Stocks were little changed to slightly higher Friday afternoon, narrowly eking out record highs as investors digested a largely solid set of recent economic data and earnings results. Margaret Reid, Senior Portfolio Manager at Union Bank and Matthew Tuttle, CEO and CIO of Tuttle Capital Management joined Yahoo Finance Live to discuss.

Video Transcript

ADAM SHAPIRO: All right, there's just about two minutes to the closing bell. Helping us ring the closing bell are Margaret Reid, Senior Portfolio Manager at Union Bank out of San Francisco, and Matthew Tuttle, CEO and CIO of Tuttle Capital Management. Thank you both for joining us.

Margaret, I want to talk with you as we go to the closing bell-- we're witnessing what could be another record close for the S&P 500. And I say, another, when we're seeing this concern about the Delta variant impacting not only global growth, but US growth. We saw consumer sentiment is taking a hit. What do you think? Can we sustain the kinds of earnings performance we've seen this quarter?

MARGARET REID: Well, certainly, corporate earnings growth have been egregiously above expectations. And that's what, in part, has been driving the markets on top of the extreme stimulus that the economy's been receiving over the course of the last year. And this Delta variant issue and rising of case rates across the country certainly could provide a haircut to GDP estimates.

In fact, you've seen economists already start to moderate their GDP estimates for this quarter to the tune of about 1% to 2%. We're going into retail earnings next week, so I think it'll be very key to hear from US retail companies to see not only if this Delta variant surge is having any impact to consumer behavior, but also to what their projections are for the rest of the year, given that we're in the back to school spending season. And we'll also get July retail sales next week-- so a lot of incremental data points in the coming week with ties to the Delta variant.

ADAM SHAPIRO: Sure. Matthew, want to give you some love here, but we got to wait to the closing bell because we want to get your insight into what you do as we go forward after we do ring that closing bell. So let's take a look at where we're probably going to settle at this point, because we've got the indices all in the green right now. The Dow is going to be up 15, 16 points. And they hit intraday highs today as well-- S&P 500 is going to hit a new high, NASDAQ is going to be up about 6 points as we go to the closing bell. We ring it loudly.

[BELL RINGING]

SEANA SMITH: That wraps up the trading week. As Adam was just saying, you're looking at gains across the board, although we didn't move too far from the flatline-- the Dow barely closing in positive territory. The biggest gainers in the Dow today Salesforce, Microsoft, Disney, UnitedHealth, and McDonald's-- those five stocks are the outperformance in the Dow.

You can see the S&P closing up 7 points and the NASDAQ barely holding on to gains, closing up just 6 points. In terms of the sector action today, the laggards energy and financials. But what was working in today's trading, utilities, consumer staples, and real estate among the out-performers there. We want to bring back in our panel, Margaret Reid and also Matthew Tuttle to help us break down not only today's action but what we could expect going forward.

And, Matthew, investors don't really seem to be concerned about some of the weak data points that we got out this week-- this morning's number on consumer sentiment. What are you most focused on going forward?

MATTHEW TUTTLE: So, I mean, we're focused on two things. We're focused on Treasury yields because, you know, that's the tail wagging the dog between growth and value stocks, also love to see what's going to happen once the Fed does actually start tapering. And we're focused on COVID. We're focused on Delta.

It's looking like things are peaking here. We're kind of following the UK's lead-- so, you know, not that worried at this point. But you know, that's something that could turn on a dime and would change a whole lot of things out there.

ADAM SHAPIRO: Margaret, you know, we just heard Matthew talking about the yields, and I'm looking at the 10-year-- it fell again, we're back below 1.3. And it doesn't seem as if anybody in fixed income is going to get any kind of return unless they're willing to borrow, or lend, rather, to a really risky asset. So what do you advise clients in this kind of environment?

MARGARET REID: Great question, and one that we answer quite frequently in this interest rate environment where clients are searching for yield. And they're searching for that yield without taking too much of a risk in any given investment. So certainly looking at the sectors that provide a more attractive dividend yield relative to the 10-year Treasury-- if you look at financials, utilities, consumer staples, even, there's plenty of opportunity set when it comes to delivering income in this low interest rate environment. But I would just definitely argue it's worth looking underneath the surface and making sure that you're not overpaying for such dividend yield income and taking on too much risk in portfolios.

SEANA SMITH: Matthew, investors are going to be closely watching Jackson Hole in a couple of weeks from now coming up at the end of this month. Just in terms of what the Fed needs to communicate to the market or what the market will be listening for, I guess, what's your gauge on that right now and how important that could be here for future earnings, at least in the short-term?

MATTHEW TUTTLE: Yeah, so, I mean, we're looking at Jackson Hole as a live meeting. And we really think that they're going to communicate their plans about tapering. That's going to make a lot of people happy, make a lot of people unhappy. I mean, you can't satisfy everybody, obviously. But I think what really the focus there is going to be is kind of what is their plan? And you know, what can we expect going forward? But certainly, would not be a buyer of bonds right now.

ADAM SHAPIRO: We've been talking a lot about equities and bonds, but Jared Blikre is going to take a look at what's going on with Bitcoin, because it's trading higher again.

JARED BLIKRE: That's right. It's a Friday after the bell-- we've got to talk about Bitcoin, because Bitcoin moves on the weekend. Last couple of weekends it's been to the upside. So hopefully-- I'm talking my book here-- get some continuation.

But it's not just Bitcoin that has been getting a lot of action recently. You take a look at some of the alt coins like Litecoin, Cardano-- Cardano's gone from 1 to 2. That is a 100% price an improvement over the last few weeks. So high hopes for cryptocurrency over the weekend-- 45,000, 47,000 those are key levels in Bitcoin-- don't want to see a strong downdraft off of those levels, but if we see 50,000, I'd say the worst is over here for crypto temporarily.

ADAM SHAPIRO: All right, Jared, thank you very much. Let's go back to the panel and talk about what we're witnessing in these markets. I had to ask Margaret this question as to whether or not the kind of earnings potential that we've witnessed this quarter is sustainable. And, Matthew, I'm curious-- do you think it's sustainable? Because we're seeing supply constraints still impacting companies, and yet their margins are as healthy as they've ever been.

MATTHEW TUTTLE: We do think it's sustainable. We think the economy is really growing and earnings can continue to grow. You know, there's a lot more room left out there to grow. What we're going to be really focused on is in looking in these reports and what companies are talking about is what they're saying about COVID. You know, you had Southwest and Airbnb kind of the first to really mention that. So we'll be focused on that.

And we're going to be focused on inflation. You know, there's still the argument out there-- is it transitory? Is it not? What does transitory even mean? But we do think earnings can grow from here.

SEANA SMITH: Margaret, we'll also be getting some readings on housing next week. And this has been an area that's held up very, very strongly throughout the pandemic, also has been pretty resilient at this point in the recovery. What are you expecting to see on that front? I guess are you seeing any investment opportunity there?

MARGARET REID: I'd say, Seana, the debate around the durability of the housing strength is very, very robust among clients and the investment community. I'd say that there is certainly room for the housing market to continue to be strong. I mean, if you look at record low housing inventory, constraining new home supply-- we keep tabs on affordability, which still stands below the housing bubble of 2004-2005 really driven by the low interest rate environment we're in.

And then, two, we've seen the consumer de-lever their balance sheet to a 40-year low. And one fact that we're raising too around the housing market is just there is not that egregious risk-taking that we've seen-- like we did see in the housing bubble of 2004-2005. For example, interest-only loans or affordability products made up 40% in mortgage originations back in that housing bubble versus today about 2%.

There is not that amount of risk-taking. But the one thing that we are keeping watch on is just the growth of home prices. One could certainly argue that we're going into a seasonally less robust period into the winter months where foot traffic is very typical. You could see some moderation in prices, but certainly that low inventory side, which we'll hear some of that housing data point next week with the housing numbers coming out, could certainly be supportive of the home prices overall.

ADAM SHAPIRO: Let's go back to Jared Blikre down at NYSE, because, Jared, if the S&P 500 were Britney Spears, it would be singing "Oops I Did It Again" with the records. Jared, are you muted?

JARED BLIKRE: I don't think I am.

ADAM SHAPIRO: Oh, you're on. There you are. Got your audio. Got you now.

JARED BLIKRE: All right, very good. I was looking at tech for the week. So we saw nice advances in the S&P 500 and the Dow, not the NASDAQ. Just looking inside, I look at software and the chip stocks-- those are two of the major subindustries. Software had a pretty decent two days here, but still ended up in the red.

Stocks-- the chip stocks not looking the healthiest-- Micron is down something like 12% or 13% for the week. So I definitely have my eye on them for next week. If we want to see materially higher highs in all three major indices, we're going to need to get some of these industries back in the mix.

ADAM SHAPIRO: Jared Blikre, thank you very much. And want to say thank you as well to Margaret Reid, Senior Portfolio Manager at Union Bank, Matthew Tuttle CEO and CIO of Tuttle Capital Management.