Newscasts - Market Talk: Japan trade deal could further fuel US stock surge
23/07/2025 22:07
Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_jl91t1bc&referenceId=tag:reuters.com,2025:newsml_RW201723072025RP1_930&pageId=Newscasts Source: 'Reuters - Business videos' Description: Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, said the U.S.-Japan trade agreement should encourage cautious investors to enter the stock market, helping to push an already record-breaking S&P 500 even higher. Lisa Bernhard has more. Short Link: https://refini.tv/4lLfANK Video Transcript: Trump lands his most significant trade deal yet. Michael Landsberg of Landsberg Bennett Private Wealth Management joins us. Michael, the US-Japan trade deal sets tariffs at 15% for imported Japanese goods. Does this bode well for other deals with major US trading partners? Absolutely, Lisa. I think in particular, it really is kind of a stepping stone for what we're going to see in Europe. I think the EU is probably next in the agenda. Again, it's not going to be anywhere near as complicated as the Chinese tariffs, but I think that's the President's goal, is to get some wins under his belt, go to Japan, go to the EU, get some of those, and ultimately push the most difficult tariff negotiations with China off a little bit. Stocks have reacted positively to the news. Does this propel equities even further when we've seen record highs already for the S&P 500? I think it does. And there's a lot of froth in this market, but at the same point, a lot of institutions are kind of positioned not really aggressively in this market. When you look at the futures markets, the S&P is not- the options markets not grossly overweighted. So, I think you've got some people that are expecting some volatility, and some of these announcements that come out are positives and people are not in a great position, so they have to keep buying them. So yes, I would expect, as we get more and more of these deals, the market to continue to go higher. At some point, you think it's fully priced in, but days like today show you it's not. Well, you mentioned markets being frothy and we're seeing the return of the meme stocks, and this time around, it's Krispy Kreme, it's GoPro, among others, and we're seeing other risk assets like Bitcoin climb even higher. So, what do you make of this? Does this concern you? What do you think? I think those are concerning. I think the thing that we look at isn't just the names, but there's data that says roughly a third of all stocks that trade, the volume is in stocks below $5. Those aren't investors, those are traders, and that's a concern. And so, the other thing that I think that's out there is roughly more than 50% of the options trades are daily exploration trades. Those aren't investors, those are traders, and those are gamblers. And I think there's a speculation in this market that probably has to be unwound. I think ultimately, we like having speculators in the market because it gives us opportunities when they overreact to things. But yes, there's definitely some speculation back in there. As markets continue higher, people are worried about missing out, and that's really what you're seeing here. Alright, we're at the point in second quarter earnings season when the Magnificent Seven are reporting their results. How much is riding on them this time around? There's a great deal riding on it. I mean, what we've looked at is we think we're going to see a deceleration in this quarter from the first quarter. The S&P is probably going to be up high single digits. NASDAQ could probably still be up high teens to low 20s. But obviously a lot is riding on the Mag Seven because realistically does it perpetuate the trade in terms of AI. That really is what happens is the ecosystems that's created with AI starts with this Mag Seven or at least four or five of those Mag Seven, and it goes out to all the kind of ancillary, whether it's energy, utilities, industrials. I think if the Mag Seven can deliver growth in the AI space, I think the market's in pretty good shape. It probably rallies the back half of the year. What are your thoughts more broadly about Q2 earnings expectations? I think most people on the street are under where we think earnings are going to show up. I think the expectation that tariffs were such a big hit are really going to affect earnings. I don't think you're going to see that. I think we will see a deceleration. It'll be a slight deceleration. But I think when I look at where Wall Street is on S&P estimates and NASDAQ estimates, I think they're going to show up a little bit low. I think that bodes well for some positive surprises, which may give the market some momentum as people realize, "Hey, it's really not as bad as everyone says it's going to be." And I think that's really the case so far with the earnings that have come out, like I said, they've been more impressive than I think a lot of people thought, and we think that contends for probably the rest of the quarter.