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So we were just talking about this idea that the 493, the forgotten 493, are finally having their moment to shine. Do you see that becoming a reality this earning cycle?

Yeah, I I think there's two components to that. Number one is cyclical, right? So you're going to see a slowing in the economy and some the stock market in general is going to struggle with that, right? You're going to see earnings struggle and all that cyclically. Uh but what can save the day, what can save the day is that margins look pretty good, right? Number one. Number two, the Fed is expected to cut rates. So from a cyclical perspective, that's a bonus. From a secular perspective, the tech revolution is just beginning. We're talking about AI and we're talking about the deployment of AI in technology companies still. It still has not hit that second and third leg of this, what is typically a long revolution in any technology. As that gets deployed, productivity improves, costs go down, profits go up. So we think that broadening out of the market is coming. Fed rate cuts will be one trigger, but that's probably going to be priced in.

Yeah, Jose, what what do you think the timeline looks like for that, just in terms of what exactly is going to be the catalyst? And and when we have this massive gap between the out performers of the handful of winners and really underneath the surface, when you take a look at a lot of challenging times right now for for a number of companies, is that something it's not going to be a quick fix, right? Like this is something that's going to take maybe months here to correct if we are going to see more of that in-line performance across the board.

Well, I don't. So growth is outperformed value by 4X, right? So year to date, it's been a monstrous out performance. Thank God we've been on the right side of it. Um, but I think you're going to see some catch-up. Valuations just are compelling in certain areas and I think that's going to play out over the next month or two, uh, before we get to the Fed rate cut. Remember, September is the end of the fiscal year for the federal government. God knows what's going to happen in terms of treasury issuance, right? And that could push rates back up, as we've seen two times already in the last year. Uh, and that could have an effect on the market short term. Longer term, however, fundamentals still look good. And again, I would I hate to sound like a broken record, but those four underlying themes continue to push growth, growth and inflows of capital into the US upward, which is good for equities.

So if we're hearing all this good news from you about growth for equities, then why rush to worry about a rate cut? I mean, we're heading towards the S&P having its longest stretch of not having declines of 2% since the global financial crisis. Why mess with it?

Yeah, well from the Fed perspective, well because they look at the economy, not just the stock market, right? So I think you're going to continue to see a lot of byplay between the Fed governors talking about not cutting rates and cutting rates over the next, especially as we get through Jackson Hole. You know, it's it's more of a theoretical conversation. I think they're going to focus on a lot of that to try to keep the market from melting up further, uh, and and therefore potentially stoking some inflationary fires as the consumer feels richer, is richer and spends the money. They want to avoid that, right? So they want to have this be a gradual increase. And I think historically, when the Fed cuts rates, it's accretive to earnings and it is very positive for the market. So we want that to be built in over time.

Jose, do you think the market's getting a little bit ahead of itself, just in terms of what it's already pricing in, what the Fed is going to do here in terms of cutting rates at the September meeting? Is that too optimistic at all?

No, I don't. We don't think we've said September all along. We we feel we're pretty comfortable with that, and I think the data have slowed sufficiently to to warrant a Fed move, right? Remember, it's not just about the headline data. It's about what's happening underneath the data. And we're seeing pockets of weakness in some of the consumer areas, right? Even though consumer spending looks pretty good for Q2, based on this morning's data, right? The control group was up is almost 1% in one month, right? That's pretty good. Um, so I think the consumer though is slowing. We're seeing that trade down from steak to hamburger already take place. And you're seeing more importantly, the retailers are responding. They're cutting prices, right? So you're seeing it across in products and services. That said, I think it's important to remember that the Fed is not focused on 2024. They are focused on their own calendar, which is the easing cycle, which they already told us is going to take two and a half years.

So real quick, does that mean that you think that the Fed is more important than the election in terms of the market impact?

Yes, yes. Okay. Well, the the election is important, but remember, we're up every almost every year, except 2000 and 2008. US stocks are up and they outperform by almost 5%. So elections are important, the Fed is more important because it lowers the cost of money.

All right, Jose Rasco, always great to have you, especially here in studio. Thanks so much for joining us today.

Thank you. Thank you both.