Good morning everybody. Welcome back to another episode of the market open. We are here and live. It is Wednesday, November 5th. couple days into November and we are live for the open folks. We got a lot of stuff to talk about. We had a ton of earnings yesterday that we are going to get into. We had a ton of elections happen yesterday where the Democrats had pretty much a clean sweep across the entire country including New York City. Zoron is now the mayor of New York. So we have that that took place last night.

Uh, last night if you were looking at your portfolio in the overnight markets, call it around 8:30 to 9:30 p.m. It was a blood bath. It was ugly. And and like I started getting texts from people like, "Yo, what is happening? Why why is it dumping so bad?" I didn't have any idea. By around 11 p.m. after most of the elections were called, we pretty much recovered. Now, we didn't recover entirely, but there was a decent level of recovery that got rid of the extent of that blood bath.

Ethereum was very close to going below 3,000 during that time. Bitcoin did go below 100,000. Uh, and Ethereum right now at 3350, which I know is not near anywhere where it was over the past month, but at least it's not below 3,000. Then Bitcoin right here making a rebound above 102 102.8, which is also not as bad either, uh, given it was at like 99 last night. So, if you just slept early last night and didn't look at your portfolio, you you didn't see some of the the carnage that was happening and now you've had a little bit of more of a recovery.

But uh nonetheless, I think some of the instability or volatility of not knowing what would happen in the elections was resolved. And as a result of that, you got a lot more uh not excitement in the markets, but just general like, hey, we don't have to be that afraid. And sort of my my my my working theory around this is that Democrats sweeped last night across pretty much every state uh including my home state, New Jersey.

Um, and I think what that showed the Republicans is they're going to have to reopen to the government and negotiate with the Democrats because at this point, if the shutdown continues to happen and the Democrats had a clean sweep last night across the entire country, you don't want to risk the midterms and losing the House and the Senate. And the longer the government is shut down and the more opportunity Democrats have to pin this on the Republicans, even though Republicans are pling it on pinning it on the Democrats, it just creates more volatility on potentially losing the midterms. And as a result, that would not be good for the party in power.

And so maybe the market's kind of pricing in, hey, this is a kick in the ass to everybody to say the government's got to reopen and the government reopening could be the tailwind to get the market to not be uh, you know, as scared as it was before. So I think that's kind of what's going on right here, but we'll talk more about it.

I think we'll just get started real quick on the election results and then we'll keep going from there. Uh again, Democrats had a clean sweep. Mandani is the new mayor of New York City. In January, he will be sworn in as the uh mayor. It was quite incredible to see. I did watch his victory speech last night. I will definitely say the tone of the victory speech was uh very braggadocious. I think objectively it was not one of those humble hey you know let's bring the city together. It was mother effer we won this is a new city this is a new uh paradigm of thinking of politics and quite frankly there was a very strong classfocused message in the speech.

I mean, he was quoting famous socialists of the past as as as references for trying to make the argument that he was making, which I I thought was quite incredible. I mean, I I you know, Mandani from what I've seen in a lot of different videos and clips is more so this like guy who's like nice and just trying to be your friend. This one was like quite literally this one was like we are going to take over the capitalist class and and to an extent it almost literally sounded like that in certain moments.

So, I I thought that was quite incredible. I didn't expect the speech to be as aggressive as he went for. Uh but the speech was, hey, this is the time for working-class people. Working class people decided to make a decision to go in a direction that is explicitly for them. And now it's going to uh take a few years to see if there's any level of progress that matches the reality or matches the ambition of what Mumdani has been saying over the past couple of months.

What does this mean for the markets? Quite frankly, it added a lot of clarity to the markets last night and and realistically before the uh before the markets or before the elections were called, the markets were dumping. I think the markets just wanted some clarity. I really do. and the fact that we got clarity last night relatively quickly you saw the markets rebounding or it could mean nothing for the markets and it was just convenient that Algo started going back and forth during the election and that was some of the election volatility

but uh I don't know if it says much about the election at the end of the day the mayor of New York has to govern with the uh or has to work with the governor of Albany to be able to get anything done if he wants to actually get free buses or free healthcare or child care or raise taxes on the rich like you're really going to need to work with New York State not just the New York City state assembly because they don't have that much power and So, it's now going to be a couple years to see if Mumdani can carry out this overall policy.

Uh, Bill Aman, who's been very against Mumani, he tweeted yesterday, 140 characters, very simple. Mumdani, congrats on the win. Now you have a big responsibility. If I can help in NYC, just let me know what I can do. So, uh, although he was vehemently against this guy winning, uh, he's ready to help New York City. And, you know, Bill Aman's a native New Yorker. He obviously loves the city. He wants to be in the city. is likely not leaving to Miami. Um, but that is the approach that Aman is taking now based on this election.

Okay, private ADP payrolls. We got that this morning. I forgot we were getting this number, but we got it. 42,000 versus 22,000 expected. Not too bad. It follows a 29,000 decline uh in September. So you have some level of stability to the upside in the labor market.

The market thought we would add 22,000 jobs on the private payroll uh sector. October ADP showed we added 42,000. Again, we had a 29,000 decline in September. So although we don't have labor market data from the government, we don't have a variety of different tools like jolts or jobless claims from the government. We do have some of this third party data which is signaling that maybe the reports are not as bad.

ADP saying that private payrolls grew by 42,000 in the month of October. Uh with a decent split when it comes to by sector goods producing up 9,000, service providing up 33,000. This is a question. Is this the new normal we have to get used to? Is a relatively lackluster number that because we have we don't have the labor force growth. Is this a good number relative to the labor force growth? We don't know because we don't have the unemployment size. What I don't the the the household survey.

What I don't like is how we got here. And this is something that's a a bit of concern here. Small businesses uh less than 50 workers losing 10,000. That is the third month in a row that they have lost workers here. Mediumsize down 21,000 and large over 500. That's where the job gains are. I have a concern anecdotally that this is a potential tariff effect here where small business is being hurt also perhaps at the consumer level. What's going on?

some people are saying is this good news is bad news and the reason you would say it's good news is bad news is because um the reason we need a rate cut is because the labor market is weakening. So if the labor market is strengthening, wouldn't this oppose the ability to get a rate cut? And I don't really think that's the case. This was a good report. This was not a phenomenal report. So what I mean by that is this was not like oh my god we added 500,000 jobs. This is we added 44,000 and as you saw the breakdown right there small businesses less than 50 employees actually lost jobs

and the only businesses that added jobs were businesses above 500 employees and small businesses at the end of the day at the backbone of the country. So if you do have small businesses that are hurting and likely cannot afford the cost of capital because rates are too high. They can't continue to employ people. If that effect continues to compound across the entire country I mean obviously you're going to get a lot more labor market weakness.

So, th this was a good report in the fact that if we had a negative jobs number it would signal that we really need a rate cut. We still really need a rate cut. It's just not as dire of a situation as if we had like negative 500,000 jobs because if that's the case then we have an underlying problem in the economy and rate cuts probably are not even going to solve that because you need a year for rate cuts to even have any level of meaningful impact. So I think it was a good report. It was not the best report, not the worst report, but it was enough of a report, I think, to reinforce this argument that we are going to continue to see a December rate cut.

Okay, earnings. Let's get into it. So, we had a lot of earnings today. First of all, uh let's just real quick do AMD. AMD crushed it in my opinion. I don't think AMD had a bad earnings. We covered it live with Jose Neil. 244. It's down about 2%. Revenue was up 36%. They beat on EPS. The guide was a bit stronger than expected.

They did get questioned on the earnings call on what exactly they can give on terms of details on the guide and they weren't able to really give those details because they're going to have some investor event uh next week. So, they're saving a lot of that information for next week. But overall, 3% beat on EPS, 6% beat on revenue. Revenue is up 36% year-over-year. EPS up 30%. I thought it was a pretty good quarter and I don't think there was anything to be concerned about in the quarter itself.

I don't think anyone who's in AMD should be that upset because your big move, your real Super Bowl happened a month ago when they announced the opening eye partnership. Once that was announced, that really was the move. And if it goes higher, that's great. But if it goes lower, I you can't be that ungrateful given it added, you know, 100 billion of market cap in a month based on that OpenAI partnership and they don't even have any revenue from OpenAI.

Let's start off with uh some of these companies. Lemonade crushed it. They beat by 27% on EPS. EPS is up 46% year-over-year. Revenue is up 42% year-over-year as they beat revenue by 5%. Congratulations to those who have uh Lemonade. Absolutely incredible.

If you take a look at this chart right here, premiums are up 30%, customers are up 24%, and their gross loss ratio is down 11%. They did all of this while operating expenses included growth of just 10% since 2022. So Lemonade absolutely deserves the uh momentum that they're getting right here in the pre-market up 70%.

McDonald's, they missed by 3%. 322 versus 333 expected on EPS and then 7.0 over 7.09 on revenue. Revenue is up 3% year-over-year. EPS is down year overyear. McDonald's stock is actually up. So, I don't I didn't hear everything they said in the call or in guidance, but I think I think the one thing they did say was same store sales are up year-over-year by like 3%. So, it's not like that bad.

Unity, they crushed it as well. 18% they beat 20 cents versus 17 cents expected and then 4.70 versus 453 million expected. They beat by 4%. Revenues up 5% year-over-year. EPS is up 5% year-over-year. Again, another name that just continues to beat on the top and the bottom.

The one stock that got really wrecked yesterday was Axon. And I think this is just because the valuation had too much of a premium focus down 21% right here. These guys sell body cameras primarily at police officers. They missed on EPS by about 20%. And you know, their stock was just trading at a at a pretty aggressive multiple. You can't miss on EPS when it comes to this type of stuff.

Trump has said this would be the worst thing for the history of this country if uh we did not have the tariffs continue to be upheld by the Supreme Court. Here's a little bit of coverage on that and then we'll keep going from there.

The Trump administration is asking the Supreme Court where remember Trump has appointed three of nine members to reverse a ruling from a lower court that found that most of the tariffs are an illegal use of the International Economic Emergency Powers Act. Trump has used that law to impose what he called his fentanyl tariffs, his liberation day tariffs earlier this year.

An estimated $90 billion in tariff revenue hangs on the high court's ruling here. Treasury has said it most likely would have to send that money back this year if the Trump administration is to lose this case. Now remember, the Constitution gives the power to impose tariffs and taxes to Congress. No president before Trump has used this 1977 law to put tariffs in place. But the law does allow a president to quote regulate imports of property owned by a foreign country or foreign national.

Now, the White House says that's enough to allow these tariffs. But the businesses that are suing the administration argue that the power to regulate is not the same as the power to tax and therefore the tariffs should be struck down. We'll see what the court has to say about all this at about 10:00 a.m. this morning. And by the way guys, the companies that are suing the administration here, not the big global conglomerates that you might expect, the two initial cases were brought brought by smaller firms, including two toy manufacturers, a New York wine importer, and a woman's apparel company.

Julian Emanuel says. So, this is uh one of my and this is kind of his projections on how this bull market is turning out and what the long-term trend continues to be in place. as uncomfortable as owning stocks at this valuation has been and frankly we want to see it become uncomfortable once again uh you know you look at the AI story it continues to get better um and the earnings are just incredible so it it what you're saying is basically disregard um some sentiment and stay in for the long haul if you're that type of an investor

Right. Well, so and and if you look at this last couple years of bull market, unlike the late 1990s, which we are all fond of comparing it to, you've had market breath expand the entire time, whereas in the late 90s it was declining for those last couple years. And so to sort of lose that prop the last few weeks is certainly a worry. And and to your point earlier, Tim, is nobody is positioned for a stronger dollar. And when that's the case, you tend to have other pain trades. Bitcoin is certainly uh likely to be one of those.

so his kind of core argument right here is that earnings are strong. you are getting some dollar strength which potentially is taking away some of the value from the other riskon trades that are kind of a hedge against the dollar continuing to get stronger like a bitcoin. I mean look at the dollar right here we're above 100. Every time we've checked this for the past couple months it's been like 97 right? So we are not down 11% for the year as much anymore which could be contributing to why we're seeing some risk on volatility especially in Bitcoin.

In the midst of those macroeconomic concerns around kind of the short-term nature of the volatility with the dollar going up and other trades reacting as a result of the of the Dixie going higher, you have earnings growth. And until we get Nvidia, we're not going to fully understand what the earnings picture looks like. But based on the earnings picture we've seen so far, it just seems like it's hard to fade this market. Evercore even said by 2026 we could be pushing well above 8,000 on the S&P 500 just based on the idea that these companies continue to execute, continue to perform, continue to buy back their stock, continue to overall lift the market as AI becomes the tailbone.

We got ISM folks. Let's bring that in for services. October read on ISM services are strong. 52.4 is a headline. Well above expectations, two and a half points above our last look. Sequentially strong, best since Feb of this year when it came in at a strong 53.5.

Prices paid moving the wrong way. Another reason yields are going up. 70.0. We're expecting 68 69.4 in the rearview mirror. Highest prices paid since October of 22. Three years. If we look at the new orders, also well above expectations, a wild 56.2. That would be the best going all the way back to October of last year. One-year high there. And on the employment front, and we saw ADP better than expected. Nothing terrific. This is pretty solid. 48.2

48.2 still in contraction territory, but better than expected. Better than a 47.2 2 in the rear view mirror and 48.2 would be the best since May when it was in expansion territory the last time at 50.7. So these are solid numbers. We're trading 414 now. That's up a handful of basis points as we're hovering with some of the highest closes since early October.

All right, wake your ass up. Let's get into it. The googs opens up at 278. That's up half a percent on the day. There you go. The googs 278.98. Palanteer goes down again. Paler was at 181 yesterday. Pal right here at 18919. So you got pounder opening red, but it is up from where it was last night. S&P 500 goes red 675 AMD down 2%. SoFi 2959 that's up. Grab right there up half a percent that's at 582.

Lemonade they had a massive earnings. They are up 13%. 13% move on Lemonade getting a big move right there. Unity Unity is up 18. It was up 18, now it's up 11, losing 7%. So, Unity up 11, Lemonade up 14,

There was a headline this morning from China that said that Chinese state governments are uh forcing Chinese companies to use Chinese chips. They kind of don't have a choice because we're not selling them any chips. But the Chinese government is kind of making it a bigger priority to make sure the Huawei's, the 10 cents, the Babas of the world, the JDs continue to use state manufacturer chips, which obviously is not good for Nvidia AMD, but if we weren't going giving them our chips anyway, then I don't know if it's going to have that much of an impact in terms of the perception of the stock.

I think this is, you know, I think I think this is I think the next two weeks are going to be a little bit more choppy consolidation. We're waiting for Nvidia earnings. Like there's not really a catalyst over the next couple weeks outside of the government reopening, which okay, when that happens, sure, that'll be bullish, but like that'll be priced in relatively soon. Um there's no massive earnings outside of Nvidia in a couple of weeks. Every really important earnings has already happened. The elections are over. Democrats clean sweep across the country last night. Mdani is now the mayor of New York. So that volatility of no of not knowing who's going to win, that's done.

if you have an investment thesis and something doesn't change in the investment thesis and you have a three to five year outlook, couple of days of strong volatility is not going to matter. And especially with the M&R, I went over it last night. If you look at a five-year chart, there are significant drawdowns on Ethereum that are very similar to what we experienced over the past couple of days.

And this is part of the game. This is part of investing. And everybody knows what they sign up for when they allocate capital. And when it comes to parent, many people have a lot of gains on it. And seeing a 10 or 15% dump isn't the worst thing in the world. It's actually healthy. And this quarter signal that they are one of the most incredible companies I have ever seen.

I do believe that the fact that Palanteer couldn't make it to 225 or 230 after an absolute crushing quarter that they threw the kitchen sink and everything at it. Nobody really thought that they were going to get above 60%. And they got 63% year-over-year growth. I think we've hit a short-term top. I think it's going to retrace a little bit and then I think it's going to go sideways.

Now, before if you talked to me last year about it, I thought that the metrics were really crazy. this year. I don't think they're really crazy anymore on a forward basis only because I think the rate of revenue growth on a dollar amount is going to increase so much at their margins. I think they could be a 10 billion revenue in 2027 at this point.

Maybe maybe 2028. 2027 2028 I think they'll be a 10 billion revenue company generating four to five billion in free cash flow. And that puts them in a very similar realm to other companies. And if they can get to 15 or 20 billion revenue by, you know, 2031 or so, this is a company that can do 10 billion dollars of free cash flow.