JD Durkin: Jed Ellerbroek, Portfolio Manager at Argent Capital Management, making his, I believe, Taking Stock debut. My man, nice to see you here today.
Jed Ellerbroek: Great to be here, JD. Thanks for having me.
JD Durkin: How are you thinking so far? Let’s take the broad look view on this, the start of Q4. You remember the way that September ended on kind of a meh note. This is the fifth trading day we have in October. It’s the first day we’ve had red overall. Today’s kind of selling notwithstanding, pretty strong start to the quarter. What have you seen so far?
Jed Ellerbroek: Yeah, exciting time in markets. You know, we’re just a week ahead of third-quarter earnings starting with the big banks. That’s going to be a lot of excitement. I think we’ll see good results from JPMorgan and some of the other large-cap banks, to be followed by tech, where we’re going to see monster results, I think, really across the board.
JD Durkin: Let’s start with the big banks. Is it net interest income? Other key metrics you’ll be looking for as we start to hear those big banks roll out? And that’s how we always know earnings palooza is once again here, once we hear from some of those big names.
Jed Ellerbroek: Yeah, I think investors are most interested to see net interest income results. A little bit of weakness there. Deposit costs are rising, so that’ll present some pressure. But I think loan growth will probably offset, and they’ll be able to hit their numbers.
And then I think over on the investment banking side, we’ll see really good trading results again, but probably not as good as second quarter, which was really a standout.
JD Durkin: The Mag Seven tech stocks today, obviously the most important, the most consolidated names in the S&P, they were kind of in mixed territory today. But overall, XLK as an overall group has really caught a bid here to start Q4.
As we back out from the big bank earnings, get a little closer to those tech earnings, what are you going to be looking for under the hood that gives you confidence to say that the current AI momentum can continue?
Jed Ellerbroek: Yeah, I think there’s three big metrics investors should focus on. The first one is GPU pricing in the rental market. There, we’ve seen slight increases in prices, which is great news. Typically what you see is a steady decline as the year progresses, so good news there.
Second, revenue growth rate compared to prior quarter for the big cloud-computing giants. We’re going to see acceleration in the third quarter. That’s good news.
And then finally, CapEx plans. We’re going to see strength there from the big guys: Meta, Microsoft, Google and Amazon. So I expect really strong results across all three of those leading indicators.
JD Durkin: How are you thinking about the macroeconomic backdrop? Because, let’s say, I think it’s the week after next, October 28th will be the second-to-final FOMC decision of the year.
Not a lot of us came into 2026 expecting interest rate hikes to be on the table, talked about as much as they have been. But here we are with two meetings left. How are you thinking about the Fed and monetary policy as it relates to a lot of these hyperscaler gains that you just mentioned?
Jed Ellerbroek: Yeah, we’ve spent the last six months really listening to Kevin Warsh tell us no more forward guidance. But then last quarter, rates up 50 to 60 basis points in just a couple of months. He had some of his key lieutenants come out and give us some of that forward guidance he had disavowed.
He said, you know, calm it down, market. We’re not going to raise rates at these next two meetings. We can wait and see. So I think we’ll probably see no hike in October, or excuse me, in November, and then perhaps an increase or two after that, but nothing major.
I think that they really tried to calm the market down after this really big increase in yields.
JD Durkin: I’ve got less than a minute. Four weeks from yesterday will be the November midterms, possibly already here Tuesday, November 3rd. How are you thinking, how should investors in the major market indexes be thinking about what could happen in the hallways of Congress down in D.C. and what that means for their money?
Jed Ellerbroek: Yeah, you mentioned health care in your previous segment. Health care investors are very interested to see how the House and how the Senate end up. I think most investors are expecting the House to flip over to Democrats. The Senate is more of a 50-50.
Hospital investors, health insurance investors, you know, are really eager for Democrats to make this a divided Washington, D.C., so we can perhaps reverse some of those Medicaid cuts that are set to take effect early in 2027.
JD Durkin: Jed Ellerbroek of Argent Capital Management, his first time on the show. It will not be his last. You crushed it, dude. Really nice to see you here today. Come back and see us anytime.
Jed Ellerbroek: Thanks, JD.
JD Durkin: Take care.
