00:00Well, let's talk now to Matt Maley, who's Chief Market Strategist at Miller Tabac & Co.
00:04Good to see you again, Matt. Welcome back to the program.
00:06So let's talk about oil prices first.
00:08And often when there's instability in the Middle East, we see oil prices rise, don't we?
00:12But they've gone lower. So what's going on?
00:16Well, I think the main thing is that what's happening here with this response from Iran yesterday,
00:23you know, they told it. It was telegraphed in advance.
00:30And so it was pretty feeble, to be honest with you.
00:33So people really think that, OK, Iran's response is not going to be a big one.
00:37They're not going to mine the Strait of Hormuz.
00:40The Strait of Hormuz is not going to be shut down.
00:42And so this has got people thinking that the odds that we'll see a big spike in oil is very, very low.
00:48And therefore, they've fallen back down to the levels that they stood before the initial attack came from Israel on Iran about two weeks ago.
00:56So we've seen the markets jump on the news.
00:58Is that why? Is it down to oil?
01:01Well, that seems to be the main reason, yes.
01:03I think so.
01:04But it's interesting that as much as the market has rallied, it has not skyrocketed higher.
01:09And even though we're pushing up to near the all-time highs from earlier this year,
01:14it's still, I mean, it's still not up that much on the year.
01:19So I guess my point is that there are still other headwinds that we have to face in the marketplace.
01:23The market is still very expensive.
01:25And so people are starting to figure out, is there going to be a lot more upside from here,
01:30even though this geopolitical issue seems to be calming down?
01:34Well, headwinds on the mind of Jerome Powell, no doubt, as well.
01:37We've heard from him saying that rate cuts could wait.
01:40What do you make of his comments?
01:43Yeah, I thought they were important because, you know, it's interesting.
01:45The last couple of days we'd heard from other members of the Federal Reserve saying that we could see a rate cut in July.
01:52That seemed to be taken off the table by Chairman Powell today, although he said it's still a possibility, but they always say that.
02:01And so that seems to be calming things down in terms of getting excited about the Fed being more aggressive.
02:08And, you know, I guess the point is right now, though, is what people need to be looking at is what's going on in the economy overall.
02:15It is still slowing, even though it's growing.
02:18That rate of growth is slowing and earnings estimates in the U.S. continue to come down.
02:23And so with the stock market trading at more than 22 times earnings, it's tough to think that it can push or skyrocket a lot higher from here.
02:30I mean, he's got a lot on his mind, though, hasn't he, Jerome Powell?
02:32He's got inflation, this geopolitical uncertainty, and we haven't spoken about them for a while.
02:38Tariffs, there's a lot to factor in here.
02:41You know, it's so funny how the tariff issue just suddenly disappeared after being the most important one anybody could talk about for many, many weeks.
02:48If not months.
02:49And, yes, that's going to be coming right back in because we do know that a lot of the impact of those tariffs haven't been felt yet.
02:55So if inflation is going to pick up, it's probably going to pick up later, not sooner.
02:59Or when I say it's going to pick up soon.
03:01That means in terms of July, August, September.
03:04And we weren't looking for it so much in May and June.
03:07So these are the things he's got to be concerned about, even though oil prices have come back down.
