now we see valuations extended.as you mentioned, there are macro risks really being discarded by market participants. in an environment like this especially two weeks before a very tight presidential election i am very -- more cautious than consensus. what i am suggesting to our clients and what affectively i am in my global roadshow, my trips, is to protect your earnings. yes, tech has done phenomenally well and right now it is a great time to be buying options that are relatively inexpensive to protect those earnings, not liquidate, not sell but protect them. sonali: speaking of protection the s&p tray today is fascinating. another down day after a down day yesterday. we had a flurry of earnings as well. even companies that had a fairly promising guides did not seem to really meet the bar for investors. 3m for example rays to their guidance again for the second time under a new ceo. it did not really need expectations. where do we stand today? are valuations too high for earnings? kathryn: you make a good point. i

they say valuations don't go up forever.respond to that >> well, you just had michael on he can tell you valuations the last decade have gone up 12.5% in the nfl over 11% over the last 20 years. that's through pandemics, that's through recessions, that's through global financial crises. what we're finding is that sports has -- there's an interest in sports that is necessary for all the new technologies that are out there, whether they be social media, whether they be streaming, whether they be linear television, for many years and cable. so there needs to be content sports is the content for the world. and we're getting into a position here that where you have globalization and digitization coming together around and into the sports world that the real smart money you're seeing is going to continue this explosion in valuations. >> it's proving to be one of the best returning asset classes ever, especially at the top of the cap table if you will when you're talking about the nfl marc, good catching up with you. we'll see you

let me give you two caveats on valuations.l, and i heard people mention this on the show and if you had a return on equity for the market you get a valuation that's actually below median by historical standards. because of all of the technology in the s&p 500 and those humongous, very large returns on equity, when you look at the index it's actually not that expensive if you adjust for it, so that's caveat number one on valuation. the other one is that the average stock in the world is trading at about 13, take the mscil country world index, equal weighted and look at its p-e, about 13 and that's its long term 30-year average. so the average stock in the world is valued and it's sort of average relative to history. so we are positioned for a market broadening. we talked about how we're long value and we are long international, small cap and we are long emerging markets and that's how we are playing this broadening? >> yeah. why are you long international small caps? >> i'm thinking if there are enough risks on people's minds h

have reasonable valuations. so it's not just buy all midcaps, it's buy selected midcaps. >> how much do tonight's earnings matter for the mid term? we are talking about the most valuable company in the market. it was teetering flipping back and forth with nvidia. apple still has great importance to this market. does it still have as much as it used to? we used to talk about it, as apple goes, so goes the stock market. now i don't think we need to do that anymore, but you tell me. >> maybe the read through is the connection of apple's valuation and the overall market's valuation and how much this market is willing to pay up for growth. apple's trading at about 30.5 times forward earnings which is near its 2021 peak. that would say to us that that's a pretty high bar that they have to deliver. apple's earnings have never been that extraordinary in the last two years. i think the earnings growth is close to about 9% this year. so it really comes down to the valuation and if the results are not received well, maybe

so i agree valuation is a poor timing tool when it comes to the market when valuations are low, there's usually a reason, and those macroeconomic reasons tend to be something that happens investors just don't want to buy into. whether that was the pandemic or the financial crisis and we think a lot bit of a pullback in markets will be healthy, and i think those are going to be bought because a 5% correction here is kind of being expected with all of the volatility that's expected with the election i think people will buy that >> what would cause a 5% correction if i know the economy is good, it doesn't matter as much as i once thought it did being rate cuts, and we seem to be in a pretty good environment all the way around >> sure. i think sentiment could do that and we get a lot of the big tech earnings next week if those disappoint similar to what we've had recently with some of the earnings being good but not good enough, you can just get a little bit of a pullback and then, again, with yields rising higher than everybody is expecting, that really plays into the long-term valuation a

ubs had an interesting note about valuations. we debate this a lot on the desk, whether the market is too expensive or not. they suggest valuations are likely to move higher. at 21.5 times market p/es are 1 1/2 standard deviations above long-term averages. however, the median company is less extremely priced. you can't look necessarily at the overall market multiple and say, well, the market's expensive if it's been driven by seven stocks to get you to the more expensive historical pe multiple that you're complaining about. >> i would completely agree with that assessment. i think you can come at it two different ways. markets are expensive right now because of a small handful of names, and if you strip out the mag 7 and left with the s&p 493, valuations are a lot more reasonable, a lot closer to earth. you can make the argument closer, more structural, the composition has fundamentally shifted. this is not a bank and oil company equity driven market. it is technology driven. you don't buy them for 10 months of earnings, you buy

, and this valuation is at 8.1.ranchises are going to forever be worth whatever anybody is willing to pay for them and they are proving to be somewhat indestructible. >> it's like if you went into a lab and you said we want a noncorrelated asset with trophy asset asset attributes and have the gambling overlay and the league makes sure the ownership gets its share and there's a saeurs deval devalue -- scarcity value. >> you have big-pocketing big tech companies with the broadcasting rights and then you can expand to europe and latin america. >> $8 billion is crazy relative to where the teams used to trade, but $8 billion in the world we exist in now with the amount of wealth it has built-up and what individual companies are worth right now, it seems like a cute little side thing, you know i think all those things feed in that direction, now, when private equity is involved, the economy, the value has been realized and now we are just handing it over into a different structure. we will see? >> i would almost make the

there are questions of valuation. it all comes down to earnings growth. for all of the investment in ai and capex what are they showing in translation to earnings. if you take those announced next week or strip out meta and cleared nvidia, earnings growth expectations are less than 20%. that is still big relative to the index overall. it is its slowest rate of growth at about sick -- in about six quarters. things are changing and the bar is higher as a result. sonali: if the bar is higher how will investors treat the marginal spend? ed: there is just more evidence companies are spending and investing even more. for example, alphabet. it's capex is tracked so closely because it's cloud business is the number three player in the market behind aws and azure. at the same time it's investing in waymo. we just covered that this morning. is it translating to topline growth and bottom-line growth? prior portents show yes. google cloud platform did provide on data. again relative to expectations will it continue to do so? one example. sonali: i want to talk about

the valuation was in line with indian peers such as maruti suzuki.ow, the ipo is significant. it is the first time the korean car maker is listing outside its home country, and for india it's the largest public issue ever at $3.3 billion, and also shows how crucial india is for hyundai. it's the second largest car maker and seller here with a 15% market share. the listing has, in fact, come at a time when car sales have slowed down in india after two years of record highs, but analysts say india will remain a fast growing car market with a rising middle class. hyundai, too, has indicated plans to ramp up capacities and use india also to export more, both electric vehicles and suvs, to other emerging markets. brokerages believe the company did go ambitious on valuations, but as it settles to a more realistic figure, the company holds potential in the world's second largest car market. in australia, employees have the right to ignore their bosses outside working hours thanks to a recent law which enshrines the so—called "right to disconnect." the legis

the latest round takes their valuation to $160 million.et's bring in our tech reporter in hong kong. openai well and truly one of the most valuable startups in the world. annabelle: yeah. you are talking about the top three here, so openai, spacex, the parent company of tiktok, bytedance, an exclusive club. what has happened is we have had another fundraising round and some of the key details, it was led by thrive capital, $1.3 billion, got 6.6 and we are hearing that microsoft contributed $750 million. they have been the biggest backer to date. others include venture, and softbank, there were reports they were looking at handing over $500 million. nothing was announced yesterday, but they typically would not an ounce investor deals. it tells you that the tech industry as a whole is continuing to believe in the power of ai what is ahead. the question is how does openai plan to use such a large cash pile? , the company said is that they are looking to put it toward ai research and scaling up there compute capacity, huge valuation, certainly

the valuation was in line with indian peers such as maruti suzuki.d show, the ipo is significant. it is the first time the korean car maker is listing outside its home country, and for india it's the largest public issue ever at $3.3 billion, and also shows how crucial india is for hyundai. it's the second largest car maker and seller here with a 15% market share. the listing has, in fact, come at a time when car sales have slowed down in india after two years of record highs, but analysts say india will remain a fast growing car market with a rising middle class. hyundai, too, has indicated plans to ramp up capacities and use india also to export more, both electric vehicles and suvs, to other emerging markets. brokerages believe the company did go ambitious on valuations, but as it settles to a more realistic figure, the company holds potential in the world's second largest car market. in australia, employees have the right to ignore their bosses outside working hours thanks to a recent law which enshrines the so—called "right to disconnect." the l

valuation is high because you have really good companies, good growth companies and good balance sheets and a lot of optimism it's not so high where you can't make money going forward. >> but that's -- how much money you can make going forward seems to be a question david kosten was asking that question earlier this week, i'm sure you saw that, over at apollo also asking similar things when you have stocks this expensive expect muted returns in the years ahead. >> if you go out five and ten years mid single digits makes more sense, more like growth like -- eps growth-like returns with some multiple compression, but, again, if you go back to 1999, you are looking at multiples in the high 20s, growth rates that didn't exist you did not grow earnings for a number of years. i don't think that's true going forward. as we're looking at growth rates, they actually look pretty good for '25. >> mid cap growth, got a lot of play this week and that's where you think a lot of risk reward is. >> yes. >> why >> good valuation, it's at a discount to the market, the technicals they've been -- they've u

this is based on valuation.ur prior mutual stance was centered around valuation but now we appreciate the company is expensive for a reason. then they continue, there are still levers to be pulled in the ads-free basis while the ads tier has been de risked, in direct to the downgrade. they say, consensus margins also could prove to be conservative in 2025 and 2026 based on incremental margins over the last few quarters. i like this. overall they see, quote, we see multiple scenarios to positive earnings revisions. good news. piper likes the upcoming slate. if you are curious, i was for the upcoming slate. what do we have? emily in paris, loves that one. coming out in september. jay paul versus mike tyson boxing match scheduled for november. the netflix games taking place at christmas. season two of "squid games" out in december. the arrival of wwe raw program starting next year. i can't wait for the nfl games at christmas and "squid games" season two. that's it from the list. don't take it from me. the piper san

i think valuations feel a little full for the here and now. when i fast forward into 2025 and run my valuation numbers and we bake in more fed cuts, get ten-year yields down more, our modeling suggests you can get to a 23 times trailing pe. if you use my earnings, that gets you to 6200 on the s&p. 6500 if you bake in consensus earnings. i still feel reasonably constructive over a longer period of time, but right now, we feel like we're where we deserve to be and sentiment is a little stretched. >> you think it could be a little tactically messy between now and the end of the year as the election takes center stage? >> that's a perfect way to put it. i tell people, we can't live in the tails and maybe i'm a little too guilty of doing that right now, but we do think there's a lot of uncertainty related to this election. one thing i hear from investors is what if we don't have a resolution sooner rather than later? not saying it has to be decided the next morning, but there are some concerns about what awaits us on the other side. if you even loo

we have not utilized valuation.to add to the position we established in oracle is due to the fact that microsoft is now looking to have more competition in oracle. i think there is room in this. a.i. has been the theme since 2 2023. right here, right now, we will see what the partnership looks like if they are going into the data base in texas. if that is the case, there is another 25% higher in the stock just like nvidia has run. i don't think it is that far out of context with the market cap of the company when you compare to nvidia. >> when you say valuation is out the window, it is hard to go back and forth with you on this one, jeff. another wicpick for you. tesla. the robotaxi event. >> i heard about it. >> you may have seen a few things online. do you have con fidence that eln musk will meet all expectations? >> i think there is always a question mark. as a tesla investor, he promised the robotaxis would be out in a year in 2017. here we are in 2024. i do get excited about the unveiling. the tesla vans would

sarah: ai valuations are lofty, multiples above valuations of other sectors.ing in the ai space needs capitalization and investment, a theme that we believe in, but it's important to partner with the best gps out there. separating the signals from the noise is everything. not all ai companies will be winners. lisa: how optimistic are the investors that you speak with now? do they want to take risk and go into these areas or are they feeling nervous? sarah: public markets portfolios continue to be strong even with today's selloff. that is keeping investment programs overall pretty healthy. liquidity is a challenge. we are seeing some institutions that we work with for the first time ever having zero distributions from their private markets program in the last quarter. if that continues, that could cause problems, but right now institutions are not in dire straits. the private markets market value stays elevated which means we don't need to commit as much to get to our target private market allocation because it is not coming out of the portfolio. we are seeing

should look like. >> on the other hand you've got nvidia where you do understand the valuation.g it, mike >> well, yeah. i mean, so on the valuation on open a.i., the number that was getting bantered about is under 160 billion and it is believable it could be worth that or a higher number? i think so some of the rivals' opportunities -- that's not really a public markets conversation i wasn't crazy about the reported comments sam aldman was making that he only wanted people to invest and back them alone and not their rivals that seems look a dangerous situation to have only one supported a.i. company nvidia at the moment still has the demand for their products. and, you know, if there's going to be support for companies like open a.i. and their rivals, that means there's going to be continued demand for the products that essentially are doing all the churning on this so, that supports vst, by the way, which you were talking about earlier. >> that also sounds like, you know, this is almost like buying an etf when you own nvidia, they're going to own pieces of all of these a.i. co

valuations are 40% higher than other verticals.h larger. $6.6 billion is not a typical deal these company should expect anytime soon or ever. it is when you talk about the trajectory of the dollars going into the u.s. for the global venture market, that needs to be taken into account. caroline: if you are not ai native or ai adopting and you have a decent run rate in terms of revenue, do we need more exits to see the money come back in? kyle: exits are still the dam of venture activity. we know there has been very little for the past two years. even the ipo's of q1 and q2 were not able to sustain the venture market. we take how long the limit has grown and consider all of that is stuck private and lps have no way to use that cash for more investments or to recycle it back into venture. you can start to see why there is such a slow market over the past few quarters and something we should expect for the coming quarters. caroline: i'll stanford, we thank you. let's get more analysis from the horses mouth. lux capital partner joins us

it's a valuation call.rward earnings, 8% free cash flow yield and a lot more free cash flow to come. the stock is too cheap i think the market's going to feel hopefully a little bit better about their -- product after this call. we met with the company pretty recently and felt better about the prospects. the stock is too cheap here for the franchise it is. >> up next is ecolab, the water treatment and systems company reporting results before the bell on tuesday. the stock is on a tear of nearly 30% in 2024, but down 3% in the past week. you say it's perhaps worth holding the shares for now >> yeah, absolutely. we've been fortunate to own this for clients for a long time. we really like the company they're well positioned in essentially cleaning and sanitizing products for a wide array of industries. they had a little bit of a reset last quarter, so i think expectations are much better heading into this quarter. and they still have ample room for organic growth and margin improvement. we like this company go

a couple arguments have been made on that note that just given where the valuation of the market is, that you're going to have a problem with really good returns for the next handful of years perhaps. >> i don't buy the valuation argument on its own but i do buy the idea that in order to see a step change in valuations from here you would need to see potentially a new catalyst for activity so what is that new catalyst for activity after we've seen a lot of capital intensity around the ai trade already i think the answer to that at least in part is that we're seeing the broadening of that trade into energy and infrastructure and utilities and i think we will see the further broadening of that real productivity inducer into the corporate application phase this have technology. i think there is an opportunity for let's call it average equity returns over the next three to five years that's a good outcome, it's just going to feel very different from the only tech driven much more than average equity gains of the last couple of years. >> are you concerned at all where valuations are i ask

we struggle a little bit more with valuation. i recognize malcolm's point. large growth in the magnificent 7 is pretty significant. priced for perfection. there are other areas whether it's the s&p 493, midcaps, small caps where you're seeing the acceleration in earnings and you're not paying much for it in large cap group, in the magnificent 7 where there will be a slowdown. there will be areas to go where you're not overpaying. good and improving fundamentals driven by whether it's the yield curve steepening, whether it's ai expanding out from nvidia and helping other companies or whether it's reshoring, bringing back manufacturing to the u.s. there are a lot of positive tail winds happening in the economy. you have to be aware of where valuation is and try to go to areas that maybe haven't priced in such a perfect outcome. >> i feel like, mike, maybe one of the principle lessons of this bull market we'll look back on and say that valuation will prove to be that one thing that some look to overplay, that it made people uneasy on the way up at several times

>> but it is the valuation conversation of am i using valuation as the guide or to north star of where the price is ultimately going to be in a year, and i am comfortable for the premium on it, and i get that it the valuation is elevated and those who are value oriented are more focused on maybe disney or warner brother, but good luck with disney, and i gave the statistic with over the last ten years, it is up 13.9%, and i will pay 32 times on netflix, and get the growth. >> you own it, too, jason and the targets are limited upside ahead for the variety of the reasons that i just mentioned. >> yeah. so a couple of things. obviously, the subscriber growth is going to slow, to your point, moderate this year of 4 million subs, and net new additions and doing 8 million last quarter. part of it is that they are monetizing, and they monetize the existing base from the password sharing which is going to monetize some, and leverage some, and you make a big point about the two major games in december, but that is just the beginning. >> it is not for free. >> they can't afford it. >> and netflix

i wouldn't worry about the valuation. people are only going to worry about it when they miss on subscribers and the stock is trading down 10% or so. but right now, it's probably just fine. i don't think you buy it here for, you know, the technical reasons that steve mentioned, some of the reasons that guy mentioned and karen's a little worried about, i think that's going to encapsulate a lot of investor opinion. >> they've got the jake paul/mike tyson fight and two nfl games on christmas day. how do you know that? >> it's in the letter, so, i have to -- >> if you have to pick something, i mean, we talked about it before the show, latin america was actually churn, and until they have some content that makes people want to turn it back on -- >> right. >> that was down, though that is a much less valuable customer than the u.s. >> did you see the revenue on the chart that we just put up? so, to dan's point, you have the paid membership kind of rolling over, you have revenue kind of rolling over. so, these are things that hap

i will not comment on the valuation. arm is well-positioned.ys been about blueprints for chip design. energy efficiency has always been the secret sauce. when you get to the edge of ai with apple intelligence and autonomous car's, that gets to be important. the graphcore acquisition is a signal. the company is being explicit that arm intends to be a challenge to nvidia in terms of their dominance in data centers. there is a lot of that going on. my own view of ai, i spend time with senior advisors and what they have avoided getting into, the lm's, what they are seeing is ai focused on their portfolio and the implications for deploying ai. jensen wong talked about it in his last earnings release. air ducts and a 30% reduction in service cost. that stuff is real. ed: they were in early in nvidia softbank but they got out early. 500 million dollars in openai may not be big. you said they will make their next big bet. how do you know he will time it right and that in the end, whatever happens, he will be part of the conversation? alok: the track re

about which stock truly lives up to it valuation hype.e coming right back. nasdaq is still kind of the worst performer here. we've got it down about 2.25% if or 459 points. ♪ ♪ meet the traveling trio. the thrill seeker. the soul searcher. and - ahoy! it's the explorer! each helping to protect their money with chase. woah, a lost card isn't keeping this thrill seeker down. lost her card, not the vibe. the soul searcher, is finding his identity, and helping to protect it. hey! oh yeah, the explorer! she's looking to dive deeper... all while chase looks out for her. because these friends have chase. alerts that help check. tools that help protect. one bank that puts you in control. chase. make more of what's yours. the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai. leo! [whistling] ever since we introduced him to the far

what we know about the pricing and valuation? manuel: an interesting one.s on fire, it's such a booming market. hyundai is just the latest and biggest ipo to come to market. we just saw the news on the price range. that translates to about $22. the valuation will be $19 billion. this will be the largest ever ipo in india. it will be very important to watch closely as it will be a bellwether for other ipo's in the pipeline. definitely one to watch closely the left -- the next couple of weeks. trading should start october 22, that's the schedule as of now. the books will open to receive orders in the coming days as well. definitely one to watch and one that is keeping us busy. haslinda: you said euphoria in the indian market, what are the next steps from here? manuel: the next steps starting next week, books will open and they will get bids from investors and start lining up anchor investors. we understand based on reporting that there is already steady demand from a mix of international and local institutional investors. the usual suspects. those are lining

help us understand how you read the valuation.n analyzed sales. you're someone that sees the big picture. that's part of what you talk to us about often, with some other companies. does this number make sense? should it make sense does it matter $520 million valuation at the start of the year. >> for perplexity, this one's a little bit tougher for me, because the valuation, to me, it's what's the cost to play in this larry ellison said it's $100 billion to be kind of a large language model, that's what you need to raise, so, you look at the $6 billion at openai, you need to be raising in chunks of billions, not millions and understand that it's a big raise for a private company that's moving quickly, but they're going to get acquired. they just -- they're just up against too many other big guns here to try to get to those coveted four, five spots of the llm landscape. >> it was interesting it says it makes the economics to go from horrible or even worse so, having to pay for content, does that just make the smaller players go away

the story, unlike google and meta, it's about valuation. just a question of what you want to do here. the azure growth is excellent. if you think about where we've gone over the last three quarters in terms of where that was something that was a big concern, you're now picking up the pace. i think the numbers are fine. i think there's less to be excited about, though the street seems to be pretty happy with what's going on here. >> yeah. karen? >> well, i want to hear the call, right? you always want to hear the call, because you can get so much more color than sometimes you get g tfrom the release. but i thought productivity was good, as well. i want to hear about that. but again, it's just a question of, what do you want to pay for that? i feel like it's a little rich. >> probably more expensive. >> but still -- >> yeah, if i'm doing the math, it's probably trading maybe 29 1/2 times next year's numbers now, at this current price point. obviously it's not traded great since july, but we're right back against levels that we previously got

we're at the top decile of valuation levels. now if we have a soft landing and double-digit earnings continue, those valuations probably stay where they are or go higher, but i'm not sure it's quite that simple. in the last four weeks, charles you probably know, 43% of earnings estimate changes were up. 57% were down, so despite all the good news, people are reviesing numbers a little bit in the wrong direction. charles: and you also write too about sentiment in your report. now, the bank of america, their global manager sentiment gauge, really now here the bullishness is at the highest level since you go back to 2020, and so is that also a red flag for you? >> it's at least a yellow flag. short-term, the momentum is driving the market, but when sentiment gets this strong, you wonder whose left to sell a stock and is the buying exhausting itself, so we'll get a pullback at some point in time. we usually do when sentiment gets as strong as you know charles. charles: reading your report, bob, it seemed like there was more, it feel

the other thing is that valuations are high. if you look towards big tech and nvidia you could make an argument that valuations are high. but outsides of tech and -- consumer and real estate staples come to mind. small and big caps look attractive especially in a rate cutting environment. sonali: i am glad you brought up the consumer. you brought up staples in particular. it is action really the discretionary -- actually the discretionary trade. you saw a significant bid into the stocks but it has been a choppy trade. how risky is it to get into the discretionary sector at this point? callie: discretionary is tricky and i want to cap yacht this with i hope that the fed is able to apply the right touch to everything so more cyclical sectors can perform better. consumer discretionary is tricky. it includes amazon and tesla which are consumer discretionary stocks but not the retailers that one thinks about when they consider this being more of a retailer focused sector. consumer discretionary relies on a consumer that has a flexibl

most sub models like this trade at high valuations.on suffered the last number of years because they thought they would be bigger. maturities have come sooner than expected. they had a cost base that was based on the only thing that matters is revenue because wall street values us on price to sales. there's a lot of cost-cutting for peloton to do. peloton probably needs to spend more time on the peloton. if they do that, the margins will improve and the stock is inexpensive relative to other submodel type of companies. they will get a new ceo. in the worst case, if they are not able to turn around, there are a number of larger companies that would be interested in owning this. >> i want you to weigh in, as we speak now, tesla came out with earnings in the last 24 hours. the stock is up 19%. you have been short before. wondering what you think at this valuation? whether you would go short again? david: we don't comment on short positions anymore. we stopped doing that a few years ago. sonali: can you speak to the valuation? david: i'm n

. >> brent, do you find that we're getting to a valuation time period with these names, or are we still just focused on ai? because google could be considered cheap, nvidia could be expensive but are we not there yet is it still ai-centric >> we're not you look at nvidia and microsoft trading at 30 times earnings, these are not dot com, internet, cloud -- palantir is trading at 30 times revenue, nvidia and microsoft are trading at 30 times earnings so i don't believe we've hit this bubble. second, there's no mass, rip-roaring ipo market we're not seeing that. we're not seeing huge multiples. my entire industry, which is mainly software, the multiples have only compressed, and gone into energy, gone into financials we've seen actually at our desk more money moving out of tech into other sectors, given the rip we've had in semis so i don't think we are in a bubble from what we can tell across multiple fronts we don't see it yet. the question -- and you guys raised it earlier, capex every investor we meet with globally are like, when are all these dollars -- how do i know we're getting a r

seema: valuations we know are very stretched.last 20 years, using valuations to drive your positioning would have been a horrible mistake. we have to keep that in the back of our mind. when we come to elections, you don't see much of a sustained market impact unless you get major changes to fiscal policy, major changes to regulation. from our perspective, we are not sure there are going to be sweeping changes from the election. you are seeing a lot of volatility to the run-up and may be the weeks and months after start to fade out. from an investor standpoint, it is important to take a step back and try to look through the next couple months of the election, the labor market data which the fed has said is compromised and start to think about what are the fundamental aspects of the economy? ? the clear thing we continue to see is household balance sheets are pretty strong. there is likely a slowdown coming through but corporate balance sheets are in strong shape. even if there is something about the economy which is weakening, it

jason: my gut check is that valuations are stretched. markets do things we don't expect all the time, but if i look at the valuations and i look at what in my opinion is a best case scenario playing out in terms of expectations on future earnings, it is tough to see these levels go materially higher without breakouts. that said, we have had that. we may see that moving forward, but i would take it back again to making sure, regardless of what happens -- look under the hood of the portfolio. i sure you are not overweighted in any individual names or one particular sector. caroline: what about the macro picture? if you are thinking about anyone sector, it has been impossible not to be overweight and to be heavily weighted toward technology because of the valuations of technologies. how do you rebalance when you are thinking about what interest rates are up to? jason: when we are rebalancing, we want to -- i think investors have gotten away from that a lot over the last year or two, and that is part of the reason why we have probably seen t

if you look at the valuation of the market cap, $750 billion.e struggle to value the business at 150 billion. you are getting $600 billion of valuation subscribed to the autonomous vehicles and robots is a lot of value for a lot of execution al risks and not a lot of valuation for safety on the margin side. >> our digital team is fully across the story ahead of the u.s. open. head to the cnbc web site for more details. >>> let's give you a look at how europe is trading right now as we track into the trading day. first into your heat map. major markets are in positive territory on the whole here. the stoxx 600 at 519. still on track to close out a volatile week with the bias to the down side. autos had been leading declines. markets also turning cautious ahead of the critical policy briefing from china set to take place tomorrow. here is a deeper dive across the markets with the specific focus on the uk after monthly gdp data out today. we saw 0.2% increase in august. markets seemed to be taking it in stride. this coming after we saw stagnation i

looking at its estimated valuation which was $157 billion.he question is how does openai plan to use this cash given they have got that power to be working through. they will be putting it toward ai research and adding to view capacity. it is certainly transfixing a lot of people in silicon valley. tom: it is a huge ticket number. to some extent it is indicative of the continued demand for exposure to some of the leading names in the genai space, but does the valuation cause anyone concerns? are there any eyebrows being raised about the skyhigh valuations? annabelle: there are some people who continue to pour cold water over the ai height, and it is the use case. we have yet to see a real-world breakthrough application for ai technology and see something that comes into the mainstream, it is a rate that is done well is an interview bloomberg did with the renowned m.i.t. professor, and basically he is saying at a time when you have got a high stocks that are outpacing the broader market and you have got every single industry looking at job des

so, a lot could change in this valuation, as well as his wealth.ll be fun to watch, frank. >> really interesting. while you were doing this, i was thinking what's the second most profitable business venture. but i'm not going to put you on the spot. great to see you. reminder on election, cnbc will be live all night long, bring you reactions from the biggest names in the market. starts 7:00 p.m. eastern time from the new york stock exchange. we'll have live coverage from the overnight hours midnight to 5:00 a.m., me, brian sullivan and contessa brewer. looking at the asian and european action. and then "squawk box" picked up that coverage at 5:00 a.m. eastern. it's getting an early start. full night of election day coverage. next day, "squawk box" has the highlights and reaction as well. >>> coming up on "worldwide exchange," one week that will likely have an impact on your portfolio, including a fed decision, torsten slok is going to weigh in next. >>> also, we're looking at shares of d.r. horton, they're coming off the biggest daily drop in nearl

dan's right, where did this come from i don't know i don't like tesla here, because i think the valuation is something that i really can't get behind >> let's get more with "fast money" friend gene munster gene, you heard the conversation here where did it come from and to tim's point in terms of lumpiness, this looked like a great quarter, but we have no idea what next quarter is going to be. and that's sort of the roller coaster ride, i guess, that investors have to just expect. >> i want to put a little bit of context on next quarter, that they did give some guidance related to what the revenue is going to look like they said that they expect deliveries for 2024 to be up slightly that basically implies 10% growth for the december quarter for deliveries the street was at 0.5, so, call it 1% growth so, their outlook for december was a surprise i was expecting the profitability to be below the street i was not expecting that to move up so, as somebody who is optimistic about this, this caught me by surprise, kind of the strength in these numbers. i do want to highlight an important point

it is valuation that gets hit when long-term bond yields start to rise, and so are valuations cheap? 22ish forward looking guidance on elevated earnings doesn't seem cheap to me, but until -- so, it's a question. now, will the fed's -- is what is keeping multiples high, the expectation of significant rate cuts, or is it something else? and that will be seen. >> andy, thank you. always great to speak with you. a andy kconstan of damp spring. the other part of that, the whole sort of thinking about valuations, where they are now, is, if you believe that ten-year yields are rising, we've seen this before, so, it could be that the markets have sort of digested this and accepted this level of rates, have become -- >> these aren't long-term rates where the ten-year is is where it belongs, i don't know. >> yeah, so, maybe valuations are fine where they are in light of that? >> well, the optimists, and the bulls will say, maybe correctly, by the way, that rates are going higher because the economy is on steady footing. the employment rate probably sits around 4.2, 4.3 for awhile. and rates c

but valuations are notoriously bad indicator of one year forward returns.take that off the table and think about momentum and think about catalysts, more negative catalysts than positive catalysts. >> how are you thinking about volatility coming into the election and beyond? we're at 20 now on the vix how should we look at that >> we get a lot of questions from clients on this point we have a standard playbook with volatility you buy the s&p when the vix gets to 27 or 35 27 is a good buy signal. 35 is a great buy signal going back to 2022, if you bought the vix every time it got to 35, your one-month average return was 6.5%. so, for a trade, if you get volatility to really spike, which is entirely possible, we're looking for the vix at 27 and 35 and then at 35, especially it's very safe to buy the market for a trade it's going to feel awful at the time, obviously. but that's what the volatility and stock market returns always does >> nick, thank you >>> up next, we track the biggest movers into this friday close. steve kovach is back with us for that steve?

the valuation is nowhere near a stretch. basically we were talking about its 90 fifth historical percentile. europe is in there, they are long-term average at the moment, suggesting european returns could be long-term average over the next decade. the warning is that european return on equities, strong as it is in the u.s., is weak. we have recently downgraded earnings growth over the next year for europe. we only expect 3% to 4% over the next couple of years and we don't expect re-rating either. it's only going up 3%, 4%, giving you low returns, really. lisa: right now in the united states we are talking about pricing in a trump trade in the equity market and bond market. maybe that is part of the reason yields have risen in the united states and may be part of the reason we have seen that performance in the financials. is the trump trade getting priced in for european equities? sharon: this is a great question. i do think it is a trump trade, putting yields up globally in the u.s., you are starting to see it priced into ce

you actually have valuation and now that momentum.really good to us technically. >> these stocks, you know, most of them, certainly the tech names, are up more than 30%. that's a lot obviously you make the suggestion this is just getting started >> it really is. i know it's such a human instinct to say how can i buy because they're up x, but all the work we've done, there's no relationship between a short-term move of any consequence and a need to mean revert i think it's people's primal fears that will hold them back from making a lot of money here. we can pull back, consolidate, have a 10% consolidation i think it's a gift, frankly, if you get that we're going to be aggressive not only adding to those positions but putting leverage onto that >> the problem some have with this trade alludes to the idea of a lack of trust it's like stan druckenmiller the other day suggesting, i have no interest as long as xi jinping is running the country how do i deal with that stimulus versus trust you put those both on a scale, i'm not sure which o

it's just to me just, you know, it's a victim of its own success, the valuation is just too high.uarter wasn't bad, i mean, it wasn't as good as people hoped but it wasn't bad. >> no pun intended but we are in the digestion portion of the trade with cmg. >> do you know what we have not said all night. >> burrito blowout. i might say it on my way home tonight. right now, no. to karen's point, 6% comp is great but go back a look and look at what the comps were compared to what the street is looking for and then you saw the growth. not so much now. margins have been not decelerating but not as robust as they were which suggests the company is getting mature. it happens but where do you buy the stock not where you sell it. it's had a runoff of 49 to current levels, maybe it gets down to 54.5 or 55 and you buy it. >> 98% of the stores are here. that premium at valuation, yes, it was a brian niccol premium and that one you will see starbucks and those two compared for the foreseeable future, but it's still a growth company. i think you're paying for international growth. >> another afte

but valuation multiples are not cheap. i would like to see earnings kind of catch up a little bit here. i am sticking with 5800 by the end of the year. that's not to say we could not get to 6000, 6100 in the next few weeks, but i think it will correct from that kind of level. i think we are looking at 6300 next year. by the end of the decade, a conservative target is 8000, so i think we have a decade where we have a bull market. mark: what is the thing that most concerns you about being wrong and changing your view? i was slower than you to get on the idea about the u.s. bull market enthusiasm that you got on in late 2022. i have been very bullish this year. i am getting to the stage where valuations are stretched and there has been a tailwind of activity, also a fiscal tailwind. the issue that concerns me is the bond vigilantes enforce a little bit of school conservatism, so we lose the fiscal tailwind before the ai transforms productivity even further again, and at these valuations that might become a headwind, especiall

. >> there's a valuation play out there, is there not? it looks like we could see compelling valuations coming through, and on top of that, policy makers have said more stimulus is on the way, so is this a buying opportunity? >> time will tell whether it is a buying opportunity. i think the first point that you made, you know, there's a degree of volatility here. when this kind of volatility comes to a market, it does tend to stick around. there may well be a valuation opportunity. it's less cheap than it was a few weeks ago. as i say, time will tell. but one thing investors should probably be aware of is this kind of volatility when it comes, tends to stick around for a little while. >> okay. fair point. let's shift over to the united states. one of the other interesting things we've been watching is the 10-year. i'm curious what you think the strategy is going to be moving forward? >> i think when it comes to u.s. equities, there's a different story, and there is, of course, a connection between the yield, the rate environmental, and va

the valuation of openai, 1$57 billion.the round a source telling cnbc it was led by thrive capital. including participation from existing backer microsoft as well as nvidia, softbank and others >>> let's check the futures this morning. still red. not quite as low for the dow now, down by 130 points. the s&p futures off by 12. the nasdaq down by 46. over to dom chu, he's got a look at this morning's premarket movers what is dragging things down today, dom >> let's start with a look at levi strauss the denim and apparel company is down roughly 11%, now 12% premarket after reporting better than expected profits and weaker than expected revenues levis kept the full year profit guidance and cutting its revenue guidance to the low end of the previous range the company is going to look into selling its dockers khakis brand, a drag on some of the performance. so levi strauss down 12% and then red hot china stocks as of late, some of the biggest and well known names are cooling off this morning alibaba, jd olympiad com, nio off 3%

taylor: i want to talk about technology in valuation, there is an incredible chart showing after openai latest funding they just pulled in $6.6 billion funded not that values them at $157 billion they are worth more than some of the other major big caps and there's certainly worth more than the big caps in the mag seven that were alive during the.com bubble, do you get worried about big tech valuation. >> there is no question about it and when you look at openai i think what people are looking at this is the last best ipo that is coming out is this the one that is absolute game changer the one we have to have new what is happening a confluence of a lot of money on the sideline a lot of money and private equity right now still willing to throw money at big tech, there is no question about it but then you look at this and say this has been in the making for a while, there are firms out there in venture capital that says we have got to have that, yes, i am concerned about the valuations and i think what we have seen happen over the last several months the last six months with the likes of

so it's not necessarily a valuation thing or a quarter thing.e fact yoit's had the ru it's had. >> it's the only group in industrials that's had both positive revisions and attractive valuations. we've been interested. i checked in with our data science guys and they track all these travel related metrics. they said it's kind of boring right now. things are pretty steady state in terms of flight searches so maybe there's still questions about the consumers, business demand, but i think they're interesting. >> boeing announcing it could raise as much as $25 billion in shares over the next three years to strengthen its balance sheet, it would also reach a credit agreement with lenders as it continues to grapple with production strike and regulatory issues. shares down more than 40% this year. they've still got a massive debt problem, but at least this gets them to live another day. >> it's interesting because it would be easy to say that the market had priced this in and this was a small relief and at least for the short time takes the credit rati

with the expectation rate cuts justify the valuations.n you get the rate cuts, how much upside is there to the stocks from there? >> you think a lot of it is just in the market. what areas of the market do you like? because when you sat down and said you're kind of uncomfortably the bear out of the group thus far on the show, it's not like i don't like anything, but what do you like? >> yes. well, we tend to have more of a barbell approach to our portfolio where you have the steady compounding ballast positions. reasonably priced, not as cyclical, and then cyclical opportunities. so on the kind of more ballast side, we continue to like the telecommunications companies. i don't think many people are aware that actually you have had two of the major wireless carriers in the u.s., their stock is up around 30% this year. like, massively up from the market, but they're still quite cheap. >> they did underperform prior to that, didn't they? >> but the whole point is what has been the opportunity for this year and what's the opportunity from her

the valuation gap opened up a taking timebomb. on daybreak europe we will feature start ups, it's an investment bank backing these companies and faculty ai, that coming up later this week, across the show. stay with us. the summit where energy and finance and technology converge kicks up with guests using the qr code, you can scan it now and tune in for that virtually or in person. stay with us, this is bloomberg. ♪ tom: happy tuesday. soft right now in a just tech stocks in hong kong. rotation into mainland markets after golden week. benchmark close to 11% of, the last time i checked you were up 4% and you had been up for nine days prior to the holiday and now you are back. in drc did not deliver in the fiscal support. we look to the state council, worth noting dater came through in mainland china in terms of travel and shopping and consumption, a bit of a lift to sales but the gays we saw have come off. more trepidation when it comes to the chinese market. disappointment around measures from china, iron ore, middle east politics