BlackRock senior product strategist Tushar Yadava joins Market Domination Overtime to give insight into Big Tech's market concentration and what investors should consider for their portfolios.

"Until we see some sort of broadening in earnings, it's unlikely you're going to see some sort of broadening in the market. And absent some kind of major market macro catalyst, you're not going to have that happen. And just, as a sort of footnote to that, a market catalyst that's a big sort of major macro driver of stocks is also going to be a uniform condition for the growth names and for the tech names, just like it hurt them in 2022," Yadava tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Nicholas Jacobino

Video Transcript

Thank you so much for joining us.

As we were just saying, There's been a lot of concentration when it comes to big tech.

What are the potential risks there?

We don't see that broadening out of the market in the second half of the year.

Yeah.

Listen, we can focus a lot on the risks.

I. I think that's, you know, again, uh, tough for a lot of people because, uh, most people came into the year expecting some kind of broadening out.

Maybe that whine that you're hearing is the noise of everyone complaining about the fact that we haven't had that so far.

Listen, the market's doing its job.

It is chasing higher fundamentals and where you're getting higher.

Fundamentals are in those pockets of the market that are driving earnings growth.

By no surprise that happens to be tech.

Or we like to call the tech plus, including some of those, uh, consumers.

Uh, the communication services names, uh, that often get lumped in with that mag seven as you're showing on the graphic, Uh uh as well as the growth names and in our target allocation portfolios, which you know, any advisor can follow on BlackRock's Advisor Centre.

And you could see what we're, uh, you know, looking at buying and selling in our portfolios.

We've been very heavily overweight.

This theme, uh, and part of the reason has been because earnings have given us no reason to move off of it.

Uh, and that's happened in the last season.

It's been happening in the last few seasons that we've been seeing.

It certainly isn't likely to continue into perpetuity.

But until we see some sort of broadening in earnings, it's unlikely you're going to see some sort of broadening in the market and absent some kind of major market macro catalyst.

Uh, you're not gonna have that happen and just, you know, as as a sort of footnote to that, a market catalyst that's a big sort of major macro driver of stocks is also gonna be uniform condition for the growth names and for the tech names, just like it hurt them in 2022.

So, you know, for us, that's a reason to stay bullish and stay bullish in this particular area, the market where we're seeing above average earnings growth where we're seeing, uh, you know, those pockets of the market really driving the market higher.

And the market's doing its job in prices, reflecting the reality that we're seeing in those stocks.

You know, it's interesting because you you hit on one theme you'll hear a lot about, I mean, and it certainly investors are focused on this.

This idea Well, we've had this rally, but it it's been so narrow and and we've had any number of strategists come on that they they throw a yellow flag at that toe, gets them a little nervous.

The other theme I do wanna get your take on it is you'll hear folks kind of talking about the economic data and we got more today.

And and now whether you know, is that calling into question on the soft landing scenario and maybe folks getting a little bit more sceptical.

Ho, how are you feeling about that?

Tar are Are you in that soft softish landing camp?

Well, we've soft landed at this point in time.

II, I think you know, talking about what type of landing we're gonna have was a very 2022 2023 conversation, maybe.

Uh, I, I think you should have to look at the reality.

Uh, you know, the the last Federal Reserve rate hike was, you know, far, far in the past.

At this point in time, if there was some transmission mechanism that we were gonna see an economic impact, we should have seen it by now.

And and I think we are seeing it in some pockets of the data, and it goes back to this broadening out.

Sorry to keep harping on.

You know where the challenge flags are coming from, um, or or the yellow flags that are coming from, you know, I'll throw a challenge, flag on it and say, Look, it's all related to some degree.

Uh uh uh, and unfortunately, part pockets of the market that rely on financing costs that rely on the ability to have sort of, uh, you know, project shovels in the ground, things that are, uh, you know, gonna be dependent on the cost to finance those projects.

They're gonna struggle, and they have been struggling.

Uh, I think other areas of the market where you're seeing revenue in the door, you're seeing orders in the door and you're seeing sort of strong economic activity are not.

And the econom economy as a whole.

I beg your pardon, I I is is an amalgamation of all of that.

And, you know, some pockets of the market and the consumer have ex, uh, remained extremely strong.

Uh, some pockets of the market, certainly on the industrial side.

Uh, and you know, next week we'll see that continuation, maybe on the manufacturing and industrial sort of data that's coming through.

Have not, uh, and it is an unequal economy.

It is an unequal economy for those respects.

I think if we sort of detach ourselves from worrying about how we define what the economic cycle has looked like for the last, you know, six months to a year and just sort of reflect the incoming data continues to remain strong, but there is weakening at the margin.

I think that informs us for how we wanna look going forward, which is that you know, we see a federal reserve that is on the precipice of having to sort of make maintenance cuts or or or or look at, uh, uh, cutting rates.

Certainly comments from, uh, Raffel boss, just before I, you know, we started this segment reflect a lot of that reality, which is that higher rates have bitten the portion of the market that they were going to bite.

Uh, but as a whole, the economy, um ha has Ma managed to sort of weather that storm and has landed quite softly overall?