Nvidia Earnings Looming 11/15/24
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Carl, thanks so much. Welcome to the hf time report. I'm scotland in front and center at this hour. The state of stocks is in video earnings room large next week. And just this new question sort all now about the mega cap trade we will discuss with the investment community on this friday. Join me for the our josh Brown Jenny hearing ted device, amy asking the sector markets here.

We do have read across the board to spend ten days since the election or there are about so as we take stock about where we are and where we may go, we want a zero in on tech for a moment for obvious reasons, given what's looming next week. Now next only of one and a half percent since the election. Tech as a group is then OK.

It's underperformed other sectors. It's only up one percent relative to say, financials up six and a half, discretionary five and a half, an energy up four and a half. The hyper scales have been uneven as well.

Microsoft alphabet, meta not doing much. We mentioned yesterday amazon amazon hiding this high. But but josh, you know otherwise there just haven't really been many stand out at a time when I think the tech trade, especially big cap tech, is being questioned. Yeah, I think that's right.

And one of the more interesting dichotomies with tech is the software versus chips debate. How do you want to be positioned? And the chips look like a mess right now.

Now, first of all, the ratio of invidia to S M H is at an all time high. So as greatest in video continues to act, the rest of the group is fading hard from election day through today. In videos, s up eight percent.

The S M H is up only two percent, which sounds not so bad, only up two percent. But when you look at the fireworks that we've seen elsewhere, it's a big labor group. Now you have an index that is two percent below its fifty days, only two percent above its two hundred days.

And within the ssh, when you look at the name's judge, the median rsi for the group is thirty nine, in video is fifty four, the S. M P is about fifty two. So the stocks are ice called.

Only twenty eight percent of S M H names are above their fifty day, and the rest are in like little minibar market. So that definitely makes an impact on psychology, people being a little bit closer when they go into attack. And I think trying to be positioned in areas where tariff aren't so much of a big threat, international trade general is not so much of an issue. And that, I think, explains why we are where we are. And it's where people are putting to money, money to work currently anywhere but h sammis.

you know, amy, since the election, the mega caps, I say this every time we do this. H X tesla, okay, because the stock has had such an outsize gain. And we generally don't talk about IT as certainly a hyper scale related to A I or anything of the light alphabets up one percent.

Microsoft up one percent. That is down one and a half percent. Since the election, we learned yesterday from thirteen fs, that third point has exited its alphabet position.

These are always backward looking. Their hard to know what's real in the real time and in the moment, but none of less is an interesting thing to know. You've got apple, amazon, alphabet and microsoft. Were you thinking about these stocks?

We're underweight all this entire group. Amazon's the only one that we're sort of market weight. So we've sort of been in that position for a while, and i'm comfortable being in that position going forward.

I just I don't think the election really moves the needle for many of these companies, and I think they're still a lot TBD to be determined about what the implications of the election are. So i'm not particularly surprised. I feel like we're continuing the trends that we sort of work experience preelection with this group of people sort of not really knowing what to do with IT and had a big move. They're increasing cap ccs will see if they get the return on this cap backs. All those questions are still out there.

Why we're out of the monolithic. A right where you don't just look for these things is as a big group to move in tana, they've separated themselves from one another, as I as I just said, in the results from the election and how they've traded. But you've got all these apple, amazon, alphabet, microsoft and meta. yeah.

And I sure to put netflix in that group as well because they sized and even not to consume your company. Look, the reality is I don't know what's going to happen. I don't think anybody knows what's going to happen and which is focus on this for now.

What if lean icon stays or forget ninon? What if he goes? But what if somebody comes in with a similar thought and they get more gressier, and you have both? Justice c, everything controlled by the president read his mind. I can't, I don't know. You'll want to break them up.

I don't know. Feel dick, ed, I to read the, read his mind room, read the room. The room is that there is going to be, animal spirits are going to be unleashed, particularly when IT comes to ema and the ability of companies to do deals. Again, sorry.

is mine read the room? I'm read room and I don't know what room you're reading really talking about.

What do you I talking about?

What do you mean? What am I talking about? You think anything clear about what's going to happen the future?

I don't. I don't think it's it's a slam. Don't M A picks up. absolutely. Think about IT.

You've got a guy on a populist record, not on a big company record, right? That's nobody. One on pushing the C. S, those is just fax guy.

He on the same thing that he won the last time that I.

not you, that's not sure. Okay.

okay.

What do you want on is saying your individual life will be Better? IT will cost you less? IT doesn't cost you less if emerge coverage. Do you think anybody paying .

less for airline, you think that you think there's like the chance of less? Ma, under understandable. And there was under biden.

Well, really, I don't think it's and i'll tell you why be you can laugh and that's that's fine. You can laugh, but i'll tell you why. Okay, i'll be serious. And okay, where are rates going?

Who knows the exactly .

what policies that trump s do? Do you think they're inflation? You're going to lower rates? No, they are going to raise rates.

Do you think IT makes financial sense for companies emerge if the financial cost are more than the synergies? no. So that's how I look at IT as an animals of IT.

But you still need to have the P. E. Firms actually come back to the market. And that's something and that the bankers are talking about that there is a backlog people were waiting for this.

So I do think you .

probably get some point, right, because generating .

exactly they're not generating fees with cash with not drawing capital. That's the biggest motivator due deals, right? Not trump, not interest strates. Those are other valuable imports.

There's so much pent up demand to do deals.

It's to make economic sense. They still to make economic sense.

If interest rates stay around where they are, you're telling me that there aren't going to be any deal.

I'm telling you are right to aren't to say where they are. I'm looking to the future, not today OK. Okay.

that's my now in a world where the economy you has the the potential of picking up even further if rates are moving up for the right reason, you're the one who's made the argument for as long as we've known each other on this program, rates and stocks can go up together because you've done that for you that that's always happened. Rates and stocks and group together.

So what's different this time? I think you thinking of a different point i've never made. I've never made they can on occasion, but that's not law. That's not what happens all time. In fact, there's the inverse correlation to rates and markets for good reason.

It's the speed in which rates go up are are potentially the issue. But I don't know how I do, but the notion that .

ever done dcf analysis, have you ever looked at what you cost the capitalist, which you waited to cost the capitalist the way to cost captain gets too high. You're not doing the deal rates go too high. You're not doing deal OK.

So look at this point, just stay with the argument that you made this going .

to be fewer deals under trump that no.

I use you the question and yeah and .

i'm saying I don't know and i'm saying again, I don't know. There are other inputs.

of course, there are other inputs, Jenny.

okay. So I actually completely agree with Steve. And to me, when you say read the room, here's the room that I am reading. I am reading a room that's telling me very straight and clearly like cash is coming.

And so what we did over this past week because, by the way, I didn't expect a red wave like I really expected purple. I expected some gridlock, and so I didn't expect as much out there. So we had, through line by line, every single stock in all three portfolio.

And we said, how is this impacted by the regulatory environment by maybe three million people will be deported, maybe eight million, maybe none. Maybe like, what's gona happen? The taxes late.

Well, will the previous cuts just be extended? Well, they know what's going to happen with earth. Is sixty percent real? Or is this just a hammer that is coming to the negotiating tactic with table with and probably the latter, probably.

But here's the thing. There were a few companies in the portfolio, mostly financial, where was clear cut, almost everything else IT was, who knows? And it's very, very hard.

And getting back to argument is Steve, on rates and going up just for the show on my partner, dragon, I were on with a client talking about exactly that and he said, jean, particularly with respect to your dividend strategy, if rates go up, how can your stocks continue to go up? And I said, well, history, ally, here's the thing. Historically, rates go up because the economy is good.

And even though they're considered bond proxies, the reality is they have a new year reaction. okay? Bond proxies aren't as good as denier treasury and they go back.

But the reality is, is there so equity so then the earnings are good, the stocks eventually increase. And that's the argument for stocks in general going up with with rates because it's the conomo y is good in its looting at all. But right now, the question is wire rates up.

And to me, this is very much up for grabs. R raids up because people had horses treasurer going into the election and sold off, and I got back into risk in your assets for animal spirits. Is that IT? I don't know, because I would thought that would have faded last week.

Is IT that they're looking at the U. S. And I like, holy smokes, chaos is coming, right? And this mean really tRicky time.

If you think if if people thought that chaos was coming to the united states, people would be buying treasure is and right to be moving the opposite lab.

But you know, what i've learned over the past few month is that that marginal buyer of U. S. Treasuries isn't as stronger like to be by us treasury ies as they were before, right? China is not the buyer that they were a decade ago.

They're not a sight about that. And also with respective test coming, my thought on that is very different than IT was even a week ago. I would say even in the past two days with the nominations that we've been, we're like, holy cow, even this morning thinking about fazer and think about buying kanada, which i've been time out forever.

U, C, R, F, K, right? Who knows? All food is poison.

Like why do you think was biggest city of ma bin health care? What health health care CEO or P E firms going to go buy health care company? Not knowing what future is.

but even getting bigger than that? What do people do when they think it's going to be chaotic or even nervously hanker down? They just do nothing. O and I think that's why we kind of have flatter .

returns than anything else. I'm just going off every single um investor of of a certain level. Um every senior banking executive that i've spoken with is beyond optimistic about .

information. The world changed date dated IT was before he nominated this Kennedy IT was he nominated the head of dod? Those are two the large corporations in the world, and one has management experience.

And you know, as both news pells and and wash the deliver alpha conference, both of them answered like, when do you think the rally can keep going in there? I guess seems a little lot like a different .

argument is to whether there has been too much ephor a since election day in the stock market.

Why is that a different argument? They're saying, hey, I think we need to take a pause like, hey, this before he seems to be too crazy .

that was think that you think they are talking about the M N.

A market. No, i'm time at the broader market. I'm saying I think ma is one sliver of what's going on. I think you're right. Big picture in theory, right?

If the regulatory environs loser, yes, ema picks up, but there is so much more than that, what happens if they actually deport eight million people and there's eight million months that aren't consuming calories OK, right? Like what happens if the department of health gets cut in half? And like we're not selling va big .

percussion that might set vironment.

I just so I would just say we had these belts with uncertainty about appoints on in the first trump administration. There's a couple of things worth pointing out. Number one, these cabinet appointments can be musical chairs.

And you get one person in the job, you can get one person in the job who makes trump look bad or say something off message, or has a scandal that starts to get investigated. That person is thrown out and they're pull in jet collision or whatever. If you think that this is going to be different than what happening years ago, come on, sky changed.

So don't get scared of of R, F, K. Don't get scared of every little appointment. And and remember is only two scotch.

Trump cares about his golf score and the stock market. He's fixated on the stock market. Everyone around him will tell you that. He will tell you that with his tweets. And if he's really doing things that are holding back his friends like mark roll at a at Apollo and all these private equity funds that are in sitting on over a trillion dollars and dry powder, if he's really doing things that are stopping those people from doing what they want to do, he's going to hear about IT. He's going, of course, correct.

Let me look you. The value there is different than last time. Last time he went for people that were experienced quality. He based on components, major selections, even the replacements. Now space purely on not compensate experience, but loyalty.

Would you invest in any of those companies that just brought somebody for loyalty to the board? And I had no experience in voice. Number two, if here a pe person.

these are not wedge. Hold on. We .

invest private companies. When I want to buy private company, do I want the market to be high? No, I want to be low because that will .

you call the secretary and health and human services before you buy the company?

No, but I don't send the question. What's the question?

What's the question? I'm just whatever. Just what's the question? I don't even want to believe with this anymore.

You know, I want to talk about, I want to talk about the video next week. So i'm moving in the ball. How about that? That's what were going to do.

I started to show out by suggesting how tech is underperformed and how the nasdaq has to and the performance of the hyper scales are uneven or is that even excuse me, um they're obviously spending a lot of money within video cheers up sixteen percent in the past three months. Amy, you're on video. Tell me your thoughts on this.

Um we ve on IT forever and I keep trimming and it's still the largest position in my portfolio. IT just keeps working, keeps working. I'll probably tried again, we have a big issue with gains in the stock.

Um our clients are very tax sensitive and so that becomes a big issue. Um but look, I think this continues to work until they sort to eat through more and more of this backlog. I think that at some point in twenty twenty five, not exactly sure when IT is. We'll talk a little bit about this new race by by musk A I company. But this largest position now .

it's my largest position .

just because of movement, because of stop that, because IT keeps working so well. But i've trimmed IT multiple times this year.

Just are you thinking about in video and going into the report next? Think it's wednesday.

Five straight quarters of triple digit earnings growth is the reason why amy and myself and many people have clients with really big embedded tax abilities here. It's a it's a really tough thing. We utilize custom indexing so that we can algorithmically tax those harvest against some of that position.

But to aid's point, the stock just continues to strengthen. They gave guidance for this quarter. They're about to report judge. They said thirty two and a half billion. So the prior consensus was thirty one point seven billion on data center revenue.

From my perspective, if they can do the thirty two and a half billion plus on data center revenue and not disappoint on raised guidance that they themselves just gave the last time they reported, I think you're okay in the stock. Um but I I want to remind people this stock, even with good news, has had a history of a really short, really sharp drawdowns that can shake people. And as recently as this August, september, the stock was in a twenty four percent correction of a bare market.

Um IT didn't last long. If you blink you miss IT. But if you're in this name, just be aware of that potential. And IT doesn't mean in video is a good or a bad investment, is just the nature of the stock. Not only does IT infuriate people who missed IT IT also doesn't make IT easy always to stick with IT because of that that beta. And you've gotto accept that if you're gonna part of this trade going .

into an earning report, another reminder of just how influential in video is and how how much is going to remain. So in the great A I built out, you look no further than David favors reporting of earlier today, when mosques X A, I is raising as much as six billion dollars in new capital post money value of fifty plus billion.

What they're going to do with the money? Well, they are going to buy more eight, one hundred, one hundred thousand of them, by the way, for the new data center they have in members. Then you have must turning up his lawsuit against OpenAI, adding microsoft as a defendant, which we thought I would be fun to take a look at whether we're on the cusp of a full on musk altman battle royal for AI domination. Kate warne joins us now with that perspective because i'm not sure people fully realize how closely these two gentleman are. Link Scott.

it's gone back a decade and you're write most people really no mosque for tesla. You think of space ex buying twitter. He is also a cofounder of OpenAI and has had some very public beef with CEO sam altman.

And back in twenty fifteen, open I launched with moss, along with mother tech luminaries and academics. Three years later, musk suggested taking control of open I or merging with test la, arguing that they've en behind google. After that company bought deep mind that was rejected in the musk left the company the biggest criticism we've heard from musiciens eyes, nonprofit status.

IT turned into a cap profit company and then took its first billion dollar investment for microsoft, also moved away from being an open source model to a close source approach, which has been a big ripe for musk. In flash four twenty twenty three, another shot at OpenAI launching X, A, I as a big competitor, and then sued the company, sued OpenAI for breach of the original contract, saying that they sacrifice safety along the way this morning, actually amending that suit, saying that open an eye is a monopoly. This company, OpenAI, has raised six point six billion dollars, one hundred and fifty seven billion valuation at its last mark. And then also, i'm told heading to a four profit structure, officially X A I as favorite report of this morning, looking now at evaluation, about fifty billion dollars.

Got kay. It's a good set up for us. I appreciate you on that. Thank you voice. And wondering how you're thinking about this. If you have an intensifying battle between musk, altman, en and X, A, I and OpenAI, is there fall out potential form the microsoft of the world for the metas of the world, which I mean muslim zc have verbally sparred. They never got in the occur together, but they are verbally sparred.

Is their meter risk? As as much musk presence in washington grows larger and his company in a eye grows bigger, what's the fall out potentially that people will need to think about? Our viewers need to think about as their owning and .

buying these stocks a look, I think there is because of the abba nature of must and suck, I think there is potential fallout. That's what stocks telling now, however, would be very difficult to target one company. So I think it's okay.

And the fact that musk is now building his own OpenAI version for himself and you continue to have both companies a raise capital. That's phenomenon, I hope, the original of the ten billion because a chuck of it's onna go to in video. So that's a very positive from video.

And in terms of video, I really don't care what the quarter as. Of course, I want to do well. I want to surprise that university whispers numbers, but ultimately, its can be just one moment in time.

And the company still has a very unique value proposition for its custom race, which is growing. So look, I don't think my soft of volatile daily in stock is going to be impacted by this. I think that I still want to own, but it'll just be rocky. And I think you bear I think you bear those tough seas and hold them just you .

have you have a perspective on this because I think it's gonna a legitimate conversation for months, many months, if not the next few years, how this all plays out with these personalities and these companies.

Look, I I think this is going to be a period of time where it's gonna very necessary for people to not take every single comment or tweet or response to a reporter um as literally as maybe they might want to. You're gonna see overreactions over the place. And just like situation awareness, understanding that that that's the environment that we're gna be in.

IT will come, IT will go, IT will feed away. Um but that's probably, I am guessing, the first two quarters this year. That's that's and even before then, um that's really what we're in for.

And maybe if you're an investor, try to use that to your advantage, try to try to remember that, that all things pass uh in the end like the market can continue to react and be shocked by the same sorts of things over over when IT happens once, twice, three times and then IT. okay. But listen, i'm old enough to remember last summer when the glp ones, when the G, L, P ones, had people thinking, no one's ever going to go to mcDonald again.

How stupid. With those trades in hindi. Look what the consumer staple stocks did.

We just have to steal ourselves for, for the coming environment. You can change IT. no. But I I think .

you're kind of emphasizing what my initial point was, which is like there's me personality conflicts to the point you made earlier. There's me ataman appointments ts that changes me, hiring expires like it's going to create chaos from chaos. You and I both know Better than anyone from chaos comes opportunity, you know. So if we'd continue that out.

I would have said, like Jenny, Jenny, agree. Let me just point out, S M P five hundred went on, okay. So we're going to start if we going to start running portfolios as though we have some sort of the edge on how people are going to react to chaos.

I'm telling you right now, it's a losing formula. I don't think anyone can really do IT. So if you worried, okay, with you, stop loses, get off margin, take smaller positions, maybe dressed, trading overall.

like be the most prepared, very fairways .

to its cold sorry.

sorry or I don't do any that just be emotional prepared and be like if I know what's coming, which is chaos driven like minia on this, you know in this sector, in that sector, in this talk, that's not like just be prepared, like be prepared to buy, get your teeth, get through IT, don't be in. But I think we're actually totally on the same page.

I think you are two page I said i'm holding and yes, you know i'm hedge. I've edge quite a bit.

but but I think we're all expecting the same personality conflicts arguments like petty pet.

Is you really making your investment decisions based on petty arguments and personality clashes? Okay.

I open.

Here's the email to me questions, let me answer.

So the answer is no, but it's going to create opportunities. And so i'm looking at canada a and all the stables right now down four percent and what's that from that from some guys. And I ve okay.

So I finish answers the problem.

which which i'm not going to make investment decision based on the fact that part that there's going be clashes and cause, but i'm going to say I will be ready when distortions and dislocations are created because of that.

What are you doing right now with the stocks that are related to any of what your word is, chaos. So here we go that you say glacis fier gx .

Smith fisa are the perfect examples. They both have. They both have vaccine. Vaccine businesses. Visor reported earnings, what a couple weeks ago, they had great earnings. The stock was down because the earnings were driven by covet vaccines stocks down another five or six percent today. You won't got you.

no. I added to IT a .

few weeks ago, just bumped IT up a switch to the full size. No, but i'm just take .

with thing just holding .

IT because i'm getting this juicy dividend. I'm sticking through IT, but you have to manage the expectations so people can live with volatility and stocks and certain positions if they know what's coming. And that's i'm saying I just be prepared for this like josher, right? And you know some people want to put stop losses on.

Some people want to put hedges es on. People just want to grit their tea and get through IT. I think just knowing what's gonna your way .

really helps get through IT. We to go, we will take a quick break. We have moved to get you too.

And we I promise you we will because we have several to run to. Kevin simpson's got a couple of new things that he's just done. He's going to join us next.

Our goal is to empower you to be a Better investment teaching.

I was able to learn and become financially independent in my retirement.

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Welcome back. I said Kevin simpsons had a couple of new moves. In fact, he joined this right now to document exactly what they are.

Nice to see you. Thanks for joining us. So you sold monolithic power systems.

M, P, W, R. It's down twenty four percent. This we just had enough yeah .

know every time we make an investment, they don't always go up and sometimes we've got to practice risk management. So it's a great you had a great leading with the previous segment when we looked at this company. IT was a china play in A I play breathe summary.

They make integrated circuits that work with invidia chips. They had earnings on the third quarter that were decent sales were up twenty two percent, but the market didn't seem to like at the stocks sold off about ten percent. We are.

So later, Scott research company came out and they said that the the circuits didn't integrate that well with the new black well GPS. And the thing just take. So we are implementing a stop loss here.

I think that's the important lesson. We love the brag about names that go up, but if you take a small loss, you can always live to fight. Another day, we wound up losing about thirty percent on the name.

Because when you have these these high momentum, grow stocks and they roll over IT can do so ferociously. So ultimately, there was a half a percent position. We lost thirty percent on the name with the important part is there's no emotion behind that. It's just a math equation in a one move on and find something else. But here's a great, great lesson in managing risk when you owe a growth portfolio.

Yeah, me, there was a nice run up and then a painful one down. So a little momentum down off the train. Momentum up.

Write IT coin base. You add IT to that stop, forty seven percent since the election. Bitcoin surge to what's what's behind this. Just simply the momentum here.

I mean, I think longer turn there's profitability. You know you look at the landscape and what everything crypto related in post election was was europhile c we added to this name or initiated the position at two twenty over the summer in the surge post election, I think I got as high is about three thirty. Yesterday we picked up more at two eighty.

If president trumps going to replace gary against the at the c, and you have a more ecri pto friendly environment. This is a crypto at Jason, and we're not after trying to pick crypto coins, but this is an exchange that we think can create profitability. Just there's a short term trade, but really as an investment, but with any of the names on our grow strategy scope, I mean, it's a roller coaster. It's fine when they work for sure, but like we talked about with my oyster power, they don't always work. So not for the faint of heart when you're trading growth names.

that's for sure. okay. Kv, thank you. Appreciate you. Thank you. That's Kevin simpsons. why? I mean, we just talked yesterday about you buying bitcoin and gray scale bitcoin trust both both of those. So you you're a big believer now in the momentum, the moments of of bitcoin moments .

tum in the scarcely of IT. If if the administration does what they say, they'll do reserve currency, it's going to just exploit for me. But even if that does not a current that and that's dead, I say the fact is that you will bring in regulations, you will make IT OK for all institutions to own IT.

And with bitcoin actually havings going on cutting number points that out there, I just think that this is the one thing you can rely on. You know, in fact, i'm making, i'll says preciously. It's my favorite investment, my portfolio now because I know what the fund males will be in camby.

Okay, Jenny, you just trim m max, right? I'll be IT slightly, slightly.

So I mean, kind of twenty five percent or four percent to three percent and our spin growth strategy. And this echoes what immediate with video. It's just prudent portfolio management. So I originally bought this in twenty sixteen for one hundred twenty three box trading at a fourteen times multiple fast four today at treating at nine times earnings. It's still has thirteen and our'n cent earnings growth ahead of IT for the next two years. But if there is a lot of movement and there is a lot of volatility in the market, like i'm perfectly happy to take a little bit of a money on the table, one percent sticking in the pocket and save IT for for a rocky day ahead.

I mean, IT is interesting to me that you so M X up eighty percent. yeah. This year you trim a little Fisher and glacial are down and you have you have genuine concerns about what lies ahead as a relates to health and human services. But you'll you'll stick with those.

Um okay, so that's aren't yeah are we allowed talk about genuine concerns about health and human services? Now you want to go there.

I just find IT curious that so you trim the stock as a top a lot. These are. So I didn't say I didn't say that I have genuine .

concerns with health and human services. What I said is that there's going be a lot of volatility in the perception around what's going on there. And so when you bring R, F, K, N, right, who knows if he even gets appointed, right? He's nominated. Who knows if he makes IT through the senate? But what you see right now is those stocks are slapped because .

because every right.

that's my whole points of why would I sell those today?

I do not know you were talking about all the chaos, right going to right?

And all that means is that there is going to be share Price volatility. That doesn't mean that the long term fundamentals of companies like that are going to be impact.

And I think and .

and I think we need to get past january twenty, actually past february two eth to actually see who's appointed and what they actually do. And until we get there, it's going to be chaos.

I thought maybe you d be buying more vizor.

G S. I've got a full position size. I've got three percent positions in those. Know when you manage a portfolio, when you say to your clients, hey, i've got thirty to forty stocks, the average position sizes three to three and a half percent.

You keep in baLance because that's the like you it's boring, I guess, but it's the winning strategy for the long term. And to end this point, you just trim when things get up. And like I said, I added some vision at twenty something and change was so high I ish i'd waited two weeks, but I wasn't expecting this OK.

So thank you. You're come savana. He now has the headlines force.

Hi silvana, afternoon me. With south korean president and japan prime minister for talks today, the meeting will take place during the asia pacific economic CoOperation summit in peru. The talks come amid concern of about north korea's growing military partnership with russia and its testing of exploding drone missile.

North korean state media published photos today of came near the drones, and so the drones accurately hit its targets. North korea says its leader came john on called for a mass production of the weapons IT comes as the us, south korea and japan held combined military exercises nearby. And ford is recalling more than twenty thousand thousand vehicles in the us. Safety regulators say the airbag warning label maybe missing from the dashboard. This comes after ford agreed yesterday to pay a fine of up one hundred and sixty five million dollars for moving too slowly to recall more than six hundred thousand cars with a effective rear view camera cup.

Thank you. Coming up a big cell call on one of josh favorite stocks, we debate IT next.

Experiences the power of cnbc prose best deal of the year track your portfolio from every angle on one optimize platform cc pro C N B C that comes lah pro like friday terms and restrictions apply walk back .

the health care trade filling a little under the weather lately. IT is the worst performing sector since the election. But does that recent pullback present a big buying opportunity? Let's get to dome to yesterday's sector. Ics force down.

What do we find here? Yes, sir, judge, we do. The healthcare sector isn't, well, as you point out, after a recent folks more than twenty percent below the S M P.

Five hundred just in twenty twenty four alone. As you can kind of see here behind me, we're looking at the forward Price to earnings ratio of the biggest names in the sector by market cap. Now the fifth biggest out there is mark.

That stock is twenty seven percent below its recent highs, fifty two week high, according to data from White charts. They have a fower P. E.

Right now. I just run twelve and a half times. The fourth biggest one is evy. IT is eighteen percent of its recent hires, and therefore PS hovering right around Johnson.

Johnson is ten percent from its recent high, and again, fifteen is the forward Price earnings multiple. United health care, six percent below its recent top. And the four pe there is twenty two and the biggest stock in the entire sector, no surprise.

E, I, lilly IT has had a rough two months done, about twenty percent in that span. And again, the one still that looks expensive with a four P. E ratio around sixty two.

Now some of these valuations, including lilly, are high, in part because of the G, L, P, one kind of phenomenon a lot of analysts have weight in, in the last few days, urging to focus less on any vaccination issues and headlines coming from the incoming administration, and instead to focus on those big money, G, L, P. once. So Scott, keeping on those valuations. Health care, the worst performing section of the year of .

some things back over to you. I damn, thank you. It's damn you. Up next mix and toler, he joined us with this midday word or back word after this quick break.

I were back. Senior markets commentator mike and toli joins us now with his midday where I want to see IT towards dominos. Yeah because we learned burker was buying.

You go to omaha every year for the for the annual. So I I bet you have some thoughts on this. This is the changing makeup p of the portfolio.

It's interesting. Well, first of all, you have to acknowledge that sometimes there are non core, non long term place, right? They just sold out of alter, right? That was seemingly another play of a kind of a growth oriented chain retailer that, that had had some juice, another out of IT.

That being said, I do think IT probably says something about what bircher assesses. A sustainable competitive advantage is not a cheap stock, never really has been, but it's out of owns its its area of the market pretty well. It's not a big position for birth year half a billion dollars, but it's not small in terms of the percent stake in domino itself because it's like a mid cap at this point.

So it's interesting again, you don't know if it's buffet, you don't know if it's blue tenants, but given the fact that they've been aggressively lightning up on the most concentrated positions, the apples in the bank of america, IT shows just a smt. And then by the way, pool corp. Is the other new position, which is housing related, which is a huge bundle of assets that picture has set on.

What point do we assume? What point do we assume that most of IT is the the lute tenants and is so pretty inrush table? I want to say, I want to say IT so carefully. And with the greatest amount of respect, of course, for mr. buffs. T, but at what point do we say, okay, this is certainly LED by the lootenants, and this is just the the difference of the maybe the way that they are going to invest in the future relative to how they did in the past.

Yeah, I don't know that there is a real sharp line in terms of saying this is them or not. By the way, they don't run a huge chunk of capital within burks, at least as far as we know what the arrangement is. And I think as long as but it's there on the job, Lucy, you know and I think he was at the last minute, he said, oh, paramo is my idea entire time. Up to that point, people are like, I don't think that's his trade.

So who knows if they if they even keep IT clear ah well, maybe that maybe that was him. Take one for the this is .

buying a whole company. I think you can say you don't know fully.

Yeah, now it's fast. I'll see on closing. Thank you. Are right up next the netflix knock out tonight fight between my place and and local. Apple expected to draw record numbers, but will the throw down send netflix shares to knew all time highs we will discuss next.

Okay, welcome back. And that flicks knockout. That's what's taking place tonight as that streaming site is set to host the jake poll versus mike tyson fight eight P M, E stern time the stock at a new record high yesterday, jack Morgan said IT could be the watch boxing match ever. Why you own the stock? I don't know if you'll be watching the .

fight going to actually .

fit is the Price target card starts at eight? I don't know what time the mains on, but maybe you'll .

still be up is another name that, that's just going to be impacted by their fundamentals. So that's why I like this one quite a bit. IT was just hit in a high yesterday.

I'm not sure this is the opportunity with the market backdrop, but I definitely buy this one. I've got a very big position, so I can't buy more. But if you don't owe IT, I would keep my eye on IT. And as soon as things stabilize, i'd buy. In fact, I probably start buying IT at this level and just keep some dry powder by IT if .

fingers go down. Just thought.

yeah, I think this is really the final frontier for netflix is live sports and news. They're not doing news yet, but that's coming and netflix by by doing look, I only be a great boxing match. I think it's gonna equal part spectacle and sporting event but people don't care.

It's entertaining. Everybody loves mixing and people under the age of thirty, reviewer jake paul. And I think this is going to just be one more reason why netflix almost is the way to think about IT.

It's the most profitable utility in the united states. Nobody turns IT off. It's like electricity and water.

And so if they keep doing events like this and they get further into live sports, it's just such a defensible mode around this business that nobody will ever cancel a subscription. And I think the stock continues to work. I'm jealous of vice. I wish I was still long.

Alright, will do finals next.

Joy closed, and bell will close out the week with the world. And scholes germy single, that should be fine. I'll see a three clock eastern time. Let's do final trades. Amy asking, what do you have force today?

My final trains were general. This stock has lost a third of its market cap in the last few months, particularly on the amine um approval for their bio. Similar for elia, we think it's overdone and represents a good opportunity to get in.

Read the room is part I.

like I was light s lido sited new high all time, might over two hundred just a few days ago. So the defense sector, where you can do off baLance sheet for the government, that's where you want to be. Lighters as one of those just down.

given some back from from the .

now the the store because .

of spending cuts.

because spend cuts, uncertainty of where the deals going .

to spend their budget. OK, gene OK.

ducky. And this is from our discipline growth strategy. And when we went line by line through the portfolio, we thought this was totally neutral with respect to what could happen. Five and a half percent free casual yield, decent earnings .

growth ahead, train one off the tracks a little bit back on when .

people watch .

the world's first .

trillion dollar non technology company Better. Having raised the .

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