appreciate family. And he's really, really intense about both.

about work, about stocks, and also about family. So it was pretty cool. No, Jim's been a great advocate for fast money without question. I said it every year on our anniversary, you know, without Jim Cramer, without his support, there'd be no fast money. So I agree. You know, the person you see on TV is an entertainer. The person you meet in real life is an absolute gentleman. So

So thank you for sharing that. So let's get into it, Steph, because here we are, month into the year. The market is effectively at all-time highs. Let's go from the top down, sort of outlook for this year, the economy, markets, those types of things. Yeah, well, I think that this year is going to be a little bit harder. I don't think we're going to see another 20%.

plus S&P 500 return. I don't think we're going to see 3.4% GDP growth like we saw for the last two years as well. And it's really pretty simple, guys. We're not going to have nearly the amount of fiscal stimulus put in place in 2025 like we have seen over the last five years. We had to put stimulus in place, both fiscal and monetary, during COVID. I get that. It worked. We recovered.

after we closed down and the world closed down. But we overextended, in my opinion, on the fiscal side. That's why we had so much inflation. All that being said, it led to better growth. So we're getting inflation to come down. It's still sticky, and we can talk about that as well. But the stimulus from the fiscal side is certainly not going to be the case. Now, offsetting that, you're going to have pro-growth initiatives from Trump. You're going to have deregulation, lower taxes, et cetera.

So I think you add it all up and maybe we see a decel in the GDP to like 2% or so. By the way, that's still above trend. Trend is 1.5%. If you have 2% growth, I think inflation will kind of be around 2.5% at the end of the day. And the Fed, I don't know what they're going to do. Are they cut? Are they not cut? It doesn't matter to me. What I prefer to look at is, yeah, the growth in the economy, if you're growing 2%, you're

And you have inflation coming down and you have a solid consumer driven by labor and wages. You have manufacturing renaissance happening. That's all good for earnings. I think you could do earnings about 10 percent, 12 percent. And we all know our good friend Larry Kudlow. He has told us right from the beginning of time, stocks follow profits on the way up and on the way down. And right now they're going up, but they're not going up as much as they had. So I think maybe you're looking at like net

7% to 10% returns this year, which is not so bad because the long-term average is 7.5%. Yeah, let's back into that. And by the way, your friend, Larry Kudlow, when I think about what the average consensus price target amongst sell-side strategists, and again, who really cares about that? But 6,600 or so, here we are in and around this kind of 6,100

$100 level. And so when you talk about 6%, 7%, 8% returns, that kind of is in line with where the street is right now. The only problem that I have, Steph, is that FactSet has consensus EPS growth year over year at about 13.5%, right? So at some point, there's going to have to be a

a downgrade to S&P 500 earnings. And what's different about 2024 is that there was double digit expected earnings growth and they kind of came in line. Like you didn't see that number come down over the course of that year. So how do you think the markets take that as we start to kind of see those estimates come down a little bit? And, you know, again, we're not expecting huge growth.

year-over-year performance of the S&P 500 if you're looking at the sell side, but it seems to be that you have a situation where it's one and a half, two times expectations for strategists in the markets and where EPS estimates are.

Yeah, no question that earnings expectations are high. We are, by the way, running at about 12% right now in this past quarter. So we're doing better than even I thought and expected. Where I could be wrong, where we all could be wrong, is on the margin side. There are a lot of strategists out there and economists and all, a lot of analysts that think that,

margins have peaked. I think that that's going to be your surprise to the upside. I think companies have done an amazing job on margins, on protecting margins and on expanding margins. So where I could be wrong is if we get mid single digit revenue growth, but we do get margin expansion, we could do better than like a 10%, 7% to 10% earnings growth figure. That's what you're seeing in this past quarter, the quarter that's getting reported right now. The other thing I would just say is

Maybe, just maybe, the overall S&P 500 doesn't do as well. Maybe it does about 7%. Maybe it does 5%. But I do think that there are pockets and sectors that could do better. And I don't think it's going to be mag 7 again. I really don't. I mean, I'm...

secretly I'm hoping, because that's not the way my portfolio is positioned at all. And it kicked my butt not owning the MAG-7 in a big way last year. However, I do think that there are other sectors that are perking up. We are seeing a broadening out. And the reason we're seeing a broadening out is because you're seeing earnings growth in these other sectors as well. I mean, energy, healthcare, financials have actually led on the earnings front more so than technology this past quarter. So I think you're going to see kind of the baton getting moved a bit

That's not to say you don't want to own technology. We can talk about that if you like, but I do think you have to have a barbell and I think you want to own different sectors this year.

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You know, let's talk about this move in interest rates, which, again, when the Fed started cutting, 10-year yields were 3.6%-ish. You saw them rally all the way up to 4.8%, back down to 4.4%. We got up to 4.63% this week. Let's call it 4.5% now just to sort of split the bid a bit.

What are your thoughts in terms of where rates go and what it means? I'm of the belief that rates go higher, and I think they go higher for the wrong reasons. Curious as to your thoughts. Yeah, well, I think that we're going to be in a four, like anywhere between like 4.2 to maybe 4.8%. We're going to be in a trading range.

I think the reason why as soon as the Fed cut and rates backed up, I'm of the belief it's because growth has been better than expected. I mean, we are going to grow about 3% in the first quarter of this year. That's way more than I even expected. As I said, I'm expecting a decel, and we're not seeing a decel. The Atlanta Fed tracker officially is at 2.9%, and I know that number moves all around. That's why I say like,

where are we going to go? We're going to grow two, we're going to grow three, but it's above trend. And that's one of the reasons why I think the rates backed up initially. I think right now the market's trying to figure out the Fed, do they go at all? They're trying to figure out inflation, does it start to reverse? And I still think that inflation is in that two and a half, 3%. I know we got hot numbers this week, but the PCE numbers seem to be in check

And OK, it's not where the Fed wants it to be. That's why I say I don't know what the Fed is going to do. Maybe they don't do anything this year. But if you have the better growth, you don't need the Fed to really aggressively cut in my mind, especially if you have a consumer that remains pretty resilient. When we think about employment, so we're just talking about obviously inflation and kind of growth. But when you think about employment, you know, we have unemployment at 4 percent. Right. And we have a situation where when the Fed started cutting interest rates in September, they talked about being supportive of

Of employment. Right. So obviously they have that dual mandate, stable prices, full employment. So when you think about, you know, government workers likely, I don't know, maybe it's a few hundred thousand get cut over the next year or so. And then you see a headline like we did recently from Chevron this week that they're cutting 20 percent of their workforce.

I don't know about you. When I saw that number, I thought it was off by a zero or something like that. 8,000 workers. So what does that mean to you as it relates to what the Fed was focused on a few months ago, what we might be seeing on the employment front, and then you see companies like Chevron taking a whack at their employee base like that? I look at the weekly initial jobless claims as a

as a leading indicator. I don't look at the non-farm payroll numbers. I think that, and you're at very low levels, you're at 213,000 that we posted today. We're at about 220 on average for the four week moving average that I tend to look at it, smooth it out a little bit, just by a heads up. And I know you guys know this number.

During recessions, weekly jobless claims gets to as high as 350 to 375,000. So we're at 220,000. We are nowhere near a recession or something to be concerned about. That being said, companies are real time. That's a few for a forward look.

indicator too, for sure. I think Chevron has had a really challenging few years for sure, for sure, in terms of their operations, in terms of their execution. They have met, the stock has massively lagged Exxon, which seems to be doing a lot right these days, which

is really pretty remarkable. For decades, it was the reverse. And so I think they're doing it out of almost necessity and to clean up their operations. And because their earnings results have been very spotty at best,

That's not to say that maybe they see some patches of weakness. We haven't seen it though. I cover and I own Schlumberger SLB, which is its new name, which I hate. But they have done a really, really good job in terms of focusing on what they can, and that's technology and innovation. And they're focused on margin expansion. So they're seeing margin expansion. Chevron's actually seeing margin degradation. And I think it's a company-specific technology.

at this moment. Now that's being said, we had JP Morgan said they're going to trim a little bit. We even had SLB say they're going to trim a little bit. But I do think that speaks back to if companies are in a position of strength, that means that their margins are going higher and not lower. And if they're cutting, that means obviously that they're trying to get their costs into control. It's interesting you bring up Chevron. I don't want to play stock market, but they announced a $75 billion stock buyback in January of 2023.

right around the balls high of the stock. And I remember the Biden administration came out and eviscerated them. And if you go back and look, the stock really never saw an uptick since. So maybe this announcement will be sort of the inverse of that announcement back then. With that said, let's talk about some of these sectors because as much as I loved energy last year, it didn't work. I mean, there were pockets that sort of did, but it didn't work. Healthcare had some ups and downs. So

Banks, obviously, a lot of people loved banks last year, completely outperformed. What are your thoughts on some of these sectors that sort of you're gravitating towards? I would say financials and industrials. Those are the two sectors that I actually like the best. Financials are still, the valuations are still very cheap. We all know about deregulation and what that's going to mean for M&A. Last year, we saw $3.3 trillion in M&A, which was actually flat on the year, almost flat to up one.

So far this year alone, and we're at February 13th, you've seen $400 million being spent in terms of M&A just to start. And that's very early on. So I think you're going to see M&A. I think deregulation helps. But the real story and capital markets, we all know that the pipelines are full.

But I think this year is going to be net interest income and net interest margins. Both of you know we haven't had a cycle in NII in years. And I do think the steepening of the curve and the positioning of their books are actually going to position them very well for expansion in terms of net interest income. And that's the next leg. That's the next wave. And I don't think a lot of people are talking about it. And you're trading at about 1.2, 1.5 times book on average. Some of the regionals like Truist,

which I own is trading at 0.9 times book. And they're buying back a ton of stock, which is a creative, especially under one times book. We all know that. So I like that sector. It's taking a pause in the last couple of weeks, to be honest, but I do think that the activity is in their favor and the valuations make sense.

Healthcare, I'm very mixed. I'm underweight healthcare, have been for the last two years, and that's been kind of the right decision. But what I think is happening is there are a couple of areas that have gotten just so oversold and so overdone. When they sell UnitedHealthcare down 25%, 30% from their highs at the end of last year on concerns about the Trump administration and them going after PBMs, you're getting

the number one set the number one company in the industry training at 12 times ebitda historically its average is at 16 times this is the biggest blue chip name in managed care and i know there is a lot of concerns about what's going to happen with managed care companies but i do think that the mlrs meaning the margins i think that they are troughing and i think they're they're going to do a good job lily what's not to like about lily other than their valuation but i

I was willing to scoop it up when the stock fell 13% two quarters ago. So I guess, Guy, my point being is it's going to be company specific and maybe some themes that are underappreciated. Industrials, we've talked about this for two years, all about onshoring, reshoring, supply chains coming here. If you believe in AI, you have to believe in data center growth. And if you believe in data center growth, you need a grid. The grid hasn't been repaired in 50 years. And

and you need power, which were undersupplied. So those kinds of things are very attractive to me. And I don't necessarily wanna play Nvidia on AI. I wanna play the infrastructure guys, the guys that are building out the stuff. Because data centers, we have 5,400 of them in the country, in the US, 11,000 worldwide, but 5,400, we're gonna go to 11,000 in the next three years. That's significant infrastructure growth. And so that's why I kinda like that as well.

Let's talk about a name that's near and dear to probably both our hearts, one that I tried so many times over the last year and a half to be positive on, and it never really worked. Now, I will tell you that secondary they priced late last year might have been the trough, and I'm talking about Boeing, of course. And very quietly, you've had this stock pushing up towards $190 in the absence of bad news. And I know that's a big if.

I think the stock can go, when I say significantly higher, 235-ish and nothing's effectively changed. So thoughts on Boeing? I said that in December on halftime that it was my favorite 2025 story.

So I am very big in it and I've been adding to it on any bad days. So it's really fairly big position, but you're right. You're a hundred percent right. Like if nothing goes wrong and that's a big chance that I'm willing to take, but it's because of their new CEO and the new CEO, when he was at Rockwell Collins,

When he was a CEO there, the stock was up 100% in three years. And the market at the time was, if you can compare it, didn't return nearly that much. But in three years' time, he was able to fix that company and then eventually sell it. And I think, not to say that he's going to sell anything in terms of Boeing. Maybe there are parts that they can sell. I don't know. But I just think better execution.

He's an engineer. He's going to be located in Seattle, which is where he should be, not in Chicago and not in Washington, D.C. or Virginia. He should be where the manufacturers are. He's building relationships and repair. And I think at the end of the day, the most important thing, he may be able to improve the execution, but this is a supply problem. This is not a demand problem. Between Airbus and Boeing, they have 13,000 planes in the backlog, seven years worth of backlog.

So, they just need to be able to execute on production, and they have. And in fact, in January, I think one of the reasons the stock did well in a crappy quarter, and it was really bad, but I think the reason the stock actually rallied from there is because they are getting production increases, especially in the most important plane, the 737 MAX. They did 33 planes in January. They're capped by the FAA at 38 planes.

Think about it. If you go from 10 planes of production to 15 to 20 to 30, now 38, your free cash flow, once you deliver them, your free cash flow can go higher. So I think there's a very good chance, net negative 4 billion in free cash flow in this past quarter. I think you can get to flat free cash flow by the end of the year.

And then we see growth next year. And of course, you know, the market's going to anticipate that. So I think that's what's happening. And, you know, we just have to cross our fingers that there are no additional problems. Steph, I want to go back to some of the sector commentary that you just had. And, you know, I want to start with 2022 when we had the bear market, right? We know that the NASDAQ was down.

a bit more than the S&P 500. And it's interesting that a lot of folks forget that Nvidia, Tesla, Netflix, Meta all sold off about 70%, right? And at the lows in 2022 from their highs in '21. And a lot of folks were out there, see them on CNBC or folks that we're talking to is like, the leadership out of this bear market is not going to be the leadership that was basically brought us there. And that meant mega cap tech. And back then, I think there were $2 trillion

companies, right? Apple was one of them and maybe Microsoft. And now if you look at the fateful eight, now that we have a Broadcom that joined the mag seven, you know, they're all trillion dollar market cap companies, right? So we've heard about the concentration. We've heard about the contribution to S and P 500.

We know that last year, NVIDIA's performance was 25% of the 25% gains in the S&P 500, right? So you just said that I don't think it's going to be the MAG-7 that is the leadership. And I'm not telling you you're wrong. I just go and I look at the subsectors within the S&P 500. I see Infotech at 33%. I see consumer discretionary. This is important at 11.5%. But 35%.

35% of that is Amazon and Tesla, right? And then if I go to communication services, I see another 10% or so. So you nearly have half the weight of the S&P across that swath of names. I just don't know how financials, where they are right now, with JP Morgan, where it's valued relative to its peers.

what we just had to say about energy, which is only 3.5%, right? Staples, about 5.5%. You're talking about margins that are going to outperform to the upside. You're going to need a bunch of those sectors, right? The other ones outside of tech to make up that margin expansion.

which gets you to the broadening out of earnings growth and stuff. So I know that was a long winded say. It wasn't a double question, Guy. It's going to end up in one question. Guy hates the double question. It drives me nuts. But I wanted to lay the landscape for that a little bit. It almost feels to get another double digit percent gains in the S&P 500. You didn't say that that's what you expect this year. You're going to need technology to be participating in a big way. I don't

I don't know if you need it to participate in a big way. I think you just need it. It can't go down. That's the thing. I think if it kind of just stays here and it may be you see like like year to date, it's not technology not doing that great. I mean, health care, energy and financials have done much better year to date. And it's very early on. But I mean, tech is lagging by a large. And so.

And yet, you know, kind of the market is kind of trying to settle and get its footing. But I don't think we're going to see another 20%. If the Mag7 participate, if tech outperforms, yeah, maybe I'll be so wrong and we'll have another 20% year. I just don't see it. I don't know who your incremental buyer is on any of the Mag7. Save app.

because that one is a little bit more controversial. But I think everybody and their mother, including the taxi driver, owns NVIDIA and the Mag7, and they all know about it. And so to me, I just don't think that's the best risk reward. Does that mean they're dead? I don't think they're dead. Not when they have the free cash flow that they have, not when they have CapEx budgets. I mean, think about this. Amazon is going to spend $100 billion on AI this year, right? They raised that number up from $85 billion last week.

they are still going to generate $55 billion in free cash flow. I mean, it's absurd. The numbers are just absurd. So I don't see them collapsing per se, but I do see them maybe just limited upside for the time being, especially if we get participation from other sectors. But that

That does mean you're right. That does mean that the overall S&P 500 is pretty capped. But where I do see the most margin expansion is in the 493 other names versus the MAC-7. We all know how great and beautiful the MAC-7 are. We all got it.

margins are actually going down because of the CapEx numbers. So that's where I was going next. And if you think about Microsoft and Google, then Amazon and Amazon sell-off wasn't significant. But when you saw these big CapEx numbers and you saw, you know, just flat revenue growth, you know what I mean? That wasn't beating. Investors sold those stocks. And Google obviously was the biggest down 8%. But on market cap

terms, you know, Microsoft down 6% the day after, and then Amazon was down about 4%. You know, I think expectations were high with Amazon and with Google. They were both at all-time highs. But I think that's something that could start to play out, right? If you start seeing a decel in revenue growth, if you start seeing pricing pressure on the compute, on the services, and that's really what deep seek might mean for all these hyperscalers.

then you don't have the margin improvement that a lot of these folks have had, or you don't get the leverage from the spend. And the last thing I'll just say about the spend, you know, Meta says $65 billion. Amazon ratchets their spend up a big, right, like a big number. You know, Microsoft's year over year is not, it's kind of flat, right, or something like that. So I guess my point is that those numbers, they're not taken to the bank.

And if you pull those back, let's say 30% in a slower sort of demand environment, then it kind of crashes the whole ecosystem. I don't mean like market crashes the whole ecosystem, but you're just going to see a pullback in demand if that makes some sense to you. So I think there are some landmines out there for this generative AI trade. And what is the third year of this huge CapEx expansion? I'll say 100%.

I agree with you. That's why I don't own all of the Mag7. I only own Amazon. I do own Broadcom, and I owned Broadcom before it was cool. I promise you that. I got beaten up silly on that name three years ago. Who beat you up on the HDR? Who was all over the grill? You know it's our friend. Do you know it's our friend? Just real quick about Broadcom. I mean, we were talking about Broadcom for a long time. I know you were as well.

We said on valuation alone, if you want to get into semis, AVGO is the place to be. Now, I think it was going up 45% in one day. I don't think you probably thought that either. But now at least it makes a little more sense. Anyway, please continue. Okay, so why I like...

Let's just say Amazon and Broadcom, they're not pure play AI stories. Now I know that Broadcom has gotten revalued because of the AI commentary and the opportunity. And we know it's three to four times as large of an opportunity for them between now and 2027. And now you're looking at 11 or $12 in earnings power.

AI is about 30% of their revenues. Software is 40% of their revenues. The VMware transaction was brilliant. Everybody hated it. And you have their cyclical businesses, broadband and networking, which are starting to trough. So I think there's a couple of ways you could win with Broadcom. Am I adding to it here? I'm not. And that is because when you and I were buying it, it was at 14 times forward estimates just a couple of years ago. It's now at 32 times. It's not cheap.

That being said, numbers have gone up substantially. They have the highest margins in the industry, both gross margins and operating margins, and the best free cash flow as well. So I'm going to hold on to it, but I'm not adding to it because I just don't think it's cheap, but I want to have exposure. Amazon is also diversified, right? We know AWS and advertising, that's the profitability driver of the company, but you know what?

The retail business grew 10% in the US and the margins were the best since 2004. So they are getting more profitable as well in maybe some of the other business, the non glamorous businesses, if you will. And so I think there are stories to be told. Now, Meta goes up every day, that one scares me, but I understand they're doing the best job monetizing.

I just can't own it in terms of what it has done. I think Alphabet is kind of a mess, to be honest. And Microsoft, I don't know why you're paying 35 times earnings for flat earnings growth. So I just think that there are other places. You know what I really like, guys? And it's now picked over for sure.

But I think cybersecurity is bigger than AI. I really do. And that's a sad comment, right? Because- Well, look at the bounce back in CrowdStrike over the last, it's pretty remarkable. I mean, they obviously fell on some pretty hard times, somewhat self-induced, somewhat not. But I mean, it's all time. I think, I haven't looked at it today, but I think it's trading at an all-time high. Yeah.

Yeah, I never owned it. And then it collapsed in the summer. And I'm like, oh, best in class on sale. This is a glitch. I mean, they're going to get through it. Great management team. So I got kind of lucky on that one. I'm interested in Palo Alto tonight. That'll be an interesting one. I actually took a nibble on that one as well. Zscaler has actually been the big laggard. So there are places to play. But I have talked to, as I'm sure you guys have talked to as well, some of the chief technology officers at various different companies recently.

Including my own, Hightower. And I asked them, where are you spending? And they all say, AI, because we're trying to figure it all out. We have no idea where it's going to go, what it's going to mean to our business. And cyber, because we can't wake up in the morning and lose our business.

And all other spend is going to grow, but not nearly what these two segments and components will grow. And so that's a big tailwind. And that's why I don't want to get so negative just on, you know, kind of the max seven, but look for other ways to play AI. And that is cyber and that is infrastructure. You know, Z scale was everybody's darling into 2021. And,

valuation got in the way. And it's still, even with the move lower, valuation's a problem. But I mean, I wouldn't put it past in the environment that we find ourselves in for somebody to spend $50 billion to buy like a Z scale, or it's not ridiculous. With that said, I'm going to pivot real quick to sort of market structure stuff. And you teed me up really well with these individual stocks up and down. I mean, Broadcom is a great example. I mean, that stock moved 35%, 40% in 10 minutes. So-

And we're seeing this up and down and across a swath of industries. So you have individual stock vol and you have a VIX that's trading either side of 15 and a half right now. Does that make sense to you?

No, it really, really doesn't. It's scary, the moves that are happening. I don't know. Is it kind of the Reddit traders? Is it just like the leveraged ETFs? Yes, I think that's a big part of it. I just think that it's hard to make sense of it all. And it's not my expertise. I am aware of it. It bothers me for sure.

What I try to do is just take advantage of it. You know, like we were just talking about CrowdStrike all the way on the deck. I mean, it fell 41%. This is the number one company in the industry, down 41%. Like, I'm just looking for opportunities. And yeah, like when something, when you get lucky and a stock is, I mean, IBM, we've talked about that one. They had a great quarter. That stock was up 10%. Like,

It's crazy. So I try to kind of maneuver around the positions and just try to do as much homework as I can to have conviction, especially when the stocks come down. Steph.

A couple more questions here, and we really obviously appreciate your insight. And it sounds like you have a relatively cautiously optimistic view of the economy. You have not overly aggressive assumptions for returns for the S&P 500. You see some of the internals for the economy doing just fine. One of the weak spots we're all going to keep a close eye on is obviously the employment picture.

Where do you shake out? And I know this is a hard one, though. When you think of all the uncertainty now, now everybody can go back and say Bidenomics was a bust, too much fiscal and it did this, that or whatever. And, you know, geopolitical stuff seemed to be an overhang. Well, it's kind of interesting that in the first month of this administration or throughout the

transition, it seems like all the geopolitical stuff, ironically, kind of cooled down a little bit. And now it's the uncertainty around tariffs and trade and how committed we are to our allies, which would be obviously the southern border, northern border and Europe here. How much do you expect that to kind of continue to play out after we get through these one

you know, first 100 days and the like, and, you know, they're flooding the zone and no one can kind of keep their head straight here a little bit. Do you think that's going to be a headwind to the economy and thus the markets?

Well, I think we have to get answers first in terms of Mexico and Canada. I honestly was very surprised at 25% initially in terms of tariffs on each country because there are neighbors. And it was never really like there were no whisper numbers. It would be that China, on the other hand, and I think the reason why China is up more than the U.S. year to date, China at 10%.

Um, that was way lower than I expected. I was hearing numbers like 30 to 60% tariffs. So we have no idea. But let's just say it's 25, 25, 10. It doesn't seem like it's going to be 25 and 25. That's going to come down. But let's just say it is.

That's about a 7% hit to, um, to revenues in the S and P 500. It's about five to 7% hit to earnings. So we really can't afford it, but it's not a disaster when we've, when we're talking about the economy, where it's growing and in terms of where we talked about earnings and revenues and that sort of thing, certainly the markets are trying to suss all of this out. Um,

But he is the art of the deal guy. And I just think it's not going to be nearly as bad. I also think you've got to pay attention to what did inflation do back in Trump 1.0? And it was 1.9% on average. He ran on lowering inflation. He's going to have to figure out how to get that to be the case. And so we'll have to see. But it's all...

Part of the reason why you guys know me, I'm usually very positive. I'm very optimistic. I'm always looking at glass half full. I'm less so this year because there are all these moving parts. And I think it's prudent to do so because we just had amazing returns over the last two years. It's not that easy, right? We all know that it's not that easy.

Stephanie Link, we value your intellect, your market acumen, but of equal importance, your friendship and your support of us over the years. And you should always turn the volume up when Stephanie Link appears on a myriad of different shows on CNBC. Thank you, Stephanie, so much. Thanks, guys. Thanks, guys.