Hold Off on Hikes, Deals in the Driver’s Seat, and Luxury Lodging 6/30/26

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com or find Schwab Market Update wherever you get your podcasts.

**Kelly Evans** (0:58)
You're listening to The Exchange. Here's today's show.
Thank you very much, Scott. And on this last trading day of the quarter, a quarter that saw Sandisk rise 245 percent and Intuit fall 40 percent, a quarter that also saw the biggest IPO in history, a new Fed chair, and the Dow close above 52,000 for the first time. I'm Kelly Evans, and welcome to The Exchange. We close out the month of June and the first half of the year with stocks up across the board today, the NASDAQ in particular. And what a stellar first half it's been. Best one for the Dow in five years, best one for small caps in more than three decades. We'll also get to Nike, Uber ending its Waymo partnership in Phoenix, and why young millionaires love real estate. That's all ahead this hour. But let's begin with these markets because if you thought the first half was pretty spectacular, just wait. Our first guest says the S&P is on track to easily hit 8,000 by year end. And in fact, the market, despite the rally so far, has gotten cheaper this year. His firm also thinks CPI could end the year in the low 2% range. Talk about Goldilocks. Let's bring in Michael Kantrowitz, the chief investment strategist at Piper Sandler. I'm not trying to make you sound like a Pollyanna, Michael. I mean, but, and you're not, you don't have a single price target, but putting in what we've done in the first half of the year now, what does it tell you about the rest?

**Michael Kantrowitz** (2:20)
Yeah, well, the beginning of the year, for the full year estimate, earnings growth was supposed to be about 15%. In the first half of this year, we've already seen that earnings estimate number rise by 20%.

**Kelly Evans** (2:33)
Wow.

**Michael Kantrowitz** (2:34)
More than offsetting the decline in the market multiple, and obviously helping to push the index higher. So we think, you know, you have AI certainly driving the earnings story, but what's also happening is there are many other companies. We now have 75% of stocks in the S&P 500 that have seen increases in earnings estimates this year. That's the highest in five years, and I think it's due to the also broadening economic backdrop that we're seeing.

**Kelly Evans** (3:04)
Let's talk about that inflation piece. When the firm is saying it's possible that CPI headline could have a two-handle by the end of the year, am I correct about that?

**Michael Kantrowitz** (3:15)
Yeah, our economist believes that inflation is going to come down, and we're going to start to see that on the 14th in July. We've obviously seen a lot of commodity prices fall, oil prices, gasoline, urea, etc.
And there's a lot of other structural disinflationary trends like what's going on in rent. So perhaps we get there by year end, maybe it's the first half of next year, but the point is the trajectory is lower. And to me, that suggests that the market is misreading how hawkish Warsh is. And at the back half of the year, we could potentially push those rate hikes out further or even just push them all out entirely. And I think that's something that could lift the market multiple and add to the already strong earnings backdrop.

**Kelly Evans** (4:02)
Let's talk about Warsh for a moment. I think we hear from him tomorrow, right? Out at Cintra, the Central Bankers Forum.
So what tone are you expecting him to take? How's the market likely to interpret that? What do you think the real story is?

**Michael Kantrowitz** (4:16)
Well, I think we're going to hear every time we hear from Warsh over the next couple of FOMC meetings or other speeches between them, an incrementally less hawkish Warsh.