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options market is signaling the worst of the stock selloff could be behind us. The cost of hedging against a 10% drop in the S&P 500 Spy ETF now at a two-year low relative to contracts that profit from a 10% rally and a potential stabilizing sign for the market. Joining us now, we've got our very own Josh Shafer. And Josh, it's interesting. I was just reading an article too in in the Wall Street Journal this morning about how negative sentiment can often be a contrarian indicator that you can actually see stocks going up if investors, particularly retail see signs to the downside ahead. What do you look at?

Yeah, sure. I mean, I I think the question right now among strategist is, is sentiment negative enough, right? There are certain surveys, you could look at the AAII survey that's been very bearish recently, right? That's a survey of investors. But overall, I think what strategist are arguing is where people are actually positioned where the money is might not be quote bearish enough yet, right? So when you think about just simply where valuations have fallen to, we were very extended from a valuation standpoint, how expensive it was to buy stocks. We've just come back to normal range. It's not like there's a lot of things you can circle right now index wide that are necessarily considered cheap, right? No one's saying big tech is now cheap, the mag 7 are cheap, the S&P 500 is cheap. They're just a little bit closer to normal. And so I think that's one thing equities strategists are talking a lot about right now. And then I think from the economic side, we've talked a lot about pricing in slower growth, right? Let's take RBC Capital Markets, where Kavaseen has called from this morning. So she moves her S&P 500 year end target from 6600 to 6200. 6200 notably still a decent jump from here, right? What she did with that was move her GDP forecast from somewhere in the two to threes to somewhere in the one to twos. But she pointed out, what if GDP is lower than 1%, right? So what if right now we're just pricing in a little bit of a slowdown? What if the economic data over the next several months are actually worse than we think? That's not fully priced at this point, and that is why a lot of strategists say maybe stocks end the year higher, but over the next couple months, maybe we still have a little bit of chop here and a little bit of concern because we haven't really priced in that much of a slowdown in terms of what we've seen in this pullback.

That kind of mirrors what we heard from Tom Porcelli actually last week from PGIM, who was talking about their view being that they're going to see cuts this year, but they're also making the argument potentially, or they can make the argument for some pretty aggressive, if they did see aggressive tariffs even more so from here, that they would usher in, or the Fed would be prompted to usher in a more aggressive easing cycle as well here. And so there's the larger question of, all right, for an administration that's now talking about aggressive tariffs, talking about, or at least not talking about a recession, where everyone is prodding with those questions, is there even more that analysts are trying to get ahead of at this juncture and trying to anticipate what the real economic fallout could look like and thus resetting positions.

Yeah, I mean, I I think it's just hard, as we've been talking about, it's just hard to forecast right now, right? And one thing strategists have been highlighting too is when you think about trying to time a bottom, of course, that's very, very hard, no matter what. But trying to time a bottom between now and April 2nd, which we know is that big tariff deadline, just seems like potentially a fool's errand according to some strategist because that's sort of the big That's the big day though, right? That's where you're going to be. So yes, maybe nibble until April 2nd. But if uncertainty is part of what's brought us here, until you have some sort of lifting of that cloud of uncertainty, it's not a lot it's not a market a lot of people want to be in right now. Even you just look at the market action on Friday, a rally led by quantum and AI stocks is not normally a rally that a lot of strategists are going to cheer, right? There wasn't a lot of high-quality names leading that rally necessarily on Friday, right? So I think that's why a lot of people aren't necessarily saying right now, buy the dip, the bottom is fully in. I don't think there's that confidence.

All right. I guess I'll keep my quantum hat in the closet for now. Thanks so much, Josh. Appreciate it.

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