jett r jethro, what's your final play >> avaya holdings. they have a partnership with ring central >> jon najarian? >> jd, we bought that during the show today upside calls. >> good stuff. love that. see you all tomorrow "the exchange" is now. thank you, scott hi, everyone here's what's ahead this hour. will they or won't they? the dow briefly went negative after speaker pelosi said no skinny deal for the airlines this after the president called talks productive we will have the latest on these market moves plus, banking bonanza. morgan stanley, earnings next week we'll look best how to play the financials. mcdonald's blowing past expectations, hiking its dividend we'll speak with the u.s. president ahead. dom chu has the latest for

us. >> markets right now at the highs of the session the s&p 500, 3442 the last level, up 23 points. at the highs of the day we were up 25. hovering around there. 3375 is a level you want to watch. that's the average price of the stock market and the s&p 500 over the last 50 days. nasdaq up 0.50%. one of the big trades we've been watching, energy, the bounce back there energy stockings, the bounce back there yes, they've been beaten up all kinds of way so far in 2020. wti crude at these levels is running into a little area of resistance at $41.22 this could be a price that stalls out a little bit. we'll see if you can push through. remember, we have that big storm brewing in the gulf of mexico, hurricane delta, so crude prices still in focus there you mentioned the bonanza of a deals in financial services. eaton vance up 48%, $60.67

morgan stanley will buy them for $7 billion in cash and stock get this, kelly, morgan stanley already a huge, a massive wealth management player will now have in a combined company in its investment management division 1$1.2 trillion, with a "t," in assets under management and revenues per year of $5 billion. it's going to create a big, big player i know you'll be talking about that and much more later on in the show back over to you >> yep, really looking forward to digging into that more. again, if you're eaton vance shareholders, you woke up with your head exploding. dom, thank you very much we appreciate it let's get to the latest developments on covid relief house speaker nancy pelosi saying a short while ago there will not be a stand-alone airline bill without a broader covid relief bill. >> kelly, as they say in washington, nothing is agreed

until everything is agreed to. today house speaker nancy pelosi says there will be no aid for the airlines unless there is a broader deal in place that guarantees help for state and local governments and includes a commitment to crushing the virus. as for the other things president trump said he wanted, including extending ppe and direct checks, not going to happen, she said >> this is deadly serious, so let's take a serious, not a skinny, not emaciated, but a serious, appropriate approach to crushing the virus and then talk about some of the other good things that would flow from that >> reporter: now, beyond the house, the idea of a stand-alone bill for the airlines was also facing some turbulence in the senate this morning two key republicans, senator pat toomey of pennsylvania, and senator mike lee of utah, they raised

concerns about helping the airlines but not restaurants, hotels or the entertainment sector and they also argued that any aid to the airlines should be structured as long-term, low-interest loans rather than as grants. kelly, all of these developments are seeming to quash any lingering hopes for relief in washington before the election back over to you >> it was already looking pretty unlikely after all that happened this week. this back and forth is emphasizing how crucial a role washington will play into next year for the markets goldman out with a note today looking at the impact of different election scenarios on the s&p 500. they're suggesting a split congress could lead to a 10% move to the upside by year end and 9% jump by the middle of 2021 a democratic sweep, they say, would blunt this year's rally, but it would provide a 12% increase next year what about a contested election? if we don't know what happens come november 3rd, goldman says that's the worst outcome for the

s&p, dropping to 3,100 here to talk markets, neil hennessey from hennessey funds and terri spath from sierra mutual funds neil, i'll start with you because you're good at distilling the signal from the noise. what's the message you're coming away with here >> you have to be thematic in other words, look at the overall market there's a lot of potential, a lot of value in the market you can look at the nasdaq that's up 25%, 28% in reality is only up 11% if you take out apple and google and amazon and microsoft and even, worse than that, only up 8% if you put in facebook and tesla. so, when i talk about themes, i'm looking at -- forget the noise, forget about the stimulus bill, forget about the elections. there are still things happening out there. the biggest thing that's happening out there, kelly, is cities are getting crushed

nobody wants to be in new york or san francisco or chicago. it's too expensive if i'm going to work from home, why do i want to be in an expensive area i can move out of town when you think about thematics, you start to think about housing, appliances and beer those three things are going to do well in this environment. >> that's been the thesis of yours for a while. we talk about beer, crown holdings that's the beverage maker, kb homes, whirlpool these speak to what you see as the bigger trend despite the political noise. ter terri, let me turn to you with the same question. what would be your advice given all these different outcomes goldman is laying out for the results of the election? how would you have people focus? >> right so, i totally agree there's a lot of noise out there in the markets right now. it's hard to avoid that. as a result, because there's

some bifurcated outcomes that specifically will come with the election, stocks and other risk-on assets are in this purgatory place between now and then not heaven, not hell just sort of bouncing around based on the latest headline and the latest, you know, nonsense that's coming out of washington, d.c. so, i think that investors, you know, need to be really careful about the risk but also recognize the tails have gotten a lot fatter the things that are going to work, will work really well. the things that are not are not going to work very well. so we're looking for a barbell approach in how to play this market between now and the end of the year. >> and i know that even includes looking at emerging markets, like korea, for instance there's a lot of fed speak we just heard from eric, he said it's tragic more fiscal stimulus has not been provided so far the fed has to assume it won't

be coming but he said there's a need to extend the payroll protection plan. for an investor, how important is another round of covid relief from washington? >> i'm not sure it's really all that important from the standpoint that businesses are getting their legs underneath themselves as the economy opens up a little bit. yes, there are sectors that are hurting, like real estate, hotel, travel, airline but in the big picture, you know, when you look at companies, they're focused on making money long term so, a little restructure, they'll figure something out even if a stimulus bill doesn't come through probably one of the worst things was, it doesn't really matter what you think good or bad, but there was a lot of regulations and rules that were put in under president obama's administration that should have curbed business but did not. they figured out a way to do it. i think the same thing is going to happen here, kelley, be it a

stimulus bill that's free money or not. >> terri, quick final word i mentioned korea is one area you like anything else under the radar? >> yeah, there is. i disagree that we don't need fiscal stimulus. the fed has been extremely accommodative, but in the recession, interest rate sensitive things like housing, like real estate, those were the areas that were the big problems that low interest rates could help that's not the case. low interest rates don't create jobs in the travel sector, for instance, so i think stimulus is very important how to close it up, how to play, emerging market equities, like korea, how they've been managing the economic crisis, and we also think treasury bonds make a lot of sense rates will not just be longer for longer, they'll be lower forever. we think that barbell strategies allows you to cushion your

upside and downside. >> appreciate it, guys thank you very much today. dow hanging on to a 79-point gain after fluctuating all morning. regeneron requesting emergency use approval for antibiotic taken by the president it follows eli lilly's similar move a day ago meg terrell with the latest on the covid treatments. >> this is incredibly fast move for emergency use authorization. we had just seen the first data from lilly and regeneron last tuesday. dr. fauci was just on with andrea mitchell and she asked how well these drugs look to work >> monoclonal antibodies, which the president did receive, are in clinical trials and the data are being accumulated. they look quite favorable. whether they get an emergency

use authorization will depend upon an analysis of the data by the fda scientists >> now, if the fda does give that authorization, there are a few issues with these drugs. one, they won't be super easy to take thaiven given by iv administration another challenge is the supply of them is going to be pretty limited at the beginning the companies have told us, from regeneron, they'll have 50,000 doses. that's enough to treat 50,000 people available niche initially, hoping to get that up to 300,000 lilly says 100,000 doses will be available. the companies and doctors will have to make decisions as to who should get these drugs the trials were run in recently diagnosed patients they should be prioritized by age, underlying conditions, basically their risk of severe disease.

in trials they're still being tested on those at risk from high exposure. >> what would you say is the main difference between the lilly treatment yesterday and the regeneron one today? >> the big difference is regeneron is a cocktail of two antibodies the initial treatment from lilly is a single antibody they have a combo they presented data on yesterday that looks strong that's the main difference as of now. single antibody versus double. with the two antibodies you do have a bit stronger data >> interesting meg, thank you for the latest on the covid treatment, regeneron's in particular today. coming up, it's big macs and big celebs they see big sales as the travis scott promotion drew in sales. we'll talk to the president about that. home builder stocks have surged as builders can't keep up with demand.

jpmorgan says the rally is far from over. the analyst behind that call joins us back in a couple

erlinger, the president of mcdonalds's. thank you for being here. >> thank you very much it's a pleasure being on. >> well, congrats on the sales numbers for the quarter. very strong as we mentioned. we know promotions like the travis scott meal and spicy nuggets helped to bring in new consumers. how sticky are those new customers and do you think they'll stick with the company once these promotions run out?

>> thanks for the question i know everyone wants to focus on the travis scott deal and spicy chicken mcnuggets which definitely contributed to the fantastic september we had, but the setup for this great quarter actually started much earlier in the year i think as you know, our drive-throughs have been getting faster at mcdonald's we made a lot of investments in digital and drive-through and delivery as well really we made a lot of changes to our business model as the pandemic set upon us over 50 changes in operations. we limited our menu. we made our restaurants easier to run and i think all of that also at the same time, we conserved some markets funds. when we began to unleash those markets funds in the third quarter and that set up this great result, 4.6% double digit comps in september >> also breakfast, as we all know, has been a challenge not just for mcdonald's but the

industry at large because everyone's routines are kind of disrupted because of the pandemic you had positive comps throughout all day parts you also introduced new breakfast items very recently. would you say breakfast is back at mcdonald's? >> also when we entered the pandemic, we had reversed what was a long-term trend of negative guest count i know it's been lost in the results and what happened in the pandemic, but in january and february we actually had positive comps at breakfast and positive guest counts. it goes without saying, we don't sell the spicy mcnuggets or travis scott meal at breakfast, so we are very optimistic about the day part we're excited about the bakery launch that will take place later this month and we've got a real built-in advantage on this because of our drive-throughs and because of our overall convenience factor so, yeah, i like the characterization yes, breakfast is back at mcdonald's >> also, franchisees were in a

strong cash position heading into the pandemic. what would you say is their biggest headwind moving forward in the despite these results it's just a challenging time in the industry what's their biggest challenge looking out ahead, joe >> yeah. they did come into this in a position of absolute strength. 2019 was the highest cash flow ever for our franchisees and i think some of the steps we took through the pandemic, both to support them in terms of their liquidity, and also to make the operations of the restaurant easier. we actually improved margins at the restaurant level as well so, they're actually coming out of the worst of the pandemic in a very good position, very strong financial position. the mood amongst our franchisees was strong i was in restaurants in washington state last week ago last week i was actually in washington, d.c. there's a lot of optimism and confident as we enter the fourth quarter. >> great we're going to leave it there. we really appreciate your time today.

thanks for being here. >> thank you >> kelly, back to you. >> kate, thank you for bringing that to us again, pretty remarkable comeback by mcdonald's in the u.s. and globally given what's going on with this pandemic. coming up, the big bank deal of the day morgan stanley is acquiring eaton vance a year after buying e-trade. what is this telling us about the future of the banking sector we have answers and how to play it ahead. nancy pelosi saying there will be no stand-alone airline bill we'll talk to the problem solvers who remain optimistic. doug parker joins cnbc as pelosi was speaking earlier. here's what he told our phil lebeau >> we support a larger bill, we think that makes sense for the economy, of course that's where we're headed. but what we know is that can't happen before the election that's going to have a seriously detrimental impact on our ability to continue to provide

essential service to the country to hp ce t telitomouofhis coronavirus pandemic

welcome back to "the exchange." let's get a check of markets the dow briefly gave up all of its gains. it was up 155 points at session high went down to gain of 16 after secretary pelosi said she wasn't going to move forward on a skinny bill for airlines speaker pelosi, i should say now we're kind of treading

water. the dow is up 67 points, a quarter percent. the laggard. the s&p is actually leading the way today, which you rarely see. it's up about 19 points right now. 0.6% let's check on the sectors and get a feel for where we're seeing more strength it's energy up 2.25% you heard dom talking about the price of oil earlier on. utiliti utilities, real estate up there. and financials are up. and here are some other movers ibm is higher by about 7% last check on news of the company will spin off i. tmplgt. infrastructure the sector enabling ibm to structure cloud. and shares of domino's pizza are lower despite quarterly sales that surged more than 17% during the pandemic but they also face higher costs, which hit earnings it has been one of the best performers giving up 6.5%.

shares of coty sharply higher on expansion news of its kylie skin beauty line in the uk, france, germany and australia. the shares up 11%. still they're under $4 the battle over covid relief continues with both sides digging in president trump pushing for a stand-alone airline rescue bill but house speaker pelosi saying there's no stand-alone aid without a package. the problem solvers caucus, which helped jump start stimulus talks a few weeks ago remains optimistic joining me on the co-chairs of the caucus, josh gottheimer and tom reed congressman gottheimer, let me start with you why no skinny bill on airlines >> i think you need to take, i agree with the speaker, a more

comprehensive approach who are you going to leave out restaurant workers airline workers? what about the other small businesses the only way to get this done, and i think we were really close. we just have to get everyone back to the table, is look at this the same way we've been looking at this. help small businesses, help families get through a tough time, help our small towns and local governments who are struggling so, the deal is -- there's a deal, but as you know, it's very hard when you startbreaking it up into small pieces because then you'll leave certain people out and leave others out. >> congressman reed, is there a dollar figure for you for a combined bill that would be too high as i understand it, there's some pushback among some republicans who face maybe not an election this year in the senate but in a couple of years, who think the size of spending, the amount of it could come back to haunt them is there a range you're comfortable with here? >> as we put in the problem solvers caucus, a bill built from the bottom-up, what is needed to get us through the

foreseeable future into march. if you do that, the number takes care of itself i've heard a number potentially being discussed of $1.7 trillion i think that's in the zone our problem solvers caucus was at $1.5 trillion that was based on evidence and data i'm letting the ed and data drive the bill i know they're very close. they are so close. if they would just listen to each other, i think we could get a deal done here for the american people and take care of not just one industry, but millions of americans as well as hns of tos of employees that are threatened with layoffs if we do nothing. >> congressman, i'm going to ask you a question that sets you up for an easy one, but how close was a deal before the president's tweet the other day and how close are we now the analysts we've been speaking to this week say there's no chance anything gets done now before the election. what would you say >> it's certainly a lot harder

than it was a couple days ago before the president's tweet and i think, you know, tom and i aren't in the room, of course, but we're talking a lot to our leadership on both sides and to the white house and to all the parties. i know they were really, really close. i really want to thank them for staying in the room and not walking away on the american people as you know, any deal to get done, you have some ups and downs but you have to stay in the room right now i believe the deal is still there to be had. i don't think there's a -- if you ask had my opinion, we just have to get back to the table. we're trying to help and do anything we can because the idea that you would walk away until february, until the next inauguration and leave all these families and communities and leave them out is, frankly, unconscionable and the economy can't handle it and our families can't handle it, not to mention all the testing that needs to be done as we head into the flu season and face spikes of the vies are. we don't give up

stay at the table. calling everyone to get back and we're going to keep pushing. >> i don't - >> sure, go ahead. go ahead, congressman reed >> i don't look at the president's tweet as devastating as many other people do. i think it's throwing out the last and best offers from both sides in black and white to be put on the table maybe that's what needed to be done it's time to put the best offers forward. if you do that, it is very close in regards to a deal that can be -- that can be hatched here that means the american people win. let's just do that, stay in the room, exchange that final paper, work out the legislative text. i'll tell you f you do that, i think the daylight will see this deal through to the finish line. >> but, congressman reed - >> i understand -- >> aren't going to be back in person for a couple of weeks go ahead. >> it's going to take time to do the legislative process. the senate will be in session

taking care of the supreme court nomination what you could envision is the senate takes it up, gets it it through and the house can do it with unanimous consent or 24 hours notice is all it takes to get us back there, sign the bill into law we can get this done the mechanics of the legislative process, if we have the will and the agreement, i believe -- i know we can get this done for the american people. >> all right you guys got those talks restarted just a couple of weeks ago. so, maybe giving a little of a glimmer of hope now. again, appreciate you both joining me today thank you so much. congressman josh gottheimer and congressman reed of the problem solvers caucus. still ahead, financials finding footing as we head into a big week of earning for the sector we'll debate which names should be in your portfolio ahead of those results. the analyst that says the recent home builder rally is just getting started. how can that be?

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welcome back to "the exchange," everybody let's get to the deal of the

day. morgan stanley will buy eaton vance for $7 billion in cash and stock. eaton shares are up 48%. it's part of morgan's push into the more insulated business of investment management. this comes as investors are starting to see signs of life in financials, which have gained 7% over the past two weeks. the year has still been a slog for the sector but we're above the 52-week lows here to break it down, steve biggar from argus. good to have you both here steve, i'm going to start with you on morgan in particular. you like this deal and what does it do for morgan stanley >> hi, kelly i do like this deal. i think morgan stanley has transformed its business to be much more balance sheet light and really more towards the fee based wealth management. it's -- so it's just been a much more stable mix of business. and all else equal, it should

result in a higher multiple for the company to get -- have that more volatile trading and underwriting segment become less and less so, this does that it pushes the health management and those businesses towards close to 60% of revenues on a pro forma basis. i like that as a business mix much better. >> wow anton, where would you position morgan stanley among some of the other banks? as i understand it, wells fargo would be one of your picks morgan has been a pretty good performer relatively speaking. is this going from strength to strength do they have a less compelling valuation? how would you rank the big banks at this point? >> we do own both wells fargo and morgan stanley we think it's a great use of morgan stanley's excess capital, increases their return on equity again, diversifies the revenue stream, so i think it deserves a higher multiple.

wells fargo is a self-help story. we just believe two things will happen over time one, they will get out from underneath the fed they have been working for years to get underneath that asset cap and earnings will go up substantially when they can grow their balance sheet. two, they publicly talked about a very large amount of cost cuts i mean, as much as $10 billion that's not in anybody's earning estimate i think that kind of a self-help story is kind of appealing >> anton, i read one analyst's take this morning that said morgan stanley can basically buy them for free because they have excess capital i don't know if you want to dig into that but we have earning season coming next week. what are your expectations and why do you think they have been up recently? is it rates? rates are a knee-jerk. but i think a lot of the heavy lifting is behind the banks. they did a lot of reserve building in the first and second quarter. they have a new accounting

standard that's very conservative in terms of life of loan lost. and those estimates in terms of economic inputs are going to be very, very different looking certainly much more positive you know, record gdp for this last quarter versus coming out of the second quarter where you didn't know what was going on. i do expect much better numbers than people expect morgan has been an amazing tailwind for the financial institutions as well. >> steve, your picks as well if morgan stanley continues to go in the wealth management direction, do you expect rivals like goldman to follow suit, or are they carving out a niche of their own? >> they've been larabsent from large acquisition for a while, goldman. and moving into consumers like buying portfolios and partners with some in the credit card space. it's a bit of a different strategy historically the banks had been more kind of tied at the hip with respect to the prospects

and largely that would ebb and flow with capital markets but each is carving out their own niche, it would seem to me, with the type of acquisitions they're doing. >> yep steve, you think the election is a risk for the banks or a catalyst or does it depend on the outcome? >> i think it is a risk in some aspect you know, over the last six months the banks have really had a perfect storm of rock bottom interest rates, which has really killed lending margins you've got a lot of concern about credit quality given the high unemployment rates and business and foreclosures and the like of course, the fed has put a hold on dividend increases and buyback, so it's removed a big catalyst for bank stocks the election -- of course, the pendulum has swung very much in favor of banks over the last three years really under the trump administration with respect to the vogu voekle and

think the pendulum under the biden administration could tip back the other way and become more of a headwind so, that's -- i do think that is a risk here. >> we'll dig more into it as we start to get those results next week and see what the election brings for now, thank you both. appreciate it today. by the way, morgan stanley's ceo james gorman will appear on a first interview on "closing bell." let's get to sue herera for a cnbc news update. very busy news day michigan's attorney general has charged seven men associated with the militia group for allegedly plotting to target law enforcement and attack the capitol building

basically they are facing a number of key charges. they could face life in prison at this point. the biden campaign is rejecting the trump campaign's proposal to hold a third debate on october 29th. one week later than originally scheduled. he says it is ready to debate on october 22nd, a date apparently also agreed to by the president's campaign no word yet from the debate commission on what it wants to do in new jersey, new daily covid cases have more than doubled in 24 hours to more than 1,300. that is the most since may the governor says many positive tests are being traced back to reopen schools. senate majority leader mitch mcconnell says he has not been to the white house since early august because its approach to preventing covid is, quote, different from mine, end quote but he says he talks to the president a lot on the phone you are up to date

i'll see you in an hour. back to you. >> sue, thank you very much. still ahead here, shares of powellty homes are up more than a percent and jpmorgan says the stock has more room to run we'll talk to the analyst behind that bullish call. why work from home could add stress to uni bonds but add value to others. taking its coul

impact the beleaguered uni bond market even more here to join me is tom cazlet. i want to dig into this concept of how work from home might hurt certain parts of the muni bond market dh ones in particular? >> let me be clear on the work

from home concept. the first thing is, i'm seeing all the polling and data and results that are saying there are all kinds of people who like to -- they like working from home i think in the near term, there will be companies who allow folks to work from home. i think it's going to be more of a temporary situation, temporary meeting, something that could last for the next one to five years. as you alluded to, i think in the near term there could be some situations where state governments, local governments, other entities relying on things like wage taxes or commuter taxes, there could be some budget gaps that are going to need to be filled as a result. >> yeah. i know you're going to get to who you think are beneficiaries, but i want to stay on this for a moment because the next one to five years could be a very difficult period depending on what relief does or doesn't come from congress. which parts of the muni markets

are most vulnerable? >> i wouldn't necessarily say i'm telling folks to necessarily stay away from certain situations or certain entities but i think some of the larger entities on the coasts and the accommodation of california and new york, some of the larger cities on the coast are going to be impacted negatively i think some of the beneficiaries could be some of the midsized cities where a combination of corporate headquarters and other folks might move there as a result >> i mean, it's so difficult to know where we're going to be in five years you know, if you're right and we're all going back to work, that's one thing, ail though there clearly has been a charge in the distribution of the population is clearly changed. on the other hand, if even a fraction of people, a significant fraction, continue to work from home or work elsewhere, that would seem to have a big impact. so, how do you think that's going to affect things down the road >> yeah, i think that there are -- one of the things that's happening is that a lot of the

trends that we saw are occurring already are just being accelerated. i think one of the big changes we've seen in this time period versus 20 years ago after 9/11 when folks started to move out of, you know, say the new york city area, technology is a lot better now and that's one of the reasons why i think that people believe that in the -- not only in the next couple of years but even in the medium and long term, they believe they're going to be able to do their jobs, you know, for the next five or ten or 20 years remotely well, i think what's going to end up happening is after companies allow workers to feel safe, when things get -- when we finally get on the other side of this, i think that individual workers and companies are going to remember and/or realize that one of the big reasons we jam ourselves into cities is because of the concept of human capital. and the concept of human capital creating relationships, i think

those are some of the things that are going to be very important going forward. >> it's going to be a tug of war. don't tell my friends who just bought houses far out who are counting on work from home for a little while with their young kids, we'll leave it there, thank you. tom kozlik from hilltop. coming up with housing and tight supply, would-be buyers are turning to builders and they're having a hard time keeping up with the demand we'll hear from one such builder xtne

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welcome back with housing in tight supply, home builder can't build new homes fast enough. diana olick has the story for us housing is still hot and supply just continues to plummet, even for new construction like this and that has home builders in a sweat. >> all of a sudden people just said i've got to upgrade my home and they came -- the flood gates kind of opened >> reporter: when the pandemic struck the u.s. last march,

builders like mark reuben feld in mid atlantic told us they just shut down they build about 20 miles outside d.c. construction was deemed essential but they didn't want to put up a bunch of houses no one wanted that was a mistake >> it's really hard to keep up every time we release lots, they're snapped up >> a house is no longer just a house, it's a gym, an office, a school, a movie theater. for a lot of people, that means either an upgrade or move to another area this community has already surpassed full-year sales projections and as much as any builder would love that, reuben dl reubenfeld said there's plenty of headaches >> obtaining permits are slower because folks are working from

home we've been raising prices every two weeks and this is in line t attempt to keep up with lumber increas increases. >> lumor is up over 100% due to the pandemic and western wildfires. that's adding about $16,000 to the cost of the average home and the labor shortage is only getting worse. >> this demand, we don't see a finish line on it any time soon. >> now, some builders say they're slowing production again now so they don't get caught building so much when production costs are think high >> that's amazing. raising prices every two weeks i'm tweeting that out, diana thank you very much, diana olick. >> they just keep coming >> let's talk a little bit more about this as we look at the etf that tracks the home builders, the xhb hitting an all-time height tonight check out some of the moves off of the lows as well.

puelte group and others are up 200% on average than they were in the spring. michael of jpmorgan, you think these stocks still have room to run. start with pulte how much >> good afternoon. we put out a sector update report in which we rolled out our 2021 price targets and updated our numbers. simply put we do think there as a lot more room to run here. and, you know, it's not only because of the fact that you have a very strong fundamental backdrop, low rates, tight supply, affordability is good and we can list another five factors, but we also see a lot of historical precedent when you look back and you understand that we're just right now after 13 years of single family starts

being under 1 million, which is unprecedented and in the past prior 40 years it only happened seven years in a row and we're just getting back to that long-terp oflong long-term average, we think there's plenty of room for the market to continue to recover. when we look at the builder fundamentals themselves, you had several consecutive years last cycle where the builder were putting up solid double-digit order growth, very strong margin expanse aion and several years f outperformance >> you have pulte overweight as well nbr you do have downgrades can you tell me about those and why? >> so looking at the group, the group generally does trade together and with our updated price argtargets, we have an 27 upside as of yesterday the ratings we take a more relative approach within the

group and focus on relative valuation against the relative fundamental profiles we downgraded maritage, more in line with the group, therefore a neutral rating still 20% up side but it trades a the a good valuation premium to its smaller cap peers that premium is reasonable, but it does result in a more of an in-line up side potential. we also have an underweight on toll brothers having a nice premium valuation to its larger cap peers despite below average and returns outlook. >> as you explained, you think pulte could be another trend that runs another 15 months. what about the valuation this is one of the most loved sectors of the market. is it high by historical levels? >> for pulte specifically, we

find it particularly attractive. we added it to our analyst focus list this morning and as of yesterday an up side potential of 39% currently as of yesterday was trading at only 7.5 times our forward numbers against its larger cap peers at over nine times yet also having the best margins and returns in the larger cap space, rureturns outside of nbr that is in terms of the valuation for the group overall, actually it's trading right in line with the past cycle at this point in time in the cycle on a relative basis. so currently it's trading roughly at half of the market multiple and in the last three years, it been in a range of .4 to .6, right in line with the range it traded in the first half of the 2000 decade.

>> yeah. as well as they've done, it still not screaming that it's overvalued thank you for joining me, appreciate it. michael rehaut of jpmorgan that does it for "the exchange." sick around for "power lunch." i will join tyler mathisen after this quick break my name is henry. working within amazon transportation services, i really saw the challenge of climate change. we want to be sustainable, but when you have a truck covering over 300 miles, or you have flights going hundreds of miles, it's a bit more challenging. we are letting the data guide us to the best solution. it's inspiring to try to solve a problem that no one else has solved. that's super exciting.

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. good afternoon, everybody. welcome to "power lunch. here what's on tap, folks. stocks are modestly higher, shaking off another ugly jobless claims number this morning and uncertainty around the world about what's happening with the stimulus negotiations. on off? skinny bundle? what we'll bring you up to date on that plus harley davidson going, what else, hog wild, jumping after a top analyst adds the name to his best idea list after what has been a rocky ride for harley stock. that analyst will join us. and later former google executiv