On today's episode of Market Domination, Hosts Julie Hyman and Josh Lipton break down some of the biggest stories from the trading day, from fresh labor...
break down some of the biggest stories from the trading day, from fresh labor market data to the state of the streaming wars .
And by the way has been for some time, one of the data points out this morning, the GDP revisions, I thought they were really meaningful. And for the most part, the revisions were upward, there was a lot of economists talking about these numbers today.And also the decline in jobless claims was, it was interesting, Julie, I did see, you know, different economist strategist, some who, you know, been on the show.
So if you look at first time claims in isolation, it really doesn't look like there's anything wrong with this labor market whatsoever.Earlier this week, we got a report of the conference board uh that ha have some indicators that directly tie to the labor market that are, that are also telling us something about September and that data weakened pretty precipitously.
And when that happens, you have an economy that tends to be growing below trend or below the growth rate of potential and it's very unlikely that, that kind of a thing plays out, uh, in just sort of studies at, you know, at, at a level that we think is, is, is healthy and consistent with the soft landing.Uh, but, you know, we're 8/10 of a percentage point off the trough on the unemployment rate, you know, and we're still at a historically low level here in the, in the low fours.
I think a hard look at the data, uh, really leaves more questions there than answers, but, you know, obviously hope springs eternal. So this move higher over the last two years is, is essentially valuation driven, driven and we've reset to where we were in late 21 early 22. Bain and company report on the spending that's expected for A I, but I'm curious how you're thinking about the fundamentals versus the stock action in that particular group.So for the Infotech Index, we've doubled, uh the S and P 500 Infotech Index has doubled over the last 24 months and earnings have been better than the overall S and P but they're up about 20%.A lot of excitement and optimism over A I and the spend out that's going on.
Typically, uh things start to tip over a bit and that could be happening with some of these stocks that have been leading the S and P 500 you know, five or six names in two sectors now uh account for 40% of the market cap.So, you know, it is a healthy thing to see some of some of the other sectors do a little bit better here.Um We've liked the more defensive areas So I'm happy to report that the utilities are the number two sector year to date.
That a prosecutor at the US Attorney's office in San Francisco asked for information, the journal saying that appears to be connected to a former employee who, as you mentioned, uh Julie accused the company of accounting violations that that former employer filed a whistle blower lawsuit. But I think that's a really interesting point about there are not that many players, they are very large.
Uh So between the three, there's just actually a lot of demand and, and those three will interact over the coming years as well. I actually think it allows people to find new and higher value activities, but there, there'll be dislocations along the way. And as we've got into it with our clients, we've found that it's not just a technology deployment, you could give out uh a copilot or a coding assistant program to all of your employees and it could have almost no value whatsoever uh to get it right.In other words, to get value out of this, you you have to have people doing their work in a different way.All the things that you have to do to sort of get value out of.
So that means that if you've got that mortgage, that's over 7% you know, you may be in the money to refinance now. That means affordability is still a challenge and that's going to suppress new construction activity.Did you like Lauren speaking that, I mean, you obviously election year politicians, you know, are aware this is an issue for a lot of Americans.It's very hard to say that a policy prescription can fix a market that is imbalanced.So we see population flows moving across the country really some markets are very hot.
But I want to switch gears and talk about the prices they may be paying on things that they're buying every day. Lauren, as you noted, I mean, obviously upended during COVID um supply chains have bounced back though generally they look healthy, they look resilient, they do. And of course, remember tying it back to the discussion, we were just having this is gonna come on the same day that there might be a port strike being announced.
The session on Yahoo finance is trending tickers page shares of China stocks jumping again today after some of the country's top political leaders said they're pledging to shore up the country's economy. I saw, I just saw Co Bob Jordan quote in reports saying uh details by Southwest have been in the works for a long period of time longer.Let's also talk about Wells Fargo because those shares have been rising today after the bank reportedly sent the Federal Reserve a third party review of its risk and control overhauls.In other words, it could only grow so much.
In other words, they say Jamie Diamond has basically added nearly an entire Wells Fargo to his balance sheet. Uh Some of the India business coming off of the PNL, probably not quarter, but primarily it's about the launch of the ESPN Direct to Consumer service.And this is the same ESPN that you get on pay TV.Well, at least since Disney Plus launched five years ago.
We think though that um by putting his over the top, there's a like a very likely chance that cord cutting will accelerate by our calculations, cord cutting uh means about 8.5% of consumers are dropping pay TV every year.8.5% is probably gonna, you know, go to maybe like 15 or so percent once ESPN direct to consumer hits the market over the subsequent quarters.
I think the train has left the station a long time ago and I think consumers are looking to streaming as really their primary means of gaining TV. Uh, the, the funny irony of this is they've done well well, news and sports are keeping people on the bundle. So maybe by that time, Disney is in a more stable spot and it might be a good time for him to step down.
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