Asks if Lori expects more pain for the equity market given the geopolitical backdrop.
Dani Burger
Lori Calvasina
States it wouldn't surprise her to see more downside, but she is actually pretty neutral. Explains RBC's 'tiers of fear' framework, noting the current drawdown could be a tier one (5-10%) correction, similar to last October.
References John Zito's comment that the market should be down at least 10%.
Matt Miller
Lori Calvasina
Attributes US market resilience to pre-existing factors: P/E multiples creeping down since August due to AI jitters, private credit fears, and geopolitical tensions that spiked in January. Notes many investors were well-hedged coming into the Iran conflict.
Asks if she's worried about the consumer given rising gas prices and a mixed outlook from Dollar Tree.
Matt Miller
Lori Calvasina
Points out the S&P 500 doesn't have the same weight to the consumer as the US economy. Shares results of an internal RBC analyst survey gauging impact of prolonged high oil and Middle East conflict.
Confirms staples may not be as defensive as thought, corroborated by her analyst. Notes the sector had better valuations coming into the year but has underperformed recently alongside materials.
Asks how much of recent market action is due to positioning by 'pod shop' hedge funds.
Dani Burger
Lori Calvasina
Agrees it's generally the right instinct. Says long-only managers tend to sit back, wait for dislocations, and then look for things to buy.
Brings up John Zito's recession comment.
Matt Miller
Lori Calvasina
On consumer confidence, notes the Michigan survey dipped due to the Iran conflict and gas price mentions, but the series has been stabilizing at extreme lows. Companies have been dealing with weak confidence and inflation consistently post-COVID.