Hello, and welcome back to another episode of Blue Chip NOW! Today you only have Daniel Dusina, chief investment officer, and Vince Parrack, investment analyst. We have a couple of folks that are either dealing with illness and don’t want to get us sick or are out of the office. So, today I think we’ll be a little bit more. Call it economy kind of policy heavy just given recent developments.
00;00;58;22 – 00;01;17;00
But we are also going to touch on some market related items, including, you know, what are some takeaways from the most recent earnings season that is starting to wrap up, as well as kind of some sector and asset rotation and then maybe at the end, just touch on any key catalysts to watch over the next coming weeks. So, let’s kick it off here.
00;01;17;01 – 00;01;45;20
Number one item we’re going to talk about tariffs. We’ve got tariffs back in the spotlight after a Supreme Court ruling has left some policy flux here. So what happened. The US Supreme Court ruled that former president what says former President Trump can I mean, okay, okay. So what happened? The US Supreme Court ruled that President Trump’s broad tariffs, which were imposed under emergency powers, were unconstitutional in a 6 to 3 decision.
00;01;45;23 – 00;02;13;03
So that happened last Friday. We’re recording this on Monday, February 23rd. So that initially lifted stocks and eased some trade concerns. Markets quite frankly, looked a little more upbeat as many of, the tariff arguments lost their legal footing. But really, that doesn’t tell you the whole story. So, the Trump administration has responded by imposing a new blanket 15% tariff using a different statute, meaning that trade policy uncertainty has not disappeared.
00;02;13;03 – 00;02;42;21
It’s just shifted form. So this morning we’ve got market reacting with, lower futures, weaker risk appetite and some rising safe haven demand. So you want to think about the broad based impacts here? I think, you know, risk assets, stocks and specifically sectors like tech continue to get hit by uncertainty. You’re seeing a flocked to safe havens like gold, where we’ve seen prices rise today and and generally kind of consistent with past periods like this.
00;02;42;24 – 00;02;58;14
And global markets are kind of reacting unevenly. Some Asian markets are climbing on hopes of reduced tariffs, while as we said, U.S. markets are kind of drifting lower. So, Vince, I don’t know what to make of this. It feels like we’re kind of, ten months down the line on the tariff conversation and we still know just about nothing, right?
00;02;58;14 – 00;03;25;15
Yeah. I think, you know, myself and everyone at blue Chip and like many more are experiencing fatigue around this topic. It’s been in the headlines for, you know, nearly a year at this point. And something interesting with the the new 15% tariff is that it’s being instituted under the, Trade Act of 1974. So with these tariffs, they can only be in place for 150 days until congressional action is required to extend it.
00;03;25;17 – 00;03;45;04
So, you know, we’re going to expect continued turmoil and continued headlines around, you know, where are we going to land? And all this. Yeah. Continues to be just kind of a mess. You know, we’re talking potential refunds from the tariffs of last year. So that will also be, you know, a very messy, event, figure all that out.
00;03;45;04 – 00;04;02;24
So, yeah, just continue uncertainty. Yeah. It’s hard to hard to get a good grasp of, you know, what to expect. Yeah, I think that’s exactly it. And and that’s why I believe you are going to see markets continue to be choppy anytime this topic kind of comes to the forefront. Just as we’ve seen over the last year.
00;04;02;24 – 00;04;25;10
Realistically, if you get some meaningful news on this developments or deterioration in negotiations, you see the markets react positively, negatively. It just introduces volatility into the experience, which again, I don’t think you can invest around. I think it’s it’s trying to step back and understand what types of themes or sectors or industries are broadly impacted by any of these changes.
00;04;25;13 – 00;04;45;19
And it’s just it’s honestly going to be very challenging until we have a firmer grasp on what the, what the call it steady state of, of these tariff actions are. So, something to pay attention to, but certainly not to make gut knee jerk reactions around. All right, shifting gears a little bit, we had some meaningful economic data come in last week.
00;04;45;19 – 00;05;13;22
So specifically, what I’ll mention today is, gross domestic product figures from the fourth quarter of last year. And the headline really is that, you know, the most recent figures show that U.S GDP expanded at around 1.4% annualized in the fourth quarter of 2025. And that’s markedly below forecasts as well as the prior quarters. So much of this slowdown I will call out stemmed from the 43 day federal government shutdown, which sharply reduced government spending.
00;05;13;24 – 00;05;32;08
So I don’t know if you can make two too much out of this, but some of the other kind of takeaways, you know, consumer spending still grew just a little bit more slowly. And we know that’s the bulk of gross domestic product or economic growth here in the U.S.. Other items, business investment outside of artificial intelligence and key tech areas was somewhat subdued.
00;05;32;08 – 00;05;58;13
So I think that’s a little bit more concerning. And then finally, underlying indicators suggest that essential economic activity wasn’t collapsing, but momentum just clearly decelerated. So some of the implications from this, I think fed policy uncertainty is is higher now. Slower growth with somewhat persistent inflation makes decisions on rate cuts a lot trickier. So I mean, we always talk about forecasting interest rates as more or less a fool’s errand.
00;05;58;13 – 00;06;23;11
I think that holds true here. The Federal Reserve is very much in a wait and see type position right now. So, any of and of of the kind of push and pull that happens, whether it’s headline economic growth, inflation, labor, there’s a lot to unpack still, which is why you have the fed kind of just sitting put but then, you know, you have risk assets that are going to be a little bit more sensitive to data surprises.
00;06;23;14 – 00;06;44;22
So I think you saw some of that when this data came out last week. But the bottom line, I think, is that at least for the U.S, this this most recent set of data shows that the economy isn’t crashing, but it isn’t necessarily accelerating either, which makes monetary policy and investor positioning a little bit challenging. You know, it’s we’ve said this for the better part of two years.
00;06;44;22 – 00;07;07;08
You know, we’re in this environment of slower economic growth, but not no economic growth. I think that very much holds true in the most recent GDP print. And, you know, I the whole asterisk on it around the 43 day federal government shutdown makes it challenging to make too much out of this. Right. And, you know what’s interesting with that government shutdown is that it essentially, you know, artificially pulled down that Q4 data you’re reading.
00;07;07;08 – 00;07;29;01
So with the government resuming, we can kind of expect that Q1 GDP may see a catch up effect, with, you know, a backlog of federal spending being pulled forward in Q1. We may see that artificially kind of propped upwards. And, another, you know, thing to mention is that the GDP reading was the preliminary release.
00;07;29;01 – 00;07;55;09
So we can expect revisions there. You know, revisions have been, fairly notable. You know, at certain points in the recent history. So, yeah, it’s kind of a couple things to continue watching there. Yeah. And so I did say that, you know, business investment outside of artificial intelligence and key tech areas was subdued. But if you look at that, that portion, the the call it AI driven investment, that has been very persistent.
00;07;55;09 – 00;08;19;21
So even with broad uncertainty, companies have really continued to invest in equipment and technology, AI related hardware. Recent data outside of the GDP print showed that core capital goods orders taking out defense and aircraft stuff, which can be very volatile, increased far more than expected last year, which to me indicates some confidence in long term business expansion and productivity spending.
00;08;19;21 – 00;08;49;07
So for investors, I mean, I think it’s it’s a very clear message that continues to resonate. And that’s just that AI and tech investment is keeping parts of the economy buoyant, which can somewhat counterbalance weak consumer spending or service areas of, of the economy. And, you know, I think this can somewhat act as a proxy for business confidence, meaning that, you know, firms are still planning ahead and a positive early cycle signal, if you will, even as we’re getting some broader macro data softness.
00;08;49;07 – 00;09;11;24
Right. So I think it’s just something to watch going forward. But I have said on this podcast, and I think in some of my writing in the past that, you know, the whole idea of this artificial intelligence tech stack build out does serve to place a little bit of a floor underneath economic growth because, I think there’s just massive amount of dollars at play and we’re continuing to see that show up in the data.
00;09;11;26 – 00;09;30;28
It’s interesting too, because, it was a little over a week ago. We actually got a surprise. The upside in the employment picture. So that’s been, you know, a topic that people when talking about AI displacement and the labor market. So, you know, that continues to kind of be reflective of the strong labor market. So yeah, no concerns on that aspect as of right now as well.
00;09;30;29 – 00;10;01;15
Yeah, certainly. And maybe taking us, you know, one further step, looking at the kind of market implications on the AI and big tech front. So, we’ve seen earnings season progress and we’re kind of closing in on the end of, of the earnings season, at least from the perspective of the fourth quarter of 2025. And as you can expect, with how the last few calendar years have been, which has really been, dominated by big tech from a returns perspective, you have investors very closely watching big tech earnings.
00;10;01;17 – 00;10;28;19
You know, we’ve got Nvidia upcoming. And really I think investors kind of view Nvidia as a proxy for the health of the AI investment cycle. And Nvidia’s results themselves often act as a bit of a bellwether for artificial intelligence demand and semiconductor spending. So some of these artificial intelligence names have remained volatile as as investors are trying to unpack growth expectations and how sustainable the levels of profitability the displaying are.
00;10;28;22 – 00;10;58;12
And because of that, you’re kind of seeing this broader rotation underway, capital flowing out of some certain what have been deemed overvalued tech names and into segments that benefit from stable earnings or inflation insulation. So you can think of that as, away from tech and into maybe some safe havens like gold and into some retail cyclical names and energy, some industrials names that are maybe kind of the indirect beneficiaries of this AI trade.
00;10;58;15 – 00;11;26;12
Those are the kind of trades that you’re seeing happen at least year to date, and a much more stringent focus on valuation as we’ve talked about, you know, so far this year in this on this podcast. So asset rotation type signals are not always kind of consistent in how they operate. But we are just seeing people be a lot more selective with regards to risk valuation and and how that is all kind of playing into the macro picture.
00;11;26;15 – 00;11;54;06
Yeah, absolutely. I think, you know, the selectivity you mentioned is interesting. The view within the actual, you know, artificial intelligence exposed names, for example, like memory this year, memory producers micron, Samsung, Hynix, they’ve all performed very well. Well, what has been working in the past? Hyperscalers have not. That’s like Microsoft down 20%. There’s even some fragmentation there at Google, you know, roughly flat for the year so far.
00;11;54;09 – 00;12;14;14
So it’s, you know, really interesting seeing that fragmentation that’s selectivity within those markets as well. Yeah. Yeah. And I don’t think that’s a trend you’re going to see go away anytime soon. So it’s basically like, you know, the different phases of this kind of investment cycle, specifically with regards to AI, you know, like the build out and then what.
00;12;14;20 – 00;12;37;12
Right. So it’s something that needs to be watched pretty closely. Going forward, because I think the technology is just developing at a pace that, many people, myself included, did not expect. So with that requires some nimbleness. And I don’t think you can just blindly invest in some of the usual suspects and expect to reap the benefits from this massive tailwind that is artificial intelligence.
00;12;37;15 – 00;13;01;01
So wrapping up here, maybe just if we look ahead to to discuss some key catalysts, at least from our perspective, that we think you should be watching, I think, you know, Federal Reserve communications on rate policy. That’s of course, always going to be front and center, especially because even though the fed is in kind of this wait and see mode, we are structurally in a rate cutting cycle.
00;13;01;03 – 00;13;27;26
Now we’re getting some conflicting sets of data, whether it’s weaker GDP, relatively stronger inflation data that came out last week and a stronger labor market, you know, net net that doesn’t really in my opinion, force the Fed’s hand to make any additional rate cut decisions right here and now. But again, any communication on on rate policy is going to be heavily scrutinized as well as you know, an upcoming transition in the fed chairman role.
00;13;27;28 – 00;13;51;17
Other things I think we talked about some of this already, but upcoming earnings from major tech and industrials firms, you know, we are wrapping up, fourth quarter earnings season, but still a number of headline names to watch that are that are yet to report results. And then finally, you know, more macroeconomic data, inflation, employment, consumer sentiment, all these things are going to be very heavy drivers of market direction in the in the coming weeks.
00;13;51;19 – 00;14;13;20
And as will some of the tariff negotiations and the legal developments there. So certainly a healthy plate to keep investors busy over the next couple of weeks. But in short, right now I think, you know, you got the U.S. market backdrop being one is of policy uncertainty, mixed economic signals and selective sector positioning. You’ve got traders bouncing, optimism and caution around trade policy and slower growth.
00;14;13;20 – 00;14;32;13
So certainly exciting times. Even though we’re kind of sick of the tariff rhetoric, it’s important to pay attention to and, and we’re we’re curious to see, you know, what this next chapter really holds anything else for us today, Ben? What do you think? No, I think that, you know, sums it up. Know the current environment pretty well.
00;14;32;18 – 00;14;39;23
Okay, well, as always, thank you so much for listening and tuning into another episode of blue Chip. Now we look forward to speaking with you again soon.
