Elections & Earnings: How Will Markets React?
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L C member A S I P C I. Welcome to the monday edition of the on the tap cast. I am DNA and I joined by danny moses and liz Young Thomas.

He is the head mark strategist at so far. Welcome, peeps. Good morning. Good morning.

I M is in part I I mean, he's I know we cannot even ducked him because he's away and we don't know areas. And I asked the son and that doesn't areas, but that's fine. Hopefully guy is having A, I don't know, a good weekend there.

We got four things to do today. We ve got to go over a little bit about what happened in that october jobs report. We're going to talk obviously about the U.

S. Federal reserve they are meeting this week. Uh, there is a very high probability of the twenty five basis point cut.

We're going to talk some single stacks up some earnings. And obviously, the election, i'll just say this dandy, this might be something that resonate with you. The distance to the end is closer now and it's ever been.

We're going to get you see what I did there. We going to get the upper hand on this market on the election in the light year list. Let's first start with these jobs report.

IT came in at a minute. Go I want to ten thousand or so. Ah that was down from an expectation of one hundred and fifty or so and from last months two hundred and fifty four, which was revised a little bit lower.

We know that was the private employment market that might have been secured by the hurricanes and by the boeing strikes. So what was your take away of that? And does IT change your view of the U. S.

Economy here, the numbers themselves, where we added twelve thousand non farm payroll in october, the expectation was for a hundred thousand. And so that was a really big miss. But the unemployment rates stayed steady at four point one percent.

And that seems to be the thing that people watch the most. So IT didn't scare anybody. And what I had thought before is exactly what came true in the sense that even if this is way off of expectations, it's going to be explained away by hurricane.

It's gonna explained away by strikes. So people are just committed to not seeing this as a bad sign. I think it's probably, in this particular instance, a little bit true that we have to just wait this one out, wait for the next data and maybe more importantly, wait for the revisions, which take a couple months to come in.

The revisions this time were also downward so that a number of jobs that we thought were added for the prior two months or less than so. Again, disappointing, but nothing that has been alarming. So to answer the question very directly, does that change my view of the economy right now? no. But I do think that this report was a bit of anonymity because of some weird stuff that happened through .

september and october. So I think that number you think about expectations, mockery of IT. why? Because the certainty of a rake cut on thursday after the fed meets ah is now ninety eight percent and moved up a little bit. So obviously in your certainty and then you saw the december meeting, the probability of a twenty five basis point cut also move you know higher to about eighty two percent or so. So when you look at a number like that is kind of supports the case for the fed to continue to cut rates, which is support of of an economy that some folks think is weakening, made evident by that october job report?

yes. I mean, spending by the consumers still pretty strong. GDP came in so pretty strong. I don't think a monthly number of the jobs number the is which is talking about breaking that down.

Does anything this kind of change the names of the fed soon to be fifty based points from now to year? And I just want to make people note that because the election, the fed meeting actually decisions thursday, this time set of wind. So I know that happens every once.

So well, just one of the point that out. So no, I think what companies are telling us with earnings, I think the most ee is still pretty much know in place here. The consumer keeps spending companies for finding away to earn around all of these issues.

And I look at the companies individually on the bottom basis to make these investment decisions. And the macro is certain ly important, but is just noise because all these revisions that we can changes see a month to month. So I think we're pretty clear that inflation actually may have not slowed to point.

Now people want IT to. And next one thing that i'm going to watch now is really the inflation numbers as partly economic landsat more than anything because again, we've we ve seen inflation come down, but not to the level. I think it's stopped going down level people are gonna .

get comfortable with. So it's mention consumer. They continue to spend despite the cumulative gain inflation, which has come down and considerably over the last you know two years or so from nine percent down to what this three percent bound.

But when you think about you just mentioned, you know on the individual stock level, carcases tweet this out this morning from George bank earnings beach running well. About average seventy eight percent of S P. Five hundred companies have beaten on earnings by an aggregate of seven point one percent, well above the historical average of four point nine percent.

This we talked to our main man, john butter's, all the time. He is a senior earnings inside analyst over there, at fact, that he often reMarks help earnings estimates come down over the course of any sort of quarter. And so yeah, some of these beats that you see that are above like the five, ten year averages or so often times they come in in line where the consensus was that, say, a quarter or two ago. But this seems far greater, is far as the magi ude of the, you know the beat, but also the amount of companies in the S M P. Five hundred that are beating you.

I think there's two things going on here, the first of which is mention the consumer is still spending. And I think that has actually sed companies. I think Frankly, it's surprised economists. It's surprised a lot of people even surprised market. So as we continue to see personal spending income and strong personal income come and strong, but without the pressure of wages continuing to go up and affecting inflation, I think that's been a positive that nobody y's really expected to be quite as big of a positive. So that help helping company's revenue line.

The other thing that I think is going on here is that despite the fact that all of this maco data seems to continue to come in solid and there hasn't been anything terribly concerning, the vibe check on just regular americans and the vibe check on cfs and ceos is that they've been cautious because they don't feel like they have as much visibility as they Normally do. Rates, great expectations have changed so quickly and so much throughout this year. Yields have moved so much throughout this year.

Obviously, we're on the precipice of the us. election. There's a lot of uncertainty that has plagued the markets and plagued capital capitalism, Frankly, for the whole year. So I think CEO and cfs have done a good job of forecasting in a conservative way, which has had expectations lower than maybe they would be if they were super optimistic. S beating those expectations has been easier.

The last thing i'll say about this is what we've learned in markets over the last handful of quarters, though, is that in order to really get rewarded in your stock prize, you gotto beat by a lot. You have to be pretty exceptional in order to get that rewarded by the markets. Because now as investors, we expect beats, we expect companies to come in show growth, particularly in technology. So the bar has just risen for how much the stack Price is going to move on those result?

yeah. And I guess to any we think about the potential for inflation to move higher. We know the inflation expectations are moving higher depending on how far you look out. And I see four things in the offing that you could ignite, obviously, this rate cutting cycle. You also have the chinese, which have been stimulating their markets, right? And so the fed, I think they're meeting this week in beijing and they're expected to announce another bit of fiscal stimulus s and so that could be inflationary.

OPEC just said, they are pushing out um you know production hikes that could obviously be inflationary if you have the chinese with our stimulating the economy, you know you see crude oil up a couple box here, right? And so maybe that this sort of thing and then obviously the us, no matter who wins this election, you either have tax cuts, right, that could be inflationary, or you have death, is its spending on the fiscal side that could be inflationary. So anyway, when you think about all those things, combine, you know IT is a difficult task to consider how low inflation might be able to go towards the feds. Two percent target because there's a lot of things out there that could service tail winds to inflation.

Yeah, you use made in oil. And I think that's been a huge factor for the U. S.

Consumer as well, certainly some to keep in an ion with related from sixty seven to seven one, as you mention on OPEC, cutting back their production two point two million for the rest of the year. They just extended amount, by the way. So it's not a huge deal.

But again, send a signal to the market place. And again, the only way you get out of this, the deficit, is inflation. You have to actually inflected IT away.

So that's kind of a problem, right? things. And liz s comment, you know, about companies learnings. And your comment, the end about beating, you really do have to be and guide up when your overall market is trading at twenty two earnings and you Better be guiding up.

I think more importantly, what you're saying in the future, you could potentially get away with maybe not beating as long as you raise to talk about the future. So talk about this market, the Prices to perfection. To a degree, it's really amazing to me what investors want, have faith and believe in what they don't.

But sometimes you get punished for being really honest. The marketplace as a reset, but those companies are honest, are the ones you want to own over the longer party time. We don't get caught up in buying, buying and selling at the bottom of a of a bad quarter potentially than buying at the top of what might not be realistic forecast. So again, very important to understand manager of these companies and kind of their guidance here and whether they're truly meeting decide the guidance.

So yeah, and I guess you know lily was a great example last week. This is obviously one of the largest players in G, L, P. ones.

It's been a massive story. This was nearly a trillion doll market cap at its highs and they had its this winning sales outlook, the stock cap down nearly fifteen percent. This was last thursday, I think, or wednesday.

And IT made up a lot of those losses throughout the day and close down six percent or so. But it's kind of shoot first, ask questions later. This when we came into this year, okay, in the twenty twenty four, we are looking at expectations for double digital earnings growth.

They think ten eleven percent. And then in twenty twenty five, you know thirteen, fourteen percent IT looks like we're gna hit double digit earnings group in twenty twenty four, and we haven't seen twenty twenty five estimates come down materially. So you have A S M P trading at twenty one and a half times, which seems you know high on a historical basis.

Five and ten years. I think it's high teens or something for both of them. But when you have these of secular moves, as far as you generally, they live and some as other step that we're expecting maybe on the fiscal and monetary front, does twenty one and a half time seem reasonable as long as next year we're still staying? You put with this fourteen percent expected growth.

The way the math would work is if we had earnings growth that did come in, in the double digits again in twenty twenty five, even if the market didn't move, the multiple will come down. So IT might actually look more rational if if we don't have another twenty five percent year in the S M P, let's say we have a Normal year in the S M P where earnings growth actually outpasses the growth in returns in the S M P, you'll see a natural compression of the multiples. So we maybe we end up and in the high teens and then people will feel Better about that.

I do think that we are Priced quite frosty, but that being said, we have been for a while and we keep sort of worrying that just because it's high, IT has to come down at some point. And this goes back to that golden note from a couple weeks ago, where market concentration seems to be the biggest risk here, that the multiple is high, much of which has been driven by just a handful of companies. And that concentration makes us so much more reliable on the multiple staying high in those particular companies.

So if those companies give IT up, then the whole thing starts to come tumbling down. The issue with that is that given why it's happened, the a item and the optimism around IT in the fact that now we are seeing little glimmer of companies actually producing some results because of A I IT doesn't necessarily have to end just because it's high. And I think anticipating that particularly, I just speak for myself, anticipating that has to end just because it's been going on for a while is not a good way to run a portfolio.

And that's something that I fell victim to probably for most of this year, thinking, you know what? This feels like too much. IT feels like too much. We should pull back and IT just hasn't happened. So I think we have to keep ourselves open to the possibility that even a concentrated market that feels a little bit at a wac can continue for a long period of time, especially when we don't feel like it's entirely rational .

and we got to go back to because you just mentioned the concentration of these names, you have an S M P that's up twenty percent in the year, year to date, obviously. And now that composite up twenty one percent apple after its results um last week, which we were disappointing, I don't think expectations were particularly high. Apples up sixteen percent of the year.

Microsoft after a slightly disappointing quarters, up ten percent on the year, right? So we're starting to see google is basically online. Amazon is out performing good quarter, you know, guide was great and the stock move tire.

But you microsoft, one of the larger market cap companies in the world behind apple and NVIDIA, you know similar stuff that they reported as far as their cloud business was, you know I mean, they say either capacity constrained and are going to continue to spend at a high pace, but at some point that they just have less demand. The city that they built might be too high in the spending rate. You know they just kind of way on the stock, I think, is waiting on IT right now.

And so I guess the question, danny, of in video in a few weeks and november twenty, you like we say this every quarter for the last six or so, this is gonna be a big macro o event, the one quarter where they finally kind of issue guid insets below the street. That's the sort of thing is that could put IT in the penalty box of dani. I'm just you know, we have a lot of things you're going to get election in a second IT seems like there's so many massive events in the next few weeks.

Where do you place in vidia as far as this secular trend? Because i'll just bring you back to lilly for a second. I don't think anybody had an another bingo card that, that company was going to miss sales the way they did. So sooner later, we're gona have one of those in the general AI trade. And if IT comes from in, video is going to be lights out for at least a few months.

maybe a couple quarters since the law of large numbers. And just back to the comment that is made about the us. Market treating where they do. So the sexy game in town is supplying demand.

And because the way the market structure is set up, a lot of passive funds that out there itself fulfilling the money will go to the large liquid name. So let's just establish that right now. You look at super, my gro, which i'm not going associated with any other company potentially within the A I space.

But it's really is a wake up call for a participant is in the space that may either be potentially a bad actor, which may in D B, overwatering or inflation order expectations that people read through a lot of different things. So we are now reaching a point to your point, in this in video quarter is going to be hugely important once hopefully we get through the election noise in this fed meeting of people focus on IT. But you Better to your point, you made early, you Better beat and you Better guide IT up, which I probably expect them to do.

But at some point, I remember I talk about this a lot. In nine and nine and two thousand, there were companies that were still beating and guiding higher. And the stock started to drop.

I always say jd s universe is kind of vibration tic poster child. And again, it's only because everybody's already there is a law, large numbers. And when the stock started to come in, what is the bay point on those names? The trade that IT is just in. So IT really becomes be pay attention to Price and you're positioning on these names that don't fall in low with stocks to gold, fall in hate with stocks at the same time, but from a short perspective. So that's kind of how .

I would look at IT when that started happening. Where did the money go? Did IT go somewhere else and equities?

Or did IT go to bomb? IT went up in smoke. Because when you had, like literally, the nazi closed down thirty percent in two thousand, and the S.

M. P. Closed down a little and ten percent. And you know what is all sudden done? I mean, the as that you could have danny's point about the bay point.

I know plenty of people, portfolio managers, traders, we're just averaging down. They were like, holy shit, the sp, I was at an all time high. IT closed down thirty percent. Well, oh, one was worse than two thousand. And o, two felt like in an absolute gut punch because we had three consecutive years of this bear market.

And that's the interesting thing is, is like if you live through that and then you got to the financial crisis, IT happens so much quicker, right? The market was only down one year, which is two thousand and eight. Then fast forward to cove IT, right? And we had literally one.

We even have a downside, did we? Two, two thousand and twenty, we closed up, and twenty, twenty one, we are off to the races. So we just had a quick kest, thirty five percent to climb about a month or six weeks or like that. S M. P. But I leave at IT.

But what's very different about this, I will say this time period, you've got a glimpse of bit in August where people started crying for the fed to emergency rate cut seventy five bases once because the market was down. With different about this time period is the reliance on global centre making the baLance of everything. And at some point, people will pay attention to the debt, pay tension to the the feed, to only control so much.

The problem with this particular time period, if you ask that and get IT. Going to reverse all this moves in inflation, and they will basically self fulfilled higher inflation. We won't even go there right now. This is not a long of pocket on the point is, every time here is different. This one, I think, is the most interesting elements to IT for sure.

a lot of moving party. But that is what do you make of, you know you hear that a lot of folks say this despite you know that you had paul tute Jones and stand just talk about how we did they are to treasury in their portfolio to the idea that, you know, we have to inflate this away with danny just mention. So that just means, you know, we're going to have a lower interest rate regime.

Know, a lot of folks feel like we're going to have a much higher interest rate regime because we're going to these inflationary pressures that are going to be long lasting. You well after this copy hangover. So thoughts on that because the way that the treasury market yields have moved over the last month is about as curious as i've seen as long as i've been in the markets and have been focused on IT.

You know, the idea, to danny's point, that people were calling for this massive rate cut, right? They were really worried about the economy. And then we saw some data that kind made to feel okay.

But fifty, I think that they did in september. A lot of folks feel like I was way too much. And now here, we have a highest probability that we've seen a very long time that we're going have another fifty over the next two months or so.

So to me, it's about as clear as mud, you know. And i'm just curious what your thoughts are on the rate moves and how much I may listen. Here's the other one.

We going to talk about the election, obviously, but let's say this thing is not settled for a while, Daniel. I remember what two thousand was like. I mean, that took months right to settle the election. That's the sort of thing where the fed is gonna to stay pretty easy.

yeah. So first and foremost, I think they should have done fifty in september. I I onesta think they probably should have started in july with twenty five and then on twenty five in september.

But in order to catch up and send the right message, I think fifteen and september was fine. I think there would be two different regimes or two different periods where and we have to separate interest strates from yields. So what's happening right now, that's odd, is that we know the fed is cutting rates.

We know that they're on this trajectory down where yet yields have gone to need complete opposite direction. So what I think could happen is that they continue to cut too quickly, and we haven't got in our arms around inflation, which we know this has been a risk for this entire cycle. If they continue to cut too quickly because something like the labor market is faltering, then you could see a recognition and inflation and see some problems there.

IT would require the consumer to pick up their slack, though. IT require the consumer to be spending. And I don't see that entirely happening if the jobs market is getting weaker.

So there are a lot of different things that would have to fall in place in order for that to be the case. I still think inflationary pressures would mainly have to come from the commodity complex and mainly have to come from probably wage pressures. So there's there's a lot of data that we have to get in before that would actually occur and then yields rising in this environment.

I mean, that has done something that I think has surprised a lot of people, but apparently has not bothered the equity market very much at all. But I think as we get closer to, let's say, four point five on the ten year and god forbid, up to five on the ten year, the equity market will start to really feel that pain and move in the other direction. But I think again, the odd here is that we know the fed is on a cutting cycle.

Yields are moving in the opposite direction, and that's the stuff we talk about every single day. What you actually want to look at our inflation expectations. You can look at that in a number of different surveys, and you can look at that in something like the break even rates.

And we have seen a big rise and the break even rates. And the reason that matters is because that's what the fed watches for whether or not inflation has become entrenched. And if those break even rates are those expectations for inflation go up and continue rising, that's when you have to start to expect the fed to take a step back and say, you know what, maybe cuts are not the best idea right now. Maybe we should at least pause for a month or a couple month .

that brings us back the year two thousand and two thousand and one when you remember, like we just talked about, you know, in two thousand, how much the nasdaq was down. And you know, the popping of that bubbles seem fairly evident by the end of two thousand. And the fed came in and early two thousand and a one, and had that surprise rate cut and really IT felt like to support the stock market, not really the economy.

And they kept on cutting, but the market the stock market kept on going down, right? So at some point, they talk to us a little bit about that because we're gna basically have, you know one hundred basis points of cuts between and december until lizz point. At some point, you know the stock market sometimes s got to give IT either is the economy and flax.

And we just saw that GDP print right that look Better than expected, I think was two point eight percent. Let's say we have the my rate doesn't go up meaningfully. You know, like this is the sort of situation where maybe it's a bit of a goldy lock scenario. We can say that because guys is not on the pot right here. But again, if you thought that where interest rates were going really relative to the ten year and you said we're still kind of restrictive in this economy that hanging in there, you know, is IT about the economy and the jobs market was about risk assets.

yes. And yes. So I think this move that we've had had in the ten year yields have been kind of that. We've gone from the three sixty to four thirty love. I know where down a bunch today.

As we sit here right now, I think we're down from four thirty, sixty four, twenty eight or somewhere and that ranged. But I think a lot of the move has been economic growth and people feel okay. The next leg, to your point, the story part four and half of five percent, maybe something completely different, more embedded inflation expectations or got to forget to term premium.

They're to have to get a higher rate to take the risk to own U. S. Treasuries are able talk about that.

Again, that's podcast about our debt levels. And so this is we've been a prisoner. It's really start with with berankis. We to call IT his precious with the stock market.

So in two thousand and eight and two thousand and nine, two thousand and ten, ever there, there be a crisis. When I say crisis, a stock market drop because of a turns, whatever we would ever know. He come out to do something, but he always reacted to the stock market itself.

I don't think pal is as bad. He has n't relented to all those pressures. We saw that in August. He didn't kind of move like that. So I think it's a combination of um again, who you're audiences but more importantly than its credit spreads. And credit spreads have been so tight here, even with the treasury moves in, the yields of we've had higher, right? Is actually tiny me even more because the corporate credit in the private landmark this stuff has not moved remains tight.

So that's what i'm watching more than anything because the functioning in the credit markets and the ABS markets, the ability to initiate and sell auto loans and credit card receivables and always buy now, play later, all this stuff is still working if that we're to back up because rates get to a certain level and or economic growth slows to point with people started to question IT. That's when you have a massive black in the system. That's what the friends you can have to pay attention to more than just the stock market.

So I know I went up that was a long answer to the question, but there are just so many variables here to think about. The bottom line is the end? Yes, the dark market PS people are programmed to look to the central banks and the fed in particular, to quote, save them and at some point, saving them, promote inflation. And that does not work.

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Salt eye connections asia is the largest capital introductions event in the asia pacific region, bringing fifteen hundred leading asset allocators and alternative asset managers from around the world to explore more about eye connections events and gain access to their members. Only platform visit eye connections that I O so far the only one super APP for banking, borrowing and investing or an industry leading A P Y get great loan rates and trade stocks. So if I get your money right, banking products and loans offered by, so if I bank NANMLS7801 age and active investing products through sofi security lc member fera S I P C。

Let's talk about the election here because, again, we're recording this monday right after the market open, and this was a very interesting weekend. There was a lot of movement, at least from a sentiment standpoint, that I OA poll that came out is supposedly a very high quality hole, showed something about potentially like a shift for the democrats, for Harris in particular.

And I think a lot of folks, you on either side of the fence said that if the I was paul, okay, shows Harrison leave, you can see a lot of stuff break that way clearly, you blue wall in that sort of thing. And maybe this is a bit of a wave election, which would be crazy if you think about just how close the polling nationally is, right? And then IT comes down to this prediction markets.

And we talked a little bit about this on the pod over the last few weeks, easily spoofed, right? And may be sort of thing that is trying to kind of make certain or the electorate feel something about their candidate, one where another maybe it's to help set the stage for whoever wins to make the case that will look at the polls and look at the prediction markets and look at your meme stocks and say, how could I be that this candidate law, that sort of thing. So please, how you thinking about just the change in element in such a short period time right before the election because, you know, I think a lot of folks, it's kind of like higher taxes if you know you have a Harris win, but really, you know over four hundred thousand dollars in income.

And when we can think about how many people that the higher taxes effect on the very high end, we're talking about low percentages of our three hundred thirty million people, right? And then on the flip side, you have lower tax primarily going into large corporations, but large corporations also make up a very small percentage of the businesses here in the us. So I think they probably net themselves out. So curious how you're gaming this out and how you think the stock market and obviously yields are gonna act to, let's say, a surprise Harris win at this point or a trump in well, okay.

So first of all, let's go back to what happened over the weekend. IT showed there was a demode poll that came out. Apparently the pollster who runs is supposed to be the best in the business.

IT showed that Harris was ahead by about three percent in IOS. The read through of that is then, well, then maybe she's ahead in all of the swing state by roughly the same amount, in which case all the bedding markets move to expect that. I wrote about deficits last week, changing the subject a little bit here.

now. I wrote about deficits last week. What I what gets frustrated for me about elections is will focus on one of the elements of IT and not the other elements. So we focus a ton on taxes, right?

The expectation of trump elected is that obviously the tax cuts will get extended if herr's gets elected, maybe only part of them will get extended and then taxes will be raised on the other part. The other thing that we have to remember that is both candidates are gna continue spending money. They're just gonna end IT on different stuff.

So the deficit problem doesn't get solved no matter who is in office. And this expectation of having to issue more treasuries in order to cover that deficit doesn't get solved either. So it's just a matter of how we get there.

It's the different components of an equation as, okay, spending are gonna up on both sides. Taxes may come down under one and not under the other. But if you off set IT with more spending, we still have a deficit problem. So IT s IT doesn't necessarily change things all that much the way that I try to think about elections.

And I think we learned to this the last time that we had a contentious election, in the time before that when we had a surprise result, and even we learned IT and break IT polling going into the election is just not necessarily reliable. If you position your portfolio for what the polls say when the market closes on election day, you have, I would say, about a fifty fifty chance of being completely wrong. And remember what happened the last time that trump s was running for president? The overnight markets were completely different from the live session that started the next day and ensued for the following days. So this close to an election. I would not be relying on a poll to position my portfolio and bacon, who I think is gonna in yeah hey.

danny, when you think about just the movement here and you think about the dollar weaker today on Harris prospects rising a little bit, you're probably going to see some stuff in some different actors move around to liz's point, fifty fifty chance of being really wrong on the flip side of IT. And you brought up brags in two thousand and sixteen in that election.

There was some crazy moves, I think in the and when trump one, I mean, the futures in the equity market were locked down limit right overnight. And at some point they just started rilling and kept on going. So when you think about the S M P, it's pricing in like a one percent move in the either direction by wednesday's clothes, which is kind of interesting to me.

IT seems a little bit light and two and half percent off by the end of the week. What are some of your expectations, maybe the kind of baseline is we have a fairly tight election that's gone to be contested for a while. Is that going to be the sort of thing that the kind of ushers just a new period of volatility? Because other than early August and than a few days in early september, it's really been bottom left.

upper right for requires yeah. So I think to the election on tuesday night, I think we will know georgia in the ina, which maybe tell us lots will get some type of clear if we're not of everything. And as far as the house in the senate, I think we may get a Better picture on the senate, but certainly not the house.

So there's a lot up in the air. I think trump brings a lot more geopolitical risk into the equation. Therefore, some assets that have been moving up into this, which have been gold and crypto and obviously bitcoin is part of that universe in the dollar.

Obviously, your point dance coming in to ever having. So it's ptsd, I think where this has been going on now for basically three election cycles as we sit here. And so obviously watched the banks.

I think the regional banks are a big play into this and have been a bigger play than some these other things that i've been watching. So watching that obviously, and treasury's, I honest, wouldn't be able to tell you if there was a new term joke reaction. If we had a real issue and K O sorted to break out, you would think inherently the treasury fields would drop.

And that's probably what will happen over time. But I think the market is interesting. That is pricing what you say, a one percent move. That's basically this one I think the best of IT made. And I know were going to talk about these bedding markets, if you're potentially and what they're been expressing kind of way of the markets.

But I really focus on there's not going to be tax cut extension, sorry, but people that I believe that you going to have, maybe you're get an extension of, but does that can have some type of question are just dreaming because at some point, we have to pay for all this stuff. So all the promises that are made and are not at attacks over time. And I could I it's just noise to me because the reality is we have a fiscal issue no matter which party wins, and that's what i'm trying to focus on.

And i'm trying to focus on only the companies that are immune from that for the most part. And there are a lot of companies which i've just been doing their business and creator insulating themselves from a lot of these things in next to me where you want to be focus. I don't have that. Listen in front of me. This is get get your .

popcorn ready. You know it's sitting when you say the repercussions. I mean, you know a lot of the sea level sweet here in the amErica holding off on certain decisions other other than the generated AI you build out the data center build out.

I mean, those guys we learn from their capex last week, they are going, you know, full force in one direction. And you know I think regulating generate A I in generals going to be a bipartisan sort of thing. But this when did you just mention we're talking about this prediction market? okay.

So it's you know poly market is predicted. IT is also called a. These are getting a lot of attention, but these markets can be moved by you know a handful of players.

They don't seem particularly transparent. Supposedly, there's a lot of wash trading going on there. U. S. A strategist are probably getting tons questions about the polls and about like this is the first time I remember so much emphasis has been placed on these prediction markets. How do you think about IT? You think it's actually influencing investors and what they are doing in much larger risk assets?

I think that is ending at a time when risk appetite is still pretty high and people are willing to have fun in a prediction market. We have a surprising mentality as investors broadly betting on sports. This is, I believe, the first time that betting on the election has been legal.

So it's just another way to express risk appetite and express this risk taking behavior. So I guess i'm not all that surprised that it's happening. Do I think it's IT has the power to actually move markets or change investor psyche? No, I don't think that, that's happening right now. I think that this is something that people are doing on the margin for fun, and the rest of us are just sort of watching as as some kind of exhibit.

So we talk about all these gambling heights now that offered the obviously take best, let's keep in my, that the C, F, T, C tried to block the ability of in the U. S. Gaming on us.

elections. And they were overall by the hello court. So just a few weeks ago, this because he started taking bats, and I think there up one hundred and thirty nine million total, that s comparison.

The billions which have been waiting the public market over using crypto over in europe and Robin hood is now taking into actor brokers is now taking again. I think they're small on their basic bet set out there. I think this is what the cftc kind of feared.

but. Just keep in mind the lack of liquidity in the U. S. Marks and how much you could move as as kind of a predictor there.

Yeah, quite. I want to hit the mornings this week, plentier reports after closed today, monday. It's ninety three billion doll market cap company company, up one hundred and forty percent on the years.

Expect to do two point seven billion dollars sales, three point four billion next year. So this is not like a hyper growth story within the A I. This company has been you very, I would say, promotional.

And the co, the company was on C, M, B, C. Very long. Interview the other day he had was not missing worries about a whole host of other things. They saw a lot of their services to the U. S.

Government, specifically the defense department, when I think about know much of the general vy, I trade as we just kind of elaborated, it's really around these hyper scales, these trillion dollar plus market cap companies. This will will be interesting to me from a sentiment standpoint to live move in the market mark, about thirteen percent on average. The stock has moved ten percent the day after earnings, uh, over the last four quarter.

So really want to hear what they have to say. The other name that's interesting to me on wednesday is nowhere notice. We just talked about lilly little bit and that sales miss.

So to me, you know, when we think about these mega trends from a sentiment point, again, if they miss this, i'll be very interesting. I think the stock is the risk for a couple reasons. It's already down twenty five percent from its recent all time highs.

And IT chased at a much cheaper evaluation. So that's one i'm looking at. And this maybe you can to pin on this.

It's not on the specific name, but airbnb reports thursday after the clothes about seven, eight percent play move. But this is a stock that's unchanged on the year. You know revenue and earnings growth expectations are about ten, seven percent.

So this is not a high growth company anymore, but it's from a consumer standpoint, what what are some of these earnings that, that we're getting to? What are they telling you if if airbnb, let's say, has a weak guide going forward, stocks expensive, expectations are not particularly high. You know, on the revenue, the and point is this one of the ones where they would shoot first, ask questions later, and I would have to be a big beat and raised to get IT going. And I guess i'm just curious from a market standpoint, how important is a guide up for a name like this .

from a broad market time? I don't think it's all that important right now. But to your point about health care before, if you've got lilly disappointing, if novel notice disappoints, some of that when you link IT together becomes a theme.

And we we've talked about this in the consumer space companies like walmart and then costco and target. If all of those are saying the same thing and if it's all negative, you have to assume that there's a theme going on in the space. I think look at the travel and leisure space.

Airbnb would be lumped in with a lot of those if you've got big hotel chains that are saying the same thing or they're under pressure or the stock is moving sort of the same direction. If you've got airlines talking about leisure bookings that are faltering, if you've got cruizers that are talking about the same thing, then IT becomes a theme. What the maco data has shown so far is that consumers are still spending on services.

There hasn't been a huge pullback in that part of the economy. So I wouldn't expect there to be a big change right now. But if into twenty twenty five, we start to hear some of those companies linking together and saying, you know what, our demand is down, our costs are out. Lets say oil places go up that sort of thing, some of the input costs go up. I think then you have to take a step back, look at consumer services as a whole and make sure that you're not over exposed to the place where people have decided to pull back their standing right.

Last thing here, over the last, I want to say, a month or so in amazon, we seen microsoft. They've done something that I don't think too many folks thought would happen at any time. soon.

Theyve struck these power deals with these energy companies. They are putting back online in some of these nuclear facilities that know, and through my island, for instance, one of these reactors have been closed for forty years. And you know the thought that the energy consumption to run these data centers, you going to go off the charts. Dani, talk me a little bit about this ruling from a federal commission that came out. I think you would call IT what you call these things that come out on friday afternoon.

Fried and I dirty. This was, this was a big one. Dirty, almost a dirty bomb if you want to go nuclear into IT right friday night.

dirty. There was two fried in eight thirties, one not so dirty was the change in the deal components that in video is gonna place intel. And then also shown womens is going to a replace double chemical, not to be confused with double, just want what people to know.

Again, the double Jones is a horrendous way to monitor the market. It's Price weighted, is not market waited, as a matter of fact, in videos is going in is number twenty two, but I respected because of the Price of the actual stocks. So just want to pull that out there.

So the other thing that came out was the federal energy regulatory issue basically told talent energy and amazon, hold on a second, learned about Prices of energy to the consumer and availability power and the bridge to the consumer. So we've talked about this before, how these utilities and talent of independent power production, but still regulated by fork, that these are regulated entities, right? And europe, basically bringing forward all potential revenue in the ice space.

And the biggest concern has been you generate enough power in general. So you saw consolation energy get hit, vista energy git hit, and I versy talon get hit directly on this. But they were leaking kind of late friday, so to speak.

So this deal, though I just wanted note, is different than the other ones, because this is tapping in to an existing grid. All these other deals we ve seen from microsoft, google, exciter have been based to either build new power plants or not take power away from the existing consumer. So this will play out in courts.

Obviously, they're still going to allow town on to do, I think, three hundred megawatts first kind of the four eight they were looking for. But this is a wake up call, I think in the sector in general, on the secondary plays, charger y plays into the sector. Just know what you and when you only utility that has a point five five percent divided yld or point seven one percent divided yld by consolation vista, understand that at some point you be Better to be raised that divin in, which won't happen for years based upon this revenues coming. And so just be smart about IT.

Just a wake up. Yeah just to be really clear. I mean, talent with these stocks were up you know two hundred three hundred percent off of their recent laws to start the year.

And obviously, they are coming off here a little bit. There was a huge second leg of those moves when microsoft, amazon started striking these deals. So again, an interesting kind of outgrowth of this mega trend, and we'll see if the regulators can continue this sort of pressure on them.

Are guys we covered a lot of ground. I think we have to say, strap in here a little bit because this could be one of the more interesting weeks of the year in the markets. Thanks so much. Liz Young, Thomas dane, i'll see you guys all later this week of market call and the honey pocket.

I want to say one thing and thank you. Want to say if you are a company out there that wants to put out bad news, I would say tuesday of four o'clock in the afternoon, your best time, I thought out on the tape so that I would be convinced I.

that I be looking for, right? So maybe a tuesday, I dirty or two, see you.

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