Might see some of the popular trades start to unwind as people take profits: Morgan Stanley's Toomey

my next guest says we could see some more profit taking from here Morgan Stanley's Chris Tumi runs one of the highest rated private wealth advisory teams in the country he joins me here at Post 9 nice to see you again I I was like this has to be the day this has to be the day that Chris Tumi is going to sit across from me or next to me and say you know what I'm finally turned yeah I'm I'm bullish this Market because there's no other place to be and no other way to see it you're shaking your head

no no why I'm sorry why well I look I mean just because you want something or think something should be something isn't what is actually going to happen and I think if you look at despite you know your previous guest conversations S&P is up about 7% year to date equal weights up about 2 and 1 12% that's what the median return is about you know we've gone up 25% since the October lows you know right now I think people are saying you know what we've gotten here maybe I need to take something off

the table a little bit if you look at what's worked really well on the hedge fund side you go long momentum which is 75% the mag 7 and you go short the small caps the unprofitableness are doing well unprofitable growth is doing really well so what you might see is some of these trades unwinding people starting to take some profit and I think what's really interesting is we got a really difficult January number right we had a difficult retail sales we had a difficult CPI which we can talk about a

nd the market sold off a little bit what was interesting was the names that actually did the best were the names that had been doing the best so you didn't necessarily see people taking profits there and in reality those quality names continue to outperform okay um almost everything's been going up right over the last month I'll read it again because I think it's a story that's not getting enough credit and people who are bearish or cautious don't seem to want to mention it discretionary stocks

are up 7% in the last month Industrials charts looked unbelievable up 6% materials up 5% financials and Healthcare up 42% respectively tech only up 3% Ralph Lauren up 26% I got probably 60 stocks in front of me right here tried and true names in this economy that are hitting 52- we highs or all-time highs over the past week not one of them is a mega cap Tech stock on my list right what more evidence do you need well look you've got the the mag 7 which is mag 5 mag 4 they're up over 35% year to d

ate right so yeah there was time for them to come down a little bit and for some of these other names to catch up but I think what's important is looking at the fundamentals right so go all the way back to 2022 Market was pricing 150 basis points worth of cuts Fed was talking about 75 basis points of cuts we saw 50 basis points in Hikes right start of this year we had six Cuts priced in starting in March now we're at three right so over that time period we actually had flat earnings in the S&P 5

00 everyone talks about the fourth quarter how we outperform no one talks about we did but no one talks about the fact that 3 months before earning started they cut estimates by 8% right so this is your son saying I'm going to get a D in math and then coming back and saying I got a C minus right this isn't what really is going to drive performance of the S&P 500 but when when when when your expectations were that he might get kicked out of the class and here we are because the economy is super

strong strong enough um we have no recession multiples you can make an argument are Justified at these levels because of the economy and the fact that earnings came in better than expected most of the naysayer predictions for just have not happened they happens they haven't happened with regards to price but they have happened with regards to fundamentals right if you look at the S&P 500 up 25% on flat earnings right so why is the multiple expanding we're not cutting rates and here's the bigger

problem right if you think about the fact that we aren't going to be cutting rates the way the Market's pricing it what happens right you don't need it well no that that's that that's that's what we don't need now but you've got $800 billion worth of corporate debt that is rolling over this year right you've got over $1.2 trillion worth of corporate debt rolling over next year 4 trillion until 2030 right we're going to get rate Cuts we're going to get rate Cuts but when are we going to get them

right these companies are running out of cash you look at the consumer the consumer's got $1.2 trillion worth of debt that they're paying 25% on so everyone's talking about how great the consumer is he's just extending he's extending waiting for these rate cuts and these rate cuts are getting pushed back further and further and as much as pal would want to cut he's not because he's concerned about inflation because he's seeing it right and because there's precedent if you look back at the 70s it

's very hard to get this perfectly right with regards to inflation so what I want to be paying a premium for the market in this environment would I want to be bidding up these stocks right now not necessarily