Most like to buy hell join us with that in just a moment power lunch starts right now welcome to power lunch. Im dominic zchu. The Energy Sector is leading the market higher and up around 16 for that sector, its best week ever, ever historic levels. First, its a long, long 2020 for the group here, still down 45 for the year overall take a look at two of the big earnings winners youve got cisco up more than 6 and disney off the highs but still up 2 as its streaming service passes 73 million subscribers. In just the past two weeks, the dow is up nearly 11 for more on the markets now, lets go over to bob pisani with the latest bob. Hello, dom. This week has been about the rotation from growth and momentum into value and cyclical stocks, and thats playing out again today, very similar to what happened in the other four days just take a look here. Good day for energy stocks, good day for bank stocks, good day for industrials. These had great runs this week ener energys up 16 , banks up 12 , industriali industrials, 5 . Some of the big mega tech names are down 3 or 4 but tech flat for the week you want to see what the market is anticipating . Theyre trying to figure out what its going to look like in the springtime the refiners have been on fire this week. This week phillip 66 is up 25 this week. It means the market is anticipating an awful lot of people are going to start driving in the springtime. Thats vaccine optimism right there. These stocks have been up every single day this week practically. Meantime the work from home stuff, the stuff that we love to talk about, the amazons, the etsys, c etsys, clorox was down 5 . They are trying to over look the valley of the winter and into the springtime a few weeks ago they were expected to rise 11 and now expected to rise 15 wall street wants to believe in the story at the end of the First Quarter and the beginning of the second quarter, were going to see a real opening. Its a real weird dichotomy here between the intermediate term, which doesnt look very promising and the slightly longer term and wall street is choosing to believe right now the slightly longer term story, which obviously is a lot more optimist optimistic thats the only explanation that makes sense to me the earnings and economic recovery could still be pushed down the road till 2022. Nomura cutting forecasts fr here joining us is Louis Alexander. Louis, its good to have you lets begin with next year what are the main reasons why you have done this already based on what we know and how big are the down side risks at this point . Before the election we were talking about fiscal support well over 2 trillion. I think now realistically youre looking at a phase four deal of Something Like 500 billion. Thats 1. 5 trillion defereniffe. That matters a lot interesting but the near term effects of covid are getting worse. Thats the other fact. Yeah, absolutely. I didnt mean to jump in there id like to hear you explain a little bit kind inform contrast to what the markets are doing right now, which as bob said is looking through this winter and saying the vaccine is coming and were going to kind of get back to normalcy. You know, tell me how you see the risks and kind of the if then, you know, how much of kind of the chicago style advisories do we need to see before that really starts to add up to something thats a bigger drag on growth . So first thing id say is we always expected wed get to a point where covid was no longer a threat theres no question the vaccine is positive but it brings forward that recovery. Its not fundamentally anything different from where we thought wed be at the end of 2022 what has changed more substantially is how much fiscal support were going to have in the near term i just cant express were moving into a world of divided government. If you look at how thats operated in the past, its turned into substantial fiscal contraction. The good news about fiscal support over the last year has been its been very large and very front loaded. That also means it rolls off very quickly so i think the net effect to us of the combination of the vaccine news and whats going on in politics is negative for 2021 look, i get it that people are more optimist ek aboic about the vaccine and i agree thats positive over the immediate term but people shouldnt lose sight over how much the fiscal outlook has changed and will into next year as i think through the 2 trillion and 3 trillion figures that have been put out there in terms of the next stimulus bill, im just thinking about the dynamic thats already played out this year. The fed is buying so much of our treasury supply. Does it matter in other words, if we fast forward to 2021 and we get this magic bullet for the economy, which could be a 1 trillion or 2 trillion stimulus package, thats basically double what the fed is already supporting through its bond purchases at what point does that all have a meaningful economic effect or is it simply the larger the balance sheet, the more liquidity, the higher price in the new york city astock market we ever see about it the physical california is going to support spending more or less directly you have some direct spending on health care and those kind of things youre also seeing direct support from businesses and individuals. Thats very important to mean t maintaining aggregate demand the support we had last year was great but its rolling off a lot of Unemployment Benefits are scheduled to roll off at the end of this year i thisnk if we dont replace that, youre looking at a contraction in activity. I think the fed can make sure longrun rates dont constrain the recovery weve had longrun rates run up over the last several weeks or so we think they will increase or make changes in the composition. Obviously when we get the vaccine, when do we get to the point where covid19 is no longer constraining Economic Activity it goi its going to be important over the medium term. For the next six months or so, these other factors will be more importa important. Fed chair jay powell said theres a risk of longer run damage to the productive capacity of the economy and the peoples lives who have been disrupted by the pandemic. He refers to women leaving the workforce, children falling behind in education, Small Businesses how does it manifest itself negatively in the coming months and quarters if that were to be the case so one question is just labor force participation. If you see people drop out of the labor force for an extended period of time, its hard for them to get back in. We saw the risk is the longer the labor market remains depressed, the bigger the challenge it will be thats particularly an issue for women who have dropped out of the labor force more than men in part because of day care and those kinds of things. The problem with Small Business and the fact were going to go through a very high level of business closures is another big could be strant. Yes, there will be opportunities f on the other side of this but it takes time for those things to get going. The longer were kind of in this hole the bigger those effects are, which is why i think the fed is so concerned about the next six months, even in an environment where you may be more optimistic about the virus. The fed has talked a lot about the important of fiscal in this and i think they recognize they can help but what we really need is more fiscal support i think thats what the election has called into question washington in focus big again. Thank you, lewis alexander. We appreciate it thank you the dow is up about 11 so far in november. That means it on track for its best month since april despite rising covid risks and fears of a slower economic recovery we just spoke about lets bring in the Senior Adviser er to schroaders yes, thank you both for being here perhaps, brian, ill start with you. You just heard what Louis Alexander had to say about the economy. Is this an economy thats forecast to be able to support a higher market, three, six, 12 months down the line thanks for having me. And i do think this economy can support that it might be a choppy path getting there. I think that the key thing is we kind of have to get through a rather rough winter first before people start actually getting vaccinated, like pfizer is very encouraging, a lot of people revising up their expectations about not just where we can go for the next year but when that can start to happen. Its about ramping up Economic Activity sooner rather than later. Thats one of the reasons why the markets responded so favorably to the pfizer news now we can think about with a significant amount of stimulus from the monetary side, maybe some slim down stimulus coming out on the fiscal side, that can really support a really brighter springtime for us. Now, ron, its been supportive for certain parts of the market, namely energy, namely financials. It hasnt been so much for Large Cap Technology or retail for that matter. How are we to believe this will be constructive overall for the market down the line i thought it was just five stocks that drove the entire Market Action these days well, yeah. Dom, as you know, youre seeing that rotation trade, the recovery trade take over i thought louf is was spot on on the one hand wall street is working on liquidity but i think that divergence is going to be important. Winter is coming and mom and pop stores and restaurants that are individually owned, you know, may well go out of business. You look at yelp and you see restaurantes rest restaurant reservations going down im much more concerned about main street than i am about wall street this is anathema im concerned that wall street will walloped. Im beginning to feel a doubledip recession will be the case in the fourth and fifth quarters of this year and next ron brings up an interesting point here if there were to be a protracted economic issue that pummels main street more than wall street, where is it that wall street will feel it more . What parts of the market overall . Are we talking small and midcap companies, certain sectors and key Industry Groups . What happens if winter does come i think those are the areas you would see it most and worst would be the consumer oriented side youd probably see it in the housing sector, in the durable goods areas are whether its buying washers, driers, automobiles, those big ticket items, especially things that typically need to be financed with income, if you have falling incomes or rising unemployment, thats the area that we would expect that you will probably see it first but, you know, wed like to encourage people to kind of think about that and the market is looking at this, its probably thinking more ahead towards, you know, lets say spring and summer where we can see a recovery i think a bit of an economic slowdown is currently priced in. To rons point, i agree. I dont think the market is pricing a recession risks and it is a real risk if we do see more draconian lockdown measures being imposed as opposed to what were kind of having now, which is a little bit of a relaxing or rolling back of some of those reopenings of the economy. So if it gets worse, then, yeah, well revise expectations but right now expectations is that this is merely a slowdown as opposed to a rollover. If it takes a turn for the worse, does it stand to reason the existing trend over several years about people buying pullbacks in the likes of apple and microsoft and amazon and facebook, do all those trends continue well, im not sure about that yeah, probably because youre going to get the k composition of the economy you may get the w in terms of the recovery but the k will be the composition. Those doing well will continue to do better and those who are doing bad will continue to do worse. That, again, reflects this huge gap between whats happening on wall street and whats happening on main street that k may be very much more important in the long run than the w. All right thank you guys very much for that we appreciate it kelly, over to you dom, lets get a quick check on markets and headlines here from nbc nbc has called the president ial election in georgia for joe biden as the apparent winner nbc has also karld North Carolina for donald trump as the apparent winner we want to emphasize the language, the dow hanging on to about a 321 point gain obviously in some ways this confirms a lot of the earlier reporting and different outlets have different methods here. But these have both just crossed the wires. Well keep an eye on everything and bring more to you as we get it do you is up 324 check out shares of cheese cake factory. Despite covid fierce, the restaurant rally has only just begun. Plus well Talk Health Care as hospitalizations hit records liri italk to one company devengt directly to the wealthy. Much more power lunch right after this were starting to see anxiety, depression. Theres a debate happening all across america big travel for turkey or no . Youre looking at 15 Million People the newly elected house of representatives, among the class welcome back as covid cases increase as a rapid pace across the country, businesses are facing a host of challenges our next guest thinks restaurants are better positioned to weather potential shutdowns this time around nick is a senior restaurant analyst. He just upgraded cheese cake factory to outperform and raises targets on texas road house and darden cheese cake has been closing doors in a lot of places in the country. Whats the bull case here . Lets think about the fact theyre at an average 50 capacity and their sales are only down 7 in october. So what a lot of our casual diners have learned, including cheese cake, is how to effectively, you know, do the off premise sales and at the same time the right side of the cost structure the liquidity levels across the board are at or above levels that, you know, these companies had going into february and march. So not only are they weathering, you know, the first rounds effectively, but theyre ready to go into another round of shutdowns. Yeah. So tell me why you think restaurants in general are better prepared this time around well, off premise sales is the key. Off premise sales is the key to digital, to delivery, everything from involving a labor force thats more effectively delivering for the higher off premise sales to even restructuring restaurants in such a way where off premise becomes more efficient weve seen across the board restaurants do almost the same level of sales last year on average 50 capacity right now which is astonishing. Nick, is all this market share coming from local establishments from the mom and pops . It is mostly coming from independents, but its across the board. In the case of cheesecake specifically, weve seen more than 50 of current cheese cake locations, a nearby competitor, major competitor has shuttered its doors. And thats only after the shutdowns. If we do get a second wave, these well capitalized publicly traded companies that do survive will be in an position to take an even greater market share in post covid normalization and you have cheese cake factory, which we spoke about but also texas road house and darden why those two in particular . How much up side texas road house and darden, theyre along with cheese cake among the best positioned restaurants within my coverage universe to take share in a most pos postcovid normalization were seeing levels of waiting to Start Building units again. Both concepts are outperforming. Texas roadhouse we saw positive comps at texas roadhouse believe it or not. We just think those two concepts, along with cheese cake now are poised to be the three biggest market share gainers in the post covid world wow its amazing that they could have positive yearonyear comps at this point. Again, it could be a difficult couple of months but it points to some momentum nick, thanks so much dom . Coming up on the show, leaving the market higher today and on track for one of its best weeks ever is that about to heat up and historic week for pfizer as its vaccine candidate for covid19 is 90 effective and wealthy americans are already vying for the first shot weve got details on that story, a controversial one, coming up after isre this is decision tech. Find a stock based on your interests or whats trending. Get realtime insights in your customized view of the market. Its smarter Trading Technology for smarter trading decisions. Fidelity. 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Expect great savings and a whole lot more. Energy swept up in a rally, rewarding stocks tied to the Economic Growth story, even with u. S. Covid cases on the rise and the threat of further lockdowns looming. The sector is still the worst s p 5 hup perfo00 performer thi the wide margin. For whether you can trust the bounce or not, Craig Johnson of piper sandler. Is energy beaten up as much as it has been a good buy right now, a value pick . Yeah, dom its good to see you i think yes if youre a trader that rally in the xle has lined up with the rally in oil the Largest Holding in the xle is chevron when you look at historic performance, the xle over the last ten years is down about 4. 2 annually versus positive 13 for the s p and positive 2. 3 for chevron so i would be looking at maybe buying Something Like a chevron for a trade. Chevron and the xle have been in our buy range for years. Theyre not cheap, theyre terminal think cheap i would view this as a sikim ju s sik as a c