The US Market and Economic Picture | Bloomberg Surveillance

Alicia Levine of BNY argued that the market’s strength is being driven by earnings, especially from a small group of capital-expenditure beneficiaries. She said earnings for about 45 S&P 500 companies tied to capex are expected to rise 70% this year, while the rest of the index is still expected to grow 15%, and she linked that backdrop to BNY’s new 8,000 year-end S&P 500 target. She also said the risk is to the upside, even though she expects some consolidation from the Middle East conflict, higher yields, and any stumble in AI spending.

Dean Curnutt of Macro Risk Advisors said the current setup is unusually volatile beneath the surface: tech and memory stocks are soaring, the KOSPI is up 135% this year, and two-month implied volatility on Korean equities has jumped from 28% to 70%. He recommended risk management through a mix of cash and hedges, noting that a 4% two-year note offers real carry and that S&P hedging costs have fallen enough to make puts and put spreads attractive. He also warned that future IPOs like SpaceX, Anthropic and OpenAI could force benchmark buying and create extreme price swings.

Leslie Palti-Guzman said the Iran crisis is pushing countries to diversify routes, fuels and suppliers, and she expects the Strait of Hormuz to become a lasting geopolitical issue even if oil prices eventually ease. Veronica Clark of Citi said the labor market still looks fragile, with a rising unemployment rate likely into the summer and limited inflation pass-through from recent shocks. She expects the Fed could cut rates later this year and said a lot of recent inflation noise is tied to AI-related components rather than broad underlying pressure.