VIDEO: Trump-Driven Change at FTC Can Boost This Big Tech Holding

In today’s Daily Rundown video, Chris Versace recaps the Portfolio's post-presidential election trades and explains why we will remain prudent investors even as we enjoy today’s pop in the market and its positive impact on the Portfolio. 

Chris also shares why we’ll want to follow the policy rumblings as candidate Trump becomes President Trump, but explains why we are likely to see a more business-friendly head emerge at the Federal Trade Commission. We see that as a positive for several holdings, but especially Alphabet GOOGL. 

And, as we get ready for Thursday's Fed policy decision, Chris calls out two factors that will have us parsing Fed Chair Powell’s words very closely. 

Transcript

CHRIS VERSACE: Hey, everyone. Chris Versace here, Wednesday, November 6. And as you probably saw this morning, we learned that Donald Trump will be the next president of the United States and that Republicans took the Senate. Now, we have yet to learn which party will lead the House, but so far, it appears that Republicans have the majority. But again, the final results will likely take some time.

What's the market reaction to all of this? I'm sure you've seen it. It's extremely positive. And in our opening comments that we shared with you earlier today, we shared our initial take on what a Trump win could mean as it relates to tax cut extensions likely happening, incremental defense spending, and prospects for less regulation and red tape. Now, let's think about that last one for a second, prospects for less red tape.

As we do, let's consider also that Lina Khan's term as chair of the Federal Trade Commission expired in September, and she's been a big bulldog, if you will, when it comes to big tech. Odds are that a more business-friendly replacement will be named, and that could bring some regulatory relief for big tech, especially Alphabet. Now, like always, we'll have to continue to see how the landscape shakes out. But this could be a very big positive for the shares of Alphabet if this does indeed come to pass.

One other thing is there are already rumblings across the various news sites that Trump may eventually look to shake up the Fed. But let's remember that Fed Chair Powell's term doesn't end until May 2026. And I strongly suspect that given all that Powell has done, he is not going to leave until he completes the job. What does that mean? Getting monetary policy back to a more neutral footing over time.

And if you think of the time horizon, obviously there's two more Fed meetings in 2024, 8 in 2025, and additional ones in 2026 before we get to the expiration of his current term. So there is a pretty good chance that Powell will be able to deliver that. And as you know, we are positioned for that as it happens. So one other thing that we will want to keep our minds on is the dust settling as we move from candidate Trump to President-elect Trump.

We'll want to see how much of his campaign rhetoric advances to potential policy. And based on that, as well as the final composition of the House, we will position the portfolio accordingly. Near term, as in today, we did make a few additions to the portfolio. We picked up some more shares of Builders FirstSource, also Lockheed Martin and Waste Management. Specific reasons why we made each of those are clearly spelled out in the trade alert. But I also want to let you know that we have more detailed comments on the quarterly results from Builders FirstSource and why we remain bullish on the shares over the long term.

Really two key factors here. One, the company, given the softness in the housing market, it continues to do all the right things to drive incremental cost out of the business while positioning itself for the eventual upturn. As we spell out in our note, we see the company really benefiting from growing its dollar content per home. And when the housing market eventually rebounds, as the Fed continues to deliver looser monetary policy, we really see Builders revenue stream and profits benefiting. That keeps us bullish on the long term.

Meanwhile, the shares should see some nice support from the multi-billion dollar buyback program that Builder has in place between now and 2026 as well. As it relates to Waste Management, the catalyst behind our move there is a little different. The company announced the closing of its acquisition of Stericycle. This is the business that will propel Waste Management into the medical waste business, something that we see growing. It's a nice complement to our position in Labcorp.

Now, as part of closing the transaction, Waste Management shared that it sees initial synergies of around of $125 million. But after taking a look at the gap between Waste Management's EBITDA shares and what we see for Stericycle, even after these $125 million in initial cost synergies, it stands to reason that waste is being a little conservative. But what we did see gave us enough reason to lift our Waste Management price target to 245 from 235. Hence, stepping in and picking up some additional shares.

Those are the actions we did today. But let's just step back and have a more 10,000 foot view on the market. And it really boils down to this, yes, the market is enjoying the outcome, the removal of uncertainty. That's why the volatility index is falling. Are we enjoying the pop in today's market? Yes, of course, we are. We also like what it's doing for the portfolio.

But even though we are enjoying it, we will remain disciplined investors. What does that mean? It means that yeah, in the short term. We're going to let our winners run. But past a certain point, should prudent portfolio management be called for, we will not hesitate to lock in some big gains for the portfolio, replenish our cash after today's trades, and wait for other opportunities that present themselves.

As we think about that, let's remember we do have the Fed's policy decision tomorrow. And even though the Fed is widely expected to deliver a 25-basis point rate cut, given what we saw in yesterday's very robust October services PMI and the election outcome, we're going to want to pay very close attention to Fed Chair Powell's press conference comments tomorrow afternoon. Before we get there, yes, I know, hard to believe going through all of this that earnings season still continues. But it does.

And after the close, we have quarterly results from Dutch Bros, as well as Qualcomm. So I would say that we have more work to do despite enjoying what we're seeing in the market today and its impact on the portfolio. So please remember that we will have more coming your way. Be sure to check your emails, your Alerts, so you can get our latest thinking. And just like today, if we make any moves with the portfolio, we want to make sure you are right there with us.

Thanks for watching. We'll see you tomorrow.

At the time of publication, TheStreet Pro Portfolio was long GOOGL.