Tech selloff looks like a normal correction, says JPMorgan's Jack Caffrey

0:03 NASDAQ ENTERING CORRECTION TERRITORY, THE MAG-7 LOSING MORE THAN $1 TRILLION IN MARKET CAP. JOINING US NOW IS JACK CAFFREY. AND HE'S GOT A HELP HERE, PORTFOLIO MANAGER AT JP MORGAN ASSET MANAGEMENT. THE OUR NATION TURNS ITS ONLY ITS LONELY EYES TOWARDS YOU JACK. YOU ARE THE WHAT WE NEED THIS MORNING. ARE YOU UP TO THE TASK? >> AM I SIMON OR AM I GARFUNKEL? >> YEAH. ARE YOU SIMON GARFUNKEL? LET ME ASK IT THIS WAY. LIBERATION DAY SCARY. TWO MONTHS LATER, MARKET WAS NEW HIGHS. I THINK IRAN WAR SCARY.

0:40 OIL HIGHER. TWO MONTHS LATER, NEW HIGHS THIS DIFFERENT OR THE SAME. >> I THINK IN THE AGGREGATE THIS WILL PROBABLY BE MORE THE SAME RATHER THAN ULTIMATELY THAT'S SOMETHING TO BE DIFFERENT. >> OKAY, THAT WAS THE. >> BEST NEWS I'VE HEARD ALL DAY. >> EXACTLY. >> WELL, THE DAY'S EARLY STILL, SO LET ME TRY TO UNPACK THAT FOR YOU. REALISTICALLY, WE JUST HAD A MAJOR ELECTION. WE'VE HAD SOME REACTIONS TO THAT MAJOR ELECTION. INITIALLY. I THINK THAT WAS PERHAPS A LITTLE BIT MORE POSITIVE THAN PEOPLE WERE THINKING. AND THEN IN UNDERSTANDING WHAT POLICY CHANGES WE MIGHT WIND UP SEEING, I THINK WE BECAME A LITTLE BIT MORE NEGATIVE, AT LEAST CERTAINLY YESTERDAY. BUT I THINK LOOKING NOT JUST TO YESTERDAY, BUT LOOKING OVER THE PAST SIX WEEKS, YOU'VE CERTAINLY SEEN A ROTATION OUT OF WHAT HAD BEEN MARKET LEADERSHIP THAT WAS RELATIVELY CONCENTRATED INTO MORE AND MORE OF THE MARKET. WHAT MADE YESTERDAY TRICKIER WAS YOU ACTUALLY SAW SELLING ACROSS 400 PLUS NAMES IN THE S&P, RATHER THAN SELLING 100 AND ACTUALLY BUYING 400. BUT AS WE TALK ABOUT WE'RE IN A CORRECTION IN THE NASDAQ. WE SHOULD BE SEEING 1 OR 2 CORRECTIONS A YEAR. SO IN THAT REGARD THIS IS MORE NORMAL RATHER THAN NOT. A FEW WEEKS AGO I JOINED YOU. AND THE TAKEAWAY COMMENT FROM MY WHAT I SHARED WITH YOU WAS MOMENTUM IS A FEATURE, NOT A BUG IN THIS MARKET. I THINK THAT WAS MADE VERY APPARENT YESTERDAY. AND AT THE MARGIN, DECISIONS ARE BEING MADE MORE BY RISK MANAGERS AND PERHAPS MARGIN CLERKS RATHER THAN PORTFOLIO MANAGERS. BUT I THINK STEPPING BACK, THINKING NOT ABOUT WHAT HAPPENED YESTERDAY, WHAT HAPPENS TODAY, WHAT HAPPENS AT 935, BUT LEANING INTO OUR RESEARCH PROCESS AT JP MORGAN ASSET MANAGEMENT, WHAT IS NORMALIZED EARNINGS POWER? AND THAT COMES BACK TO COMPANIES IN EVERY MEETING I'VE BEEN IN THIS WEEK HAVE EMPHASIZED THE BACKLOGS THAT THEY'RE OPERATING WITH GO OUT 12, 18, 24 MONTHS. AND I THINK THAT MEANS WE DO HAVE A LONG TERM EARNINGS STORY THAT WE CAN INVEST IN.

2:35 >> I MEAN, HISTORICALLY, IT IS PAID NOT TO GET TOO WORRIED OR EXCITED OR ANYTHING ABOUT WHAT'S GOING ON IN WASHINGTON, DC, ESPECIALLY IF IT'S NOT ALL THREE BRANCHES OF GOVERNMENT THAT ARE ONE PARTY. AND IT IT'S CLOSE, BUT IT'S NOT. YOU'VE STILL GOT YOU'VE STILL GOT TRUMP. PRESIDENT TRUMP IN THE WHITE HOUSE. IS THE FED EQUALLY IMPORTANT, LESS IMPORTANT, MORE IMPORTANT THAN THE MAKEUP OF CONGRESS? HOW DOES THAT PLAY INTO. WE HAVEN'T TALKED ABOUT THE FED ALL WEEK. MAYBE A LITTLE.

3:10 >> I MEAN, ULTIMATELY WE HAVE TO THINK ABOUT FISCAL POLICY AND WE HAVE TO THINK ABOUT MONETARY POLICY. MONETARY POLICY SEEMS TO BE ON A DIRECTION OF GRADUAL TIGHTENING IN ORDER TO TRY TO MAKE SURE THEY DELIVER AGAINST THEIR INFLATION MANDATE, BECAUSE THEY'VE DELIVERED AGAINST THERE. >> THAT COULD CHANGE SO QUICKLY BASED ON WHAT WE SAW YESTERDAY. AND WHAT ABOUT WHAT WE SEE TODAY? >> WHAT WE SEE YESTERDAY IS GOING TO DRIVE THE INFLATION MANDATE IN THE SHORT TERM.

3:33 >> WHAT ABOUT THE IDEA THAT THE ECONOMY COULD SLOW OR WE'LL SEE IT IN JOBS TODAY. WHAT ARE YOU EXPECTING TODAY. >> I DON'T THINK THAT JOBS REPORT IS GOING TO REFLECT WHAT HAPPENED YESTERDAY. NO. SO REALISTICALLY, THE JOBS TRAIN IS BEING DRIVEN BY LONGER TERM ISSUES. >> AND IT WAS IN GOOD SHAPE. IT'S IN GOOD SHAPE YOU THINK. I THINK CLAIMS AND ALL. >> THAT STUFF. UNEMPLOYMENT CLAIMS POINT TO A JOB MARKET WHICH ISN'T CREATING A LOT OF JOBS. BUT WITH THE DECLINES IN THE WORKFORCE OVER THE PAST TWO YEARS, IT HASN'T HAD TO CREATE AS MANY JOBS AS WE WOULD HAVE PERHAPS NEEDED TO IN A MORE ROBUST, POPULATION GROWING ECONOMY. YOU KNOW, GIVEN THE OVERHANG IN TERM OF SENTIMENT OVER THE LAST 36 HOURS, I DO THINK BAD NEWS WILL BE PROBABLY SEEN AS BAD NEWS IF THE JOBS REPORT MISSES AGGRESSIVELY. AND I THINK YOU'RE LEFT WITH, YOU KNOW, ANYTHING VERY DIFFERENT FROM EXPECTATIONS IS GOING TO BE A BAD PRINT. EITHER IT'S TOO HOT AND THE FED HAS TO REMAIN ON ITS TIGHTENING PATH. OR IF IT'S SO BAD, SUDDENLY WE'RE GOING TO THINK, OH MY GOSH, WE'RE GOING TO SEE EARNINGS MISSES TOMORROW. AND I THINK BOTH OF THOSE REACTIONS ARE GOING TO BE OVERREACTIONS RATHER THAN REASONABLE REACTIONS.

4:36 >> I MEAN, MAYBE WE DIDN'T POINT IT OUT AS MUCH, BUT THERE IN THE PREVIOUS ADMINISTRATION, THEY DID. MOST MEMBERS OF THAT ADMINISTRATION AND A LOT OF PEOPLE IN CONGRESS DID RAIL AGAINST CORPORATE AMERICA, RAILED AGAINST PRICE GOUGING. I MEAN, YOU NAME IT, A COUPLE OF TIMES BIDEN WOULD GIVE A SPEECH AND HE WOULD BE VISIBLY ANGRY ABOUT ABOUT CORPORATE AMERICA. THAT CHANGED COMPLETELY WHERE THEY WERE STANDING. YOU KNOW, THEY'RE ALL 20 OF THEM WERE STANDING IN THE OVAL OFFICE NEXT TO TRUMP. THAT'S GOING TO CHANGE. NOW WE'RE GOING TO GO BACK TO TO PEOPLE COMPLAINING ABOUT BILLIONAIRES. DOES THAT MEAN TRUMP BECOMES.

5:12 >> THE ADMINISTRATION IS GOING TO BE COMPLAINING ABOUT BILLIONAIRES? I DO THINK YOU'RE GOING THE ADMINISTRATION OR CONGRESS. CONGRESS. OKAY. >> CONGRESS. AND WOULD WOULD TRUMP SAY, YOU'RE RIGHT. WE DO NEED TO DO SOMETHING ABOUT THE INCOME DISPARITY. >> I THINK ULTIMATELY, A GROWING ECONOMY MAKES MANY THINGS POSSIBLE. I THINK TAKING STEPS TO TRY TO ENSURE GROWTH WINDS UP BEING ULTIMATELY THE MOST CONSTRUCTIVE THING WE CAN DO. >> WE HAD 3.4% LAST WEEK ON THE GDP, AND THIS WAS A BLOODBATH FOR THE RULING PARTY OR WHATEVER YOU WANT TO CALL IT.

5:44 >> I'D LIKE TO THINK THE GOVERNING PARTY RATHER THAN THE RULING PARTY, BUT MAYBE THAT'S. >> ALL RIGHT. >> OKAY. WE MIGHT MIGHT GO TOWARDS THERE'S. >> PLENTY OF PEOPLE ON THE LEFT THAT CALL IT A RULING PARTY BY A DICTATOR OR A KING. THERE'S NO KINGS, RALLIES JACK. >> I ASSUMING THAT THEIR ADS GET OUT. YES, THERE ARE NO KINGS RALLIES. >> THERE ARE NO KINGS RALLIES. OKAY. SO WHATEVER YOU WANT TO CALL IT, THE THE GOVERNING PARTY OR SOMEBODY. THE US ECONOMY DELIVERED 3.4%.

6:11 >> IT DID, AND IT DELIVERED 3.4%. AND A LOT OF PEOPLE WERE UNHAPPY ABOUT THE CONTEXT OF THAT GROWTH. AS AN EQUITY INVESTOR, I TRY TO UNDERSTAND WHERE PROFITS ARE, WHERE PROFITS ARE GOING, AND I WANT TO TRY TO KEEP MY ANALYSIS COMING BACK TO NEVER WANTING TO UNDERESTIMATE THE CORPORATE SECTOR'S ABILITY TO TRY TO MANAGE THEIR COSTS, TRY TO DEVELOP PRODUCTS THAT PEOPLE WISH TO ENGAGE IN, AND CONTINUE TO LEVERAGE. THOSE TWO FACTORS TO DRIVE PROFITABILITY. CAN TAXES GO UP? YES. CAN TAXES GO DOWN? YES. BUT THE BIG PICTURE IS DO MORE OF WHAT PEOPLE WANT.

6:46 DO IT AT A PRICE THAT ACTUALLY IS BELOW WHAT PEOPLE VALUE IT AT, AND DELIVER IT WITH COST, BELOW WHAT IT IS THAT YOU ACTUALLY SELL SET YOUR PRICES BEING. THOSE HAVE HISTORICALLY BEEN THE IRON LAWS OF THE ECONOMY AND DRIVING THE IRON LAWS OF INVESTING, WHICH IS MONEY TENDS TO FOLLOW MONEY. >> OKAY. >> MONEY WILL GO WHERE IT'S WELL TREATED AND WHERE IT'S, IT'S ULTIMATELY WELCOMED. >> CAN I THROW ANTHROPIC INTO YOUR MIX? HOW MUCH DOES IT MATTER TO YOU?

7:12 >> I'M NOT REALLY IN A POSITION TO COMMENT ON SOMETHING. >> THAT JP MORGAN IS INVOLVED IN. OKAY. NO, THE REASON I ASK IS IT'S JUST IS THIS THE LINCHPIN? IS IT SUCCESS SO IMPORTANT TO ALMOST EVERYTHING ELSE? >> I WILL COME BACK TO THE IDEA THAT OVER THE LAST SEVERAL MONTHS, WE'VE SEEN MASSIVE CAPITAL RAISE AFTER MASSIVE CAPITAL RAISE THE MARKETS DIGESTED THAT AND CONTINUED TO GENERALLY UP UNTIL VERY RECENTLY, MOVE ON TO NEW HIGHS IN FAIRLY SHORT ORDER. OKAY.

7:43 ULTIMATELY COMING BACK TO HAVING A HEALTHY FINANCIAL SYSTEM AND SEEING THE FINANCIALS TRADING WELL IS PROBABLY A VERY GOOD TELL IN TERMS OF THE UNDERLYING STRENGTH OF THE MARKET, RIGHT? WHETHER COMPANIES NEED TO MANAGE TIMING OF OFFERINGS, WHETHER THEY MANAGE THE SIZING OF OFFERINGS. I MEAN, ULTIMATELY INVESTMEN