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And our next guest releasing a new note, changing his stance on equities and cash for more. We're bringing in now Keith Lerner. He is co-chief investment officer and chief market strategist at Truist. Keith, it is always great to see you. So, let's talk about this new note, Keith, because you tell your clients you downgrade equities to neutral, Keith. So, you're officially lukewarm. Explain why, Keith. What are the reasons?

Yeah. Well, great to be with you all. Well, as as you all know, we've been uh, big bulls over the last year and uh, when we look at the way of the evidence in our work, it suggests a more mixed backdrop and we're making that adjustment to reflect that. And as I and as I talk about the way of the evidence, there's a couple of things that we're looking at. And you all have discussed a bit of this. One thing is the the economy. We still think the economy it will be somewhat resilient, but we're certainly seeing some softness. You can look at the economic surprise index, which is now at the lowest level since September. You mentioned consumer confidence, weak service numbers uh, last week. So, again, I think we're going through a little bit of a soft patch, which is kind of of the buzzword, I guess this week. So, that's number one. The the next thing that we're looking at is forward earning estimates for the S&P 500. A pillar of this bull market, as we've discussed in the past has been the earnings have been really resilient. Well, what we've noticed over the last month now, forward earning estimates for the S&P 500 have started to flat line. Again, that's not catastrophic, but it is a shift in that in that in that trend. Uh, and then thirdly, when we look at the technical side of the market, the price trends, what you see is a very split market. Only about 50 50 to 60% of stocks are actually in uptrends defined by above the 50 or 200 day moving average. You put that all together ahead of some event risk and the Fed being on the sidelines and some fiscal tightening, to us, it's prudent to at least make some, you know, some shift in in a risk risk exposure.

So, Keith, for for people, you know, we have strategists like you come on all the time. We talk about being overweight or neutral or underweight stocks, and just for the people who are watching at home, right, who are retail investors, it doesn't mean sell stocks. It's neutral relative to what, right? Does it mean like you should keep uh, sort of conventional 40% bond, 60% stocks in your portfolio? Like what does neutral mean actually in terms of positioning?

No, I love I love your question. It's the right one and because a lot of times, you know, we have strategies, it's like these really big bold calls, but the reality is, you know, each client has a different benchmark. Some of them are going to be much more aggressive. Some of them are going to be more balanced like you like you said. So, basically what we're saying is relative to our benchmark, let's just say it's a 50 50% stocks, 50% bonds. Over the last year, we've had um, an overweight or more money relative to that benchmark weight in equities. What we're saying is right now, we're above that benchmark. We want to bring back our equity exposure back down towards benchmark. We're not saying this is time to panic. We're not saying this is the time to have, you know, 50% cash. But we are saying is that we expect it to be a little bit of a bumpier path. We

expect that there's going to be some disruptions along the way this year. That was actually part of our outlook coming to the year. So, maybe shaving some of that off and then having a little bit of cash when we see some of these disruptions. And so far, we're only still about, you know, two or three percent from an all-time high. So, we think we just I think this this kind of corrective choppy period likely has further to go.

Let me ask you, Keith. When you when you downgrade equities to neutral, you must have been thinking through, okay, well, how could I be wrong? What are the upside risks to my call? So, walk us through that.

Yeah, now, as a strategist, I mean, you know, there's there's no certainties in what we do. That's why we say weight of the evidence. And uh, so what could go, you know, what could go? Well, well, I think in some ways we're starting to reset those high expectations right now, right? The buzzword, as I mentioned, is soft patch. No one was talking about a soft patch two weeks ago. Obviously, we have the big print that you discussed before with uh, Nvidia. That's going to be a big thing in their term. And also, if if if if the administration starts talking back some of the tariffs, that could be a little bit of a relief rally as well. And then also, I mean, maybe in a week or two, some of the soft patch and the economic data actually starts to to reaccelerate or the earning trends start to move up again. So, those are all things we're looking at. But again, we're looking at the way of the evidence and I kind of laid out the picture that at least the things in our work have have changed. And again, going back to an important point here is, you know, normally if the economy was going to show a little bit of softness, people would start thinking, hey, the Fed's going to start cutting rates, maybe they're going to start moving a little bit quicker, but they're basically boxed in our view because of the tariffs. And only way they'll cut more aggressively than mid-year is if the economy really starts to slow down, which we don't want to see from an equity standpoint.