Venezuelan energy policy and housing are pillars in election, says Jefferies' Zervos

Summary

CNBC's The Exchange speaks with David Zervos, Jefferies chief market strategist, as the Dow and S&P hit fresh record highs. Zervos argues housing reform and energy policy, centered on the administration's push to lower house prices, interest rates and gas prices, are the macro drivers propelling the market and key pillars of the November election. On the labor market, he says unemployment's rise since 2023 is being underappreciated, that the Fed and market are too focused on inflation, and that a blowout payrolls report would unsettle markets.

• Dow and S&P touched fresh record highs while shrugging off Venezuela-related headline risk.
• Zervos: housing reform and energy policy are the two macro drivers propelling the market.
• The affordability push centers on lower house prices, interest rates and gas prices before November.
• Zervos says the market likes these policy pillars and they are keys to the election.
• He flags a multi-year labor-market deceleration, with unemployment more than a point above early-2023 lows.
• He argues the Fed and market are too focused on inflation; unemployment should return toward 3.5%.
• He says a blowout payrolls report would be disconcerting for markets, though unlikely.