DOW at record high, S&P coming off best day in a month. Bill Baruch joins CNBC’s with more on the market action
TRANSCRIPT
Highs in the morning, up about 111 points right now in the pre-market, set to open up at a fresh new record high. For much more, let’s bring in Bill Baruch, founder and president of Blue Line Futures. Bill, good morning and it’s great to see you. Great to be with you. Great to join you. All right. So after we’re seeing the Dow hit a new record closing above 37,000, give us a sense, how do you see this day shaping up?
What is your next word of the day? Well, I mean, we’re getting a breakout to new record highs in the Dow. Now, I’m also a futures trader. As you know, I manage equity portfolios, but I also manage futures portfolios. And the interesting thing this week is that traditional quadruple witching, which we rolled into March futures contracts, and that March role is actually higher as a premium to that price.
So it’s actually has the Nasdaq futures on a continuous basis breaking out to new record highs today. And the S&P futures are within 1% of record highs today. So it’s a big day. This could really feed on itself. I don’t see a reason for the market to kind of fall off at the moment, but there’s been post Fed reactions that have reversed.
Of course, there’s a lot of data today in other central banks, as you’ve noted. So people have to stay nimble out there. But I mean, this this is this looks pretty good here in the Christmas Christmas rally may have just begun because of the word of the day. And that’s a pivot. I think this is this is the actual pivot from the Fed.
What we saw yesterday from Fed Chair Powell marks the beginning of a pivot man securities route. But you got us there, Bill. So your question of the day is pivot. So with that pivot in mind, another thing, another area where we’re seeing big change is the bond market. A bit of a rally yields falling pretty steadily right now.
The two year down about 40 basis points from where it was yesterday. These lower yields, does it change your view of the market for the rest of the year? Because bonds, we’re giving stocks a lot of competition. It doesn’t change my view. I mean, I’ve been a bull on this stock market all year long. I mean, one of the things that we put out to all of our clients heading into the third quarter was a it was an editorial sort of called Economic Winds of Change, calling for the data to slow down from November, December, maybe drag into January.
As culturally, you know, us as a country has have shifted. We don’t we don’t go to the mall and start spending. The holiday season is is different than it was a decade or two ago. We hunker down. I think people are replenish their wallets, which is going to be less spending. And we’re already starting to see that. But now you also have there’s other tailwinds bringing down inflation.
So, I mean, this really is is opening the door for the Fed to to pivot. But when it comes to to race, I mean, in that article we wrote, it’s coming in quarter three, we were talking about the ten year being at 4%, the two year potentially breaking below 4 to 4% before the end of the year if the curve is able to step in.
And that’s what I’m really looking for as we head into the new year, can this curve really start to steep it? And I think that’s that’s something that it’s going to start to mark maybe where we get really worried that the data is slowing heading into January, but the curve begins to step in and that does some work to ease things as well.
So I really want to focus on the day ahead of Bell as we look at the day ahead. Again, the Dow set to open up at a new record high. Where would you put money to work today? You know, it’s really tough to say. I mean, one of the things that my themes heading into next year is we’ve been very overweight and our equity portfolios tech, I mean, weighted about 50%, let’s call it in tech.
So my goal has been to sort of shift out of some of the tech and start to move into health care, big industrials. I mean, there’s some really, really, I think, great buys out there. I’ve been noting Bank of America something on my radar that I want to add to now that we’re starting to see some more strength.
I don’t think I would have a chance to buy a lower. So it’s going to be looking at buying it a bit higher. There’s some really great industrials are breaking out. One of our we’ve really concentrated our industrial exposure to Caterpillar and Westinghouse Air brake. I really like what we’re seeing Westinghouse air brake from the for the locomotive logistics side and technology side.