Evercore ISI’s Julian Emanuel believes Nvidia’s monster rally is fueling fears of missing out on the market.
He notes that clients, including many who traded during the dot-com boom and subsequent collapse, are currently more concerned about being underinvested than overexposed.
“This is the first time for us since 2021,” the company’s chief executive said on CNBC’s “Fast Money” on Monday. “This is something of a red flag.”
In his Sunday note, Emanuel warned his clients that there are similarities to the year 2000, particularly when it comes to dynamics. This time he cites the excitement around artificial intelligence and the idea that the US could avoid a recession as the main trigger.
“The mood is very, very optimistic. The bears have been eliminated,” he told CNBC’s Melissa Lee. “It’s time to think more about risk than reward until we get a little cooling.”
On Monday, the Dow closed at an all-time high of 38,797.38. The tech-heavy one Nasdaq Composite is up 6% so far this year and is less than 2% below its record high.
In the meantime, Nvidiathe global leader in artificial intelligence chips, is up 46% so far this year and 240% last year.
Emanuel expects stocks could see a 13% decline this year, which he considers normal in a non-recession period. “If you can’t see yourself as a buyer down there, you should probably relax a little,” Emanuel said.
However, he did not completely ignore the successful growth market.
“We were on board in parts,” he said. “We like Communication Services. It was a great sector. We believe there are defensive qualities.”
Emanuel’s top picks also include Staple food, Healthcare and money markets.
“At the end of the day, you still make 5% on cash,” he added.
Be S&P 500 The year-end target is 4,750, which represents a loss of about 5% from Monday’s closing price.
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2024-02-13 00:24:48
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