Santoli. The initial shock has given way to, oh, wages didnt rise as fast. Thats what the fed really cares about. Absolutely. Offsets within the data as well as i think that initial reflex Market Action tested the bounds of where weve been in stocks and bonds over the course of the week. 488ish on the 10year yield, touched it and came back. 4216 on the s p. The intraday pinball, that was a successful test. Beyond that, i do think that, you know, the markets unwilling to extrapolate this pace of job growth and feel as if this is a new regime. Good news is good news. Look at whats going on in the Retail Stocks right now. Theyre getting blasted. Its not as if people are saying, strong jobs, were going to have a big spending binge out here. Yes, its the Consumer Staples in surrender mode, probably should climax soon, but are taking walmart and costco down and other retail. The read so far is, you know, we have the economy we thought we had. We dont have to sit here, if yields arent going to blast to the moon, we dont have to root for bad economic data. Thats in that positive. And beyond that, stocks and bonds traveled a whole long way in a short period of time to essentially have this corrective move. Is there a difference between whats happened between the retailers and, say, regional banks where the kre has been unwilling to break below the june lows . Yeah, i do think so. Obviously, those june lows are really far down on a oneyear basis. And so youve seen a little bit of the medicine taken. And it seems like a little more of a orderly repricing. We know the numbers arent going to be good. We know theyll be restrained in terms of credit growth. We know theyll be sitting on paper losses. Its not as if were expecting something to blow a hole in the sect sector at this point. The regional banks trade 80 of book value. You want to sell them here really hard, youre expecting something pretty awful. Sorry. Hoarse today. I think the biggest question is the Inflation Report next week. Well get cpi on the 12th. Did you see the mannheim used cars went up. You dont want to see that. Month over month, yeah. And the biggest question that the fed is going to have around todays jobs report is the strong job market and environment. Make it harder to fight inflation. Keep it that prices are elevated because people have jobs and they have paychecks, even if theyre not as high. They absolutely are going to have that debate. They arent going to get another jobs number before that debate. You have to counter it with mary daly saying long yields have done some of this work. Is there urgency to fit in another quarter point hike in november. November 1st because we said we probably would. I mean, thats, to me, the big question. Although, it also isnt the huge swing factor for the market. A quarter point on fed funds is not going to make or break when were up 100 basis points in 10s in two months. I think it matters how long they stay there. For sure. Well talk in a bit. Mike santoli kicking off the hour. With the move lower and the pullback weve seen in recent weeshgz, our next guest is making some positioning changing. Downgrading energy to underweight, taking global tech back up to overweight. Calling this an attractive entry point for the sector. Joining us at post 9, citis u. S. Equity strategist scott is joining us. Is that the lead . We upgrade tech to overweight this past weekend. We followed up with a global call overnight. So, essentially the global tech call is mostly a u. S. Call. But we got the pullback we were looking for, carl, in terms of the move lower off the past couple of months. That reset some valuations. Interestingly while the sector has gotten quite oversold, the fundamentals have been consistently up and to the right in terms of Earnings Growth expectations. We think were in pretty good shape. Then we have sort of a debt kicker, if you will. That very simply is that the tech sector in general, growth more broadly, carries very low debt levels versus the defensive and cyclical parts of the market and very high cash relative to debt. If youre looking for a way to counter some of the rising rate influence, tech is it. Last part. If youre thinking about extending duration in a portfolio, you can do it by going out the treasury curve. In equities can you do it by going out the duration curve via tech. Like you said, a little more reliability on earnings and cash levels. I guess thats why the dows best names of the year remain all tech based. We can talk about valuation. Again, we think we have a reset. Were not giving away the valuations on tech but were much lower than we were. Heck, we did this note on the u. S. Side. We looked at the russell 1000 growth and talk about the index. You literally had 20 of the constituents in that index that are down 20 or more. So, essentially theres a lot more carnage in this growth space under the surface. Thats where were looking to capitalize. Tech is the most clear manifestation of that. Do you still like you like overseas markets better than the u. S. . If you kick the can on recession timing and you increase the chances of soft landing, essentially you set up for an economic rally. When you go economic sensitive, youre at the margin, going to favor rest of the world versus u. S. So, thats the way were playing it going into q4. It doesnt negate the view on tech, which is a way to think about getting defensive here, even as Economic Risks continue. This growth is defensive theme. We think plays out and its being augmented by the fact your defensives, as you were discussing earlier, cant get out of their own way. Dont you need lower yeeltsdz for that to work . We need to get at least to where were looking at peaking tenyear. And i think were approaching that level. Thats where were getting the courage of our conviction. The underweight on uk and the underweight on energy kind of does point to what, i guess, youre saying is a soft global macro view in house, yeah . Youve had a big move in oil prices. Our Commodity Research team have been arguing were seeing a peaking in oil prices and could probably move lower from here. Were taking advantage of that move higher in Energy Complex to take a step back. What explains the uk as well . The uk is going to be a little different. We know they have their own sort of recession circumstance, their own financial circumstance. The preference is at the margin over the continent uk itself. Hopping out of overweights quarter to quarter, would you describe these as tactical moves or is this a strategic move . Its a quarterly call, but you hope you do it with a little longer shelf life. The inputs change and you have to respond to that. Right now its kind of saying from a u. S. Lens, were kind of pretty comfortable shifting back to this growth focus. Again, on this growth, defensive theme, when you play it globally, there arent that many places to go for major tech exposure outside the u. S. So, were were playing both sides of this. The narrative gets scrambled every day, though. Today its the strong jobs report. Leading into today it was all about, okay, no more soft landing because rates are rising so quickly here. Thats going to kill off the recovery. Does a jobs report like today make you rethink the story . No. Essentially what it makes me rethink is what degree of recession probability do we put on the outlook. I have to be sensitive to that. We factored a lot into our topdown model work. We are comfortable we can navigate a growth slowdown mild recession without a major hit to our earnings outlook. Weve been earnings bullish all year long. That hasnt changed. This job print, if anything, it reinforces my view anyway that we get a pretty decent q3 earnings reporting. Where are you on 3ctionz . Flat year over year. What were suggesting is that the setup here is much like weve seen in previous quarters. You get a decent positive surprise ratio out of that. Were not seeing too much that is telling us we should expect negative surprises. But where were really differentiating is on our 24 outlook. Were still looking for 245 number for the s p. And within that, in the tech sector were looking for a double digit growth, 12 , 13 next year. We think after a couple of years of earnings nothingness from the tech sector, we set up for a growth snapback next year. The last part of this, keep an eye on Business Model maturation. Its a concept were talking more and more about. As these Companies Move through their life cycle, weve always paid a lot for their operating leverage or expectations for operating leverage. Were now getting to the point where youre seeing pretty major key cash flow inflections for a lot of these companies. We think thats going to be an important theme. Based on layoffs or cost reductions that have already been done . A lot has been announced. A lot of spending initiatives are behind. What you end upsetting up for is natural operating margin, you know, maturation level where it begins to translate into stronger earnings numbers. One thing im not hearing from you are concerns about policy, dysfunction, shutdowns, deficits. Where do those fit . Different discussion, right . I would say a common discussion point with investors over the past couple of weeks has been, a, the election. B, how do we think about the deficit situation. Those are two issues well be contending with, i think, and its going to be a source of volatility and some bigger issues that need to be rectified. Well leave that for a different discussion. I think thats going to be part of the election cycle narrative and becomes much more relevant in terms of identifying a peaking in longterm bond yields. We need to see that peaking at some point here to take some of the pressure off. I was going to say, that is todays discussion. Yeah. Thats what isnt that what Equity Investors need to figure out, when to long bonds . Thats part of where were going. The house view is that much like is being reflected in consensus right now is youre looking at a peaking in here. I get it. There are theres a view out there that tenyear yields dont stop at 5. I appreciate that. My bond colleagues tend to think bonds are, generally speaking, undervalued. Essentially theyre looking for some retrenchment in real yields from here. Not certain a discussion at all, but i do think it keeps discussion on where peak in fed long term rates are and we think were getting close to that point. Youre like, let me go back and write the report first. Scott, thanks. Good to see you. You bet. Still to come, staples softness. A number of these consumer names seeing record moves and not the good kind as rates continue to climb. Are there any worth picking up here . Well discuss. Stayitusn quk t street. Awonhe in the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Icy hot. Ice works fast. Heat makes it last. Feel the power of contrast therapy. So you can rise from pain. Icy hot. Drip. Drop. Drip. Drop. So you can rise from pain. Have you ever seen anything like this . Drip. Weve met before. Drip. Drop. Dont be scared . [ sinister laugh ] [ screaming ] heres why you should switch from chrome to duckduckgo. Duckduckgo is a browser you download to your mobile and desktop devices. Unlike chrome, the duckduckgo browser has privacy builtin. It comes with a private alternative to google search, which doesnâ– t spy on your searches, and it blocks cookies and creepy ads. And theres no catch. Its free. We make money from ads, but they dont follow you around. Join the millions of people taking back their privacy by downloading duckduckgo on mobile and desktop today. This oil selloff continues. That might be good news for gas prices. Crude and brent down about 10 a barrel in ten days. Thats the steepest drop for both benchmarks since may. Demand issue giving consumers some relief at the pump with the National Average for gas now at 3. 77. Street thinks that might be able to break to 3. 50 before halloween. Theres a lot of talk about 2. 99 if you look at wholesale gas and extrapolate that to retail down the road. Things change in a week or two in this market. Its crazy and good news for the consumer and for the story there. Lets dig deeper into themove lower. Were seeing Consumer Staples, look at the sector, down more than 7 in the last month as these treasury yields continue to rise. Yesterday names like mondelez, pepsico, cocacola saw some of the worst sessions in two years. Theyre down sharply again today. Here to break it down is rbc capital analyst nick modi. Whats driving such the big selloff . I think a couple of things, sara. Yields, you look back ten years, widest spread to treasury weve seen. Treasuries, you can make more on treasury than a dividend yield on any consumer staple stocks in aggregate. Thats number one. Fundamentals are deteriorating. The reality is volume is not coming back the Way Companies expected. There are macro pressures weighing on that, a lot of pricing taken. Inflation is affecting the volume story. And so theres some concern that promotional levels will have to rise and that will affect earnings. And then kind on top of that, you have ozempic craze and putting pressure on the food and beverage companies. And so thats your cocktail. Thats really why these stocks are trading where theyre trading. Is it legit or would you be picking up some of these names . Is it justified . I think there are opportunities. I think the package food space is going to continue to be under pressure. Its hard for even a defensive stock to go up if there is earnings risk. I do believe theres earnings risk. We have been clear about that for this whole year. Were starting to see the Companies Speak more cautiously about the future. I do think theres some great opportunities. I think Constellation Brands had a great quarter yesterday. 7. 9 depletion growth, which you can never find that in this market right now with all the inflation thats been taken. I like that story. That remains our number one pick. Kenview is trading at low valuation. Coming out of the gate as a public company, i think they have something to prove. They will be able to execute and deliver on plan. Those are two of my top ideas. One thing weve been asking executives from mostly the package Good Companies is whether the mix of volume and price can reverse relative to what we saw earlier in 23. Is that a 24 story . It could be, carl. Look, the reality is these companies took massive amounts of pricing. We had 30 , 40 price increases in some situations. That creates a whole different consideration set from the consumer. For instance, some of the work weve done would suggest that the Biggest Issue for the cereal category is the fact that the price of eggs have come down so much so families are feeding their families with eggs instead of cereal. Consumers are migrating to where the value is. The center of the store to where pricing has been sticky to the perimeter where weve seen disinflation at a much greater rate. Its going to depend on where those price gaps lie and how much pressure consumers feel. We, based on all the work weve done, believe the consumer is going to get worse before it gets better as we go through 2024. Thats interesting. You take what conagra said yesterday about chili and canned tomatoes. It does raise the question about whether habits change. When they do change, more at home or away from home. Look, we saw a really weird period the last three years. We saw consumers going from out of home into home entirely because of the pandemic. Some behaviors stuck as the kind of Work Life Balance changed, hybrid work changed. Now more people are going back to the office so youve seen more out of home consumption. If youre a package food company or even a Beverage Company and you can provide outofhome experience in home, for instance, what conagra has done with canned wendys chili, those are initiatives that will have fruit and bearing as we roll through some of this weakness. Its not like these companies arent growing, nick. Weve actually seen some pretty good growth and decent growth forecast on the back of pricing, which they are able to get. I feel like besides this yield move, you could make a case for Consumer Staples right now. You could. But i think the playbook has been adjusted just a bit. I think there are two things we need to consider that maybe we never had to consider in prior cycles. First is, fed rate policy. In the situation of the economy getting worse, will investors position themselves for a rate cut cycle . In that situation, my stocks dont do very well because people will be positioned for the higher growth data place. The second thing i think is going on, that no one really talks about is this a. I. Investment cycle is sucking a lot of capital out of my sector. I think theres you know, you can be short p g or underweight but you cant be underweight nvidia in this cycle. I think theres some anomalies going on that could be pressuring these valuations more so than we would normally expect in this situation. I will tell you, before i became a Consumer Staples analyst, i covered the internet. I can tell you during the tech bubble formation, consumer staple stocks didnt have very good valuations despite good fundamentals. I think we have some kind of analogy on that. I have not heard that mentioned before. I mean, sure, a lot of money is moving over to tech stocks. Thank you, nick. Great to talk to you. Yep. You bet. Have a great weekend. You, too. A lot more on the market in this jobs report coming up, including a warning from Morgan Stanley about any near term bounce in the market. And then watching tesla, cutting prices on the threes and whys as down from the previous quarter. That could apply more pressure on the big three. Tesla shares are down. As you can see, s p has gone green. Up four points. Ayitus. Hi, my name is damion clark. 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With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. In one year, ive lost five sizes, and im on my way to lose another three. With golo, i can do it. announcer change your life at golo. Com. Thats golo. Com. Shares of block higher as td cowen initiates outperform. Names block one of its top pick in fintech. Bullish on cash app runways for attractive growth and thinks Free Cash Flow will improve in 24. Price target 59. Trading above 43 at the moment. European markets set to close in a moment. Stocks reversing course in the last hour following the u. S. The stoxx 600 did hit a sixmonth low earlier today. Still on pace for Third Straight week of losses. Its the food and beverage names like here, the biggest losers down over 2 . Keeping our eye on yields there, because they are rising as well. The german tenyear yield coming off earlier highs, essentially flat and back below 2. 9 . Speaking of germany, factory orders rising 3. 9 month over month in august versus consensus for 1. 8 drop. Its very confusing because german exports were weaker than expected. The consensus around germany is they are in or nearing recession. Thats one of the weaker parts of europe. Overall, the data has trended worse there lately and the stocks have been following like here, higher. Its a global move in yields. Its not just treasuries. Absolutely true. So many things about germany related to china and so forth. Session highs are here. Dow up almost 100. All three indices green. Post to post with bob pisani. Look what we have here, positive. We were down 40 points after the open on that stronger than expected jobs report. Now positive by six points. What moves things . First off, technology, which has been holding up reasonably well. Continuing to do well. Salesforce, trades down here. Of course, thats held up reasonably well, along with microsoft, apple as well. I think the more important thing is outside of whats going on with technology. We have seen cyclical sectors like industrials and material stocks continue to do well. In fact, they were well right at the right as that jobs report came out, metals did very well. In fact, oil rallied, copper rallied. Caterpillar has been almost straight down for two weeks. It was 280 at the fed meeting around the 20th or so of september. 280. Its gone straight down and now rallying finally, looking for some kind of bottom. Another interesting sector you want to look at. Where is American Express . Come over here. The card names have been acting like that recently. The consumer might be falling apart or something. Amex was 160 at the fed meeting. That was the focal point. September 20th. It was 160. Its been straight down essentially since then. It went to 145 earlier this week. Look, its bouncing. Again, if the consumer was truly starting to fall apart, i dont think youd see it bouncing. Same situation, visa does the same thing. Its been acting exactly the same way. Some consumer names, which have been doing horribly. Weve been talking about how some of the Consumer Staples and health care names have been acting awful recently. Are starting to look like theyre finding a bottom here. Theres johnson johnson. Was 163 or so at the fed meeting. Went all the way down below 155 or so, 154 earlier this week. And yesterday it was up. Its up a little bit today. Its not a lot, but its up here. So, my point here is inflation is what matters. Thats the story. Are we getting inflation continuing to come down . Average hourly wages, month over month, and year over year, again, below expectations. Thats what we want. Yes, jobs report is strong, but strong jobs with inflation coming down, okay, a little bit of surprise on jobs. But not necessarily terrible for the economy. Guys, back to you. Talk in a bit. Lets get a news update with our pippa stevens. Hey, carl. Donald trumps attorney filed a motion this morning to stop his civil fraud trial in new york. It comes after his legal team made two requests yesterday to dismiss separate criminal cases brought against him. Those motions argue his federal election interference case in d. C. And his new york criminal case over alleged hush money payments to Stormy Daniels should be dismissed. Russias president suggested the they could revoke. Moscow successfully completed the testing of a new nuclearpowered missile. Analysts say theyre more worried about return to testing than the specific weapon. Police arrested an american tourist at Israel Museum in jerusalem yesterday for damaging prized ancient sculptures. Police said the man thought they were adulterous but his lawyer claimed he suffered from a condition called jerusalem syndrome. The National Institutes of health calls it an acute psychotic state observed in tourists who visit the ancient city. Back to you. Thanks very much. Coming up next, why bernstein says that disney is the only credible challenger to netflix and its time to buy with the stock near 2014 low. Dow up 150 as financials and industrials go green. Some things are good to know. Like. Where to find the cheapest gas in town. And which supermarket gives you the most bang for your buck. Something else thats good to know . If you have medicare and medicaid, you may be able to get more Healthcare Benefits through a humana Medicare Advantage dualeligible special needs plan. Call now to see if theres a plan in your area and to see if you qualify. All of these plans include doctor, hospital and Prescription Drug coverage in one convenient plan. From humana, a company with over 60 years of experience in the healthcare industry. Youll have lots of doctors and specialists to choose from. And, if you have medicare and medicaid, a humana Medicare Advantage dualeligible special needs plan can give you other important benefits. 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And, if youre eligible, and theres a plan in your area, help you enroll over the phone. Call today and well also send this free guide. Humana. A more human way to healthcare. David faber reporting exxon is nearing a gigantic deal for pioneer, a takeover worth 30 billion. It would be exxons biggest acquisition since its merger with mobile in 1999. Would surpass the most recent blockbuster deal. Occidentals acquisition for 38 billion. Jpmorgan, how best the deal could be done, whether all cash, all stock or split, saying it doesnt look very compelling from a Free Cash Flow standpoint. Jpmorgan also notes that the shale sector is right for m a. Exxon trading lower. Pioneer shares are up double digits, 10. 3 . Carl, also some questions, obviously, about whether it would pass muster with the antitrust authorities. Thats going to be big if it happens. Right, if it happens. A note from bernstein catching our attention today. Its been a tough year for shares of disney but the firm sees reason for optimism, initiating coverage outperform, target 103, calling it the only credible challenger to netflix among legacy media companies. Our Julia Boorstin digs into what is a deep dive. 150someodd pages here. Quite a deep dive here. Its important to point out what you just said, disney shares have been trending lower. I mean, just to put it in context, this week disney shares hit their lowest level since 2014. So, what they see here is an opportunity and what they say is that disney has the scale, especially once it completes that acquisition of the third of hulu, that it doesnt currently own, buying it out from comcast, cnbcs parent company, once it completes that acquisition, then it will be positioned to compete at scale in the streaming market here. And to compete really with netflix, which is number one. One key thing in terms of timing, they forecast the directtoconsumer growth will outpace the linear decline with dtoc surpassing linear in 2024. That means just around the corner, next year, we will see that tradition where directtoconsumer revenue is bigger than linear revenue. That, of course, also helps explain why disney is interested in shedding some of those linear tv assets and having conversations about that. Are other analysts stepping in with the stock price and saying to buy . Yeah, exactly. A lot of the street likes it, even though its had terrible performance lately. Thats true. I think theres a lot of optimism around the companys investment in the parks. The demand for parks and experiences has been through the roof over the past several years, coming out of the pandemic. The fact that disneys responding to that by saying they are literally doubling down in terms of their investment in the parks, theres been a lot of positive reaction to that. But i just want to point out that sea port, another analyst at sea port said we have reached maximum pessimism around disney. That fits into my noting the stock reaching lowest level since 2014. They note streaming generates 25 of disneys revenue currently. So, putting that in context. Of course, they have more scale than a lot of other more traditional media players. Yeah, we are hearing others chime in here. Weve been paying attention, obviously, to the capex at the parks. And then to the s. A. G. Talks, julia, is there another meeting today . There are meetings not only scheduled today but they will be discussing with respective parties and meeting on monday. I think its interesting they said were meeting again on monday. I think they want people not to get too upset or ak shus if theres not an immediate resolution. They said it takes time but the talks have been productive enough that they are planning to continue. Im hearing a lot of optimism around hollywood. People say its good now that the wga strike is resolved that it puts pressure on s. A. G. To come to some come myselves so everyone can get back to work. A lot of people are hoping some production can restart before the holidays. It does take a while to ramp things up again. But there is definitely optimism about resolution coming in the coming weeks. Were excited just to have late night back on track, julia. Thanks. Julia boorstin, a lot going on in media today. B of a sees farreaching ripple effects for weight loss drugs like ozempic, outlining the impact we might see across a bunch of sectors like food, gaming, tobacco and apparel. On the apparel front they say broader adoption could spur what they call wardrobe refreshes. Lets bring in courtney reagan. They get into what the average size is in this country. Yeah, its interesting. I have to admit, i too have sort of asked these questions. I thought if you have a lot of americans that are losing a lot of weight, assuming that they continue and they want to continue to lose weight or continue at least at that size, then perhaps they are going to have to refresh their wardrobe. I suppose its possible and in this note theyre talking about sort of saying when someone goes down two sizes, thats typically when they would go through a wardrobe refresh. I also think the note makes a very important sort of asterisk point. Assuming they can afford to do so. We know how expensive these drugs are, carl. I was trying to look up what the average cost is. It varies based on what kind of coupons you may have. Of course, Insurance Coverage or not. I mean, it could cost someone 21,000 per year to maintain taking these drugs without insurance. Once all the coupons expire, thats an awful lot of money. Do you have money left over to refresh your wardrobe . I think its an interesting exercise to go through and to consider. I dont know how realistic it is. It also looks like, according to kff health care study, only about 4 of the 42 of americans in this country that are obese are actually taking these drugs. So, while there is a lot of interest, and maybe some people are starting to get curious about it, the actual adoption is still relatively low. Yeah, i mean, im trying to think. Is it stimulative to certain retailers because you have to size down and buy more or not so much . Its hard to figure out. Its easier with restaurants where you dont need as much. Thats true. I mean, it could be, i suppose, right, if you lose weight for whatever reason. And then, you know, you need to buy new clothing that fits you better. Maybe even new shoes, i guess. That could be part of it, too. Again, assuming that you have the money to do that and to invest in it while youre still paying for the cost of these medications. It is definitely a hard one to figure out. That is true, who would be the beneficiary . Would it be anyone that sells apparel . Does it skew towards certain retailers . I think you have to look, well, of these individuals that may be looking to buy new clothing, where would they typically shop . So, are those the beneficiaries . I think the food and the beverage, i think that seems to be a little more clear than the wardrobe piece. Its definitely something to think about. I just dont know that we have enough information to go on more than assumptions at this point. Well watch it, court. Seeing interesting price action in shares of walmart. Well keep an eye on that. Watching the market as well. Dow up 200. When a reversal coming out of the jobs number this morning as stocks bounce back and at session highs. Morgan stanley does have a warning about a nearterm rally. Well get to that call after a short break. As a first generation cuban american both of my parents were born in cuba, migrated here to the u. S. For political reasons. 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Plus, theres a cap on your outofpocket costs so, call or go online today to see if theres a humana plan in your area, to find out if your doctor is in one of our networks, and to get our free decision guide. Theres no obligation, just good information. Humana a more human way to healthcare. Market rebounding from some early weakness. Dow up 235, session high. S p now up on the week, at least for a moment there. We closed last week at 4288. Thats roughly where we are. That would be a headline after five weeks at least on pace for five weeks down. What a sharp snapback and quite a mixed reaction to jobs. First strong jobs was considered negative and maybe digesting it a bit we saw smaller wage increases is actually good news. Just want to point out walmart as well. You mentioned this, carl, fourmonth low as Consumer Staples continue to get hammered. 3 down move in walmart. Turning back to the markets, despite recent volatility were seeing, we are about to enter an historically strong few months for stocks. Should investors expect a seasonal rally . Joining us is Morgan Stanley senior vp of investments, jim lacamp. What are you telling your clients . The stage is set for a shortterm rally. Were bouncing off support on the s p 500. Right around 4200. Weve done that all week. Seasonally were in the entering strongest time period of the month of the year, really. Midoctober through late january. Especially in years where the markets already up. In the last 56 times that the markets been up 10 on the year or more, as we enter this time frame, we went up 48 of those times. And with the market oversold, a lot of hedge funds have sold off, a lot of liquidity in the market, were setting the stage for a bounce. If you look at the chart on big cap tech leaders, they havent been going down. Even though the market is down five of the last six weeks. I think we have a Fourth Quarter rally. We have a lot of problems out there. First of all, the jobs number today, dont believe them at all. Bls has been wrong all year. They revised every single number down. What good are they revised the last two months higher by 119,000. They did that today after 13 months in a row of revisions. Leading Economic Indicators are down 17 months in a row. Consumers really stretched here, too, especially with gas prices so high. So youre shortterm positive but worried about next year . Yeah, i am. I think especially look at whats happening to the tenyear treasury today. The deals keep going up, which means the curve keeps getting even more inverted. Banks have a ton of holdings of treasuries. Guess what, we have to sell a bunch of treasuries next year, trillions of dollars worth. Whos going to buy them. The banks already have too much and china is selling theirs. Who knew when you printed darin increase the money supply by 20 over four years, you might have problems down the road. I think thats whats happening. Some still wonder what would happen if the fed were to change their rhetoric around qt, right . We would be right back in it. Theyre in a really bad spot. Paul volcker did this. During the president ial election of carter and reagan, paul volcker paused. What happened was inflation ramped up even more. So, i think the feds in a really difficult spot here. And especially with energy prices. Now, energy price is high, keeps those Inflation Numbers higher but it ramps down Consumer Spending because it pulls money out of their pocket. So, i think were going to continue to see those Inflation Numbers work down a little bit but stickier than people are hoping for. If you play a q4 chase, its around mega cap tech or something less obvious. It is. You can keep a barbell approach. You can keep a lot of money in cash because youre getting paid in cash right now, 5 or more. I like the energy space. If you notice west texas crude was down earlier, but a lot of stocks were up on the heels of the pioneer announcement with exxon. Those companies, their earnings are going to be great. Even with prices down the last few days. You can have energy on the one side, which is also a value play and large cap tech. I want to point out one other thing on large cap tech. The p to e growth ratios versus their competitors, these stocks are cheaper than theyve been in seven years by that metric. Now, it doesnt mean theyre cheap. It just means theyre cheap relative to their peers. What is sentiment like among your big client base at Morgan Stanley right now . Everybody is worried about everything. You have a lot of skeptics out there. You have very few people saying, hey, things are great. Nobody thinks things are great. Bankrupts are up, delinquencies are up. We can get paid more on fixed income now. Private equity, private credit, some of these areas are still doing fairly well. The stock market is trying to hold on support. Its not the end of the world for investors, but economically theres a lot of worry points. But thats how we came into this year and then that wall of worry led to a big market rally. A little bit of an all hat, no cattle rally, if you look at what happened earlier this year. It was about nine stocks that were responsible for 90 of the gains. Thats where the growth is. Thats why i tell my clients now, if you want to buy something, buy something thats still growing in those large Cap Tech Companies are still growing. So thats where you want to be . I want to be there and i want to have some cash. Look at the breadth. The breadth isnt any good and it hasnt been any good. Dont be any good. Dont be fully invested. Look at traditionally defensive areas like staples and utilities are getting creamed in here. Theres no safe hiding place in a troubled environment. Go with the growth or go where theres real value. You still like energy. The mantra has been energy is going to tech lately. I like i still like energy because its supply and demand and not drilling. The rig count is down 19 year over year. We still need the stuff, but theyre not drilling it. This transition to electric, its going to take a lot longer than people realize. We have to leetch it there. Thank you very much for sharing some of your views. Thank you. Carl, week to date positive. Despite a point or two. Up next, well look at the drop in megatech, especially amazon, down about 6 in a month. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Its true. Plus, when you buy your first line of mobile, you get a second line free. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Its happening. As rates jump today on that strong jobs number, is big tech a spot to hide in . Deirdre bosa is digging into that. We started the week with this chart, and i wanted to end the week with it, as well, because it tells a story. It shows megacaps on a growth ratio, they havent been this cheap in nearly six years and have only seen those kind of discounts to the Broader Market in the last decade. I wanted to show you the chart form of what they are saying. So, theres already signs, clearly, that investors are taking heald and moving back into tech. The megacaps have been resilient this week and today amid broader selloff and volatility, suggesting the street doesnt think fundamentals have changed despite rising bond yields in the macro. One exception, however, might be amazon. It is the only company in the magnificent seven grouping lower on the week, and by nearly 2 . It is also faring the worst on a monthly basis, down nearly 8 , all while it is supposed to be heading into its strongest quarter of the year, the holiday stretch. Theres black friday, cyber monday, christmas, hanukkah, even amazons prime day in october, about a week from now, which should boost sales. Amazon in particular should be well positioned at double the Logistics Network over the pandemic, and its worked through a lot of the kinks over the last year or so. But competition has been building in the discount space, and that could hurt amazons fundamentals. Shoppers are estimated to spend more than ever online this holiday season, but theyre looking for deals and discounts. The biggest discounter these days is no longer amazon. You were talking about the retail space earlier, and a lot of these folks are worried about chinese ecommerce app teemu. The u. S. Version of the app launched a year ago, but it quickly vaulted to the top of the app store, surpassing tiktok and another chinese app. Morgan stanley today took a look at the temu effect, threadup, ebay, walmart, amazon are at risk as well as the dollar stores. I wanted to note, it is worth mentioning how different this week and the last month have been in private markets, especially among generative ai startups. I want to remind the audience new reports of new blockbuster valuation. Its only been going up. Check out our tech check weekly. We look for openai and how the space is hitting stratospheric levels, all while some of the air comes out of big tech a little bit. That disconnect continues. On amazon, which youve been talking about, are they losing share . Its unclear right now. The share that temu are making are minor, but the hype around them and just the consumer uptick has been remarkable. I tend to look at things like app down loads, and thats the fear. Amazon operates in a slightly different space, and thats what Morgan Stanley looked at this morning, where theyre vulnerable and where theyre not. But its at the lowest end. When people are looking for discounts, and they dont necessarily care about how quickly they get the product, thats where you can go to teamu. Amazon may have one and twoday shipping. Temu may take longer, but if you do your shopping earlier and get the discounts and deals, consumers are waiting. Im sure you see the market share theyve been taking from the dollar stores. Its quite remarkable. Its still small, but theyve been able to scale so quickly in a place like china. The signs are there in the u. S. Everyone wants to be in marketplace. Yeah. Thank you. Deirdre bosa. With the nbas current rights deal ending after the 20242025 season, the next deal has the potential to shake up the entire Media Business based on some preliminary discussions. Nbcuniversal, Googles Youtube tv, amazon, netflix could all challenge the current rights holders, according to people familiar, although official negotiations cant occur until april. But when they do, theyre looking to have two or three Media Partners across cable and streaming, again, according to people familiar with the latter. This is going to be one of the most watched contests in the next few months. Because Everyone Wants it. Its the nba. We want to see the change economics of the industry after the fight we saw, the apple move into mls, a lot of things changing here. Right. A week from today, were going to have citi, wells, jpmorgan, pnc, delta the day before that on tuesday. Tuesday. But you cant take your eyes off this morning the ability of the market to rebound after the jobs number came in hot. Back at 4,300. Next will be cpi, the Inflation Report that matters most to the fed. Weve seen inflation come down, but is it enough for them to stop raising Interest Rates . Thats the question. Todays jobs report, the gut reaction was thats super strong and increases the probability that the fed hikes in november. Then the settling reaction was, well, wage growth has smaller increase, and thats whats important to the fed. Maybe well get this goldilocks of inflation coming down and the economy remaining stron. As somebody said, if youre worried about the economy being too hot, todays number helped, or too cold, todays number helped. Have a great weekend. Welcome in to the halftime report. Im scott wapner. What a jobs report today. Hotter than expected, so rates rip, stocks move lower, but what a different story it is at 12 00 noon in the east because we have an entirely different market picture at this moment to talk about. The Investment Committee is with me today as well. Josh, shannon, and joe as well as steve liesman, our senior economics reporter. Lets check the markets. It certainly looks different now than it did then. Were at the highs of the day