Lisa Erickson, Co-Head of the Public Market Group at U.S. Bank Wealth Management, talks about the latest batch of Q1 earnings and spotlights what slowing GDP means for the market performance. 

Opening Bell

U.S. GDP Falls 1.4% as Economy Shrinks for First Time Since Early in Pandemic

this week for more insight on early morning activity. I am joined by lisa Erickson, head of the traditional investment group U. S. Bank wealth management lisa before we jump into earnings, there's a lot to talk about there. I just want to get your read on what we just got out this morning. Some new data showing that the U. S. GDP unexpectedly contracted again at the rate of 1.4% annualized. What do you think this signals about, you know where the economy is at right now and what this means for potential upcoming Fed activity? Well, to your point Alicia, we did have early a disappointing GDP print and while we would have expected some slowdown just again given tough comparisons from last year as well as the january omicron slowdown, the numbers were actually fairly low. So I think it is a warning shot across the bow just in terms of what may be happening in terms of growth. On the other hand, we are not too pessimistic yet just simply because if you look at more broadly the indicators across what's going on in the economy, we continue to see fairly solid activity with reopening activity and some of that pent on demand from the last couple of years really showing up in terms of pickup in service activity as well as entertainment and hospitality spending. So it is certainly something to be aware of. But remember that GDP number is backwards looking and really reflects what just happened the past quarter and as we look at more concurrent measures, we are still seeing solid activity. So if you're trying to gauge how the Fed reads this in terms of what it means for their rate hikes and we know the Fed over the last two weeks has really been a bit more hawkish. Your signaled kind of a more hawkish tone. Is there any idea that potentially the Fed seizes and says maybe, hey, we were not as aggressive, maybe get a little more because the last thing you kind of want to do is, you know, have that that rate hike be so aggressive to slow down the economy even more at a time that it's already slowing down. Well, all eyes really are on that Fed policy going forward. They have stated really that their main concern right now is probably less so on the pace of growth being that it is in generally solid area and the labor market continues to heal, but more really on the inflationary price pressures that we're seeing. And so our base case expectation is that the Fed is really moving to continue to not only normalize, but titan ultimately activity. So we don't see this GDP print as necessarily taking down the Fed resolved to at least in the near term really move forward with some of that accommodation to normalization of policy. Alright, as promised, let's get into earnings. So that's where the excitement is at certainly this morning and it maybe even a better read on where the consumer is at, right. We got names like Mcdonalds, Merck and even Southwest. They're all trading higher. They were in the premarket. Also trading higher right now on these better than expected kind of quarterly results. What is your take on some of these consumer facing companies? And what do you think it signals about where people are actually willing to spend right now? Well, as we look across the earnings reports so far, we do continue to see solid consumer spending, which again, is very important given that the consumer makes up almost two thirds of the economy here in the US. So these reports generally are very positive again, in terms of supporting the ongoing macro story as well as what's going on with corporate earnings. And what we see as well from many of these reports is that for the most part we're being able to see those price increases go through. So again, that provides some level of comfort in terms of the underlying demand picture I think are real question going forward is again, depending on where inflation goes and how effective the Fed is in bringing down some of those price levels going forward. Again, how that may soften up some of the consumer demand going into the rest of the year. Let's talk. Welcome. It posted a pretty significant beat as a diversified kind of production into the auto industry. Want to get your outlook on on the chip tech sector right now, obviously ford's here on the floor of the new york stock exchange. They're a company that we spoke to earlier this morning, highly dependent on the semiconductor, a chip shortage. Really easing up even you look earlier this week, Gm kind of the same picture even in their outlook and their guidance kind of moving forward. Well, generally what we see on the tech sector is it's had obviously a difficult time in the last few months as the rising rate outlook has really brought down some of the valuations of these companies that are dependent on longer term earnings and cash flow streams. But that being said, we still continue on the sector in general, including the, the chip companies to have a positive view as we've seen again. And some of the earnings reports, people are really increasingly relying on technology, whether it's the chip components, whether it's online, cloud usage, whether it's uh, on demand, anywhere types of access, So longer term for those investors with that type of horizon for their specific objectives. We continue to think that tech sector makes a lot of sense. Speaking somewhat of the tech sector and probably one of the biggest kind of earnings report in the last 24 hours with the most excitement around it is around meta right expectations going into this report were pretty low, especially if you think about the last earnings report that the company reported and then where the stock is at down 45% year to date at least ahead of this earnings report. However, the company posted a pretty nice beat. What is your take on social media giant, the social media giant's user base and what investors really should keep in mind, especially when it comes about those metaverse ambitions. Well, again, generally when we look across the tech landscape, especially some of these um companies that really have facilitated again, communication and dialogue ongoing are longer term outlook really is is positive. Again, trends towards just being able to communicate in a lot of different formats is continuing to increase and it does facilitate really a number of working and socializing models regardless of what's going on in the economy and whether or not for example, people have to be more cautious with activity due to covid breaks and things like that. So we really continue to believe in that story longer term and see that consumer demand for that type of service ongoing. Alright, before we have to let you go here, just want to squeeze in Apple and amazon, they're both sets of report earnings after the bell today. Um, what are you gonna be watching their Well, generally our focus is across the board with, with how the earning season is, is playing playing out and what we see generally is encouraging in terms of the beat rates. So you continue to have a high level of companies beating and while that has come off some of the highs in terms of earnings positive earnings surprises from 2021 that is to be expected just because we had such a high level of reopening activity and bounce off the covid lows in 2021. But again, what we're seeing generally in terms of earnings is encouraging people are able to maintain their margins so far and pass through those price increases and that's really the biggest story that we continue to look for in general. As we look at at the earnings reports going forward, lisa always appreciate your insight lisa Erickson, head of the traditional investment group at U. S. Bank Wealth Management.