Aptus Capital Advisors portfolio manager David Wagner joins Market Domination with Julie Hyman and TheBigSkinny.com founder and Prairie Operating Company executive vice president of market strategy, Lou Basenese, to discuss the challenges of this earnings season, highlighting the "resiliency" of corporate America and US consumers.
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David, speaking about risk management, do you think that corporate executives should be managing risk a little bit more in terms of guidance revisions, being more transparent, maybe being more cautious and revising more negatively to the downside just to prepare for maybe worst case scenarios instead of middle of the road? Are you surprised by those revisions or lack thereof?
You know, I think that's the million dollar question heading into this earnings because obviously, Q1 is what we're reporting right now, a whole lot of the tariff jargon wasn't going on in the first three months of the year. Obviously, Liberation Day was on April 2nd. So everyone's trying to figure out what this overall guidance is right now. But Luke, you bring up a good point. I wouldn't bet against the resiliency of corporate America. We learned that during the financial crisis. We obviously learned it during COVID. So I have full faith in the managers to make the right decision moving forward. Like if personally, if I was a CEO, I would just maintain guidance and maybe expand the bounds of guidance just slightly because there's still a lot of unknown in the next few months, but I wouldn't make a whole lot of changes in the near term just because this is still just the first quarter. We still have three quarters remaining left in the year.
Um it's interesting, we've heard a lot of companies being very specific about their guidance too, which I I found really fascinating throughout earning season where they are really quantifying very specifically. Okay, here's the hit potentially related to China, related to other regions, etc. That way they have sort of some flexibility to say, okay, it wasn't as bad, so we can take that that off. That's been an interesting development. Um David, you talked about the resiliency of corporate America. What about the resiliency of uh consuming America, right? Which has really been the thing that over the past few years as there were predictions of a recession, people kept spending. But it's feels like now already that Americans are starting to pull back if you look at travel data, for example.
Yeah, no doubt. I mean, that's the other million dollar question I guess that's out there. Like, is all that soft data that we've seen, the survey sentiment data, is that going to transition into hard data? One thing we've been telling our clients, and it's probably not a popular take, is that there's no better time than, you know, the United States to implement tariffs right now. You know, if you look at from a consumer standpoint, just going back two months ago, consumer spending was growing at like six and a half percent year over year. Obviously, you have to look at that number in context from a historical perspective, and historically, the consumer has spent, you know, between three and five and a half percent on a year-over-year basis. So we're kind of already outkicking our coverage from a consumer spending perspective. Like that numbers come down a little bit, but investor's balance sheet, in my personal opinion, still remains very strong. If you go back over the last 10 years, the net household net wealth has increased by like 100% since pre COVID, it's still up 40%. So it's hard for me to bet against corporate America, it's hard for me to bet against the propensity of the consumer to spend right now because they still, they're still spending right now, even though the soft data kind of says that may slow down in the near term.