Wells Fargo’s top equity strategist says corporate America will post another round of gains this quarter.
In a new CNBC interview, Oshung Kwon say Wells Fargo’s machine learning models predict that AI-related companies will improve third-quarter earnings.
“We basically went through all the macro variables we could find, about 350 macro variables, and we went through this machine learning process to figure out where the turnover might be. And it still points to a pretty decent turnover.
We predict an increase of around 4%, led by AI, [semiconductors].”
Kwon says that while markets remain fixated on Federal Reserve policy, he notes that trade matters above all else.
“I think AI matters more than the Fed. As far as broadening, I think the Fed matters. Beyond that, I think it’s really more about growth.”
He also says that the market’s reaction to the Fed’s recent shift to an easing cycle has already taken place, with investors turning away from interest rate-sensitive sectors and back into AI.
“There was a lot of optimism going into the FOMC that the Fed might enter a new acceleration cycle. That’s when we really saw the easing cycle trading take place, whether it was the Russell [2,000] or the house builders. Now that we are officially in a easing cycle, we are seeing the news being sold and moving back to AI.
Outside of AI, I’m not really excited about anything.”
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