JARED BLIKRE: I'll tell you what. I'm looking at the Russell 2000 here on the WiFi Interactive. It is set for a record close here, as is the Dow Transports. So let's just check this out on a three-month basis. And you can see nice action here for November in the Russell 2000. It's up something like 12%, 13% over the last three months, most of that in the month of November. And then look at the Transports. They're set for a record high, too. You combine that with the Dow's record high yesterday, and anybody who looks at Dow theory maybe something to be said for that there. Kind of an old theory, but we're getting confirmation in a lot of places. We have pretty widespread participation. And you take a look at the NASDAQ 100 today. Yeah, you see some red, but we've seen various industries come to the forefront, get bought in various ways, and that really fuels the entire rally here for the S&P 500. You don't just need the big caps. And I think that's what we're seeing, is they no longer dominate.

SEANA SMITH: Quick bell there. It looks like. I think that does it for the trading day. Like Jared was just noting, Russell 2000 at a record close. Dow Transports at a record close. But the Dow, S&P, and NASDAQ, the three major averages, closing the day in the red. You can see it there on your screen, with the Dow off 166 points, S&P off just around a half of a percent, and the NASDAQ, the tech-heavy sector, posting the smallest losses we can say, of the day, off just around 2/10 of a percent. Scott, what do you make of this push into some of those value trades, some of those names that have been beaten down. I feel like we've been talking about this every single day over the last couple of weeks. But are you seeing any opportunity there, just in terms of some of those sectors-- financials, energy here today-- being a good opportunity at this point?

SCOTT WREN: Well, Seana, I think when you think of early cycle, you typically think rising tide lifts all boats. So we've seen that the equal-weighted S&P beat the S&P 500 since the March 23 low. Your previous guests, and I think Adam as well, mentioned the Russell 2000 since that March 23 low has also outperformed the S&P 500. So those are two really common things you see and you should expect at the beginning of a new cycle. Now in the value-growth situation, the only way value is going to outperform is if financials are leading the charge. And right now for us we don't think that's going to happen. So I think, at least in the early part of this cycle, you get some little bit of movement into value, but it's not going to be a dominating thing because I don't think there's going to be a lot of loan demand. You're seeing a little bit steeper yield curve, and that's helping. But these big banks haven't been taking large loan-loss reserves for nothing, so I would not think the prospects for the financial sector as a whole are as bright as they typically are early in a cycle. So for now I think that component of it is going to lag.

ADAM SHAPIRO: Well, Ed, I'm curious what you think about what Scott just said, because I'm looking at a chart right now, which shows the financial sector, at least, is off about 7% for the last 52 weeks. But there's been a lot of push just in the last couple of weeks for financials. So what do you think about what Scott was saying about financials?

ED PERKS: Well, I think there's elements of that that certainly we'd certainly agree upon. That point that he made just now about loan-loss reserves. They're certainly for a reason. They've got some tough sledding ahead. I think I would argue maybe that the worst potentially is behind the sector. And when you do look at some of the bigger banks, JP Morgan, Bank of America-- clear, obvious, still down year-to-date 15% to 20%. So I think there is a bit of a valuation attractiveness. And then, for anybody that's an income investor, there's not a lot of places for yield in the market. And I think financials are one area that can stand out. MetLife would be another that looks attractive from a yield standpoint on a valuation basis.

SEANA SMITH: Scott, we were talking a lot last month about money remaining on the sidelines ahead of the election. Now that we're post-election, two-part question. How much of that money do you think has re-entered the market? Has that been a result of some of the gains that we've seen over the last week or so? And then, if not, when do you expect most of that money to re-enter the market?

SCOTT WREN: Well, I think that some of it has re-entered, not a lot. I think it makes sense that we saw some good news here on the vaccine. So we saw some money come in there. There's a lot of money on the sidelines, though. And I still think that there is a good chance we're going to see a rush into it once we get these FDA approvals, which certainly, for Pfizer and Moderna, probably AstraZeneca too, not too long down the road-- we're going to see that. And then to get a little bit of faith in the distribution system. So I think there's a lot of money on the sidelines. Unfortunately, unlike most cycles in the past, we're probably not going to see even half of it come into the market, just because investors are older. They don't want to get burned like they did in the tech bubble or the financial crisis. They don't want to be down over 50% on paper. So I don't think you're going to see much, much more. And maybe you see half of that money come into the market eventually. But we've seen only a little bit come in. But certainly I think it's natural to expect some chasing here, after we get a little bit more good news. But the fuse has been lit. So I think it's ready to go.

ADAM SHAPIRO: Ed, that money sitting on the sidelines hasn't really been earning any yield. But is it time to start looking, not only to perhaps chase some yield that might take you into riskier investments, but to protect yourself against inflation? Is inflation really going to come at us in the next year or two?

ED PERKS: You know, I think in the next year that's going to be a bit of a challenge. I mean, I think the Fed's certainly changed. They've pivoted. They're targeting it in a way that they haven't historically. So it's always hard to fight the Fed. But in this case, it's been a difficult thing, really the last decade, not just in the US, but globally. So I think our horizon's a bit further out. But as we've seen in this bond market, just even since early August, you can have rates start to back up on the long end. You can have a little bit of steepening of the yield curve. And that's really what's pressuring the total return expectations. I mean, we know there's no yield in much of the fixed-income market. But total-return expectations are pretty dire, too. And certainly even with moves to 1 and 1/4 or 1.4% on the 10-year, which, in our opinion, would not be very damaging to the broader market, will still prove to be a pretty serious headwind for fixed-income investments.

SCOTT WREN: And really if you look at if these interest rates are going up for the right reasons, and there's better economic activity and all that kind of stuff, and you see that 10-year yield move up to 1 and 1/4, I mean, in my opinion the stock market's going to like that because it's getting there for the right reasons, not the wrong reasons.

SEANA SMITH: That's interesting, Scott, and I've wanted to ask you about that because I feel like, over the last couple of days, and we've talked to a number of our market guests, they were actually telling us that they would start to get concerned once that 10-year yield pushed above 1%. But you're saying, hey, that's not the case. At least 1 and 1/4, and might be all the way up to 1 and 1/2.

SCOTT WREN: Yeah, I mean, if you look at past cycles in the early stages of inflation, it's a good thing. It means there's more activity, more demand, those types of things. And stocks love a little bit of inflation. And so I think that the market is going to take the right kind of inflation from better growth and better demand. It's going to take it as a positive. And that's going to help push the market higher.

ADAM SHAPIRO: Jared, I'm curious what you're thinking as you hear this discussion because you like to point out that it's actually break-evens versus real yields, right?

JARED BLIKRE: Yeah. And we're trying not to get too into the weeds here, but yeah. I believe it's a inflation component, which is basically the break-evens, that we need to look at. And this is kind of tracking what Scott has been saying. And if you look at the real yield on the 10-year, for instance, it's still in negative territory, or it had been in negative territory for quite some time. I'm looking at it right now. Yeah, negative 86 basis points. That's why we saw this huge spurt up in gold. That's why we saw all this money rush in to these big tech stocks, the mega caps. But, if that reverses, I think that's more concerning for the market. Going forward, we want a little bit of inflation here via expectations because that's kind of tracking what the Fed wants. But, if we start going down in the real yields again, I think we're just going to see a return to the prior situation, where we have these big mega caps pretty much dominating the action 95% of the time. And that's going to be a less robust market for us.

SEANA SMITH: And, more broadly speaking, as we take a bit of a more macro view as to what's going on right now and what's driving the bond market, what's driving the equity market, that, of course, has some to do with what we're seeing in terms of the latest numbers coming out of COVID. Bank of America was out, their fund manager survey today saying that the biggest risk to the market right now is COVID. How should investors, do you think, be hedging some of this risk, given that we don't know the timeline of this and how bad the outbreak is going to get?

SCOTT WREN: Well, I don't think you want to bet the farm that everything is going to go smoothly. I think you want to definitely have a lean on. You want to be leaning toward risk assets. You want to be looking at sectors that are going to be able to participate as the economy picks up, the ones who are going to be able to increase their earnings. And so that means you're going to have to have some growth. But you're also going to have to have some cyclicality in there as well. So I think you need to lean, but everybody's got to sleep at night. So you don't want to lean harder. You don't want to get out there at the end of the diving board and bet everything on it and then have something happen where this distribution of this vaccine does not happen as quickly as many people think it might.

ADAM SHAPIRO: Ed, did you want to weigh in on that?

ED PERKS: Yeah, no, totally agree with that. What we've been seeing in the market, really since that September 2 blow-up with the mega-cap tax, this rotation, it never goes just solely in one direction. So that leaning in, that averaging in. But if your horizon is out 9, 12 months, this is certainly going to be buying opportunity.

ADAM SHAPIRO: All right. So we say thank you, Scott Wren, Wells Fargo Investment Institute senior global equity strategist, and thank you, Ed Perks, CIO of Franklin Templeton Multi-Asset Solutions. Good to see you both.