Future of the CHIPS Act hinges on the election

Election day is tomorrow and uncertainty around the next U.S. president is top of mind for executives. On earnings calls this earnings season so far 116 S&P 500 companies had mentioned the election during their calls in the third quarter. That's according to the latest data out from FaxSet. So how big of a risk is tomorrow's election for equities? Joining us now we want to bring in Kimberly Forrest of Boca Capital Partners, founder and chief investment officer. Kimberly it's great to have you back here on Yahoo Finance. So we wanted to start with the election just given the attention that it is getting here on earnings calls so far this earnings season. How much do you think is riding on the election or how should investors be thinking about what the outcome ultimately means for their portfolio? Sure well in the short term you know and no one knows what the markets are going to do. No one absolutely no one. But in the longer term I think presidents have much less direct activity towards individual companies and even the economy. And why do I say that? Well both of the candidates in this election have pretty much diametrically opposed ideas on how to deal with the economy and what is their favorite things that they think they should invest in. And yet the you know S&P keeps hitting high after high after high and most companies are well aware of this. But we also know that Congress is the thing that has to actually agree to these policies and then fund them. So it's a long way from a political stump speech to something being actually you know evidenced in the economy. So my only word of caution on that is this. Any kind of direct policy companies that are direct in the line of fire of the government are incredibly at risk. And that would be all of the green sort of leaning companies. Windmills you know anything anybody that gets a subsidy from the government that's up for debate. So and they always know that and investors always know that. So big news in the government not that much news in the economy for the medium to long term. So then Kimberly what is the one thing that you're going to be watching tomorrow night heading into Wednesday morning to kind of suss out the market's moves and what the market may be trading on if we do start to get a hint of a result. Sure. Well I'm one of those people that think we're not going to really know you know by the end of tomorrow who is going to be president. So I think the markets are going to have a lot of push pull in them. And I'm not really a behavioral economist sort of person but I know this. The polls of fear and greed really do drive the market. And I think we're going to see volatility. Not not a big surprise there as people are placing bets and trying to figure out what's going to happen. Generally when people put money at risk it means they really believe it. So that's the only solace I could have for everyone who's invested in the market and is going to see volatility in the next couple of days. And once we do clear these expected hurdles not only the election but also you have earnings season rolling in you have the Fed decision later on this week on Thursday. Is that going to be enough clarity for investors for this market to continue the march higher. I think so. You know I'm not one of the people that think the economy is all that great. I think that there are large pockets where there are issues. We see it coming to light in the employment market. Jolts was lower than anticipated. And I think a lot of lower paying jobs people are having trouble. You know people in the like second two thirds of the economy are having trouble given you know the basics are so expensive. Now gas has come down but take a trip to the grocery store and you're still you know sticker shocked there. But that being said I think that the economy the global economy is trotting on and a lot of our larger companies have that going for it that they're not just in the U.S. but can go around the world and look for growth. Kimberly to talk about one specific policy there was a little bit of a back and forth between Vice President Harris and Speaker Johnson talking about the potential path forward for the chips act. And I know that you are a personal holder of several A.I. names and you have a lot in your notes about the tech trade. To what extent do you think any changes to the chips act could impact the tech trade and A.I. trade moving forward. Well I don't think it's going to end but I do think the rules are probably going to be revised. I think the current administration put a lot of provisions in that may be slowing down the actual building of chip plants and chips. So I think if either one of them win they're going to have to look at that and see how quickly they want this the chips act to actually affect the chips being produced in America. I'm somebody that really believes in the chips act because of so much is created in Taiwan and I don't think the normal investor or even especially the normal consumer doesn't realize where all of the electronics start which is in the island of Taiwan that is very close to China and China would really like to own that outright drive what happens in Taiwan. So Kimberly given that uncertainty just in terms of the chip players and what exactly the next several months to several quarters hold for them how are you advising or where are you seeing some of those opportunities within the space because it sounds like at least from your notes here that you are still rather optimistic about the A.I. transition story. I am. I think A.I. like many tech trends has captured the attention and more importantly the imagination of investors. Now like many tech trends it never marches on in the timeline that investors really want which is how soon is now right. So I think it's going to take much much longer to deliver some of the promises of generative A.I. and as an ex-practitioner of A.I. as a software engineer I'm not fully convinced the generative A.I. is the answer. A.I. in particular is. So looking at that I know how neural networks work and what they can do and we have the fast chips we have lots of data and I think that's going to bring productivity. So where do you invest. I still really like micron because if there's one thing I know about A.I. it consumes and needs a lot of data that data has to live somewhere and micron's a big creator of something called NAND which is where we now prefer to store our data on NAND devices. Now AMD looks particularly strong and could be a nice number too for the hot chips that NVIDIA creates at a lower price and then finally Synopsys is a company that helps chip designers make chips and they have an unusual merger with a Pittsburgh-based company that we like called Ansys that can move them kind of and de-risk them from being all chip oriented to be more in the simulation for mechanical engineering applications like cars and planes and stuff like that. Kimberly I want to end by talking to you a little bit about Boeing obviously the vote on the union-backed contract proposal coming up here but the CEO Ryanair this morning was saying that any continued delays of those planes moving forward could actually be good for airlines because they've got the pricing power interest rates coming down consumer spending could tick up that equals higher margins. Do you buy that from the perspective of the airlines? Kind of sort of but not really. We have two providers of planes right I mean of the big planes that move us all around the world Airbus and Boeing so the other thing is is you can't just decide if you're united or what any airline can't just decide oh I'm going to start buying a different provider. They have a lot invested in maintenance and all the parts that they keep on hand and they so these decisions about which company we're going to buy from have huge ramifications and you can't just say hey I'm going to go over here and shop around there is no shopping around so that takes some power away from the customer. Now timing certainly does and you know they could have a little wiggle room there but it's not as big as I think the CEO kind of said this morning. All right Kimberly we got to leave it there thank you so much for joining us Kimberly Forrest Boca Capital Partners founder and chief investment officer.