PIPER SANDLER IS STICKING WITH

ITS OVERWEIGHT STANCE ON THE

STOCK BECAUSE OF, QUOTE,

ACCELERATING SPENDING,

CONTINUED FEE GROWTH, AND

STRONG CUSTOMER ENGAGEMENT,

WHILE OIL PRICES COOLING OFF A

BIT TODAY. BUT THEY ARE STILL

UP 29% FOR THE MONTH, HELPING

TO PUT PRESSURE ON THE MAJOR

AVERAGES. COULD THE LATEST PUSH

HIGHER IN OIL PRICES FORCE THE

FED'S HAND? JOINING US IS

WARREN PIES FROM 314 RESEARCH.

WARREN IT'S GOOD TO SEE YOU.

>> NICE TO SEE YOU. THANKS FOR

HAVING ME.

>> SO YOU KNOW OIL RATES

THEY'VE GOTTEN BACK ON THE

RADAR. AND IT'S VERY RELEVANT

FOR STOCKS BECAUSE AS YOU POINT

OUT, YOU'VE HAD THIS KIND OF

ROTATIONAL MARKET, VERY LOW

CORRELATIONS AMONG DIFFERENT

PARTS OF THIS MARKET. THE

INDEXES HAVE BEEN KIND OF STUCK.

BUT BASICALLY THE MARKET HAS

BASICALLY FOUND A WAY TO HANG

IN THERE. BUT YOU SAY THAT

LEAVES IT VULNERABLE TO A MACRO

SHOCK. DO WE HAVE SOMETHING

LIKE THAT BREWING.

>> POTENTIALLY. I MEAN, THAT'S

AN UNSATISFYING ANSWER. I MY

RECOMMENDATION TO CLIENTS IS

THAT TO ACCOUNT FOR THAT RISK,

YOU HAVE TO BE OVERWEIGHT

COMMODITIES. I MEAN, REALLY

GOING BACK TO THE BEGINNING OF

THE IRAQ WAR AND THROUGH IT,

WE'RE SAYING WE LIKE EQUITIES.

BUT THE BIG RISK HERE, AS YOU

POINT OUT, IS ANOTHER FLARE UP

IN THIS UNPREDICTABLE CONFLICT.

AND THE TIME'S NOT ON THE SIDE.

YOU KNOW, THE LONGER THIS GOES,

THE THE THE FARTHER GLOBAL

INVENTORIES DRAIN. AND AND

OBVIOUSLY, IF YOU HAVE A LONG

POSITION, YOU'RE, YOU'RE

BENEFITING FROM BACKWARDATION.

SO WE'RE PREPARING AN

OVERWEIGHT COMMODITY WITH

OVERWEIGHT EQUITY POSITION. I

THINK THE REASON IT'S SO SCARY,

IT'S NOT JUST ABOUT THE

CONSUMER AND HOW OIL HITS THE

CONSUMER, BUT HOW IT'S

IMPACTING THE FED AND LEADING

TO NEXT WEEK'S MEETING. AND

THEN INTO SEPTEMBER. I THINK IT

BECOMES A REAL RISK FACTOR. IF

OIL DOESN'T COOL DOWN, THAT THE

FED STARTS CONSIDERING A HIKE.

I DON'T I DON'T KNOW THAT I

AGREE WITH THAT DECISION, BUT

THE POLITICAL PRESSURE IS REAL.

>> I WAS GOING TO SAY, YOU KNOW,

IT COULD BE A LONG WAIT.

OBVIOUSLY, IT IS AN UNUSUALLY

LARGE GAP BETWEEN JULY AND

SEPTEMBER MEETINGS. AND THEN IF

IN FACT, YOU'RE SITTING THERE

ON INFLATION WATCH THE WHOLE

TIME THE BOND MARKET IS GETTING,

YOU KNOW, UNEASY FURTHER ABOUT

THAT. IT COULD FORCE THE FED'S

HAND. BUT THEN WOULD THAT BE A

MISTAKE IF THE FED WERE TO MOVE

TOWARD TIGHTENING? NOW.

>> MY I MEAN, I TRIED TO NOT BE

NORMATIVE, BUT IF YOU IF YOU MY

HONEST OPINION IS, YEAH, I

WOULDN'T BE HIKING HERE. I

THINK THAT WAGE GROWTH IS

DECELERATED. I, I KNOW WE'VE

HAD THREE STRAIGHT MONTHS WHERE

THE, THE, THE LABOR MARKET

LOOKS A LITTLE BIT BETTER, BUT

I THINK UNDER THE SURFACE,

YOU'RE STILL GETTING NEGATIVE

REVISIONS IN THE HOUSING MARKET,

WHICH IS THE MOST RESPONSIVE

AREA OF THE, OF THE ECONOMY TO

INTEREST RATE POLICY IS IN

BASICALLY RECESSION AT THIS

POINT IN TIME. AND SO I DON'T

THINK THERE'S ANY REAL

INFLATION PRESSURE FROM THE

AREAS OF THE ECONOMY THAT THE

FED CAN TOUCH. SO WHERE ARE WE

GETTING INFLATION PRESSURE? WE

HAVE A SUPPLY OUTAGE IN THE

MIDDLE EAST. IT'S JUST

STRAIGHTFORWARD, CLASSIC

ACADEMIC KNOWLEDGE THAT YOU

DON'T HIKE INTO A SUPPLY

INDUCED SPIKE. SO I DON'T THINK

THAT'S A GOOD REASON TO TO HIKE.

AND THEN YOU HAVE THE THE AI

BUILD OUT. AND I DON'T THINK A

HIKE OR TWO IS GOING TO STOP

THE CAPEX PLANS OF THE

HYPERSCALERS. AND SO ULTIMATELY,

YOU KNOW, THAT'S I THINK IT

WOULD BE A MISTAKE. YOU'RE JUST

GOING TO DEPRESS THESE THESE

RESPONSIVE AREAS OF THE ECONOMY

FURTHER.

>> ALL THAT BEING SAID, YOU

KNOW, YOU STILL SAY OVERWEIGHT

EQUITIES, STILL A BULL MARKET.

THIS WHOLE LOW CORRELATION

STORY, YOU KNOW, THE THE

PERCENTAGE OF DAYS WHERE THE

INDEX GOES ONE WAY AND THE

MAJORITY OF STOCKS GO THE

OPPOSITE DIRECTION. IT FEELS

LIKE BOTH THE BIGGEST STORY IN

THE STOCK MARKET AND ALSO ONE

THAT IT'S LIKE EVERYBODY'S

WATCHING THIS POT. IS IT REALLY

GOING TO BOIL? I MEAN, WHAT,

WHAT'S THE UPSHOT HERE? AND

IT'S JUST THE MARKET'S WAY OF

KIND OF RESETTING BELOW THE

SURFACE.

>> YEAH I THINK IT IS. YOU KNOW

I THINK THAT THE NUMBER ONE KEY

HERE IS WELL FIRST LET'S STEP

BACK AND JUST REALIZE THE

AMOUNT OF DAMAGE THAT'S UNDER

THE SURFACE. WE'VE HAD THE

AVERAGE S&P STOCK IS DOWN MORE

THAN 18% FROM A 252 DAY ONE

YEAR HIGH. AND SO THERE IS A

REAL CORRECTION HAPPENING. I

MEAN, THE THE REAL EXHIBIT A

FOR THAT WOULD BE THE

SEMICONDUCTOR GROUP. YOU KNOW,

EVEN IN THE CAP WEIGHTED NVIDIA

DOMINATED GROUP, THAT'S DOWN

LIKE 13%. IF YOU LOOK AT SM OR

SOCS, IT'S DOWN WAY MORE THAN

THAT. AND SO I THINK WE HAVE

CORRECTED A LOT OF THAT. AND

THEN WE'RE GOING INTO EARNINGS

SEASON. AND THE BIG STAT TO ME

IS LIKE YES, CORRELATIONS ARE

LOW. IT'S WE'RE VULNERABLE TO A

MACRO RISK BECAUSE OF THAT. BUT

ON THE OTHER HAND, THIS REALLY

IMPORTANT SEMICONDUCTOR GROUP

ENTERS THIS EARNINGS SEASON

WITH THE HIGHEST IMPLIED

VOLATILITY THAT WE'VE SEEN FOR

ANY EARNINGS SEASON OUTSIDE OF

THE GFC. TO ME, THAT'S A REALLY

HIGH HURDLE FOR THE BEARS TO

PUSH THIS SIGNIFICANTLY LOWER.

SO I LIKE PLAYING THOSE ODD