Episode summary
Tech selloff looks like a normal correction, says JPMorgan's Jack Caffrey
Summary
Jack Caffrey said the Nasdaq’s slide and the broad tech selloff look more like a normal correction than the start of something fundamentally worse. He argued that market leadership had already been narrowing for weeks, and that the recent pullback reflects a rotation out of a concentrated set of winners rather than a collapse in the entire market. In his view, investors should expect one or two corrections a year, and this one fits that pattern.
He said the bigger question is not what happened yesterday but what normalized earnings power looks like for companies over the next 12 to 24 months. Caffrey pointed to the backlog many businesses are describing in meetings as evidence that the earnings story remains intact even if sentiment has turned more cautious. He also said market reactions to the latest jobs data could be overdone if investors treat any surprise as either a Fed problem or an earnings warning.
On policy, Caffrey said fiscal and monetary conditions matter, but he does not expect Washington headlines to overwhelm the longer-term earnings and profit backdrop. He emphasized that equity investors should focus on companies’ ability to manage costs, keep pricing power, and serve demand at attractive margins. He also said a healthy financial system and strong financial stocks are useful signals for the market’s underlying strength.
Key takeaways
- Jack Caffrey said the Nasdaq correction looks “more normal rather than not,” and he expects one or two corrections a year.
- He argued that market leadership has already been broadening beyond the megacap winners, even before Thursday’s rout.
- Caffrey said company backlogs stretching 12, 18, and 24 months support a longer-term earnings story.
- He thinks the jobs report and other data could be overread if investors react to every surprise as either Fed tightening or future earnings misses.
- Caffrey said investors should focus on profits, cost control, and pricing power rather than Washington noise.
- He views strong financials and active capital markets as a positive tell for the market’s underlying strength.
Notable quotes
“I THINK IN THE AGGREGATE THIS WILL PROBABLY BE MORE THE SAME RATHER THAN ULTIMATELY THAT'S SOMETHING TO BE DIFFERENT”
“WE'RE IN A CORRECTION IN THE NASDAQ. WE SHOULD BE SEEING 1 OR 2 CORRECTIONS A YEAR. SO IN THAT REGARD THIS IS MORE NORMAL RATHER THAN NOT”
“MOMENTUM IS A FEATURE, NOT A BUG IN THIS MARKET. I THINK THAT WAS MADE VERY APPARENT YESTERDAY”
“EVERY MEETING I'VE BEEN IN THIS WEEK HAVE EMPHASIZED THE BACKLOGS THAT THEY'RE OPERATING WITH GO OUT 12, 18, 24 MONTHS”
“I WANT TO TRY TO KEEP MY ANALYSIS COMING BACK TO NEVER WANTING TO UNDERESTIMATE THE CORPORATE SECTOR'S ABILITY TO TRY TO MANAGE THEIR COSTS”
How the episode opens
Nasdaq entering correction territory, the mag-7 losing more than $1 trillion in market cap. Joining us now is Jack Caffrey. And he's got a help here, portfolio manager at jp morgan asset management. The our nation turns its only its lonely eyes towards you jack. You are the what we need this morning. Are you up to the task?
Am I simon or am I garfunkel? — Yeah. Are you simon garfunkel? Let me ask it this way. Liberation day scary. Two months later, market was new highs. I think iran war scary. Oil higher. Two months later, new highs this different or the same.
I think in the aggregate this will probably be more the same rather than ultimately that's something to be different. — Okay, that was the. — Best news I've heard all day. — Exactly.
Well, the day's early still, so let me try to unpack that for you. Realistically, we just had a major election. We've had some reactions to that major election.
Initially. I think that was perhaps a little bit more positive than people were thinking. And then in understanding what policy changes we might wind up seeing, I think we became a little bit more negative, at least certainly yesterday.
But I think looking not just to yesterday, but looking over the past six weeks, you've certainly seen a rotation out of what had been market leadership that was relatively concentrated into more and more of the market. What made yesterday trickier was you actually saw selling across 400 plus names in the s&p, rather than selling 100 and actually buying 400. But as we talk about we're in a correction in the nasdaq.
We should be seeing 1 or 2 corrections a year. So in that regard this is more normal rather than not.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tech selloff
- nasdaq correction
- mag-7 selloff
- stock market rout
- market rotation
Companies and tickers mentioned
- JPM
- JPMorgan Asset Management
Watch the episode
Watch “Tech selloff looks like a normal correction, says JPMorgan's Jack Caffrey” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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