Markets will rally into year-end and potentially be strong next year too: Defiance ETFs' Jablonski

For more on the markets right now, we want to bring in Sylvia Jablonsky. She's CEO and chief investment officer of Defiance ETFs. And Sylvia, I know this isn't what you were planning on talking about this morning, but welcome to live television. How concerned are you about this report out of Ukraine? We're looking at a reaction this morning of the markets down. It was a big drop down when this report came out, but you were still talking about a decline of less than six tenths of a percent for the Dow and even less on a percentage basis for the other major averages. What are you thinking? Good morning, Becky. Well, you know, it's never good to wake up to this news, but I think this has always been the caveat on on what could potentially hamper hamper markets rally going into year end or even going forward. We have essentially two wars going on, two major wars that we're well aware of and monitoring and escalations tend to lead to market pullbacks. And so what I would say is what I see so far is a muted reaction to this, you know, as compared to what we've seen with some of the attacks in Israel, for example, where you see Nasdaq off 300, 400, 500 points or so. So perhaps the market at this point is muted and digesting the information. But, you know, how how it escalates. We have a switch of presidents coming into office and, you know, kind of where this all goes is is, you know, up in the air right now. Yeah. Having said having said that, we have a new administration coming in. You have the market that has been pretty enthusiastic about the potential for this new administration, but still a lot of questions on the details of how things are going to work. There were a lot of promises made during the election cycle. And there's been a lot of commentary, some some written pieces recently just digging into the idea that these are not all promises that are going to be able to be delivered. If you're looking at the map, you make promises to the wealthy class. You made promises to average Americans. How does this play out? And I guess what do you think about where we've come so far just in terms of the market's enthusiasm and what can be delivered? Yeah, sure. So I think that, you know, where we've come in the markets is very much due to the macro backdrop, right? We have strong jobs. We have we have wages that have been steady and increasing. A consumer that's been spending, you know, a lot of stability essentially in macroeconomics, GDP to two to three percent rates coming down, you know, supportive Fed put. And so I thought, regardless of the election, the market should do well. The market should rally into year end. Corporate earnings are holding up projections for next year. High single digits, low double digits. You know, everything is sort of rosy, soft landing, roaring, roaring 2020s. And so what the market doesn't like, though, is uncertainty. And as you said, we don't know which policies actually get passed. We don't know what happens with tariffs. We don't have it. You know, we won't know what happens with immigration. Those two things can affect supply, which can, in fact, you know, which can affect inflation. But then again, deregulation and tax cuts can lead to potentially the opposite happening. So it could be a net zero. So it remains to be seen what actually passes here. But I think overall deregulation, cutting taxes tends to be good for markets and the path of the Fed matters a lot, right? So as long as inflation doesn't creep back up and the Fed's kind of steadily reduces rates, I think we'll be OK. And I think the market rallies into year end. And I mean, we're almost there anyway. It's, you know, kind of rallied in minus this pullback. But potentially a strong year next year as well. I think the biggest question maybe is, do earnings keep up with some of this enthusiasm? We we have lots of, as you mentioned, enthusiasm that is tied to deregulation and lower tax rates. And that's clearly a plus for business forces being unleashed. But you also have markets that have risen pretty substantially. Everything looks great, but there's always a price. And what's the price? So where do you think it's just about where the stocks stand in valuation terms at this point? Yeah, I mean, valuations are high, but earnings have has thus far justified those valuations. And so I think what happens is you actually get the tax cuts and you actually get the deregulation and rates keep coming down. You know, that is undoubtedly a tailwind for corporate earnings going forward. And I think that keeps up with the rally. You know, in terms of when it exhausts, I think that there will be an end in sight, but probably probably not in the near term here. So the other thing that I think investors can do, though, is broaden out their exposure. Right. So the overvaluation comes from the top 33 percent of the S&P 500, which is really the mag seven. And so if you broaden out to the other 493 names and, you know, kind of look at the Xmag, the names that are hidden in there, like the Constellation Energies, the Vistras, the GE Vernovas, the Palantir's. I mean, you know, there's a there's a lot of places to put your money that that kind of aren't overvalued at this point.