Hey, it's Steve Eisman, and welcome to another episode of the Real Eisman Playbook. And today I have two really great guests: Chris Verrone, who is the chief market strategist of Strategas, and Todd Sohn, who's the chief chartist also at Strategas. And so much has gone on in the markets this year. We're going to explore price action in the markets, what's worked, what's not working, and some expectations for what's going to happen for the next several months. I think you'll find it fascinating, fun. They're two great guests. We've had them before, and I'll be back afterwards to talk about lessons learned.
Hey, it's Steve Eisman. Welcome to another episode of The Real Eisman Playbook. And today I have two recurring guests, good friends of the show: Chris Verrone, who is the chief market strategist of Strategas, and Todd Sohn, who's chartist extraordinaire also at Strategas. Guys, welcome back.
So I thought I'd start with: if we were here a year ago, the market had had a swoon from February 29th to about April 9th because of tariffs, and then rallied. So we would have been here in late April. The market would have basically made it all back, and we would have been talking about what an amazing rally has taken place. And here we are a year later, and we had a market swoon where the market was down 4% literally on March 31st. NASDAQ was down 7%, and now it's up 4.5%, 7%, whether it's S&P. It's basically a deja vu all over again. So I'm curious, give me your impressions as to what the hell has just happened in the last several weeks.
It's funny, we always say in our work, the less, you know, right? Because if you had known what the headlines would read 8 and 10 weeks ago, I don't think you'd expect S&P at new highs, just like a year ago. If you had known kind of what the headlines would read all throughout April during the midst of the tariff storm, I don't think you would have expected new S&P highs as quickly as you did. Steve, I remember I was with you, I believe in early June of last year on this show, talking about this exact concept, like ignore the headlines, put the newspaper away, and focus on the price action. And I think what's been really compelling, let's say the last three or four weeks in particular, as we've come off these late March lows, March 30th, 31st was the low, is how quickly we've returned to what was the leadership, right? Back to the power stocks, right? Back to the kind of AI-driven names, the industrials, the banks have held their own throughout all of this.
Basically, if what you're saying is, if you took out the swoon, the story that we've had for the last year or so, which is AI, tech, power, banks, is the same story.
This has not been a resetting event. The drawdown, frankly, wasn't deep enough. I think we were down 8 or 9% at the lows, and on this recovery we've gone right back to the same types of stocks, the same type of themes, the same geographies which have been dominant before. So our big call has been what it was, and still very much is.
Okay, Todd, what are you saying? You're the chart man.
I like that nickname. It's my wrestling nickname. For me, March was about restraint, right? Folks dialing back risk appetite, and then right back in to a much more aggressive pace too. So I can measure that through equity ETFs. March averaged about 3 billion a day in equity ETFs. That's a pretty subdued number actually, and that's doubled in April.
Daily inflows into equity ETFs. We're doing about 7 billion a day in April.
Of all different kinds of equity ETFs.
Yeah. Mostly tech though.
And you know, maybe that's options and call options being exercised into that, but it has definitely been a get-me-back-into-the-market. I thought this was going to be a worse event. And as Chris just mentioned, we look through it, and now you're seeing that leadership reinforce itself. Because you know, there are a bunch of people that I'm not going to name names that during this swoon made an argument as to it's a complete regime change, that you know, sell your tech, sell your indexes, buy energy, buy gold, total regime change, and that doesn't seem to be the case.
Well, let's pick that apart a little bit. But first, I would just say, with one of the remarks Todd made, I do think that's an important difference from a year ago. If you go back to the move off last year's low, people weren't as quick to embrace it again. Like it took more time before sentiment and behavior and attitudes. I mean, we were here in June, and I remember skepticism abounds. Tremendous skepticism. So that is less the story today. There has been a much quicker embrace, I think, of this rally. We see it in the data that you look at, certainly in the data that we look at. But Steve, you touch on a really good point. I remember the weekend that that war broke out. I think February 27th, we wrote a note to clients. We said, 'Be very alert over the next few weeks. What does not act as intuition might suggest it should?' And gold was top of mind for us in that regard. I mean, gold's been very underwhelming throughout this entire episode. And I kind of go back to what we saw really from October through January. It was really, by our work, gold kind of jumping the shark from safe haven to risk asset, and then into this blowoff-like condition that we saw in January. I don't know if gold is done for good, but it has not acted well throughout any of this.
It's actually quite shocking in that, you know, during the height of the whole war news where people were petrified of inflation, oil prices are going up. If you had just said those two predicates to me, I would say guaranteed gold is up. And it wasn't. It was down.
Yeah. I remember sitting there on Sunday night, I guess February 28th or 9th, I guess March 1st, Sunday, March 1st, waiting for futures to open at 6 p.m. Having got into a pretty negative gold, sitting there worrying that gold was going to open at 6,000 or 6,500. And the exact opposite happened.
What do you think has happened here? It's extremely unusual that gold didn't act as the inflation hedge that it's supposed to act as.
I think a couple things happened, and then I think Todd will probably give us some clues on the flows and positioning as well. I would say from a purely behavioral perspective, something changed in October, November of 2025 where gold started to just behave like a risk asset. It looked like a semiconductor stock, not some safe haven. So it was correlated to NASDAQ. It became very correlated to NASDAQ, ironically, as Bitcoin started to go the other way. So something changed there. And then I think importantly, when you just look historically on gold, it changes its stripes all the time. I think this idea that gold is always this or always that just doesn't pass the test of history. So something happened in October, November. It kind of had all these blowoff-like characteristics in January. Todd, help me out with the data. In January, the options data, the float data was about as extreme as we'd ever seen.
Literally metal mania in January.
Yeah. Gold ETFs, precious metal ETFs, the miners did over a hundred billion dollars notional in one day. And that is just, that's incredible.
Yeah. Wow. Buying, selling, trading.
Trading. That's unheard of for that category.
What's interesting to me, Steve, if you owned anything, I think gold near the lows was down about 20, 25%, right? If you owned anything that was down 20 or 25, don't you think you'd have a little self-reflection on, you know, maybe something's changing? I can just say without question, kind of traveling around the last couple months, there's very little self-reflection on gold. Listen, the long-term trend may still be up, but clearly something has changed here over the last 6, 8, 12 weeks where I at least want to be open to what could look different in the precious metals market. I mean, we have a new Fed chair. I mean, we're talking about shrinking balance sheets. At the same time, industrial metals frankly act better. I mean, you have copper which has acted well, still at the highs. Aluminum acts well. So it seems to be some transition away from just the precious metals to other corners.
Let's talk about tech because tech is not universal anymore. You know, we got semis, we got equipment, and we got God help us software. And I mean literally God help us software. What are you seeing? Well, actually let's start with you. What are you seeing in the charts of semis, software, rest of tech? Like how is this playing out in charts?
The most important stat for me, of which I'll just keep beating this, is that semis are 17% of the S&P now.
Semis are 17%. Where if 10 years ago, what would that number be?
That's what I was going to tell you. 2%.
Wow. World changer, right?
Yeah. And that's exactly it. Markets changed, and that Nvidia is obviously part of the...
Micron is larger than J&J now.
Right. 20 years ago it was completely obvious that Micron was nothing and J&J was a heavyweight in the index too.
It's not like... Yeah. Yeah.
Right. It's been a pretty decent stock. Just not like Micron. AMD is creeping up into the top 15 stocks now as well in the S&P. So it's these names and it's evolving. So I went back, I looked at semis as an industry group, right, not a sector necessarily, even though they should be.
What percent? So if semis as an industry group was it 16%?
That's basically 50% of info tech.
Yeah, they're taking over the index.
Software now is down into the single digits. Software's been...
13 years ago, in the teens.
It is rare for a group to get that big. Energy did it back in the 2000s, tech did it back in the tech bubble with Cisco and Intel as part of that, but now you have just the pure semis doing this, which is super interesting to me. Is it aggressive perhaps? Is it warranted though? Yes. I mean, we're in a semiconductor world now. I just think it's important because the bulk of assets are in the S&P 500 that investors use, the majority of investing assets. So your diet is changing. It's becoming more semi-heavy, tech-heavy, right? So I think this also plays into diversification. No one else is out there that you could help diversify just in case this story hits a speed bump.
What are you seeing in software? What are you hearing from clients?
Well, first let's make a couple points on kind of the semi-observations that Todd makes. I mean, I think if you go back, and if there's been one constant rule of thumb in my career, it's that markets change, right? What was changes, and you see that predominantly in sector weights and group weights. Todd, help us. What's the staple sector weight in the S&P right now?
Right? Used to be in the teens, right? Healthcare, right? This is an evolving organism at all times. And I think the second you get stuck kind of with very static views of what the world should look like, you forget to be imaginative and think about what the world could look like. So 17 seems aggressive, but for all we know, maybe it goes to 25. What I think is interesting is when you juxtapose what tech looks like today versus what it looked like in '99, because there are certainly some parallels here, right? We're in that, and we wrote about it this morning. There is a meltup-type feel to this market here. The velocity with which it has come back is a little bit reminiscent of coming out of LTCM. The narrowly focused leadership is certainly reminiscent of '99. But if there's a difference with today versus tech then, tech there was no discrimination being paid among different groups within tech. Software worked, semis worked, internet worked, telcos worked, and then one day they stopped working. That's not what this has been. This has been, as you know, extremely rotational. '24 was all hyperscalers, '25 and still to today is all memory stocks. Now you have semicap equipment involved at the expense of software for the last 18 or so months. I mean, you have what I would describe as pretty generational oversold conditions in software. I think that's a descriptive statement. That is not an actionable one.
Explain what that sentence... Say that sentence again. I think it's important, and say what it means.
I think so often in this business the words overbought and oversold are just wildly misused. Overbought just describes a circumstance and oversold just describes a circumstance. They're conditional factors. You need some catalyst to make them actionable. And I mean, software has been quote oversold for months and months and months. We're now kind of in that generational category where you'd want to step back and say, okay, what is actually starting to show either some differentiation from the rest of the group? Because as you know, Steve, they have treated them indiscriminately for much of the last...
Completely. They're all down basically the same percent.
And when do you see indiscriminate weakness? Actually kind of towards the end of a decline, not in the beginning. In the beginning, it begins very selective. Selective weakness, it gets very indiscriminate towards the end. So you're in that zone in software. I can't imagine software, maybe Todd you agree or disagree, I can't imagine software really starts to bottom and work until semis crack, of which there's not much evidence of yet. But you're in at least the ballpark where I would start thinking about are there some names here where something could go right. We talked about what Workday...
But you know what the problem is? Last week, I mean just so everybody knows, we're recording this on April 27th. Last week ServiceNow reported. Those numbers were great. They were... not only were they great and beat, they beat, and they admitted this despite the fact that they lost, I think they said 75 basis points of growth because of deals in the Middle East that got delayed, which was completely understandable. And yet despite that, they reported 22% revenue growth and they beat anyway. In normal times that stock would go up. It was down 14%. So on what, this is what I say to my viewers, on what basis, like what piece of news do you think you're going to get that's going to get people to buy software when you just got a positive piece of news and the stock was down 14%?
Well, this is the big question, right? These things don't bottom on good news. They'll bottom or they'll stop going down on bad news, right? That's almost the test, right? Things don't top on bad news, they top on good news, they bottom on bad news. So I think what you have to look for here, given how indiscriminate software selling has been, I think over the next couple quarters, what names within the software index, which within the IGV actually start to differentiate themselves from the rest of the pack. Adobe, terrible chart. I'm a trend follower. Todd's a trend follower. Awful. But you're at the 40-year trend line where you would actually... you go back to the IPO in the '80s and you draw a trend line off the low, off the, you know, 1985 or '86, you're on the trend from there, which caught every decline in '02 and '08. And so you can start asking questions: what could go right from this condition? What could change from here? I think the mistake, just like we talked about earlier, would be getting too static in one's views.
What are you hearing from, and you too, what are you hearing from... I mean let me ask you this: how many clients are calling you and saying, 'Todd, what does a chart look like on this software stock?' How many times a week do you get that?
It's happened a lot. And the best answer is you just, if you want to take a dabble at it, you got to keep a tight leash or use the options market. So you're limiting capital. For me, I'm waiting for ETF issuers to come out with Tech X software funds because that'll be a great tell. That'll be the tell.
So like semis and Apple, right? Inevitably what happens is a theme develops and it gets overdone to the max, whether it's launches or closures. And so when you start seeing tech X software, that to me is a...
Be like a tech X software ETF.
Not to my knowledge. You can make the case, yeah, actively managed ETFs, but I'm talking like specifically an index that says I just want semis and Cisco and Apple, no software. That's usually a pretty good tell that...
