Closing Bell: Rally Rising on Election Outcome? 11/5/24
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Oh, guys, thanks so much. Welcome the closing belt. I'm sout walking in life from post nine here to new york s stock exchange.

First polls closing in just about four hours time in an election that could very well shape where this poll market goes in the months ahead. Will ask our experts over this final stretch. We are best to invest right now no matter the outcome.

Let's take a look at the score card here with sixty minutes to go in. Regulation majors have been strong all day long off the best levels in some cases, but none. The positive by almost one percent on the S N P, A little bit above that on the nazi.

Every sector within the S N P. Five hundred today is in the Green consumer directionally. The best following the strongest I S M services report a couple years.

Industrial also solid. Of course, we check tech. It's up as well. We're still watching a video and apple, by the way, battle that out of the bigger market share company in the market.

And we will, like we always do, track that through this final sixty as well. IT does take us to our talk of the tape, the election and stocks and what the result will mean for this bull. Let's ask scarp panel, new york life's laun good when eye capitals and a stadia amoroso and Charles swab s.

Kevin gorden, they're all with me at post nine laun. I will start with you first how you feel about the events. Um not so much what you think is gonna the result, but how the market backdrop is no matter what.

Well, for one thing, we're coming off of an economic growth and earnings backdrop that's incredibly resilient, and that provides to think of bolster for the bull market and Frankly, gives whoever the next administration is a bit of time in a bit of leeway to enact their policies.

Now as I think about what are the sectors and areas that are likely to do well regardless of the result, these are paradigms, fs election related ideas that are Frankly, been in place over the last couple of years. We know that trade is going to be a sticking point. We know that energy, data centers, A I are important areas of investment. Investors know what the themes are. I think we're likely to see some relief actually knowing the results so we can move on.

Yeah um maybe the market know. So the market hopes for clean a result and one that we don't have to wait for many days for. And we shall see in a ubs today, equities are attractive regardless of the election result, five percent reera tes, their target of sixty one hundred. In other words, they do too. Do you?

I do look and maybe that's what the market is trying to game out. And what of pretrail? The fact that everybody knows at this point, which is once we get past the election, equities tend to rally no matter who in the White house, they tend to rally on average, about ten percent in the twelve months after that.

We know the volatile picks up into the event, but IT subsides there after. And we also know that yields de actually continue to decline if the fed that starts cutting interest strates. So I think that's exactly what the markets are position for. Look and I agree with that, you know, we have to go back and look at the events that we had on the economic front. This the today, which is services coming in, Better expected the rate relief that's on the way that, that is likely to cut twenty five basis points tomorrow. I would got the buyback window, which is basically fully open again and we're going back into the year and set up so in and if you go back to some of the fundamentals, twenty two times, multiple times, uh, two hundred and twenty two dollars and only gives you two six thousand on the S M P. So I think that whatever but he's focused on once again.

P do you think the backdrop is positive? No, no matter what the result is. I mean, that's what the prevAiling thought I I think seems to be. Economy strong as and stages said, underscored by yet another positive economic report, services where service based economy, so that matters a lot of fed's cutting interest rates, the buyback window penned up demand for ma that I could probably find a couple of other things. But what does the backdrop look like to you no matter what happens tonight?

What's at the services part? I mean, the by vacation that you ve seen, tween services and manufacturing and IT was, I think, even ever size more today and a little bit depending on which components you're looking at specifically for I S M. That's been a theme for this cycle for the past several years. It's taking a really long time for manufacturing to really get out of its slump in at this point, even respond to directionally, where you the pathos resistances for rates, which is lower in terms of the feed you still still cutting rates, I would save from the economic in the market backdrop sense to the points that were made by laun an anesthetic.

You know, the backdrop is generally pretty healthy going into this in an economic sense, even if you back the past several months, whether it's revisions you've gotten to GDP or gdi, whether it's a GDP report you've got at least initially read for the third quarter, even some of the labor market data that is not necessarily caborn what weakness you might have seen in october. All of that is so suggestive of a relatively healthy economy. And that's been consistent with, I would argue, a healthy mark backdrop where you've got you close to seventy, seventy five percent of five hundred members on any given day trading above the two hundred moving average, which I think is is a healthy set up petting into this yeah.

I would say the Price action is really interesting to the Scott because there's twice in turns. You know, first, we see the ten year yell rising. And if you look at the republican basket was out performing ever so slightly, you saw some of the trump trades out performing, but now we're seeing some reversal of that in the ten year.

Yell back to twenty eight, and you also actually see the democratic basket out performing. So I think the markets are trying to game this in position for this. But what's interesting is the markets are up IT is sort of an everything rally. And I think that goes back to the point that policy and politics are not likely to derail the economy. And if you look, add one canada's proposals versus the other candidates proposals, there are offsets there, growth policies for both of them, and there are some negatives, but the net impact, economic impact of all of that is projected to be virtually neutral. So I think that's why the markey reaction is actually.

we look at this is just a clearing event tonight. You get that out of the way and then you can actually focus on the backdrop and the feed is gonna remind you of what the backdrop probably is on thursday or by the way, and we'll see if we have an election result by then. But again, you get the clearing event out of the way and then focus on the fundamentals.

I expect that the case, and I certainly hope that the case, I think the one risk to that, besides a contested outcome, which none of us can handy up, is the risk to long rates, essentially treasury supply. And though both parties have prosper ding policies, the likelihood of a sweep and either direction is where I think we tend to see rates back up now have been on the road a lot in the last couple of weeks.

And one of the questions that, that has come up a lot is you all have been constructive on moving out of cash in the bonds. Are we looking at a scenario where if we have a sweep in either direction, we have a bear market in bonds where that is not the right strategy, where even the income that a moderate interest rate gets you isn't the right call. And I do think that we could see some near term risk in the ten year treasury over the next couple of days if we see that sweep in the expectation of more spending, more growth, more inflation.

However, I do think that's a fade is a very tactical in the medium term and still very constructive on the income generation opportunity of bonds. But even in the event of a big back up and rates, we're looking at a policy change that doesn't likely to happen in any extreme way for many months. And so i'd fade that initial market reaction.

Twenty eight is where the ten year and a stage or currently is. And what about the back up in yields? How significant of a risk is that to this around?

Well, it's interesting because the markets manage to persevere throughout out because if you think about was been driving yield some of IT as Better economic growth and if you do a charge showing the city economic surprise index, it's really LED the move higher and yields by about a month. You know, part of IT had to do with pricing out some of the red cut expectations from the fed.

And I think that much Better lighting to what the fed actually tells they're going to do by the end of next year. And some of that has to do with this election risk premium and the potential for the red sleep. But what I actually like about the set up right now is if you there's a range of failure valley for a ten year, but that ranges somewhere between three eighty six and probably around for four point two percent.

And so we're trading uh either right at the fair value S M or write above IT. So that tells me we get past the election, especially if we don't get the red sweep, that we've appropriate justice for the fundamentals of growth and the fundamentals of federal reserve. So I might be looking to a duration at that point.

What if the wild card, Kevin, this week is that there's more fed risk than election risk in that the market has certainly brought in its expectations on both the number of cuts that we might get in the speed at which we might get them. What happens if on thursday of this week, we're LED to believe that they might only cut once between now and the end of the years?

Are risk in that? I don't necessarily think that's alright, bad or good. I think it's the context that matters.

I mean, if they stop and they maybe take a more method approach to their cutting cycle, they don't go as aggressive. Historically, that's actually consists no Better background for the equity market. So I would argue that's probably a more favorable scenario.

But also, you know the risks from a stock from a fed perspective and and an election perspective are totally different. If you have a contested election. Not only is that really hard to map out, you really just have sort of a sample size of one, at least in modern history, that you can point to in its the year two thousand.

But by that point, you were already in a bear market, which started in march of two thousand, and you were kind of on the heels of a recession that started in march of two thousand. So unless you think we're in that similar backtrack, something that is really drawn out and takes a long time for us to figure out who the winner is, it's not a perfect comparison to, you know, more than twenty years ago. But from a fat perspective, I think for some reason, if they saw you really strong reflationary pressures that we're building, which is really tough for for us to see, at least at this point, then I think it's it's pretty much smooth aling, at least for the decision this week. To me, the more important part probably comes in december when you get the next sp and when you get an updated projection as to where they think growth.

But maybe more importantly, the unemployed and the rbc says a contest election is the main tail risk for the market. I you agree with that. I agree with .

that to an extent because it's very difficult to map out what those scenario look like. I completely agree with Kevin that we don't have a lot of historical precedent. I think that a close election, especially one that um where the president and the senate are resolved this week, the house takes a few extra weeks because there are more close and contested races.

That's an environment that I think the market can manage through without a whole lot of issue. A A A truly contested result is is likely a recipe for more volatility. That's where the market backdrop, the strong earnings really .

do hope you know what's interesting when you look at the average annual S N P five hundred returns by the break out of congress, I think many people be surprised to learn that democratic president split congress again. These are average annual returns for the S M P. Five hundred.

From one thousand nine and thirty six until twenty, twenty three democratic president split congress, sixteen percent, democratic president republican congress sixteen percent, republican president split congress fifteen percent, democratic president democratic congress twelve percent, republican president republican congress twelve, republican president democratic congress nine. In other words, it's almost always close to the same and you mid load of mid double digits. So maybe much to do about nothing, which is why we suggest that get the clearing event out of the way and focus on the fundamentals of the backdrop and the backdrops.

good. Yeah, the backdrop is good. And and perhaps just as important though that sixteen or nine percent, whatever the number is historical, we have seen some difference is, especially in a couple of weeks after an election, in the sectors that are winners are losers.

But here's something that's different this time though. The though the campaigns are very different on areas like trade, like immigration, like tax, that certainly influences sector winners and losers. Perhaps more importantly, they're both quite different from the past.

So you think about the technology sector, for example, might typically benefit from a weed red sweet because you'd expect less regulation. Now we know that we've seen technology trade more to the downside along the threat of of trade. For example, a terrace.

These are sector bets that do not look like they did in the past. And so the major reaction that the market has historically had to these opportunities, they're gonna different. I think that makes this election very visible and more to the constructive size that I like the way that.

that put more investible, right? I mean, you really have to we're not buying a market. We're buying a market of stocks. And you have to be real clear on where you want to be by virtue of who wins and what the policy programs you're gonna be. Well.

I think there are two points to make about that. First of all, at the start you've listed is suggest that there's market outside to be had regardless of who's in the White house and regardless of what the composition of congress ultimately of being. So that's the first point.

With the second point, law is absolutely right. There is a big divergence within sectors that we likely observe, and so investors are clearly trying to preposition for that. I would say it's too early to recommit to some of those trades.

But absolutely, once we know the outcome, once we know who the winner is going to be and what the makeup of congress is going to be, then you can start putting in some trades. Investors should absolutely have their two list ready to go. What happens if thump wins? What happens if Harris wins?

And their trades that are cheap on either side that are Harris trades if he wins? Long, clean energy, directionally, small caps, international and terrific exposed names. And the aza one hundred, thinking that yields would potentially be lower. So you you d want to look there.

Tell me more. Yeah, that's right. So the nasdaq, I think, would out perform under Harris scenario. Our perform, excuse me, under Harris scenario over the trump scenario. And partially that's because of yields.

Partially I think you know some of the technology in the NASA names are negatively exposed to terrible. So you wouldn't have that under Harris. You know you also look at our national markets and you know it's really hard to invest in china when you don't know what the tariff policy is going to be.

It's really hard to go into international if you don't know the path of that. But under hair scenario, you would go back into some of those international spots. Clean energy, Scott, has been such an unlove theme because we don't know what the investment credits are going to be, you know after twenty and twenty five. And once we have that answer, those are some of the traits. But I also say there is really great traits to be on the other side as well.

Like look at those yeah let's look at those know if trains you long financials, domestic companies with hy percentage of U S. Revenues, industrials and small caps cyp former president, transport king, a lot about crypto. What about you like this?

I think there's a lot to be said about that first. And that under harsh y may want to go to the nasdaq under trump. I think you do want to go into the S M P five hundred because we would expect to see rebound and financials, industrials and and I I I would also say the domestic companies of something to focus on within that. I particularly like financials, all lendon activity is likely wake up. P yal curve is likely to .

be steeper and less regulate tion .

is really key.

You want to that to me. What do you make of the breakdown?

Probably take the other side, the sector argument, just from the standpoint of if you were to use the past to administrations as as a sort of thought experiment, conventional wisdom would have told you back in two thousand sixteen and trm first term, that going to be really friendly if you want to use one sector, particular to the energy sector because of policy proposals.

because of the way he talked about the worst performing sector under former president trump.

the only sector that was down, that was done by forty percent. But if you flip that on the side, and not just to pick on one administration, the best performing sector since biden to coffee bean energy, the only one, the S P, that is double, more than double. It's still up more than one hundred percent today since as an augury day.

And even beyond that, if you were sort of bonn IT out to other, is the sixth worth performing sector under trump with banks. And it's not like they're swan higher and y're the best performing industry under bidden. So I think that it's really tough to even after the person who gets elected, after you know what the policy proposals are, it's really tough to game that out and mapped that out.

So I think you know back to the broader discussion we were having at the beginning of this, taking a look at what the economic backdrop is and looking at the macro forces at play that I think is the more important scenario or not necessarily who comes in and what policies are coming in with. So I think a lot of the cyclical oriented trades, you know, make sense, but I think that regardless of who ends up taking office, unless there is some sort of extreme policy that takes you, you know, to the other side of things where the economy that materially slows, then I would alter my view. But the fact that you're not getting any sort of wake up from defensives in the market, the fact that you are seeing really relatively strong participation even in financial, specifically equalities financials, I think that much more than important sign in terms of the underlying breath that has really underpin this rilling.

Just one quick point on crypto. O. I do think you can see a pretty significantly positive reaction if there is a trump in h that's a continuation of the crypto trade. But what's interesting to it's not just for a person trump that has talk potila about group to in the the deregulation of the space, but also Harris has aluminum that as well. So that might be, to your point, a winner .

under both side, seventy thousand on big in the technology winds under both uh because IT IT did a up ninety three percent under president biden of one seventy three percent under a former president trump. And now it's a real question. Market within the market, right? We're coming off, make a cap burning. So we're trying to figure out, you know, the monolith been broken, I feel like and forget today's action in Price, but these have started to differentiate themselves.

You have we take a step back from the sectors that one during these last couple of administrations and to the policies that made that possible. That gives us clues that what we can look at in terms of a potential more durable sectors this time around. So going back off of what Kevin said, trade.

No, trump began the trade wars, but the by administration did not rule them back. This is A A policy that's unlikely to change. Similarly, energy security, trump drilled plenty, battens divided administration, and administration drilled more. This is an environment where what we're really looking at is a reglan aliza of supply chains, a technology productivity boost through artificial intelligence that's fueling demand for energy.

A re. Globalization of supply chains or A D globalization of supply chains because I mean, of you, if you're going to a start manufacturing chips and more of them on us soil, in a sense d globalizing the global supply change? No.

I think it's really globalization in the sense that what really happening is that companies and governments globally are saying, look, the efficiency and just in till nature of supply chains of the past era is no longer what we need. We need security and access. And in some cases that means reassuring, but in some cases that means braining your exposure to different countries.

Doubling down on manufacturing in multiple different places. All of these trends are capital intensive. And so if we look at sectors that then benefit from those types of trends that really again, its its policy moving away from where IT was in the past, moving into a new direction, that's the potentially constructed for infrastructure along the semi supply chain. Energy, likely defense as well, cybersecurity.

What about directionally and days? I mean, I think I saw interview earlier today with the head of the national retail federation is talking about the impact of terror and the declining spending power that would result for consumers. We need to think about that.

Yeah, I think those are different outcomes for consumers. Directionally, depending on who wins the election under a Harris presidency, we would expect a positive outcome for directionally if SHE is able to pass the child tax credit proposals that would generate something like a hundred billion dollars in additional household disposable income. So that would clearly be a positive. And of course, the terrace, which, by the way, I think would be enacted carefully with the a notion in mind that you can really derail the american consumer but nevertheless that would detract from consumer this questioning um but I give you one last trade that I think.

yes, please leave us with something action of .

all and date that I think works in a Harris or trump presidency scene. If you get the split congress, i'd love that the ten or tribe moved as much as I had. I'd love that a rePrice back to fundamentals. But if you end up with a splay congress, you probably not going to end up with the worst case in for budget deficits. So tilt you.

You like that trade.

I like ponds even as as a stock. I I like pants.

sorry. yeah. Good stuff. Believe IT there, everybody. Thanks so much, Kevin, and stays in laun. thanks. We're been here on this busy an important election day. Let's send IT to keep running now for the big is moving into the close cake.

There is Scott. We'll start with talent here leading the S. N. P. today. After the defense software company topped earnings expectations, helped by demand for A I and government software, pantier also raised its revenue outlook on the year, shares that company on pace for a record closed today, heading the clothes today after we're going to talk about club and clifts next sliding after the steelmaker, its revenue expectations for the corner, citing weaker demand and pricing and autos driving title margin. Still clever clipsed does say IT expects still demand to rebound in twenty twenty five. Scott.

back to you. K, thanks, kate. Rony were just getting started up next. Light street capital's blanca ure is back.

They'll tell us what he's forecasting for the mega caps now that earnings are in the rear view mirror came out the election as well. And what that means for those stocks were live at the new york stock exchange. You're watching closing bell on cnbc.

What's next for amErica the morning after breaking election results critical insight from campaign insiders how voters are thinking about the economy money your vote swag box wednesday day special time five A M E R C N.

B C I welcome back with the nasza leading the market hard to day, all the mega cap names are in the Green that can the AI driven and tech trade maintain its momentum after rilling more than thirty percent this year? Let's ask that a light street capital founder and cio, gland cure, walk back. It's good to see you and good to have you back on this busy and important day.

Thank you, Scott.

People trying to game IT all out. You in part what it's going to mean for the tech space. How do you think about that?

Well, no matter who wins, I think the outcome of the election of republic strong, we have a great once, some of the greatest capital markets in the world. And I think both sides, republican and democrats, are highly incentivized to keep amErica as the leader in A I technology and cyber security specifically. So we think it's gonna a great, great night.

Either way. Are you are you sizing up various trades based on the outcome though?

What you know, we had a huge position aimed at the a shift to A I infrastructure the last year or two, and we think that continues to do extremely well. You know, earlier this year, beginning this year, I put IT out to you kind of my AI five, ask the stocks NVIDIA, AMD, T S M C, microsoft bags. That's up sixty six percent year to date versus forty six percent for the max seven.

I see that continuing through the end of the year. I think what we learned in earnings over the last several weeks is that make a cap, tech companies are taking that A I infrastructure investments, taking those investments they're are making and they're using them to create new profits and Better services for their clients. And as a result, we don't see that spending slowing down this year or next year.

Do you have to be more selective though? Now IT, was that the lesson of earnings, if you will?

Well, I think our selectivity was already pretty high. I mean, our our topics have been in video a and T S M C. I do think you know we're still batting on d for instance. And I think the best their best days in terms of their exposure to AI are still in front of them. Investors are a little bit nervous about that and you saw some voluntas result, but I still think AMD is going to be a big winner from A S let me .

ask about that because I mean, there is legit double in the market, right? I mean, we saw that after earnings. Um what makes you so sure that they're going to be if not at the finish line close to when in video gets there you know soon enough?

Well, you talk to the customer sky. I mean, I think if you look at if talking to amazon or met up or microsoft, it's very strategic for them to have a second source. And you they need to keep in video pricing and check, I think, in video to their credit.

While Prices have going up and margins have gone up, they have not taken advantage of their customers. And I think you know they're profit from them greatly, but they've not taken advantage of their market situation. But the buyers we're talking about know hundreds of billions dollars here going into A I infrastructure. They need to make sure there's a competitor ah and we've already seeing you know uh the A I category for AMD growing to five billion dollar lar market for them over the next year.

I do assess apple. I think we're you know trying to figure out exactly what apple intelligence is going to mean for an upgrade cycle. How are you thinking about that?

Yeah, I think it's going to be great for them. ultimately. I think as as know, you've watch the company for decades and as we have in the company is known for being a fast follower, they have an incredible uh, set of users.

They have access to those users data with their permission, of course. And so they are going to be set up really well to um to give both business users and consumer users access to A I tools. So there they're taking IT slow.

Uh, they have that position that enables them to do this without spending nearly as much in A I because they can partner with a google. They can partner with some the other leaders in A I. So we really see their position as as still very strong, but they're .

going to take their time. You talked about cyber. We look at your latest filing IT doesn't show that you own crowd striker z scale, but you do like those stocks. What light can you shed for disclosure sake for us?

We do on them. yes. And and we do think that this is a an interesting trade for the election. So um yeah those are new positions .

for yeah I mean really relatively new within the last thirty days to yes. So you think that crowd strike has a rebounded fully and enough from the issues that I had?

I do yeah I looked there an incredibly strategic venture to their customers. And you know there's two sides of the coin of cybersecurity. It's incredibly serious business. So when something goes badly is a very strategic large issue for uh for base. But at the same time, uh, in our view, they have the best technology in the industry.

Let me let me ask you because we really think get to IT whatever kind of regulatory risk that you may see no matter the outcome. Former president trump has an exactly spoke, spoken glowingly about many within the tech industry during his term. Now know the obviously has muslim is corner, so maybe things are different and a number of regulatory um actions have come down against a number of different mega cap names. So how are you thinking about IT no matter who wins?

Well I do think the most meaningful difference between the two sides will be the ftc and uh, the part the potential departure of lean a con would be a massive positive for big capture and their ability to make M A A transactions and that flows down to private equity and the venture capital alist that are backing companies that have not been able to be acquired by, uh, the largest tech companies, largely because they're waiting for to see what happens with the current, uh, leadership at the ftc. So I think that is the biggest difference between the two who wins in this election. And so if if trump were to win and lina were to depart, we would see that as A, A, A really good change for the tech industry.

We ll talk to something good senior, as always, the catch .

join you bet.

thanks. Being here up next we have to start technician ryan teacher, and he's back with us why he is still betting on the balls despite the potential voluntier ity ahead and make his case next.

What's next for amErica the morning after breaking election results critical insight from campaign insiders, how voters are thinking about the economy SAT box wednesday special time by A M E R C N B C stocks are rally across the board .

on this election day and when my next guests expect some near turn volatility around the election he says the ball markets alive and well heading in the year n join me now, ryan detrick of the carson group so the backdrop is favorable no matter what happens tonight.

Got happy election day and thank me back. We think so. And you a great twenty minute discussion before I came on.

You know what? What do we know? Well, we had the fix is obviously got a sort from almost fifteen over twenty two recently.

Just yesterday, we saw mass of massive foods being traded. So there's hedging. We know there's a big event coming up.

All that negativity, Scott, once we kind of get through the uncertainty election, we get into the weeds of IT here. We do think that, that potentially can be the springboard to a potential another strong november. He is not forget november is higher eleven and last twelve years as just seasonality.

I get IT. But just look at the day, services number. This economy still strong. This is still able markets.

Got you think we're just on the costume of a plunge in in volatility. We do think.

think so that's a great way to put IT there or me. Listen, we have not the fixes up, up on twenty two just recently, like thirty one trading days, we only had one day the S. M.

P. Move more than one percent up or down. I was halloween in the big.

So you ve got all these bets or potential volatility would not have that in the volatility. I love him very joined yesterday, Chris point of the thought yesterday. I agree, look at what credit markets to do and look at credit spread.

S there's no real fear. There's no month of the best of the credit markets. again.

There's a lot of worry, yes, but maybe it's undo and want you to other side. You probably are going to again. Yet the upward swing out, they did, he say, doesn't matter what happens. But when you just get through the uncertain to this election, we think you know the stage is set again .

for a year and rally. But I mean, I asked the group during the conversation that you're listening to earlier whether the biggest wild card this week was actually fed risk and not election risk for the very reasons that you just suggested. Backdrops, good.

So many force see the market going hard no matter who wins the fed. I don't know. I mean, our expectations have been dialed back. What if they get dial back further?

You're right. That's a great point. Now first of all, i'll be clear, we do think there's twenty five basis points coming. We think just by another one in in december, i've become on with you all years saying inflations last year's problem. That's why we don't think when he rates up at five percent because inflation has come back.

But that could be the the kind of the uncertainty this week that nobody saw coming, right? And ding the feds on a thursday. I mean, half people on even on your neck in wednesday, like it's thursday.

This way they are really tried throw everybody off when he comes to the fed. But I just put IT like this right. We are up over seventeen and a ten percent fifty year going into this month, into the months of november.

All you need know, listening to know this, fourteen times I have, november was higher, twelve out of fourteen. December higher, eleven out of fourteen. Those two months combined were up every single time in out of our teen times. You up A A lot going into the final two months. Just one step, i'm aware, but I think this one we would not want to avoid here once we get the fed out of .

the way as well the other staff did to hangs people up is evaluation. How are you thinking about the the pressure willing to pay for stocks right here?

Yeah, great point. Their evaluations are a little Price, especially large cap. I know I came over last month, we talked about technology.

We are more neutral tech as that's where some of the Prices of parts and we look out on the spectrum, I mean, IT was a dirty word. Sometimes small caps are right. Small caps are historically cheap.

Route of large cabs would happen last week, right? Stock mark was down is what they told yet. Small caps are up last week.

Small caps up for me yesterday. Before me again, we go again with a strong economy. Small caps, my caps look good also, cynically, those industrial financials are still areas that are growing that aren't wildly over, over Price.

I guess at the same time, we've all seen the numbers. Valuations, they matter in the very long term. But again, that's why is the year term six to twelve months, but not overly concerned, you have record earnings. Come in her, Scott.

your neutral tech, why?

So I just talked about there is at a heck of a run. Yes, the the evaluations are some of the highest out there. And you get I we say neutral, we will like to be your bears and be very clear the money we run, a car, a group we have, how to tech exposure. It's just we're not going overboard the tech exposure because again, we think at some of the Price, your parts of the market we do should like communication services, which is clearly to I mean.

you're not overweight thirty thirty percent of the of the S P. 你 you are not overweight the tech sector.

that's exactly what i'm saying. We are overweight the small midcap induction al financials. And we look at this kind of average sixty, forty portfolio that we run, but we're not overweight large tech names at all here because again, there the you part of this market .

and you don't think there's risk to any part of the trade that you lie by virtue of a backup and rates.

Yeah, listen, there's always risk. There's always things we get .

paid to worries we likely risk. I mean, I know I know there's always risk. I walk outside and get run over by a bus. I mean, you know what I mean? Like legit risk, like the ten year starts to back up further, that the first thing to crumble under the weight is small cap stocks.

small caps, made caps. You're exactly right. Maybe some of those cynical, I know that those could be some areas.

And again, I guess, you know all we know is the most recent da, we've had we haven't really started to see inflation coming back. Will get some clues on the fed, obviously, this coming thursday when they do something. But the reality again is we're not seeing any major warning.

Look at the ec I eloy ment costs index just came out recently, lowest number we've seen in a long time. They're different parts of costs that are still quite low that aren't showing getting major worries, least to us why we would expect to see yield sore higher. But clearly, if you think about what some of the big risk of a political risk, you have black swan risk, but also dressy higher yields, don't expect IT. But that is one that really could upset the apple card, for sure. Okay.

but I appreciate the deeper explanation. The right? thanks. So will take right. Want to get a close develop next, which check the biggest movers into the clothes back.

Kate running for that, kate there. Scotto accounting issues causing trouble for one food producer, bringing the details after the break.

I were about fifteen from the bell. Let's get back to kate running now for the key stocks that you need to watch kate got.

So shares of archer Daniel midland flowing today after missing estimates s for the corner and issuing some underwhelmed guide. And so is short of the streets expectations plus the food processor continues to struggle with accounting issues. The company plans to refile its results for twenty twenty three and then cancelled its current quarter earnings call as well and then shares with a star labs on pace for its best day. Going back to the IPO at blue by expectations for the current quarter, then issued upbeat guidance for q for the chipmaker seem surgeon demand for its A I platforms, helping drive some of those results higher.

Today's you appreciate that. Thank you, kate. I still ahead, super micro reporting, top of the hour and no tea. We break down the key things to watch for windows numbers at the tape or back on the bill after this break.

We are now in the closing bell. Mark zone, cbc senior markets commented to x and told me here to break down these crucial moments of the trading day, plus two earnings releases out no over time that are on our radar. Super microsites a mode has that if Stevens on dev energy, mike, I began with you, you know we decided we are going to be higher today. But when really in a holding pattern, no, I haven't done all that much .

in the last few hours. No, that's true. I mean, not in the last few hours and really every day seems to be mostly the just sort of taking us back to something like A A fifty fifty type election odds outcome.

And then if if if a certain part of the market kind of oversteps and goes wide, if that market gets brought back, he saw that and treasuries today, he saw at A D, J, T, bigger though, the markets been kind of consolidating and digesting and is really close to all time highs for a few weeks now. The media peace dogs, you know, eight or six percent of for the time yet we've managed to keep in the in the utrum economic numbers, ism services come in solid. So everything else seems to be working fine with the except of those long term treasury s that have been testing the range highs earlier and then just came off the boil in the last hour to how .

do you how do you feel about fed risk?

I don't see IT as really that acute at the moment, most of because the markets still saying ninety seven percent chance we know what's going to happen on thirteen years of a quarter point cut and then the path from there. I think we can live with a lot of those scenario that are gonna laid out, probably some degree of data dependence for the next move or two, but that's probably coming from a position of strength just because if there's any slowdown in in the fed easing process is probably going to be because the economies hang the got .

you are backing the second team I tells about super micro.

Well, god, as you know a lot is writing on this earnings report. Shares of super micro, we have gone from being a favorite AI trade to now down about seventy percent from its and high head back in march, hit by accounting allegations which first came to light by shorts seller hindon burg, followed by a report of A D O J probe.

What really got a three concern was accounting firm E N Y dropping super micros, a client on october, citing currency issues now in sugar microsofts tonight, investors will wanted know if IT has been able to secure a new auditor and if not, how would plans to handle a potential deal listing from the nazi competitors. Dell and hp enterprise have emerged as beneficiaries, but industry experts point to supermen ros design expertise. That's why IT counts in vidia and elon mux X A I as customer. Is Scott right?

Seem, thank you for that. See a mody now, a devil energy and pip Stevens. What should we watch .

out for god ever is actually loved both the x and the xop. This year, as I get set for q three results and production levels have come down from q tus peak now. During the quarter, the company closed its acquisition of braces and male energy willison base and assets.

And so commentary around to how that place into twenty twenty five set up will be top of mind, including production targets, cheerful to returns, whether additional emini is necessary to enhances inventory capital efficiency, trains and permian infrastructure constrains are also key teams to watch, especially on the call. Now the company has a fairly low break even Price of around forty dollars prepared on W. T. I. And so even if oil states range bound, should still generate plenty of cash, with the company targeting roughly seventy percent of access free cash flow to buybacks, s and dividends, stocks is modestly higher here ahead of the print sct.

I think that thank you, will see you what happens. That was Stevens. Mike got a turn back to you.

Look at the sector split pretty even. I mean industrials and direction area certainly to stand out. But as we had our suggested technologies having a nice day .

as well for sure. And it's about a three to one verses breakdown in terms of is in terms of volume today. So that is pretty much across the board. I don't think it's really trying tell any real sharp story about what specific is going to happen in the next few much. One thing is interesting to me is that the volatility and is down by one of the quarter points IT obviously got kind of over inflated.

People have headed up going into this event, maybe a sense out there that we won't necessarily have to wait very long for a the size of election results and and that's what the market is maybe been most wary of, I guess, and trying to hedge against this this idea of suspended animation. So who knows? I'm trying not to over and interpret every little kind of generation within the market in terms of these teams based on what's gonna happen, but that's something that's notable today. IT seems like we have the potential for the investors to migrate back toward risk and using, you know kind of seizing on the fundamentals that supposed to trying to trade the scenarios that .

would also theoretically take some of the air out of the fix to which has been more elevated than some say is is justified or necessary with the S N P. Not that far away from yeah mean.

it's all based on you know over the next few days, this idea that you might want to be protected against some kind of big body to move and yeah that starting to bleed away at this point. Um again, you don't want to necessarily say that the market somehow knows what's gonna en. It's it's really been of of many different minds depending on the day.

And and I think right now, we can lean back on the idea that the economies and decent shape earnings have been coming through well enough to justify where the market has gotten to markets no longer really overboard. If anything, bread has been sort of in the last few weeks. That means most stocks of reset, lower and IT, they're ready.

The kind of react to the the macro as IT comes through. And yet we're going to be pivoting right to figure in out what has to say and whether that's a friendly message. But IT didn't gets a more kind of from the year place to be. And as we go into .

the rest near the highs, my mike, thank you that my and told all of four see you to see this is part of our election cover, but we're going to go out near the higher piece up that have been one. It's about waking down about fourth twenty five, but were Green across the board on this election day after a few hours in the same time over.

What's next for amErica the morning after breaking election results critical insight from campaign insiders how voters are thinking about the economy money your vote swag box wednesday special time five A M E R C N B C.