2 weeks Ago By Yahoo Finance Video
Today on Market Domination Overtime a slew of market-moving topics are covered. XMC Strategies Founder and Managing Partner Talal Debs While companies continue to purchase permits for CO2 and greenhouse gas emissions, carbon offset purchases are declining. Federated Hermes senior equity strategist Linda Duessel addresses investor concerns about the potential market implications of the upcoming election.
Despite uncertainty around the Trump-Harris race, OptionsPlay senior options strategist Brian Overby during the upcoming Big Tech earnings reports. He cautions that trading during this period can be "speculative." Markets and Data Editor analyzes t while hosts Josh Schafer and Julie Hyman preview Video Transcript There's the closing bell on Wall Street and now it is market domination over time.
We're joined by Jared to get up to speed on the action from today session. So let's see where the major averages ended the day. Still mixed.
Although we saw the S and P 500 dip into the red. Let's start with the Dow here off by about 260 points, about 6/10 of 1% lead in the decline on the day and on the week, on basically some earnings of losers that dragged it down. The S and P 500 had been higher on the day, then slipped into the red by days.
And here it's also lower on the week breaking a long weekly winning streak. But then that was the winner of the day off. The highs of the session.
As you can see here are still up though a little more than half of 1% ending the week strong in terms of large cap tech, seeing a comeback in some of the chip names, for example, and the mag seven ahead of some of the earnings picking up in that sector next week. So interesting action. There.
One more thing I want to mention is what we saw from the bond market, which we have been watching so closely here yesterday, we got a little relief on yields which started to come down. They started to come down this morning and then rebounded into the afternoon. And even though of course, Jared, we're going to be watching Economic Data.
We're going to be watching big earnings next week. We are also going to be watching what's going on with yields to see if that trend continues. Yes, we are.
And you know, it's interesting, I was just looking at the 10 year tino yield now above the dividend yield of the S and P five so long conversation to be had there. But I think it's instructive that the NASDAQ and the S and P 500 going different directions today. And for the week, that streak that you mentioned Julie ending that six weeks for the Dow and the S and P 500 it continues on for the NASDAQ, but we've seen different parts of the market reasserting.
And this week, here's the sector action, only consumer discretionary in the green. And that is simply a Tesla story. If you take a look at the losers, we have a number of markets down more than 2%.
We have materials there, health care, industrials, financials. So for the most, most part, we did see some downside action, especially in the larger issues and taking a look at the leaders, it was home builders and retail stocks. So you might remember consumer discretionary was the best performer.
How does that score with retail? Well, again, gets back to Tesla, a member of consumer discretionary but not X RT here. Uh Aerospace and defense suffered that was down about 3.4% small caps as well.
So Julia, I think the uh bond market really did uh cause a little bit of consternation for the markets this week and send it back to you, Josh Jared. Appreciate that breakdown for more on the market moves this week. Let's welcome in Linda Dissel, Federated Hermes, Senior equity strategist, Linda.
I wanna start with looking ahead to next week. We just talked about the tech rally that we've seen over the last two days. I'm curious, is it gonna be big tech earnings? Is it gonna be the jobs report? Is it gonna be inflation? There's a lot of things that could drive this market over the next week.
What, what are you watching? Uh Yes. Well, um good afternoon. Thanks for having me back again.
Um It's difficult with the jobs number which of course we always look at that very closely at the beginning of every month, but it was a really messy month with the hurricanes. You know, some of the things that have just distorted those numbers. So I don't think it's so much of that uh as you bring up inflation, inflation is something now that is starting to come back into concern, I guess for some, when you saw the strong job market last month and then maybe the CPI a little bit hotter than we would have liked.
Um Oh, could we be going back into an inflation scale? But we don't really think that that's going to be the case. Tech stocks are very, very important. Of course, they're the biggest uh sector and some of the biggest names in the market and they have been the most valuable name, most expensive names.
So yes, I think that's going to be the one as we continue on through this earnings season to see, will they disappoint, will they miss whisper numbers and of course, that they do and have a pullback that could really hit the top, uh you know, the top of the index there, Linda, how are you all positioned in large cap tech going into those numbers? You know, interestingly that's the one area of the marketplace that in our asset allocation, we're suggesting an underweight because we are, while we appreciate the strength of these companies, they are really fairly expensive as a group, I think 28 times now. And when you strip away those companies and you look at the rest of the S and P it's selling at just a 17 times multiple. So if we say, well, we believe as, as we do and I think as consensus now agrees there probably is not a recession next year.
Then why can't I bid up the cheaper areas of the market starting with the large cap cyclicals which seem to have worked out as you know, with the financial sector. So why don't we just let them take a risk, not really expect them to do anything terrible, but let the rest of the market catch up with them. That's a continued healthy broadening.
And actually, you've seen that. I think now 80% of the names in the market are up over their 200 day moving average Linda, I'm curious, we're about, I think about 40% of the S and P 500 has reported at this point. What, what's your takeaway ben from earnings season as far as how stocks have reacted, how stocks are reacting that whether they beat on earnings or don't beat on earnings and sort of the, the price moves we're seeing the day after.
What's that telling you right now about the market action? Yes. Well, I, you know, I think what we've seen is that for the most part, if they beat then, uh, then their reaction is probably a little bit, uh, uh, well, it's normal, probably average, normal, a little bit better than normal. But it is interesting like on a name by name basis, which I have thought was really, uh, fairly uncomfortable for over a year.
Now, how names can just, uh, be 10% or more on a particular day or really rise dramatically. I think you mentioned Tesla. You know, I don't speak on behalf of any individual name or Tesla.
But while to see it go up as, as dramatically as it has uh in, in the strength of its earnings figure, that's, you know, that's a lot of, I don't know, a lot of fast money, a lot of quick rotation money out there, which is not the best. Um Linda, I wanna uh switch the election because I know you've written about it a little bit and I'm actually gonna pose a question to you that I posed to uh Craig Johnson over at Piper Sandler in the last hour, which is um does it matter so much who wins or loses the election as how quickly it, it is actually resolved and that we know who the winners are both on the presidential level and the congressional level. Well, you know, it's uh as we continue to hear, it's very likely to be a contested result because the going into it was so very tight and with our country so divided as it is, you could expect a contested election.
Uh We had a contested election back in 2000. It was resolved. Gosh, I think it took into January before it was resolved.
The markets didn't seem to care that much though. And, and if you go back beyond that, back into the late 19 sixties, I believe it was 1968. You were having assassinations at that time, you had a contested election at that time, you had riots going on and the market seemed to continue a pace.
So I think that, um, history tells us, maybe not to worry that way. And then, gosh, if we look at this year, could you have ever dreamed up the year that we have been through here this election year? And the market just continues to make new highs, you know. So, uh we, we wouldn't think that should be the issue really at all.
Rather corporate profit margins are at all time highs today. That's powerful and hard to argue. Linda.
I wanna stay with what you just brought up. It's been an abnormally strong election year, right? And we didn't really get the typical October volatility. We would see, I think the VICS is still sitting below 20 right now.
Is that a concern that we haven't had the volatility come yet or we just waiting for it to come? Is it something that's gonna come? You know, in two weeks? Is it something that's inevitable? And we just haven't paid that price yet? Yeah, it's like, it's like, it's like all the old adages just aren't working for us. Are they this year? And um we are coming into this election day with uh, well, we, I guess today we made a new record high on the NASDAQ very recently, a new record high on the S and P 500 in this market, uh, deserves a correction. This, it deserves really a 7 to 10% correction.
And we are expecting that at Federated Hermes. I, I'm actually writing in my weekly this week that I wonder if in this rarest of rare election years, the correction comes after the election, but whatever, um, it's very, very difficult, you know, you've had a 30% plus year in the market and that doesn't happen very often. The last 21 out of the last 21 times, it did happen 19 of those times.
You didn't have a recession for at least a year. So, um, that, I think, you know, when we sit back and we try to take our, our minds off of this crazy election year and the emotions and et cetera and look at the fundamentals of this economy, the earnings are great. The employment is still really quite good and we're out there spending.
So it's, it's just hard not to be a bull. What brings that correction though? Then Linda, if it's not the election, is there something else you're watching that you think could bring that correction? Well, it's, uh, you know, it's really, can only really said, boil down to two things. One do we have a new inflation problem? And the fed shouldn't have cut it 50 basis points as it did if you would overlay the inflation situation today and its trajectory really since we started with the 40 year high back to the 19 seventies and you overlaid it with kind of the uh trajectory that we did back in the seventies where they claimed uh they claimed victory on inflation three times and they were wrong.
We are right on course to maybe see that turn around. And so when you look at the 10 year treasury bond yield going up and you're like, what is up with the 10 year treasury bond yield? Could it be all about a concern for a Trump win? You know, and so uh if that number should go up towards five or over 5% on the 10 year, people might start wondering if the bond market knows we have an inflation problem. We don't believe that at Federated Hermes, we believe that we're probably settling in at a 2.
5% level which all the uh all the main inflation figures are at right now, which may be where the fed really does claim victory. Then you gotta look, look at the job market. The problem with the job market is it can be fine and then all of a sudden unemployment spikes and that's what we have to watch for, but even then it's hard to get too bearish.
Um only because we start at such a very low level on the unemployment rate. Linda. Good to see you.
Thanks so much. Thank you very much coming up. It's what to watch for Monday.
We get set with everything you need to know so you can kick start your trading week, stick around more market domination over time. Still to come as clean energy becomes a bigger topic of conversation. So too does the demand for carbon credits, but for the second consecutive year, carbon offset purchases are declining.
So how should investors be thinking about this space for more? We're bringing into law Debs for founder and managing partner at X MC Stra, as well as Yahoo finances, Akiko Fujita, thanks so much for being here to law. First of all, um sort of describe to us what it is that you do. We know that you invest in these credits, you use sort of aging oil and gas assets in some cases, but it was sort of laid out for us.
Oh, thank you very much for asking. Yeah, we, we actually address the full spectrum of what we call energy transformation, which means that we wanna take uh the existing infrastructure uh in our country which has been so productive for many years. Uh and, and help it transform into uh its future.
And one of those things is to clean up old oil and gas wells which are leaking methane into the atmosphere. And one of our portfolio companies, Zafiro methane is focused on doing that and getting that financed through the carbon credit markets. Akiko um Tal specifically uh who can invest in this I mean, you know, we, we talk so much about carbon credits for our viewers.
It's sort of, you know, where do I fit into the piece of all of this who's investing in X MC right now? So X MC is um is a, a private uh private equity business, but our, our companies can be invested in and Zafiro, Methane in particular is a public company traded on the CBOE in Canada. So uh retail investors can certainly invest in Zafiro and get exposure to carbon credits because we think that that company will be the premier producer of carbon credits uh in the sort of carbon 2.0 that we expect to be blossoming coming into the next 12 months.
Well, that brings up a good question that the nomenclature that you just used, which is the premier producer of carbon credits. There's not really any sort of global definition regulator for what premier means, what is a good carbon credit? What is not as good carbon credit? How are you thinking about that? Thanks for asking. So I first developed a view on this in around 2007, 2008, end of 07, beginning of 08.
I was at my old employer, Jp Morgan. We were just getting into the carbon business and one of my jobs was to develop a view on what were the kind of carbon credits that a conservative bank like JP Morgan could buy and I've used those insights into designing uh Zafiro carbon credit offering. They are very simple.
You need to understand carbon credits, very verifiable and very interchangeable from one carbon credit to the next. A lot of carbon credits that are out there that have been out there don't have those uh capabilities and those qualities and I think that's limited their uptake. Um Talal, one of the challenges in determining what is a quality credit is the lack of sort of comprehensive regulation around this.
I mean, what do you think the demand picture will look like? How does that shift as we start to see regulation form around this? Well, look, every economy has a different view on the balance between regulation and market factors. And uh the US is usually leaned in the direction of more market factors and less regulation. And um I think the carbon markets uh in version 2.
0 will approve that out again rather than legislating a carbon market. Uh What we have in this country is essentially companies that have committed to reduce their carbon footprints uh through their net zero commitments and those are global companies and one of the few ways they can do it is to is to back uh projects like ours. Uh and in in financing the clean up of, in our case, oil and gas wells, but numerous other projects in that market.
Um Tala, who do you see as the main customer buyer of the credits that you are developing. So we see ourselves as a high quality, low cost, high volume wholesale provider of carbon credits at Spiro. And so um we have already sold and announced sales to some institutional uh intermediaries and we expect to continue to do so.
So uh we wanna provide the market with high quality and uh and let the usual intermediaries, the banks, the corporate dealers uh maintain the relationships with the end customer. Thanks so much to Lal and Akiko for pitching in. Appreciate it.
Thank you. Markets have been on a volatile ride in LA in recent months with more volatility potentially underway next week. Investors keeping an eye on fresh economic data as well as big tech earnings such as alphabet meta, Microsoft Amazon and Apple.
All set to report with option trades up for grabs for those with uh for those big tech companies. We're taking a look at the best way to play the options market. Senior option strategist, Brian over join us now to discuss for the options playbook sponsored by tasty trade, Brian.
I wanna start with those big tech earnings. So if I'm looking ahead to next week and I'm interested in playing options on some of these earnings that are gonna be announced after the Bell, what what should investors be looking at? How do you make a decision on where you wanna play options? What companies are the best to do that with? How do you assess it looking ahead to next week, well, around earnings, you're always going to be speculative in nature in the trades that you're making with options. So one of the biggest things that you want to establish first off is what the expected move is after that earnings report and the marketplace will tell you that just by looking at the nearest term option contract.
So next week, we have Google, Microsoft Meta, Apple, Amazon, all the mega cap tech stocks are going to be announcing earnings and Google is kicking it off first and Google actually has an expected move about 6.5%. And then we're looking at Microsoft, they're looking at an expected move around 5%.
Meta is at eight apples at four little less volatility when you think about it between Meta and Apple. But what the stock that I'm kind of looking at is Amazon and Amazon is looking for an expected move around 6.5% which is really about 12 points.
So if I'm setting up a trade where I wanna be bullish or bearish, because you gotta realize it has nothing to do with the, if the market is gonna go up or down, it's just saying that after the earnings report, the the marketplace is looking for a move of about that nature. So you want to fit that into your forecast. So in Amazon, they're gonna be announcing on Thursday, the front option contracts got 11 day to live and I'm looking at doing a long call spread going into that earnings date.
And I wanna make sure that the strike that I'm selling in that position is going to be within that expected move. And that's how you should always approach these speculative trades around earnings. Brian.
I'm curious, he brought up Amazon the report Thursday Friday morning at 830 there's a rather big macroeconomic release looming too. right? With that jobs report that can sometimes move the market and move large stocks like Amazon. How does that factor in when you're looking at this? Is that a concern that Amazon could have good earnings, the stock could be up after hours.
But then by the time the market opens, perhaps a bad jobs report is just weighing on sentiment overall and that there is some truth to that. But ideally when it really comes to earnings, you know, most people are looking at what is happening within that sector, within the overall space and what other companies are announcing. Now, the macro event also plays a big effect and just in general in the marketplace, we're seeing a great example today where we saw the market actually end up up and then close down a little bit.
But we saw the VIC spike up above 20 the volatility index ie the Fear index. So that does play a role in the general market conditions. But we're doing a one day event just in, uh, uh, just in Amazon, if I'm just speculating on that with option contracts, I'm not quite as concerned about the overall macro event that ie the jobs report in the morning.
Um, let's talk a little bit more about the VICS because I think we've all been sort of trying to figure out what's going on there. Right. What's sort of driving it to your point on these days when stocks are higher and the Vics is higher.
It's a little bit confusing. What do you think is going on? Well, I think what, what's kind of happening is that the market wants to go higher is what my feeling is. And one of the biggest things that is holding it up is the election.
And, and we've been talking about a lot on Yahoo Finance today and the fact that the Vix, uh the Vix means that people are buying protection when you see the VX go up, when the market is going up. Usually that means that a lot of people are buying out of the money puts and that's what will drive the co index volatility index higher. So it just means there's nervousness in the marketplace.
So what we've seen since August is quite a few rallies and then get sold off a rally again, going into October and getting sold off just recently. And that just seems to be the theme. And to me that means that the Vix has a hold on the marketplace and every time we get uh a little bit of a run up, people run to the marketplace to try to capture it and try to buy some protection for their portfolios.
Brian. So, so what's the trade on the Vics then? All right. So if I'm looking for a trade on the VICS, what I would look to do is to get bearish after the known event, the big election.
So with the Vics right now trading, well, when I looked at setting up the trade, the VX was right around 19 today, it closed right around uh 20 20% implied volatility. So what I'm going to do is I'm gonna buy the 19 straight put in the November 20th expiration. So we're going out quite a bit after the known event because obviously a little bit of concern about when the election results will come out and then we're gonna sell the 16 strike put because one of the things about the Vicks index is that it's a mean reverting index, it wants to go back to the normal range.
And in this instance, that's usually around 15 16%. And even if the don't consider what happens on November 5th to be a good thing or a bad thing. I just think getting rid of that known event is going to help the VICS settle in and the market do what it wants to do.
So my whole goal here is to uh buy the Vix index and speculation that after this known event on November 5th, that the market that the vics will eventually start drifting down and be lower by the end of November. Brian. Thanks a lot.
Appreciate it. All right. Thank you.
Time now for what to watch next week. It's a big earnings week. Of course, 169 S and P 500 companies are reporting results for the third quarter including more magnificent seven names with alphabet meta, Microsoft Apple and Amazon Apple announcing results for its for fiscal fourth quarter on Thursday after the close, the company jockey with video today for the top market cap in the US and video just briefly passing Apple and do expect for Apple that China iphone sales would be a focal point of the earnings call as reception in the US for the iphone 16 has been sluggish taking a look at the economy monthly P CE data for September.
That's personal consumption expenditures is coming out on Thursday. Economists forecasting both core and total P CE to speed up compared to August with core P ce at 0.3% and total P CE at 0.
2% moving over to jobs. The October Jobs report is out on Friday, non farm payrolls and hourly wage is expected to slow the payrolls coming in at 108,000 and wages at 0.3%.
While the unemployment rate is predicted to steady at 4.1%. That'll do it for today's market domination over time.
Be sure to come back Monday at 3 p.m. Eastern for all your coverage leading up to and after the closing bell.
But don't go anywhere on the other side of the break. It is asking for a trend. I've got you covered for the next half hour with the latest and greatest market moving stories.
So you can get ahead of the themes affecting your money. Stay tuned..
