WEBVTT 00:03.333 --> 00:09.400 align:left position:10% line:71% size:80% much larger S&P 500 to record highs this week.# There are several reasons fo 00:09.400 --> 00:14.600 align:left position:10% line:71% size:80% investors' assessments of the economy right# now and where it will be in the months ahead. 00:14.600 --> 00:16.866 align:left position:10% line:77% size:80% We're going to break this# all down now with David Gura,## 00:16.866 --> 00:19.800 align:left position:10% line:71% size:80% business correspondent for NPR, who's# been 00:19.800 --> 00:21.766 align:left position:10% line:83% size:80% David, it's great to have you here. 00:21.766 --> 00:26.066 align:left position:10% line:83% size:80% So how much is the market rally connec 00:26.066 --> 00:29.866 align:left position:10% line:71% size:80% investors' expectations that the Fed# is going to cut rates pretty soon? 00:29.866 --> 00:32.466 align:left position:10% line:71% size:80% DAVID GURA, NPR Business Correspondent:# Yes, it's hugely tied to that, Geoff. 00:32.466 --> 00:35.766 align:left position:10% line:71% size:80% And we got this indication last year# from the Feder 00:35.766 --> 00:41.300 align:left position:10% line:71% size:80% looking to make cuts in 2023. There's been some# recalibration IN recent da 00:41.300 --> 00:45.333 align:left position:10% line:71% size:80% how soon markets think the Fed is going# to actually do that, lower those rates. 00:45.333 --> 00:49.533 align:left position:10% line:71% size:80% But they're looking around, investors are# looking around and seeing a bevy of economic## 00:49.533 --> 00:53.566 align:left position:10% line:71% size:80% indicators that are looking pretty strong. And# they have this belief that the Federal Reserve,## 00:53.566 --> 00:57.666 align:left position:10% line:71% size:80% despite what seemed like small odds at the# beginning of last year, the year before,## 00:57.666 --> 01:00.200 align:left position:10% line:77% size:80% are going to be able to engineer# this so-called soft landing,## 01:00.200 --> 01:03.800 align:left position:10% line:71% size:80% that they're going to get high inflation# under contro 01:03.800 --> 01:06.000 align:left position:10% line:83% size:80% And that's certainly buoying# the stock market. Now,## 01:06.000 --> 01:09.566 align:left position:10% line:71% size:80% I should say the gains haven't been widely# 01:09.566 --> 01:14.300 align:left position:10% line:71% size:80%   wh ich ended up being a much stronger year for# stocks than I think a lot of peop 01:14.300 --> 01:17.866 align:left position:10% line:71% size:80% in light of what I was just talking about, that# being this fear that we could hit a recession. 01:17.866 --> 01:21.066 align:left position:10% line:71% size:80% So we haven't had broad-based gains,# but stocks have performed much better,## 01:21.066 --> 01:23.433 align:left position:10% line:77% size:80% I think, than Wall Street expected# at the beginning of last year. 01:23.433 --> 01:27.800 align:left position:10% line:71% size:80% GEOFF BENNETT: And there's also a lot of investor# 01:27.800 --> 01:31.966 align:left position:10% line:71% size:80%   How has the promise of A.I. reordered the markets## 01:31.966 --> 01:35.400 align:left position:10% line:71% size:80% and really fueled the returns of the# so-called Magnificent Seven? These## 01:35.400 --> 01:39.266 align:left position:10% line:71% size:80% are the high-performing tech companies# whose stocks typically do really wel 01:39.266 --> 01:41.600 align:left position:10% line:77% size:80% DAVID GURA: Yes, Geoff, this was# a huge turning point last year. 01:41.600 --> 01:45.133 align:left position:10% line:71% size:80% So you mentioned the Magnificent Seven. This# 01:45.133 --> 01:49.266 align:left position:10% line:71% size:80%   wh o's an investment strategist at Bank of# America. He allowed that he's a fa 01:49.266 --> 01:54.733 align:left position:10% line:71% size:80% Western movie from 1960 starring Yul Brynner# and Eli Wallach, which is why he named them. 01:54.733 --> 01:59.000 align:left position:10% line:71% size:80% But the seven stocks are Alphabet,# Amazon, Apple, Meta, Microsoft, Nvidia,## 01:59.000 --> 02:04.133 align:left position:10% line:71% size:80% and Tesla. And as you say, these are tech# companies, most of which are tied to A.I. or## 02:04.133 --> 02:08.600 align:left position:10% line:71% size:80% interested in A.I. or doing work on A.I. I guess# Tesla is kind of the exception to that. Nvidia,## 02:08.600 --> 02:13.133 align:left position:10% line:71% size:80% at the other extreme, this is a company that is# designing most of the microchips that are used## 02:13.133 --> 02:17.566 align:left position:10% line:71% size:80% in the supercomputers that are powering the# technology that allows companies to use A.I. 02:17.566 --> 02:24.133 align:left position:10% line:71% size:80% So they have really outperformed the market. Last# year, the S&P 500 was up 24 percent. Those seven## 02:24.133 --> 02:27.566 align:left position:10% line:71% size:80% stocks, they rose by more than 100 percent# last year. So they have been carrying a lot## 02:27.566 --> 02:31.133 align:left position:10% line:71% size:80% of the weight here. And there are a number# of reasons for that. A.I. is pa 02:31.133 --> 02:35.266 align:left position:10% line:71% size:80% Another just has to do with the fact that these# are companies that are ingraine 02:35.266 --> 02:38.700 align:left position:10% line:71% size:80% that we use every day, that they would have# staying power if there were going to be some## 02:38.700 --> 02:42.800 align:left position:10% line:71% size:80% sort of economic downturn. And, finally,# they have a lot of cash on hand. 02:42.800 --> 02:46.800 align:left position:10% line:71% size:80% a point where interest rates are higher# than they were for a really long time. 02:46.800 --> 02:49.666 align:left position:10% line:71% size:80% A lot of companies, if they want# to expand, have to borrow money.## 02:49.666 --> 02:52.700 align:left position:10% line:71% size:80% They'd have to borrow money at a higher# interest rate. These 02:52.700 --> 02:56.466 align:left position:10% line:71% size:80% that wouldn't have to do that because# they have so much money on 02:56.466 --> 03:00.333 align:left position:10% line:71% size:80%   GE OFF BENNETT: And yet there are these# influential voices injecting notes of caution,# 03:00.333 --> 03:04.333 align:left position:10% line:71% size:80% namely J.P. Morgan CEO Jamie Dimon,# who says, look, there are all sorts## 03:04.333 --> 03:09.833 align:left position:10% line:71% size:80% of financial and geopolitical risks on the# horizon. Here's what he said to CNBC earlier. 03:09.833 --> 03:10.700 align:left position:10% line:83% size:80% JAMIE DIMON, Chairman, J.P. Morgan Chase: I think## 03:10.700 --> 03:15.666 align:left position:10% line:71% size:80% it's a m 03:15.666 --> 03:18.933 align:left position:10% line:71% size:80% it's kind of like this little drug# we all feel. Like, it's just great. 03:18.933 --> 03:23.066 align:left position:10% line:71% size:80% But, remember, we have had so much fiscal# monetary stimulation. So I'm a 03:23.066 --> 03:30.000 align:left position:10% line:71% size:80%   on the question side, that we are facing a lot of# things in '24 or '25. And we mentioned Ukrain 03:30.000 --> 03:34.200 align:left position:10% line:71% size:80% the terrorist activity in Israel,# the Red Sea, quantitative tightening,## 03:34.200 --> 03:38.633 align:left position:10% line:71% size:80% which I still question if we understand# exactly how that works. I don't think we do. 03:38.633 --> 03:41.766 align:left position:10% line:71% size:80% GEOFF BENNETT: I mean, he's got a point.# Why isn't the market apparently taking## 03:41.766 --> 03:47.100 align:left position:10% line:71% size:80% into account a host of geopolitical crises# and the shipping challenge 03:47.100 --> 03:52.266 align:left position:10% line:71% size:80% it and all of the knock-on effects to the# stock market and the economy, potentially? 03:52.266 --> 03:54.966 align:left position:10% line:71% size:80% DAVID GURA: It's a really good question,# Geoff. And I think that these are all## 03:54.966 --> 03:57.933 align:left position:10% line:71% size:80% things that are worrying to some investors. I# think they 03:57.933 --> 04:02.066 align:left position:10% line:71% size:80% we have been able to get through a lot# of tumult and crises in re 04:02.066 --> 04:05.900 align:left position:10% line:71% size:80% But Jamie Dimon stands out as the head# of the largest bank in this country and## 04:05.900 --> 04:10.133 align:left position:10% line:71% size:80% somebody who is more frank and forthright# about the prospect of these risks than I## 04:10.133 --> 04:13.800 align:left position:10% line:71% size:80% think a lot of executives are. You heard# him there mentioning Ukraine, the war in## 04:13.800 --> 04:17.733 align:left position:10% line:71% size:80% Israel. These are topics that he returns to# time and time again, because he is sor 04:17.733 --> 04:22.766 align:left position:10% line:71% size:80% looking at history with a really broad breath# and fearing that this could have a big eff 04:22.766 --> 04:27.466 align:left position:10% line:71% size:80% not just on the economy, but on sort of the# geopolitical system in the world as well. 04:27.466 --> 04:31.133 align:left position:10% line:71% size:80% So he's raising alarm about this. I think a lot# of people listen to Jamie Dimon, again, because## 04:31.133 --> 04:36.200 align:left position:10% line:71% size:80% he's running such a large institution. But so far,# we have seen markets kind of sh 04:36.200 --> 04:41.666 align:left position:10% line:71% size:80% look at what's happening in the Red Sea. We have# seen shipping companies pull their ships out of## 04:41.666 --> 04:46.900 align:left position:10% line:71% size:80% that waterway, send them on a 10-day journey# around Africa to avoid that conflict there. 04:46.900 --> 04:50.133 align:left position:10% line:71% size:80% We're beginning to see effects of this# tumult. And I think it's something that,## 04:50.133 --> 04:53.633 align:left position:10% line:71% size:80% of course, Wall Street is going to continue# to watch here in the days an 04:53.633 --> 04:56.200 align:left position:10% line:71% size:80% GEOFF BENNETT: And we should be clear.# The stock market is not the economy. 04:56.200 --> 05:01.100 align:left position:10% line:71% size:80% But you could argue that, because of# a number of fa 05:01.100 --> 05:04.200 align:left position:10% line:71% size:80% Wall Street is really intertwined# with what happens on Main Street. 05:04.200 --> 05:05.866 align:left position:10% line:89% size:80% Do you see it that way? 05:05.866 --> 05:09.966 align:left position:10% line:71% size:80% DAVID GURA: Yes, it's important 05:09.966 --> 05:13.466 align:left position:10% line:71% size:80% What we're seeing right now in the# stock market is confirmation of the## 05:13.466 --> 05:17.000 align:left position:10% line:71% size:80% fact that the economy is doing pretty well,# again, better than I think a lot 05:17.000 --> 05:20.266 align:left position:10% line:71% size:80% expected it would be. So you look at the# data points that we have gotten recent 05:20.266 --> 05:23.266 align:left position:10% line:71% size:80% look at retail sales. Those came in# stronger than expected. We're go 05:23.266 --> 05:27.400 align:left position:10% line:71% size:80% get some figures on GDP, on growth later# this week, another ind 05:27.400 --> 05:31.333 align:left position:10% line:71% size:80% We have seen the labor market remain really# strong and resolute. What we're seeing is## 05:31.333 --> 05:35.133 align:left position:10% line:71% size:80% the market really embrace each of those# economic data points, Geoff. It's kind## 05:35.133 --> 05:40.133 align:left position:10% line:71% size:80% of confirming this sentiment, this sense that# the economy is doing well. And as we sa 05:40.133 --> 05:45.500 align:left position:10% line:71% size:80% big survey of consumer sentiment last week, a# lot of people, yes, investors, but consumers,## 05:45.500 --> 05:49.166 align:left position:10% line:71% size:80% the rest of us as well, are feeling more# confident in the direction of the U.S. economy. 05:49.166 --> 05:50.400 align:left position:10% line:83% size:80% GEOFF BENNETT: David Gura of NPR. 05:50.400 --> 05:52.466 align:left position:10% line:77% size:80% David, always great 05:52.466 --> 05:59.333 align:left position:10% line:89% size:80% DAVID GURA: Geoff, thanks.