SOTS 2nd Hour: Presidential Election Edition 11/5/24

Sara Eisen (0:07)

Good Tuesday morning, happy election day. Welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. Live as always from Post 9 of the New York Stock Exchange. Take a look at stocks they are gaining this morning. The S&P up 8 tenths of 1%, so we've got a nice rally going on. Nasdaq up a full percent, so it is tech driven, and the Dow's up 200 points. Take a look at Treasuries as well. They've been moving in anticipation of this election. The 10-year yield is a little bit firmer today, so Treasuries are selling off 4.3% as your yield on your 10-year, so still elevated and continues to creep higher since we got that last Fed meeting. Remember, there's a Fed meeting on Thursday as well, and a decision expected, the Fed expected to cut rates by 25 basis points this week. We're 30 minutes into the trading session. Here are three big movers we're watching. Shares of Palantir soaring after reporting a top and bottom line beat, raised guidance as well. CEO Alex Karp writing in the release, quote, We absolutely eviscerated this quarter driven by unrelenting AI demand that won't slow down. Stocks up 20.2 percent. It was also already one of the best performing S&P stocks of the year. Dollar Tree CEO abruptly stepping down overnight citing health challenges, though the company did reiterate its third quarter forecast, shares higher following the news. And then we're watching shares of DJT, of course, surging today. Now at more than 130 percent over the last one month as voting around the country gets underway. This has been one of the key Trump trades.

Carl Quintanilla (1:37)

One of the key numbers of the week is ISM Services. Let's get to Rick Santelli. Hi Rick.

Rick Santelli (1:42)

Hi Carl indeed. You see the equity markets? They're on their highs from yesterday in the Dow and rates are moving higher. As I speak, ISM Services, the PMIs are a bit better than expected in certain metrics. If you look at the service index itself, 56.0, higher sequentially than 54.9, almost 3 points higher than expected, best level since April of 22 Now, if you look at prices paid, it's moving down. That's a good thing. 59.4 last month, 58.1, and even though it's only the lowest level since August of this year, it is moving in the right direction. If you look at services employment, 53.0, much better than expected. It pops up over 50 Last month it was 48.1. That's the best since August of 23 And if we look at the new orders component, 57.4, this one's sequentially lower, and that's not a good thing like prices paid. 57.4 follows 59.4, and it's the weakest, well, just since basically a month ago at August of this year. Yields did move up on some of the strength we saw, and with regard to prices paid, we did make a bit of progress. If you summarize today, maybe the most important issue that we have in front of us is that we continue to see yields, as Sara pointed out, on the firm side. Currently, the high intraday move of late in 10s was on Jobs Friday at 438 We're about four basis points away from that. And remember, that close was the highest close since the first couple days of July. Don't forget, one o'clock Eastern, 42 billion 10s hit the public in an auction, second leg of 125 billion of coupon supply. Sara, it's all yours.

Sara Eisen (3:32)

Okay, thank you. We'll look for demand indications from you on that later this afternoon, Rick. Thank you very much. So on this election day, people vote on the economy, right? So decided to make a map of unemployment, just basically how the jobs market looks in swing states. We picked the seven swing states that will determine the election. To compare September 2024 unemployment rates versus January 2020, to see who's in better shape and who's in worse shape. So two outliers, Michigan, higher unemployment than where it was, four and a half percent, that's elevated. Nevada too, I would just call out, 5.6 percent unemployment rate. So that's worse than the 4.2 percent unemployment rate. Most everybody else is either in the same spot like North Carolina, Georgia, or better. Wisconsin has a low unemployment rate, and so does Pennsylvania relative to the rest of the country, which the average now is 4.1 percent unemployment. Obviously, it matters where your county is, where your industry is, and how you feel, but that's the snapshot. The other key economic indicator that people are feeling and paying attention to is inflation. So how do the battleground states fare on inflation then versus now? I would say mostly lower, especially in places like Arizona, where latest inflation rate drops down to 1.2 percent. There's Georgia below 2 percent. This is compared to January 2020, where we had inflation rates starting to move up. Nevada also, pretty good. If you look at North Carolina, Pennsylvania, and Wisconsin, that's where there's a little bit higher inflation rates, but just in general versus the rest of the country. But still, not in a bad spot to compare to where they were. What this doesn't capture necessarily, though, guys, is the cumulative impact. The change in prices that we all feel at the grocery store. For instance, more people are buying private label groceries instead of the brands because they're cheaper. Because the prices are 20-30 percent higher on the grocery aisle than where we were in 2020, and that certainly takes a toll. The only other chart that I wanted to mention today, because we're all talking about tariffs and there's a lot of threats of tariffs, especially on the Trump side.