April's consumer price index (CPI) showed inflation cooled, marking the lowest annual increase since February 2021.

Prairie Operating Co. executive vice president of market strategy, Lou Basenese, joins Catalysts Host Madison Mills to take a closer look at the economic data and what it means for the US economy, Wall Street, and the Federal Reserve, as well as sharing some of his top stock picks in the tech sector.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

Video Transcript

00:00 Speaker A

stocks are edging higher. It's not like a massive rally here. Do you think the market is pleased with this CPI reprint?

00:09 Speaker B

Yeah, I think it's a yawn, right? Like we were I think for the markets to really rally on the CPI print, we need to see a tremendous drop. And I think what's interesting is this is the first report where we should have seen some impact from tariffs, and I think that's just a okay, there's not really that worry. We've seen this. We've been having this discussion. The soft data has been suggesting really terrible times ahead, but now we're getting actual hard data. It's not coming through. So I think market is just, okay, this is good. Let's see what happens next with the Fed, right? I think it gives a more clear picture for the Fed as opposed to them having to balance maybe labor changes, the jobs market changing quicker, while we have, you know, a dreaded stagflation scenario where inflation might be, you know, returning. So

00:56 Speaker A

Can the Fed and can we trust the data when it's being gathered as negotiations are getting struck as we speak?

01:03 Speaker B

Yeah, trust but verify. I think this is one data point. It's one month. I think it's going to take several months before any of those tariff impacts to work their way through the system. You know, we saw it in the the Q1 GDP print, right? A lot of inventory building. How long does it take to shed that off? How much how many companies are sitting back on capital expenditures? You just don't know those decisions that are being made in the C suites and where it's going to trickle through into the hard data. So I think can't put it all on one data point. I wouldn't say that this is a given now that the Fed's going to cut next month. Um, I haven't looked at the the probabilities of you know, it's it's swung so fast. I mean, a month ago, there was only a you know, there was a 60% odds of a June rate cut. Now it's down to like 8%. So I think everyone's still trying to figure out what Jerome Powell is going to do and Jerome Powell might still be figuring out what he's going to do.

02:11 Speaker A

Right. We're still looking at two rate cuts priced in from the market this year, but I do want to get to some of the individual names that you sent over to us. Taking a look at what's driving the major averages today, you've got tech as the biggest sector gainer. I know that you are only looking at one name in magnificent 7 though. Talk to me about that.

02:28 Speaker B

Yeah, it's alphabet. I mean, I think I've used the analogy and it's getting worn out, but the the Mag 7 is a boy band that broke up. Just everyone didn't get the memo yet. And so I really think you're seeing solo careers and outperformance. Apple, um I think Alphabet is the next one to have a breakout solo career because if you look at the valuation, it's the cheapest it's been in over a year and it's the cheapest of the Mag 7s and it's really attractive from that standpoint. And if you look at the other side, well, can they compete in AI? Look at the last quarter's results. They're actually showing what matters in AI, not just that we can do a lot of computing power, but that we can use that to help our customers do better advertising. So it's really driving their business. I think that's going to continue. And I think it's one of those things, it's fallen out of favor over regulatory concerns. They might break them up. I don't think that's ever going to be happening. We've been talking about this for 10 years, right, breaking up big tech. Not a single big tech company has even been close to being dismantled. So I think this is an overreaction and I think it's undervalued. Uh I'd rather buy here cheap at a good price while they have good growth coming than trying to chase a name. I love Apple too. I've been a long-term shareholder, but I don't think it's really compelling at this at current prices.

04:04 Speaker A

How are you thinking about Apple right now in the face of tariff headwinds?

04:09 Speaker B

Yeah, look, Steve Jobs gets paid to do exactly what he's doing. He's showing that he can move production. I'm sorry. Steve Jobs. Yeah, Tim Cook. Tim Cook's doing what people didn't think he could in the aftermath of Steve Jobs. Um you know, and if he just points to the scoreboard, if you look at the stock, it's up 1,300% since he took over in 2011. Um so I think he's showing, hey, I can be nimble even as a multi-trillion dollar company and move production and save on costs and honestly, a $900 million hit, not that big of a deal to Apple. It sounds in absolute terms like a big deal, but when you look at these companies that are making, you know, 15 to $20 billion a quarter, $900 million is really really a rounding error. And then if you give, you know, Tim Cook some time to really figure out where he's going to get supplies from, I think in a quarter or two, it's it's long forgotten. But middle of the year always seems to be the time everyone gets negative on Apple. The next iPhone's not going to be great. They need to iterate or they're going to, I mean, innovate or they're going to die. It's the same mantra every time and yet the company keeps executing and going higher.  Related Videos

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