Welcome to Morning Brief. I'm Julie Hyman. Let's get to the three things you need to know today. First up, tech is back, leading the charge on Wall Street. Futures are pointing to gains and the market's looking to end the week on an upbeat note. Chips leading the way as the key semiconductor index is coming off of a record high. And helping lift chips again this morning, the US Taiwan trade deal. A key part of that agreement, building more semiconductors and chip factories in the United States. Taiwanese chip and technology companies will invest at least $250 billion in the US for production capacity. And in exchange, the US is limiting reciprocal tariffs to 15% down from 20%. With the rising cost of electricity tied to the AI buildout, the White House is looking to take action. The Trump administration reportedly teaming up with a bipartisan group of governors to pressure an electricity grid operator to hold an emergency power auction just for tech companies to bid on contracts for new power plants. But it's unclear if that plan will move forward. The grid operator was not invited to attend that event at the White House.
Getting a check in on stock futures right now. We are seeing a little bit of dispersion here between the Dow and the NASDAQ 100 futures. Dow futures only up marginally here. NASDAQ futures indicating a gain of about a half a percent at the open, illustrating a little bit of a comeback in tech. Although this year thus far, tech has still been lagging. And Wall Street is wrapping up a volatile week as earnings season kicked off. Stocks coming off a winning session, snapping a two-day losing streak. But with valuations continuing to climb, we're dissecting how to navigate the markets with Oppenheimer chief investment strategist John Stoltzfus. John, it's always good to see you. Thanks for being here.
Oh, thanks for having me on the show, Julie.
So, John, it has been an interesting few weeks of this new year to say the least. But let's sort of zero in on earnings and what we've been hearing so far from the bank stocks. What is this telling you about how earnings are going to go and whether that's going to continue to sort of propel stocks higher?
Well, Julie, it's still too early really to judge the direction of the whole earnings season with really things just getting underway with the big banks, but we've got to say with just about 5% of the companies, a little over 5% of the companies having reported thus far, I mean, my gosh, this looks like we're going to have a good earnings season. And a lot of positive surprises. I think it's 82% are positive surprises and we think the guidance is good. Some of the selling we've saw on good news pretty typical of late. The traders seem to sell less harshly on good news and positive surprises and of course they'll trounce something that disappoints even if guidance for the forward is better. There's a show me, it's we're from Missouri kind of attitude.
Yes, definitely. John, you know, as somebody who is pretty darn bullish for this year, I believe you have one of the highest, if not the highest targets for the street. I'm curious how you're thinking about this year differently from last year or if you are like is the same playbook going to work this year?
It's a similar playbook, but it's a broadening playbook. And we've seen the broadening really goes back to the fourth quarter of 2020. It would have been a bear market kind of year and the market got trounced on a lot of negative pitchbook stuff. It was never realized. You know, earnings recessions and unemployment and recession all that didn't happen. But the bounce showed an interest in things beyond tech. But with tech and the leadership but it's become much more pronounced now. I mean if you just look at what the market has done so far this year. I'm looking materials are the best performing sector year to date up over 7% industrials nearly 7% up energy up 6 and a half% and staples up 5.7. Looks like I need reading glasses but anyway what we're seeing is a rotation and it's not necessarily away from technology as we would think it's some profit taking to broaden one's exposure and diversification and then the smalls and mid caps are doing great. They are essentially outperforming stateside with gains. Midcaps up 6.4%. The S&P 600 a better quality small cap up 7.3 and the Russell 2000 when the tide comes in all ships float up 7.76%.
I mean it's been pretty remarkable to see that Russell 2000 make new highs and to see some of that other rotation that you're talking about. But John, man, we've been talking about broadening for a long time. This is something I've been talking to you about. I've been talking to other investors about for a while. And we've seen these sort of little fits at doing this broadening that then have faded. And so I guess the question is, is this a more sustainable broadening than what we've been seeing over the past year?
We believe it is. We believe that at this particular stage, we're beginning to see, you know, if you just consider what was the most recent GDP number, I think the third quarter came in at 4.3 versus 3.8 or something like that expected. The economy is showing resilience and strength, but not robust. We don't want to see robust. We like resilient, great operative word. And then in terms of corporate earnings, managements are doing well in terms of the consumers. Soft data of course can tend towards the negative but the hard data shows the consumer keeps shopping even though they perhaps they've toned down the volume of spending but at the same time they still shop because in the US we judge our jobs and our dedication to things on what we can buy indeed for ourselves and for our loved ones.
John, do you think that if the broadening is going to stick around, are you participating in some of the buying in some of these groups that you were just talking about? Materials, industrials, even energy.
Right. Right now we hold positions in all 11 sectors. Our overweights tend to be info tech, communication services, consumer discretionary, industrials and financials. But we also hold positions that are slightly overweight where the market is in energy stocks as well as we have positions market weight related to utilities as I recall.
And if I, you know, as a bullish guy, as an optimistic guy I think probably by nature as well as by profession John, if I was to pin you down and say listen, what could go wrong this year, what do you think has the highest likelihood of going wrong this year. What would you say?
Well, first thing I would say is anything can always go wrong. It's always the unexpected that bites, right? But we'd have to think here that it could be just earnings disappointments, all of a sudden a realization that technology's morphing process has reached a plateau. You know, like it did during the tech bubble. Or it could be short term, very short term would be some kind of geopolitical rattle thing that would cause the market to wobble. But generally speaking, geopolitical risk turns into opportunity to buy shares because you know uncertainty tends to be profitable these days.
Yes, it does. And speaking of uncertainty, I mean this year with there's already been a lot of headline risk coming from Washington after a little bit of a lull. Do you as an investor just try to ignore that entirely? How do you handle it?
Well, one thing is we've noticed as you know I've been in this business this year is going to be 43 years sometime between May and July. I've seen just about all boom bust and recovery cycles. In this particular cycle, you know, the market tends to discount both good news and bad news very quickly. So, we take comfort in that, but we would have to say the president's saying that he was going to try to cap at 10% credit cards and now it looks not so much that he's backing away, but he's refining his thoughts on that seem to have swayed the market somewhat. Let's see how financials do today. And then the other thing would be we would consider concerns related to the hyperscalers and just worries about when will all this investment of theirs become profitable. And we think the real answer to that is anytime you invest in a watershed change in technology first you invest and you got to wait a while to make profit. So investors should really think patience may be what's required here. So, we think there's a lot of offsets to the negative potentials.
And patience is always a good thing to remember, I think, when investing. Lastly, switching gears entirely, John. I think a lot of people who watch financial TV might not know that there is a substantial dead head contingent on Wall Street. You are a musician yourself. You play in a band. And of course I think a lot of people on Wall Street were mourning the passing of Bob Weir of the Grateful Dead over the past week. So I was just curious to get your thoughts and kind of what is a fascinating interweaving of music and Wall Street at times.
You know, it's interesting when we look at the markets, we think it's not just about mathematics, but it's about emotion. And if you consider that music is mathematics and emotion, a piece of sheet music is a mathematical equation that is interpreted by a player, by a musician. Our band happens to be a band that's very much focused I'd say on the pre-1980 era Tina Turner, Allman Brothers, Rolling Stones and Van Morrison. But our drummer, for example, plays in two bands and he plays in a band that is well known for Grateful Dead tunes. We would say the passing of Bob Weir is most certainly a loss. We saw him as a bright light within the genre of music that the Grateful Dead play and a brilliant musician. By the way, our band is called Exile on Broad Street because I named it such because Oppenheimer is one of the last very recognizable names that has its headquarters on Broad Street.
And there you are still on Broad Street. So thank you so much for that, John. Always love talking music with you, so I appreciate it.
Thanks, Julie. Great to be here.
Take care. Coming up on Morning Brief, we'll bring you today's top trending tickers. Also, we'll be joined by the CEO of Klarna next.
Now, time for some of today's trending tickers. We are watching PNC, BYD, and Immunity Bio. First up is PNC. The regional bank reporting fourth quarter earnings ahead of the opening bell, and the stock is jumping. Profit topped expectations and earnings were in line with Wall Street estimates. Those results driven by increased loan growth and rising demand for its financial services. Next up is BYD shares jumping in overnight trade on reports the Chinese EV maker is in talks with Ford for a partnership. The focus of those discussions is around batteries. Ford would buy them from BYD to use in hybrid vehicles. That's according to the Wall Street Journal. The company is still figuring out the details and it's also possible a deal would not come to fruition. Finally, Immunity Bio. Now, this biotech stock is extending its 2026 rally. It has doubled in value already this year, and it's risen every single trading day in 2026. The company's had several catalysts lifting shares. It reported preliminary earnings on Thursday, saying full-year revenue from its bladder cancer drug is expected to soar 700% year-over-year. Separately this week, the same drug got approval from the Saudi Food and Drug Authority to treat non-small cell lung cancer.
Well, Klarna is pushing for a shakeup to the credit card industry following President Trump's call to cap credit card interest rates at 10%, calling the idea a win for consumers. Joining me now, Sebastian Siemiatkowski, Klarna co-founder and CEO. Sebastian, it's good to see you.
It seems like this credit card thing is not going to happen at this point. It also seems like if it did happen, it could be good for Klarna. So given that it's probably not happening, how are you thinking about it at this point and it seems like it's been kind of a good marketing point for you guys this week.
