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Joining us now to discuss for today's strategy session, we want to bring in Stephanie Aliaga at JPMorgan Asset Management Global Market Strategy. Stephanie, it's great to have you. So, we certainly have seen the return of tech stocks here this week. We have the Nasdaq. I believe it's on track for the best weekly performance that we've seen in about 10 months. I'm curious how you're looking at the fact that we are seeing technology stocks back in favor.

Absolutely. I think the last few weeks of choppiness have just really underscored one of the maybe unintended consequences of the really impressive performance we've seen in the markets over the last, you know, 18 months or so, and that is just that it leaves markets more susceptible to choppiness and just a few individual names. And while the quality in a lot of those tech names that are leading the index is still very, very good, um, they are much more susceptible to really any misses in sentiment, any dimming in sentiment, and that could lead to some, some volatility in the markets. So, I think it's a really important point for investors to just look at their overall exposures. You know, where have they gotten a little bit offside? Do they have the right amount of risk exposure to some of these individual names? Um, and fortunately, now this year, we have this broadening out in earnings growth that is providing a more durable support for the markets that is not just relying on these few individual names.

Where can investors be, be comfortable with risk in their portfolio and, and of course, it depends upon the risk appetite for their portfolio, but where are some of the more stable risk names in the market versus those that perhaps are still needing to prove themselves and prove the valuation that they should grow into?

I think the focus really has to be on quality because even if, you know, tech, uh, we traditionally think of that as perhaps a riskier sector of the markets. In the current market environment, you have, uh, a lot of these tech names have a lot of cash on hand and they're using that to invest in future growth opportunities in R&D and capex. But it's not only tech that actually has healthy cash balances. It's other areas of growth markets, consumer discretionary, consumer services, also healthcare, real estate. Um, and it's also not only tech that's investing or that is a beneficiary of all of the major capital investment going towards AI and these AI infrastructure needs. So, it's really, I think, looking underneath the hood, continuing to emphasize quality at this juncture, and companies that can still do well with a moderating economy.

Talking about a moderating economy, some of the sluggishness that we have seen, especially within the labor market, has sparked this debate about what the Fed should do at the meeting next week. There was a lot to talk about 50 basis points initially following some of those weaker labor prints. Now, in the heels of CPI, more talk about 25 basis points. I'm curious, though, let's first focus on 50. Could that potentially do more harm than good, and why or why not?

We think it could, and the key here next week, and Powell's has worked cut out for him, is in getting the messaging, right? Because besides the 25 or 50 basis point cut, I mean, we're talking about a Fed funds rate that's at 5 and a quarter to 5 and a half. Meanwhile, unemployment's at 4.3 and now headline CPI 2 and a half percent. The time has come to begin normalizing policy. The debate is around, do they start really small, do they start just a bit bigger? Um, but the key here is that the Fed begins this easing cycle by continuing to emphasize the, uh, confidence and the success in bringing inflation down towards its 2% rate and just acknowledging that the labor market is cooling. It's time to start normalizing policy, but they're not getting into emergency mode of trying to, uh, prevent a recession. That's where the risk is. If they do this and risk markets thinking that they're behind the curve, that could actually, uh, create more harm than good with this 50 basis point cut.