Market Recap: Thursday, Nov. 4

Loreen Gilbert, WealthWise Financial CEO, and Lamar Villere, Portfolio Manager, Villere & Co, join Yahoo Finance to break down Thursday's market action.

Video Transcript

SEANA SMITH: Well, two minutes here until the closing bell. We have Loreen Gilbert, WealthWise Financial CEO, and Lamar Villere, portfolio manager at Villere & Company.

Take a look at where things stand. The Dow off just around 60 points. S&P and NASDAQ, though, holding on to gains. You could see the NASDAQ the outperformer in today's action, up just around 7/10 of a percent.

Lamar, I'll start with you. When you take a look at the recent action that we've seen, S&P and NASDAQ both registering record intraday highs today. We could see record closes here at the bell. How does this set us up going into the end of the year?

LAMAR VILLERE: It's going to be tough to keep this momentum going. You know, especially these mega cap-- some of these mega-cap names that are really driving the index returns have just been on a tear for the whole year. So we think, particularly on the mega-cap side, it's going to be a challenge holding up these kind of returns. We wouldn't be surprised to see a pullback.

SEANA SMITH: And, Loreen, how about you?

LOREEN GILBERT: Well, I think what we've seen this year are fits and starts between growth and value in that large-cap arena, and where we've seen it take over is on the value side, mid-cap and small-cap value but not large-cap value.

So what we expect is a continued movement towards value where there is more value than in the growth names, especially given even recently, you know, talk about this global minimum tax. That's going to impact your large-cap technology companies significantly. So there might be now this shift over to value.

SEANA SMITH: All right, let's take a look at where things are because we have 30 minutes-- 30 seconds here, excuse me, until we do get that closing bell. Dow still off just around 50 points. The worst performers in the Dow today, Dow Inc. That stock off just over 3%. We're also looking at losses from Goldman and Verizon. NASDAQ and S&P, though, holding on to gains today.

In terms of the sector action, leadership there coming from consumer discretionary and technology. The laggard is financials.

[BELL RINGING]

ADAM SHAPIRO: All right, put a fork in it. The trading day is done. One more to go this week, and let's see where we are going to settle. The Dow is going to be off, but it's off session lows. It's going to close down about 32 points. S&P 500 will close up almost 20 points, and we've got the NASDAQ settling up 128 points.

Let's get back to the guests to talk about several things that investors are keeping an eye on. And, Loreen, [AUDIO OUT] ask you about this, because we had Kevin Brady on yesterday. And he was talking about this global minimum tax, the corporate, you know, 15% tax. What do you think of that? Because he says it wouldn't prevent the inversions that we saw a few years ago as companies would race to get out of our tax code to other countries.

LOREEN GILBERT: Well, I think the intention is to avoid the inversions and to keep companies from doing that. And so it really set the stage before, in the US, we look at potentially raising corporate taxes as well. And so, you know, it's still yet to see.

And what I'll say about this global minimum tax, it's going to take many years for companies to actually enact that, and there are quite a few exemptions in play. So we'll see who the winners and losers are, but it's not really going to impact the stocks necessarily right away because it's going to take a while for this to actually be in motion.

SEANA SMITH: Lamar, I guess what's your take on that just in terms of how the market-- how do you think the market is looking at the potential for this?

LAMAR VILLERE: I don't think it's going to move the market one way or the other, to be honest. We expect-- you know, obviously it looks like the G20 countries are going along with this. You know, we're more focused, really, on US stocks. That's kind of where we think is the better place to play. So the bulk of our companies are based here and do most of their-- or generate most of their revenues here in the US, so that's kind of where we're focused.

ADAM SHAPIRO: Lamar, you're also focused on Caesars Entertainment. What is it you like about that stock? I thought some of the gambling and gaming stocks were taking a hit.

LAMAR VILLERE: Sure, and Caesars did pull back today, which we think is a great opportunity.

You know, the nice thing about Caesars is unlike DraftKings, which is pushing into the online space, Caesars is doing the same thing very aggressively. They're spending a billion dollars in the next two years to grow in there.

Unlike those guys, Caesars is profitable. They've got a great bricks-and-mortar business. They don't have any experience to Macau, so they don't have those risks with what's going on in China. We think it's a great, profitable business that's deploying its huge cash-flow stream into the next growth engine, which is the online space.

And at the same time, we think it's got a great management team that really does a good job of generating great margins. So we think with the growth in online gaming and such, it's a great place to be.

SEANA SMITH: Loreen, we're looking at record highs today at a time when inflation, supply-chain disruptions still remains on investors' radars. I guess how long do you expect these problems or challenges to persist, and how are you adjusting your strategy as a result?

LOREEN GILBERT: Well, we're listening to earnings calls to hear how companies are responding. What can they do with regards to supply-chain issues, and what are they doing with price increases? And most of that's pushing it to the consumer.

What I would say on the supply-chain issues is it's not really a short-term issue. We see it as an intermediate-term issue. It probably will take a few years for things to moderate.

And in the meantime, the consumer can get somewhat weary as far as price increases. And what we saw today, unit labor costs going up. Wages probably a big part of that, wages going up.

So we still do have these issues in the system that are going to take a while to see through, but we do think that we will get through this even with a little bit of a slowdown now and then a pickup later on.

ADAM SHAPIRO: Lamar, you're a little bit more concerned than some people about inflation. And just pointing out today, at least the sector, consumer discretionary, was up 1 and 1/2%. So it doesn't seem as if, you know, Wall Street's worried about consumers being able to spend. What should we consider? Because you are worried about it.

LAMAR VILLERE: We are worried about it, and it's one of the key drivers, we think, right now in the market. One of the things we're doing is we took a position in Freeport-McMoRan, which is the largest copper miner in the world. You know, that way we own the commodity, the underlying commodity. We're not as concerned with the rise in copper prices.

You know, you had the guy from-- the gentleman on from cars.com talking about the uptick in EVs. We're not quite ready to say that Tesla is the big-- you know, Tesla is the huge leader, but given where that stock's trading, we think a more interesting place to participate is in Freeport-McMoRan where you're paying a much more reasonable price. They just paid down $5 billion of debt in the last year and announced a $3 billion share buyback. You've got 140 pounds of copper going into every electric vehicle plus the need to upgrade the electric network. We think there's huge demand drivers.

So we think there's ways to make inflation actually be your friend or at least make your portfolio inflation resistant. So it's not-- it's not the end of the world as long as you look at a whole-portfolio view.