This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
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What we’re watching
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What we’re reading
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Economic data releases and earnings
I want to be the jolly guy on stocks after this long week.
Really, I do — it’s more in line with my nature.
But I can’t.
And I’ll give you my reasons why.
One, what has fundamentally improved, business-wise, now that there’s some form of US-Iran ceasefire? Umm, nothing?
Ships are not ripping through the Strait of Hormuz. Oil prices continue to be elevated. The president says he’s already looking for his next geographical conquest. Investors still aren’t tripping over themselves to buy beat-up tech names because of AI spending concerns.
Wall Street continues to see corporate earnings potential this year through rose-colored glasses. The next few weeks of US economic data could show inflation breakouts.
The stock market’s valuation is far from compelling. No one on the Street is rushing to take profits on defensive trades — such as oil — that have worked well since the war began.
“We still have an Overweight in areas like industrials and technology, but this is where it’s going to be somewhat messy. And if it does [the war] escalate, you want to have some hedge within portfolios. And we think the energy sector does that now,” Truist chief investment officer Keith Lerner said on Yahoo Finance’s Opening Bid (video above).
“I expect things to be messy,” he said. “But the other thing to just keep in mind is markets tend to bottom when there’s peak uncertainty. If you wait for clarity, the market’s already moved.”
Agreed on the messy aspect.
Want me to stop? Too bad, I’m not going to.
From a corporate perspective, I haven’t liked the super-early vibe around earnings.
Constellation Brands (STZ) joined Delta (DAL) this week in striking a cautious tone.
Constellation Brands — the US maker of Modelo and Corona beers — withdrew its previously issued fiscal 2028 outlook late Wednesday. It reported slightly weaker demand as consumers navigate high prices everywhere. I get that the company’s wine business has long been sucking, but taking guidance off the table? Not good.
If these two earnings reports scream “bull market back on” for stocks, maybe I need to go back to being a golf caddy. Maybe I can caddy for Tiger Woods when he returns to the Masters in 2027.
The best earnings report of the week? Levi Strauss (LEVI) crushed it. Thank you, Love Story.
