There's industrial momentum going into 2026, says Strategas' Chris Verrone

Scott Wapner (?) 00:00.350

joining us now to talk technicals ahead of a shortened trading week chris verone partner and chief market strategist at strategas research partners house trener

Chris Verrone (Partner & Chief Market Strategist) 00:09.710

he's doing much better

Scott Wapner (?) 00:10.590

script he is

Chris Verrone (Partner & Chief Market Strategist) 00:11.470

yeah really

Scott Wapner (?) 00:12.470

so give him our best

Chris Verrone (Partner & Chief Market Strategist) 00:13.430

i certainly will christmas

Scott Wapner (?) 00:15.030

i interesting stuff yeah that that you're talking about here we you you say that the rotational tape has been persisting which makes you think two thousand twenty six this could be a sign of it continuing which would be really a fundamental shift i think from the more

Scott Wapner (?) 00:34.800

speculative i guess parts of the market to the more economically sensitive parts of the market you think the economy is strong yeah i think

Chris Verrone (Partner & Chief Market Strategist) 00:43.920

so i i certainly think that the market is saying that the soft patch of three Q and four Q is probably over here and it's looking through it we've been on this idea that the real economy is inflecting up and i think you see it in the markets message with transports and regional

Chris Verrone (Partner & Chief Market Strategist) 00:57.190

banks and discretionary you know all starting to inflect at a time where i think the backdrop of lower lower inflation modest bond yields are all supportive into twenty six i

Scott Wapner (?) 01:08.350

also foreshadowed what you were going to say about the the ten year which is not you know yields are not below four percent they they tried to but they didn't get there they back up people have noted in in people that are sympathetic to bond vigilante thinking in in and you know

Scott Wapner (?) 01:26.470

worried about i don't know what they're cutting rates inflation coming back whatever it is you're not really seeing that much angst but it's not below four percent you say don't worry till four and a half yeah

Chris Verrone (Partner & Chief Market Strategist) 01:38.390

and i think you gotta be a little careful what you wish for i'm not sure we want bond yields a lot below four percent you know what would that say about the economy into twenty six if you had yields at three seventy five or some number like that if you're going to get alarmed

Chris Verrone (Partner & Chief Market Strategist) 01:49.470

about bonds look more globally i mean german thirties are breaking out aussie tens have broken out cad tens are higher so it's not really US where i think the angst on yield should be it's more global here

Scott Wapner (?) 02:01.470

all right so then then that's not something you're concerned about at this point the the rotation that you're seeing into the real economy stocks is not just in the united states

Chris Verrone (Partner & Chief Market Strategist) 02:12.670

it's basically everywhere we look i mean look at the commodity sensitive corners of the world whether it's australia or canada i mean you've seen copper inflect you've seen aluminum turn

Scott Wapner (?) 02:22.110

out what does that say so you you just said that you worry about bonds and other rates going lower in other countries because they're they're not as strong i guess relatively to the but but there's a global upswing going on and in in the economies around

Chris Verrone (Partner & Chief Market Strategist) 02:37.830

the world i think joe 's important to remember that most central banks have been easing for the past fifteen months so the lagged benefits of that are now starting to show up in the industrial economy the commodity market i think is a very appropriate reflection of that here i

Chris Verrone (Partner & Chief Market Strategist) 02:51.230

mean look at the long term charts on copper major breakout aluminum major breakout all the related issues the free ports and the rios and the valets and the BHP have turned up everywhere so i think there's industrial momentum into twenty six that is finally starting to migrate

Chris Verrone (Partner & Chief Market Strategist) 03:05.950

over to the US where you've seen again stuff like transports waking up for the first time in three years they've been off the playing field the fact that we have regional banks getting involved here i think is a reflection of a steeper curve that's good not bad the discretionary

Chris Verrone (Partner & Chief Market Strategist) 03:18.830

stocks are also still playing nicely in this environment so when you look at kind of the the the real economy signals into twenty six i do think it suggests there's this handoff away from just the speculative corners of the tape to something more real then

Scott Wapner (?) 03:32.590

you don't try to figure out why it's happening you just see that it is happening is there anything to the notion that they're reshoring that we're trying to do is is starting to happen that companies are coming back here because it's easier to make things here

Chris Verrone (Partner & Chief Market Strategist) 03:46.750

so i thought about this a lot with respect to the commodity call in particular and you know you could have three or four reasons why commodities are up right now you could say listen in fact the cyclical momentum is improving that's certainly reasonable you could say it's

Chris Verrone (Partner & Chief Market Strategist) 04:01.240

resource hoarding that's certainly a reasonable view here as well you could also say this is the raw material necessary for the next leg of the AI story so i'm not sure which of those three reasons is correct but i think if you're the stocks it doesn't matter the stock strip

Chris Verrone (Partner & Chief Market Strategist) 04:13.710

lund instruments and the stocks are responding to it irrespectively so again whether it's freeport finally starting to work southern copper just breaking out i mean these are very powerful price signals that i think the economy is on pretty decent footing into twenty six

Scott Wapner (?) 04:28.400

was were the mag seven or the the stocks benefiting from the AI boom are those those represent speculative parts of the market or real economy parts of the market or or or a little bit of both and i think a little bit what do they do next

Chris Verrone (Partner & Chief Market Strategist) 04:45.970

what do they do next i think when you look at the hood ornaments of what the real speculative trade have been whether it's bitcoin or kind of the real speculative issues like the like the occlos and the nuclear stuff i think the markets moving on from that and bitcoins probably

Chris Verrone (Partner & Chief Market Strategist) 04:58.530

been telling us that for four or five months now you know there's this view this whole time that you know bitcoin weaker the nasdaq would have to follow i don't really buy that i think what bitcoin has simply told us is the market

Scott Wapner (?) 05:09.230

is ready to what's nvidia speculative or real economy

Chris Verrone (Partner & Chief Market Strategist) 05:12.230

nvidia is still in an uptrend is what that is and i think we got to be careful that we don't get too kind of wrapped around the axle of oh my god max sevens underperforming i mean listen apples at a new high google 's at a new high nvidia is fine if you're looking for weak stuff

Chris Verrone (Partner & Chief Market Strategist) 05:25.910

in mac seven yeah it's basically microsoft

Scott Wapner (?) 05:28.190

and meta elon musk is at a new huh

Chris Verrone (Partner & Chief Market Strategist) 05:30.070

tesla trades great so this is you know i think at worst rotational right here and you know as they've sold some of the mag seven or some of the techs you know what has emerged in its wake is frankly healthcare i mean healthcare looks as good as it has in three or four years here

Chris Verrone (Partner & Chief Market Strategist) 05:44.070

so i'm not convinced that this rotational move is the end of the market