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Markets shouldn’t be looking past November's jobs report: Hennion & Walsh CIO

Hennion & Walsh CIO Kevin Mahn joins Yahoo Finance Live to weigh in on November's latet jobs report.

Video Transcript

JULIE HYMAN: We're looking at futures indicating slightly higher open this morning. Of course, foremost, among investors' minds have got to be the jobs numbers this morning, showing a gain in November of 245,000. That's versus the 460,000 consensus estimate. But there were definitely some low estimates out there, and even some estimates for a drop in jobs. So that did not materialize.

Unemployment, as you can see there, 6.7%. And average hourly earnings ticking up a little bit more than had been estimated year over year, showing a 4.4% gain. A couple of other things to mention within this report. There was a decline of 93,000 temporary census workers. So that's included in that data and something to consider, although that's something also that economists factored into their estimates.

Also, as we've been talking about, there are still 10 million fewer jobs in the US now than there were before the pandemic, even though we have come way back from the bottom. Couple of strong areas, transportation, warehousing. A weak area was retail. We just heard from the Ulta Beauty CEO a few minutes ago saying that they're still seeing some of their stores closed, some weak traffic, et cetera.

So that's something we continue to watch, even as Myles Udland hopes continue to be strong for the vaccine and how it is going to change the trajectory of the situation.

MYLES UDLAND: Yeah, I mean, I think, you know, as we've said several times, right, it's about getting us through the next several months when we get that rollout going. I just want to highlight a story here that came out from the "Wall Street Journal" late yesterday that spooked the markets just a little bit, but I think on close reading maybe doesn't totally change the vaccine rollout for this year. The story was, you know, Pfizer and BioNTech, their vaccine set to be, the jab, as they call it in England, set to be distributed to citizens in the UK next week, also to Americans later this month.

But the doses that are expected by the end of this year are now 50 million. That's down from the joint companies' goal of 100 million. But that goal was reduced several weeks ago. And the story essentially just outlines the challenges that Pfizer and many other vaccine makers are going to have in distribution. Now, next year, the companies still expect 1.3 billion doses of the vaccine to be distributed. And the 2021 goal has actually increased after, you know, these kind of few hiccups in 2020.

And so I think we'll see a lot more stories like this. Always important just to keep in mind how big of a lift this is, how impatient we all are for the pandemic to be over, but indeed, how long it will take to get mass vaccination here in the US and across the developed world. All right, we've got the opening bell there live on the floor of the New York Stock Exchange. Far Peak Acquisition Corp, that looks like another SPAC to me.

It has certainly been the year of the SPAC in markets. Man, and in a year where we've got all kinds of crazy stories going on as it relates to financial markets, SPACs might have stolen the show. And this, of course, with several big IPOs set to come later this month. All right, you see here, early on in today's session, all three majors beginning the day higher. The Dow trading above 30,000.

Brian Sozzi, I want to go to you real quick on a story that caught headlines yesterday. We're going to talk about it later on in the program. But that's what's happening in the movie space. And, you know, I don't think movie theaters really like what they're seeing over at Warner.

BRIAN SOZZI: Myles, what gave it away on the-- was it the name Far Peak? Yesterday, we had Playboy's CEO on his company SPAC that he merged with was Mountain Crest. So apparently, they all love the mountain plays. But we're actually-- right now, yes. Really, what Warner Media did yesterday is stunning. And I'm reading a story right now on Yahoo Finance by editor-at-large Dan Roberts really detailing this.

For Warner Media put 17 movies really at the same time on HBO Max as in movie theaters is absolutely mind-blowing. You felt the ground shake in the movie theater. And here's a quick quote from AMC CEO Adam Aron, and I'm reading from Dan's story. Quote, "we will aggressively pursue economic terms that preserve our business. We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject," as they should, because something like this could put AMC out of business.

JULIE HYMAN: All right, Brian, we'll continue to watch those stocks that are bouncing back a little bit after yesterday's declines spurred by that announcement. Let's talk more about the jobs report and its effect on the markets. Kevin Mahn is joining us now, Hennion & Walsh CIO. Kevin, it is good to see you. How are we to read these jobs report-- these jobs numbers this morning? Doesn't seem like there's much disappointment being reflected in the market from a number that seems to have missed estimates.

KEVIN MAHN: Yeah, I think the market is somewhat looking past this jobs report, but they shouldn't. This represents the fifth consecutive month of a slowdown in new job gains. And while it's positive that we are creating new jobs, 245,000, that fell well short of expectations for 460,000. On the positive note, the unemployment rate did drop from 6.9% to 6.7%, but it should serve as reminder of how much further we have to go to get back to the 50-year low unemployment rate of 3.5%, where we were at just in early March of this year.

Some areas that could help in that regard, certainly the passage of additional coronavirus relief bill. And then ultimately, an infrastructure spending bill, which could be helpful in putting America back to work again as well.

MYLES UDLAND: You know, Kevin, we were talking to Anthony Chan earlier on in the program. And he was discussing how we've seen the market come back with such enthusiasm, really on the back of higher profit expectations. But a lot of those expectations are driven by the need for fewer employees, you know, longer term. And I know that you're looking at the impact that e-commerce has kind of across the economy. And really, e-com, right, it's a lower employment intensity.

I know transportation and warehouse still higher. You know, you need a lot of people there. But overall, would you agree that it's kind of a lower employment impulse, I guess, over the long term and that that leaves a lot of workers needing to figure out what they're going to do?

KEVIN MAHN: Certainly. In-- we're in an economy, Myles, where 70% of our growth is driven by the consumer. And consumer spending will continue to fuel economic growth in the months and years ahead. What we saw on Cyber Monday was that shoppers spent $10.8 billion, a record for Cyber Monday sales, representing over a 15% increase over the prior year. Now, that fell at the low end of expectations, due to most shoppers starting their holiday shopping earlier this year, as 52% of shoppers indicated that they started shopping back in October.

Interesting. But what we do know is that over the course of the full holiday shopping season, we anticipate over 1 trillion in holiday shopping sales with e-commerce experiencing a 36% lift and traditional brick and mortar experiencing a 5% decrease. That is the wave of the future. And I think from an investment opportunity standpoint, Myles, opportunities within e-commerce and the old e-commerce ecosystem is something that investors should seriously take a look at.

BRIAN SOZZI: Kevin, do you think, though, on the surface, the online numbers, yes, they have grown. But they are-- really have been below a lot of estimates coming into the season. And you see this jobs report. What I think we can all agree, it was a weak report, another month of jobs increases decelerating. I mean, do you think we are nearing a recessionary US economy here?

KEVIN MAHN: I think a large part of that goes back to the rollout of the vaccine. Now, obviously, therapeutics play a large part in quelling COVID-19. But the rollout of that vaccine going initially to those that are most susceptible and obviously front line workers will help. And then getting America back to work again, feeling comfortable going out and shopping again. But if I look at the new American economy that's rapidly unfolding from the COVID-19 pandemic, there were three certain leaders that we see coming out of this pandemic.

Those being in the fields of health care, notably biotech, technology, specifically those revolutionary technologies such as 5G, artificial intelligence, and robotics. And then, of course, e-commerce. And I think every time when I speak about e-commerce, people naturally default to Amazon and Etsy and eBay. And yes, they will benefit from traditional shoppers migrating over to online shopping, as it now accounts for 16% of total retail sales.

But you also have to consider the credit card companies, the payment processors, the delivery companies, the online search engines. They also stand to benefit from the growth in e-commerce. And so long as Americans have disposable income and feel comfortable spending, that spending will likely continue to take place online as opposed to traditional brick and mortar shopping.

JULIE HYMAN: I mean, of course, Kevin, we've been talking about these themes for a while with you, right? And we've been talking about these themes for a while, period. So these stocks have already done really well. So I guess--

KEVIN MAHN: Thank you.

JULIE HYMAN: Yeah, exactly. But what's going to be the next catalyst for upside? Or is it just kind of-- you know, because momentum, one would think, is naturally going to slow.

KEVIN MAHN: Yeah, and I think if you look at where the markets are trading right now, there's a lot of positive news baked into where markets are, obviously with the Dow, the NASDAQ, and the S&P all hitting all-time highs in the month of November. And the Dow, we've been surpassing 30,000. So the thoughts on a successful rollout of the vaccine are clearly in place. The thoughts of actually having an additional relief bill passed are baked into the market.

And the likelihood of a divided government, as it stands with respect to Congress, are also part of the market's beliefs at this point in time. Should any of those three pillars start to shake, well, then you could certainly see short-term bouts of volatility hitting the market again.

JULIE HYMAN: All right, feeling bullish, more or less. Kevin Mahn, thank you so much for being here, Hennion & Walsh CIO. Good to see you, Kevin, be well.

KEVIN MAHN: Thanks, Jules, you too.