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the big trend today is a strength in the tech space it's something we've been talking about as a rotation back into cyclicals have been discussed here over the last couple weeks especially after that meltdown we saw last week but where do things go from here is today just a head fake from some of these tech names or is it a reversal of that trend and i want to get into that with our next market guest here befundstrats tom lee joins us right now and tom i always love having you on because you kind of called that bottom that we saw back in march but how do you assess what's going on here now with tech again coming off of that brutal week last week um yeah it's and last week was rough i think markets are at a crossroads because we've gained so much since march and the economic data has been better i think the health data has been encouraging because cases are falling but from a market's perspective nothing is really decisive so i think investors are still torn and i think that's why they're still sticking with these tech stocks um but you know i don't think tech needs to roll over for cyclicals to work i think for you know cyclicals to work it really just means investors need to be confident that this the good news on the economy is continuing and then the cash comes off the sidelines and the sentiment which is really bearish turns positive and i think that's what fuels uh the rally into your end and that's kind of the thing that you've been highlighting here too i mean a lot of market watchers have been highlighting that you know the the market moves that we saw earlier in this year had generally gone in the direction of coronavirus cases and we've seen that constantly improving over the last few weeks i'd be curious to know maybe if some of that profit taking in tech might not have been caused by just you know the run-up that we've seen but maybe some investors hedging against the potential risks of cases going in the opposite direction over the next couple months since we've seen that precedent of it triggering a selling wave before how much would how much weight would you put on maybe that playing out here uh i mean i think there's a lot of uncertainty because you know one of the you know models that i think's really quite good is the ihme model healthdata.org and they're projecting you know in the fall to have this massive resurgence in cases part of it's the flu season and part of its back to school you know i don't know the future but if that's the path then then then i'd agree zach like the market should be kind of nervous because we don't know how people are going to react but you know if france and spain are any template they've had cases go to all-time highs but because deaths have been really muted um you know the policymakers haven't really done anything so i think there's you know i guess it depends i mean cases are cases and that's important but but it's really gonna be severity that matters the most yeah on that front i mean we did see israel reinitiate lockdowns again so that did happen and there is precedent there that it could happen again here in the us we've seen states reverse positions certainly too but when we think about the risk reward since that really does seem to get at the heart of where investors should be positioning themselves here now i would suspect that cyclicals would take a harder hit if you do see cases rise again because some of those epicenter stocks as you call them the hardest hit when cases did start to spike here before in 2020 uh you've been advocating for getting back into those but if we did see cases rise up again i feel like they would get hit even harder so talk to me about the risk reward in those names versus some of the other tech names out there well um yeah the most sensitive to like what happens to not only the county but health is going to be the epicenter stocks because they they're so sensitive to directions and also you know they're also sensitive to do a cure or vaccine um i i think what we've already seen that states that have had a lot of cases already like new york tri-state or even florida now in arizona even when you get like super spreader events like back to school happening it's not triggering a new wave of cases so i i think that you know 25 percent the country you know it's not looking so bad right now and i i think the key now to watch is you know whether the schools can stay open and then back to work you know it's just especially new york because new york is so important to sort of how the national you know landscape looks and new york is opening for indoor dining and i think there's more people going back to work so you know normalcy might be sooner than we expect the other question too here and i want to get into some specific names uh when we think about individual storylines playing out too because obviously people getting back to work might be a positive for some tech companies a microsoft or facebook what have you versus a zoom and the run-up that we've seen there but also there seem to be storylines that are playing out completely untied to what happens on the health front and i guess maybe some of those storylines would be tied back to some of these high flyers in 2020 whether you look at uh i guess we'll start with the sports gaming space too here because we're seeing those spikes play out today when draftkings teamed up with espn to be their co-exclusive partner and espn is going to be throwing a lot of traffic to draftkings um i mean i guess that's tied to the pandemic too though every storyline inside the pandemic because we got sports back now we saw it over this weekend but that does seem to be one of those opportunities that's going to exist for years to come since it seems like that was something sports leagues cable providers did not want to touch in sports gaming but now as those attitudes change i mean talk to me about maybe that being an attractive and attractive uh thing for investors to watch well i think it's i think what we're seeing with like draftkings really speaks to a generation the millennials and even gen z because those are native digital cohorts right i mean they grew up with a digital life and now in in this pandemic we're seeing that's our notion either networks or cable sort of get on board with that and i i think that really tells you why you gotta bet with millennials and what they're gonna do and not only are they living a digital life you know they're moving to the suburbs now so housing and housing related is going to be a really important story for many years and actually it's still investible today and then all the infrastructure that goes around building a home so there's a lot of things millennials do that are you know that you're seeing and i think draftking's example the other name out there too i guess on the same theme here would be the ev space and we've seen that with tesla i can't tell you how many millennials i know out there that can afford one i've been all about uh getting an electric car and tesla the main proponent of that that's discussed here and they've recovered about half those losses that we saw in the tax selloff since the end of august here so i guess you know that being another one of those names what do you think about when you look at a tesla and maybe the same idea that it would be something to stick with here especially when we think about the price that it's trading out now north of 405.
yeah um i mean tesla i think has completely turned the head of a auto business model around i mean i think it is a lot more like apple with its iphone and how it really disrupted the handset carrier ecosystem you know in wireless and i think tesla is a car that you know has fanatical loyalty from its owners and its interface is so different and it's electric and you know i think people are going to make a mistake trying to put it into a box as a low multiple automaker but you know i don't know what the upside is cost of capital is low right now so valuation can be quite elevated for a lot of things and that seems to be the the thought across the board perhaps uh some of that playing out last week we'll see what happens this week though things kicking off in the green as the nasdaq still holds its gains but tom lee fun strike always appreciate chatting with you yeah thanks for having me
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