We're seeing signs the U.S. economy is turning a corner, says Carson Group's Ryan Detrick

[00:00:00] Speaker 1: Join us now on the markets. Carson Group, Chief Market Strategist, Ryan Dietrich. He is a CNBC contributor. When did you get into town today? Yesterday. Yes, from Cincinnati. Yeah, from Cincinnati. Hometown, your old hometown. My old hometown. Reds just got swept by the brewers, but who cares? They can beat the Yankees. They can't beat anyone else. Yeah, all right. You all along have been saying an inflationary year, but that wasn't going to be necessarily bad for the stock market. You love looking at history. We're up 20% since the March lows. Yeah. What happens after a move like that? When's the last time you saw a two-month move like that? Very rare. It is [00:00:41] Ryan Dietrich: rare, I guess you say, off of COVID, right? And then also, again, off of Liberation Day, right? So it's pretty rare. Joe, we were up 19% in 42 trading days. That's two months, like you just said. We looked at history. Only seven times has that happened back to World War II. What happened after that? You're higher. Three months later, every time. Six months later, every time. And a year later, every time. Every time. Every time. Now, seven is a small sample size, yes. But when there's lots of other things we can look at, I think this consolidation, if you will, during June, it's perfectly normal. I mean, the June swoon, the second half of June's not usually that great. That's kind of where we are. And you've been talking about before I came on, clearly the AI trade is back. So we're still pretty optimistic here after this little June swoon consolidation here. [00:01:23] Speaker 1: 1999, and we just lost down Greenspan. You missed that, too. I do. That I was clued in on. But we pointed out that irrational exuberance, that was 1996. Mm-hmm. So a lot happened between 96 and 99 to add to the exuberance. Right. You look at a stock chart of Micron, or Sandisk, or Western Digital, or any of these, and it looks like 1999. But we just saw Micron's numbers that completely support the bullish, or even more than support it. They make it seem like it could even go higher. So I said it earlier, it's different this time, because it's backed up by numbers. [00:02:14] Ryan Dietrich: Well, no, that's true. It is. And, you know, that speech, I believe, was December 5th, 1996. 1996. And we talked about that, and the S&P doubled until the next three and a half or so years, and the Nasdaq was up like 300%. So- 300%. 300%. So those things can happen. You know, I think it was neat the last couple days. Just real- By the way, welcome back, Andrew. Thank you. Yeah, last couple days, what's happened, the market was down, yes. But two days ago, down 1.4% on the S&P 500. Yet more stocks were up than down on the S&P 500. Yesterday, yeah, virtually flat. But over 300 stocks were up. So tech didn't do all that well, but what did well? Financials, industrials, healthcare. I know lots of guests have talked about this, but this rotation is real, and how we're looking at it, Joe, is kind of like a barbell approach. Yes, we are still slightly overweight technology over here. But to have some financials and some industrials over here, not to go too crazy with the tech trade here, but we do, we call our outlook ride the wave, and our mid-year outlook's coming out very soon. It's called still riding the wave, very creative, I know. But these waves are still real, in our opinion. [00:03:10] Speaker 1: Well, there's internal rotation, because chips pulled back, and now it looks like they might have made, you know, the bump in the road. Are we past it? I think so. I think so. [00:03:21] Ryan Dietrich: Nvidia goes to new highs, too? Yeah. And the other thing, I think about July, and I know seasonals, right? July historically is a pretty strong month, like one of the strongest months, especially the last 20 years. And why is that? A couple of reasons. But I think earning season is a big one, and we're going to find out real soon with these large tech names, AI names, the rollouts, the spending, the CapEx. When it comes to AI, we don't think it's slowing down, and that's probably still going to be a net positive for this bull market, which is still alive and well. [00:03:45] Speaker 1: Inflationary growth year. Your inflationary part of that might have seen the worst levels? [00:03:53] Ryan Dietrich: I'm talking about inflation? Yeah, with what's going on with crude oil and energy prices, probably. But we, again, said inflationary growth. We thought inflation this year would be about 3 to 3.5%. But again, with a strong economy, led by earnings, led by lots of things, profits and margins, that's all been playing out. What's interesting about inflation, though, look at CORE, right, which, again, as we know, strips out energy. We're seeing services inflation going higher. We're seeing goods inflation going higher. What did Tim Cook say just last week with Apple, right, increasing prices? But that probably means higher margins also. That's why that stock's done okay since he said that. All in all, if inflation hangs out around 3%, we think the market will take it just fine. And one more thing about the Fed here, or to add about the Fed, I think the Fed's on pause. I know everyone's kind of jumped on the other side of that with maybe hikes. We think the Fed's going to be on pause. And again, like you just said, maybe inflation improves a little bit, [00:04:37] Speaker 1: and that's why they'll be on pause. How many more months of the higher energy prices that we have already seen? I mean, maybe we're headed lower. Maybe, who knows? You never know. It could go back up, obviously. But for three months, do we still see some of that seeping into everything else so [00:04:56] Ryan Dietrich: that the CORE eventually goes up? We think so. I think that's the case. And again, you know, when you have a strong-ish economy like we think we do, the labor market is really starting to heat up. 500,000 jobs created the last three months. Just so everyone knows, last year we made like 100,000 jobs the whole year. The services data and the manufacturing data, there's improvements. So that inflation might stay a little hot. But again, you know, run it hot is kind of another theme we've been saying. With the Fed, that's probably more net dovish than what the Fed fund futures expect. That's probably still going to be a good thing for equity investors, and the economy's going to hang in [00:05:26] Speaker 1: there. The Treasury Secretary yesterday said that he thought we were at 4% before the Iran war, GDP. You believe that? That based on and that we were well positioned for -- we do produce a lot of oil here as the swing producer now and more than anywhere else. Big, beautiful bill. That helped? It helped. [00:05:48] Ryan Dietrich: I mean, it definitely helped, I guess. Obviously, some of the impact of that is waning, I guess we'll say. I'm not sure we're 4% GDP, but I do think the second half of this year, we might see some of those things. Three and a half percent the second half of this year. Three and a half? Yeah. We think it's possible. We have a proprietary indicator. It looks at a leading economic indicator. We look at a bunch of different things. Keep this real simple. It never said there'd be a recession in 2023, '24, and a lot of other ones did. It has been increasing, improving. So we're seeing signs again that the economy here in the U.S. is turning a corner. And again, it's -- we know AI has been a big part of the economy. We know that. But I think the consumer is going to be the winner of the second half of the year with that labor market. That's why we're going to have a solid second half of the [00:06:25] Speaker 1: year on the economy. We're very conservative in the Midwest, in Cincinnati. Do you try to predict where the S&P will be by the end of the year? Do you give a number? We do. At the start of this [00:06:37] Ryan Dietrich: year, we said about 15%. And we never cut that target, even in March. What's that equate to? Oh, well, another 7% or 8% from right now. So I like to use the numbers. We're about 8% right now on the S&P. So 7,800. Yeah, 7,800, 7,900-ish, around there. Now, we might up that for our mid-year target, which is going to come out. But I'll be honest, we manage billions of dollars. I hate to give targets as a strategist. I like to look at the market on the aggregate. I would never -- if I was a -- You can get yourself in trouble. Never give it. No, that's why I like to say overweight equity, still underweight bonds. That's still where we are. Still sticking with those cyclicals like we talked about. But we did say 15% made sense. Maybe direction, but not during that time. Exactly. Get yourself out of trouble that way. Mark, it's headed higher. That's the easy way to put it. And that's what we've been saying that for three years. And fortunately, knock on wood, it's been working.