The major market averages (^DJI, ^IXIC, ^GSPC) are taking in commentary from Federal Reserve Chair Jerome Powell as he completes his second day of testimonies before the US Senate. The S&P 500 seeks to maintain its record run in 2024 and secure another all-time high close.
It’s near the end of Wednesday’s trading day, but Julie Hyman and Josh Lipton have investors covered, reporting on the latest market movers and interviewing leading experts and top executives across various fields.
Way to Win Co-Founder and President Tory Gavito joins Market Domination to comment on where Democrats critical of President Biden should refocus their energy ahead of the 2024 election.
SoundHound AI — a speech recognition software company that utilizes artificial intelligence — is partnering with automaker Stellantis (STLA) to feature its AI chat assistant inside several of its European vehicle brands. SoundHound AI co-founder and CEO Keyvan Mohajer comes onto the program to expand upon the capabilities of this in-vehicle digital assistant.
Other top trending tickers on the Yahoo Finance platform include Carvana (CVNA), HubSpot (HUBS), Advanced Micro Devices (AMD), and Apple (AAPL).
This post was written by Luke Carberry Mogan.
Video Transcript
Hello and welcome to market domination.
I’m Julie had that Jo left in live from our New York City headquarters.
We are giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.
And here’s your headline blitz getting up to speed one hour for closing.
Bell rings on Wall Street.
We look at it that inflation, this inflation has been caused by a combination of, you know, very strong demand and constrained supply.
So there’s no data that supports that gouging of consumers is part of the, it’s been very hard to track a connection with um you know, earnings and things the fed does not want to make a mistake here one way or the other, right?
They don’t want to be on, on hold too long, but they don’t want to cut rates too soon.
So it is kind of a tight rope that pal and company are walking and that’s what the bond market is trying to figure out and why we’re going to continue to see volatility.
A highly data dependent fed, highly data dependent bond market that equals volatility.
The economy is diverse enough, strong enough resilient enough to sustain the current rates to allow the Fed to bring down this sticky inflation.
So, fundamentally, things look good for revenue and earnings growth going forward.
We go one hour to go until the market close right now.
So let’s take a look at the major averages that tight rope that you heard Kevin Flanagan talking about the Fed walking seems like at least equity investors are pretty optimistic here that the Fed is going to be able to walk it.
And that the testimony from Fed Chair Jay Powell over the past couple of days gives some optimism that the Fed maybe is going to do what the market expects and cut rates two times this year beginning in September.
See the dow right now up 240 points, 6/10 of 1%.
And the run that we have seen a pretty remarkable run from the S and P 500 is continuing here stretching it out to a 10 day chart here.
You see the seven straight sessions that we have seen increase for the S and P 500 also on track for the 37th record close of the year.
So that’s where we’re at for the and P 500 with its gains today.
But guess what, the NASDAQ is also participating in that party, if you will, it’s also set to close at a record today and it is leading gains up by about 1% of course, a lot of that has to do once again with the magnificent seven or magnificent eight or magnificent to whatever you want to call them.
Mega Cap Tech is rising once again and once again, it’s rising in tandem, which is quite interesting here.
A couple specifics to call out here.
We’ve got Apple hire on some reports about more shipments.
It’s trying to ramp up shipments.
Um, and those shares are trading at a record today with that 1.5% gain and alphabet shares are also trading at a record.
Now, these companies don’t start getting earnings reporting their earnings until late July even getting bleeding into early August.
So we’re not quite there yet, but we’re already seeing some optimism again.
You got meta hire, NVIDIA hire Microsoft as well and then Tesla and some others.
And in terms of the sectors, we see pretty broad based strength there as well.
Only the financials are lower and really not by much here today, but it is tech and materials, materials coming back from losses yesterday that are higher along with utility.
So really, um seeing a a lot of gains across the board here today when it comes to those sectors, Josh, thank you Julie earning season kicking off Thursday.
And while the gains in the S and P 500 this year have been largely attributed to the magnificent seven.
Of course, could it be time for the rest of the index?
To have their time to shine.
Bank of America STR is expecting the other 493 stocks in the S and P to post quarterly growth since the four quarter of 2022.
For more.
Let’s welcome in Os Kwan B of a Security Us Equity strategist O Sung.
And it’s good to see you, you know.
Oh, maybe we should start big picture because it is earnings season banks coming at us on Friday morning.
Just sort of big picture broadly O Sung.
What are you expecting this earnings season?
What, what are you looking for?
Yeah, thanks for having me today.
I think this earnings season is going to be another pretty good earnings earnings quarter for the S and P. Uh, we’re expecting a 2% bid for the S and P 500 overall, which is actually the smallest bid that we are forecasting since Q four of 22.
But it’s basically in line with the historical average.
And the good news is that I do think that companies are going to deliver earnings.
This I saw the weakness that we saw.
Uh, in, in macro data.
The good news is that companies are so good at managing expectations that even when you know, macro data came in below consensus, which is basically happening right now.
Companies beat consensus 91% of the time by 3% on average.
Uh So, you know, I think the momentum is still there for earnings.
The question is how broad is the momentum for earnings?
And that’s something that you guys looked at in your note, right?
Noting that, um, of course, the bulk of the earnings gains that we have seen in the prior few quarters has been from the magnificent seven.
So what happens now?
Yeah, so we’re seeing a diverging trend between the Magnificent Seven and the 493 happening uh this quarter.
So the other 493 was basically in an earnings recession up until last quarter.
We expect this earnings season is gonna be the first quarter for the other 493 to post positive earnings growth since Q four of 22.
Whereas the max seven, their earnings growth is expected to decelerate for the second straight quarter and again in Q three and by Q four of this year, uh consensus points to basically similar growth rates between the two.
And I think that will really be the catalyst for the rotation in the market to take place.
And I think about, go ahead.
Oh, sorry.
Yeah, if you think about the leadership in the market over the past two years, it’s really been driven by earnings in 2022.
Tech underperformed because tech earnings lacked S and P five hundred’s earnings for the entire year.
Uh and tech earnings bottomed in March of 23.
And that’s essentially when tech start outperforming and going forward if tech earnings are going to produce similar growth rates to the to the other 493.
Despite trading at, you know, such a big premium versus the other 493 then I think that should really be the catalyst for the rotation to take place.
And also I’m I’m curious for the 493 you expect positive earnings growth.
I’m just interested.
What, what do you expect in terms of top line growth there?
Yeah.
So I think it’s for this quarter, I think it’s going to be more driven by uh margins rather than helpline growth.
And that’s typically how the earnings recovery starts.
It typically starts with cost cutting and margin improvement companies really trying to do what they can control and then demand starts to improve.
That’s when operating leverage kicks in and you get further improvement in margins.
And I think in the second half of the year, it’s really going to be more driven by demand than anything else.
We did some interesting analysis on what drives earnings and at the end of the day, it is really about demand.
A lot of people say, you know that this inflation uh trend that we are starting to see that could put pressure on earnings.
But what we found is that obviously there is a very strong correlation between sales growth and inflation.
But when it comes to earnings growth, there’s no statistical evidence that pricing or inflation drives earnings, there’s the correlation is essentially zero over time So, whereas volume demand obviously has very strong correlation to earnings growth.
So I think going forward, it’s really going to be a lot, it’s really going to be about demand rather than inflation or pricing.
And I do think that in the second half of the year, we could potentially see demand recover and and what will drive that demand recovery?
And is it contingent on the fed starting to its interest rate cutting cycle?
So, until we see a real cutting cycle and a beginning of a new economic cycle, I think it’s gonna be more driven by many inventory cycles here and there.
Uh I, I do think that the inventory cycle is turning, we have been in this destocking cycle over the past year to year and a half and we have seen one of the sharpest uh destocking cycle in history.
And if you look at the S and P five hundred’s inventory levels, we basically hit the trough that we saw in the prior three recessions and it started to moderate.
Uh suggesting that the be stocking cycle is moderating.
And I think in the second half of the year driven by the inventory cycle, we could potentially see uh me up.
Oh, so I’m also curious when, when these companies offer, you know, on their conference calls, when we hear from the CEO, the CFO, they start offering their forecast, their guidance.
Um What do you think we’re gonna hear there?
Oh, I I generally, I, I would suspect it’s gonna be pretty, just cautious and conservative given the range of, sort of, sort of uncertainties out there.
The election, the fed, um, the economy.
But, but what are you listening for?
Yeah, I mean, all the above, I mean, I mean, there’s no reason for companies to guide aggressively, uh, but the good news is that, you know, earnings continue to meet those expectations.
Like I said, companies have gotten so good at managing expectations and unless they see great reasons to raise their numbers, they’re probably going to be on the side of being too cautious.
And I think that’s probably good for companies to or companies to actually beat those numbers in Q three and Q four.
Um and, and going forward, I think, you know, if the demand story comes back driven by the inventory cycle, uh that’s, that’s gonna be a huge boost to earnings in the second of the year.
And I think key earnings to watch this, this earnings season is really going to be those companies that are very exposed to the inventory cycle such as trucking industrial semis that talked about potential bottom uh in Q two last quarter, uh as well as short cycle industrials that could probably provide some insight on the inventory cycle and key not on that list is the mega cap tech stocks that we have relied so heavily on O Sung, really interesting stuff.
Great analysis and thanks for being here.
Thank you.
We want to get to one trending ticker.
That is one of those mega cap tech stocks.
It’s Apple, the shares are 1.4% higher today and trading at a record this on a report that the company is aiming to ship at least 10% more new iphones in 2024.
That’s according to Bloomberg, that growth would be welcomed, of course by the tech giant after a sluggish 2023.
And as we talked about a little bit yesterday, uh some analysts research had sort of been pointing in this direction.
It looks like at least some of it is going to be A I driven.
It seems Josh.
Yeah.
So this is Bloomberg citing sources that Apple is talking about about 10% growth in new iphone shipments.
Um So if that report is accurate, it looks like Apple is relatively confident about these new A I enabled phones.
Um Bloomberg is right to point out, you know, there’s a caveat here, Apple did, does have an easier comp and e easier comparison here because the company had that that tougher second half of 2023.
There are some other questions too about, you know, how exactly this all rolls out in China, um where there are restrictions, um how that could impact uh Apple’s attempts to kind of build A I into the new products.
But uh listen, Apple higher today and now up about 20% this year.
Well, and what’s interesting here again is that this is Apple’s plan now, you probably know this better than this, but anybody isn’t, is Apple pretty good at predicting what demand is gonna be like, right when it, when it makes the shipment plans.
Well, it’s always tough because there’s so many puts and takes there.
I mean, it can obviously give, you know, boost of confidence like you’re seeing here.
I, I think what’s interesting is with this A I tech, I mean, the big thing here, what they’re selling is that it’s really a new and improved Siri, right?
That’s really the big selling point in some ways.
And Syria often came in for, you know, a lot of criticism, right?
And so to the extent, listen, our own Dan Halley, we’ve got to get the tech guys out there to really review it and see if it lives up to snuff.
But if it does, um that will be the way people do experience JJ A I.
So if it does live up the expectations, that could be a bi a big deal and listen, if you’re a bull on the stock, it’s kind of what you’ve been counting on.
You think this A I enabled iphone is gonna drive some meaningful upgrade cycle.
Well, and it’s interesting too because this is gonna be a little bit of a theme I’m realizing in our show today, we’re gonna talk to the sound Hound.
A I CEO in a little bit of who, who is introducing stuff like this in some vehicles.
Um We’re also gonna talk about Amazon’s Rufus, which is its gen A I interactive bot, I guess we would call it.
So, you know, there are more, it’s not just Apple, of course, there’s a lot of companies trying this right now.
I think there’s still a big question about how it’s gonna be received by consumers specifically.
And um you know, we’ll find out this is the, you know, but you’re right to point out because this is what investors are waiting for, kind of baton being handed off and like, ok, talking about A I marketing A I, let’s see, real usage.
Let’s see, real monetization.
Absolutely and not arguing with Siri about where you’re going directions for, for example, we’re just getting started here on market domination coming up, staying strong.
OPEC sticks to its forecast for solid growth and glo global oil demand this year.
Next, more on what’s behind that call coming up.
And as I mentioned, sound how that stock is on a tear on news that is A I voice system will be integrated into select the anti vehicles.
The CEO will join us to discuss further.
Plus time is running short, long time house Democratic leader, Nancy Pelosi says the decision to stay in the 2024 race is entirely up to Joe Biden will discuss with the president staying in or stepping aside could mean for the broader party later in the hour checking in on oil OPEC sticking to its relatively strong growth forecast for 2024 and next year, Yahoo Finance’s Inez fare joins us now with the details, Anne, yeah, Josh and OPEC stuck with its forecast for oil demand growth of 2.2 million barrels per day for this year, unchanged from last month.
And basically saying that economic growth and air travel will support fuel demand during the summer months.
And also during the holiday season, transportation fuels are expected to drive growth here in the US manufacturing and petrochemical production is also expected to support demand for natural gas liquids, for example.
However, it’s really important to just take a step back and take a look at where these oil forecasts are coming because guys, it’s forecasts have really been split more widely than ever of where oil demand is going in the coming years.
In part that has to do with the energy transition and how fast the oil industry believes that that that transition will be happening.
BP for example, put out an energy outlook report this week which said that oil demand would peak in 2025 at 102 million barrels per day.
And that report says that wind and solar will grow and oil demand will fall once that peaks under two different scenarios.
Basically that has to do with the pace of falling oil use in road transportation.
But meanwhile, you have the International Energy Agency which pushes for greener energies.
It expects lower 2024 growth demand than OPEC.
It expects that growth to be at around 960,000 barrels per day.
Its update is coming out this week and then you have the IE A which expects also the peak demand by 2029 at around 100 and 6 million barrels per day.
By the way on that peak demand still does not have peak demand in their horizon obviously, right?
I mean, you would expect that they don’t see peak oil demand by the end of this decade.
So you really have to take a look at all of these forecasts.
They are diverging more and more and just take a look at where is it coming from?
What’s their um outlook for the future given where they’re at consider the source always when you were talking about these forecasts.
Thanks a lot, you know, appreciate it.
Well, let’s get to some other trending tickers on Yahoo Finance today, hub spot on the list that’s uh shares dropping after alphabet reportedly shelved its efforts to acquire the software company that according to a report from Bloomberg, the shares are plunging some 13% right now.
Now, um there had been, this had been reported on earlier this year and hubspot shares have been climbing hubspot um has a $27 billion market value.
So this would have been a big, big deal if it, if it would have happened.
Yeah.
Yeah, there were, there were analysts who cover his names who, who said from the beginning they could understand sort of the strategic rationale for it, how Google could kind of bundle GCP, Google workspace hubspot, you bundle together, you get more competitive with rivals, um specifically Aws and Azure.
But they also said often in the same note, Julie, they would say it could make strategic sense, financial sense, but antitrust concerns, they just thought we’re always gonna make this one unlikely, unlikely, just too much scrutiny.
And so maybe that’s why it did not happen in the end.
Um How about um the CRM customer relationship management?
Um small mid size companies are mostly their clients here.
Um So I did see a little bit of commentary as well that the deal not happening might be good for the likes of sales force because it would have presented a more formidable uh competitor there.
So have to watch kind of how that competitively it would have been a big deal.
But anti, you know, Trustbusters lately, they don’t love big deals so much.
All right, our next trending ticker A MD, the stock moving higher after the company announced an agreement to acquire SILO A I and A I lab in Europe all cash deal that at about $665 million.
Um We do have some instant analysis here, Julie uh Piper’s harsh Kumar, he’s a smart guy.
He likes AM DS got out form says Silo A I enhances AM D’s software expertise with over 100 phd S and 300 employees join the company.
So in part of your big brains coming on board or says, yeah, you know, it’s good to have big brains around.
I mean, A MD of course, is seen, has been seen as not as um maybe a little behind or at least not as accelerated in the A I race as the likes of an NVIDIA perhaps.
But you’re kind of closing the gap a bit, right?
But there’s been a lot of optimism that it would.
And so this looks like, uh according to the these analysts that it is a step in the correct direction there.
So, and by the way, silo some key customers here, I mean, listen some of these names, uh Phillips Rolls Royce Unilever just among others.
And it looks like they’re gonna keep the management team in place at uh Silo.
It is based by the way in Helsinki.
Yes, fun fact.
All right, let’s talk about sound hound A I, those shares are surging after the company announced an expansion of its voice assistant product, the NVIDIA back company launching Sound How Chat A I in some stance, vehicle brands throughout Europe.
Joining us to discuss the technology is Soundhound A I co founder and Ceo Kan Mohajer.
Good to see you KVO.
Um So first of all, just talk to us about what this announcement means, which cars and if I’m in one of these cars, how is this gonna work?
Great.
Thank you for having me back.
It’s good to be here.
Uh Yeah, we are very proud that we announced with the answers that uh they are launching the San Chat A I voice assistance uh in several brands including peo uh across 17 new markets in 12 languages.
Um And let me tell you a little bit more about what, what that is and why it’s so important.
So for years, consumers have accepted that digital assistance uh in cars and devices are limited, you can just set timers, navigation, digit dialing and so on.
But by integrating generative A I uh into the assistance very seamlessly, consumers can ask questions about anything and everything and you can have a never ending conversation about it.
Uh And they ran pilots, the numbers spoke for themselves.
Usage went up, multiple folds, loyalty went up, multiple Folds, users wanted it and they are expanding it across their brands and, and KVO.
Um I, I know investors who are listening right now.
Listen, their question is gonna be how KVO are you thinking about this?
Absolutely.
And it’s a great question.
We announced in our last earnings that San Cha is an Upsell feature uh both to our customers and their customers.
So, um when uh we have our basic assistant that does the functionalities of the car.
Uh We worked on it for almost two decades.
We are crossing 20 brands.
Uh So we provide that already to a lot of factors.
And if you want to upgrade to Chat A I, the it’s an additional royalty.
So our revenue will have a positive impact by seeing adoption of Chat A I.
So.
Ok. What can you tell us now about the effect your projected effect on revenue from getting this product into more vehicles?
How are you guys modeling it out?
Uh So if you look at the last four years, our company has had a healthy growth of about 50% on average or more than 50% revenue growth year over year.
Uh We are maintaining that uh for this year and we are also announcing that next year our revenue will cross uh uh $100 million.
Um This was in our last earning.
Um and um um what’s next after uh sat Chat A I which brings generate A I into the the cars is monetization.
So if you have an assistant now that you can have a never any conversation, you can ask you about any question, ask you to answer things and get things done for you.
The next thing is to ask you to do transactions.
Uh So you can, while you’re driving and imagine you can their food before you get to the drive through, you can order to your car and then your food will be ready when you get there, you can have it be delivered to your house.
Uh You can make reservations, you can book appointments, you can do voice commerce and we are building that uh and that ultimately will increase our revenue and we will share that revenue with our car makers.
Uh so that uh our product becomes the revenue source for them.
Cavan.
I’m curious, you know, we were earlier talking about Apple and its new A I integration with Siri won’t that sort of make what you’re talking about somewhat obsolete.
Like if I have my iphone, I in my car with me and I can talk to it, won’t it do all of what you’re describing?
Not at all.
Uh So Apple is uh provides uh its technology to its own products.
Um And uh we focus on um well, two verticals, one is visual assistance for physical products like cars and TV S and it devices and A I customer service and we don’t really see the big tech play in that.
Um And the amount of integration we also don’t expect them to go because the integrations we’ve done, it has taken um 1020 years to build all the features for cars integration maps in connect with the features of the car controlling the car uh and service providers that uh the cars makers want to bring to their users.
Uh The two are uh that don’t really compete with each other.
We are the default assistant of the car.
So when you get in your car, you press the button or you say a Wakeboard, it invokes our assistance and we don’t really see that as an issue.
The other thing I want to mention is that we uh we are very fast to integrate native A II.
I believe you are the, the the fastest uh to bring A I to a digital assistance uh within months.
Um It took Apple and other companies more than a year to do it and, and they’ve only announced it.
Uh We are, we are live in uh with uh in products and the way we did it is incredibly amazing.
Uh It’s so seamless when you ask about domains that we provide versus domains that might have to go to JG BT, the user doesn’t have to know where, where the answer comes from.
Uh And they can go back and forth between them, Kon, you, you mentioned uh your other business, you know, the drive through business.
So you your software interpreting uh when I, when I speak into the box, when I place that, that order, I’m just curious, Kevin, how, how you sort of see that drive through business kind of evolving and changing because when, when I speak KVO to financial analysts um who cover your company, you know, they’re excited about that.
At least some of them, I mean, they really see that as a business where there’s a potentially a lot of runway, you know, there are things that is, it’s easy to know that will happen for sure.
Right.
Um And one of them for me is in three years, if I go to a driver, am I gonna talk to a human or I’m gonna, it’s gonna be automated.
And to me the answer is obviously it’s gonna be automated.
Uh When was the last time you had a great experience talking to a drive through human that you had to go write a Yelp review, right?
So, um that is something that is gonna be auto.
The technology is ready.
We are already live with multiple brands.
They love it.
They, the uh employees of the restaurant, love it, the uh Drive Drive uh really enjoy it.
Uh And we are really getting a doctor so it is just a matter of time.
KVO always appreciate having you on the show.
Thanks for making time for us.
Thanks so much.
Coming up, Biden’s decision to stay in the 2024 race impacts more than just the White House to discuss the effects down ballot next on market domination.
President Biden facing an ongoing drumbeat of calls for him to end his re election campaign including now actor and democratic fundraiser, George Clooney, most congressional democrats not speaking publicly about their views and Nancy Pelosi towing a careful line not saying Biden should stay in the race.
Just that he should make the decision.
But a major concern within the party is what the implications of Biden staying in race could now mean for other congressional races and joining us now is Tory Gavito, the co founder and president of way to win a progressive donor network focused on down ballot races.
Tori, it’s good to see you.
So, I mean, listen, what we’re seeing with Biden right now, obviously, this is historic.
The drama continues.
What has it, what does it mean, Tory for those down ballot races?
What are you seeing?
What are you hearing?
Look, the down ballot races have always been important.
There is one goal that Democrats have for 2024 and it’s defeat mega and it’s to re secure the trifecta.
There’s no getting rid of Trump and Trumpism without securing the White House, getting enough votes in the Senate to pass rules reforms that we can take back our freedoms like on reproductive rights and getting back the house.
And so it’s really been an all above all strategy for the entire year and now is the time to double down across all layers.
We can’t walk away from the presidential campaign just in the same way that we’re not seeing Democrats walk away from the down ballot races either.
And so, Tory, what does that mean then in terms of who should be running for president on the democratic side?
I mean, doesn’t it matter to the down ballot races, um who that person is and whether down ballot candidates and donors believe that that candidate can win in our view.
We can’t waste any time in the.
Who should, what should is Biden in is Biden out.
We have to focus on what we can control.
Now.
The current Democratic ticket is President Biden and Vice President Kamala Harris.
We did some polling that we released this week on Vice President Kamala Harris knowing that she’s the second player on the ticket and she, she should be lifted up.
We wanted to see where Democrats and Independents stood on, on her, on her likability and her, her favorables and she did really well.
She’s doing really well with young voters.
She’s doing really well with voters of color.
These are exactly elements of the party that need to come back in elements of the winning coalition.
We need to win um to win in November and this is up and down the ballot.
So, so we’re focusing on what we can do now to make sure the ticket we have now is bolstered and that there aren’t any impacts on the down ballot.
Tory on our podcast here.
Opening bid.
Yahoo, finance executive editor Brian Sazi.
He sat down with Tusk Ventures founder, CEO and by the way, Democratic donor Bradley Tusk, and he’s called for buying to a draw, but here’s what he had to say about down ballot races.
Take a listen to this, you know, I’ve had members of Congress and other elected officials.
Um since the debate call me for money.
Like people do every day.
And I’ve just said, look, if you come out and say that Biden should withdraw, I’m happy to support you.
But if you don’t have the guts to just do something as simple as that where 80% of the public is already there.
Like I’m not going to give you money.
I mean, one congressman said to me, well, you have to give me money because we House Democrats are more important than ever because the president’s so weak, he’s so weak because you don’t say anything, right?
So to what, what’s your reaction when you hear that?
I mean, the beautiful thing about American democracy is that it’s a democracy and that we have to listen to everyone who’s participating in this um American experiment from donors to the grassroots and the grassroots right now are deeply engaged across all levels of the ballot.
Let’s take Arizona, for example, Arizona has local organizers in Arizona.
Local elected leaders like Raquel Taran.
They have been fighting to make Arizona a more progressive, more tolerant space since 2010 when they fought against Joe Arpaio.
And here they are, are still taking on the bid.
They’ve got an opportunity to keep Arizona in the blue column for Democrats for President Biden.
They have an opportunity to send Gallego to the Senate.
They have an opportunity to send Raquel Terran to the House and they are also fighting to take back their legislature an effort that’s been ongoing.
We don’t want to walk away from efforts like the Arizona locals.
We don’t want to walk away from efforts like that, that across this country where the grassroots are fighting tooth and nail to keep our democracy intact.
So, you know, whatever the donors are saying about what factions they’re lining up with are not the bottom line is, we’ve got one goal win in November and to do that, we support the whole ticket.
Lift up Kamala.
Make sure we understand um lift her up, make sure folks understand that she does really well with parts of our base that need to come home and then support the grassroots.
You can’t walk away this cycle from voter registration that needs to get done field work that needs to get done along with the air war.
And I, I also want to ask you about the donors themselves.
Are you focusing more?
And are you finding uh that Democrats were large or focusing more on the sort of um small dollar donors that grassroots that you’re talking about versus the big money donors?
It’s everyone.
We need everyone to support Democratic coalitions right now.
So we know that there are big billionaires that back Trump and Trump’s faction.
We’ve heard the news reports that Trump has been meeting with big business and billionaires offering them big promises.
There’s no way to compete with the billionaire class without bringing together a grassroots army along with political donors who are of higher net worth, who believe in multi racial democracy.
And so everybody is pulling on all their networks right now to do the right thing and stand for this democratic experiment.
Tori, thanks a lot.
Appreciate it.
Thank you.
And by the way, you can hear more of that conversation between Brian Sozzi and Bradley Tusk for that, you can tune into opening bid on Friday.
That podcast will be available at 8 a.m. Eastern.
Let’s get to some calls the day now, T DC and lifting its price target on big big tech names, Amazon alphabet and meta analysts adjusting their expectations ahead of the second quarter earnings season.
We’re going to get Big Tech really towards the end of the month here.
Alphabet shares, by the way, are trading at a record today with that increase.
And I was looking not just at the TD Cowan Note Josh, but at what’s been happening with earnings estimates for, for alphabet.
They haven’t really been budging over the past month or so.
Um So this uh this estimate here in the price target going to to $220 from John Blackledge over at Cowen.
Um does maybe it’s the beginning.
I don’t know, maybe we’ll start to get some revisions now as we get closer to the numbers.
Yes, earning season here.
That means the previews start coming so T DC, they like alphabet, they still like alphabet.
They take the target up to 220.
By the way, I’m just looking at the preview for meta as well and I believe there also bullish still have a buy and yes, they took that target up to 600.
They were sort of doing, um, their own surveys and checks and, like what they heard, I mean, one question that’s gonna be interesting.
Julie, is you, the, these tech names of course have just rocketed higher this year.
I mean, they had such strong runs.
Expectations are high heading into these earnings prints.
Well, what’s been interesting is, you know, we talked to O San Juan at the top of the show from Bank of America said we’re gonna start to see some broadening in the earnings performance beyond Big Tech, but he didn’t say and I really haven’t heard others say that Big Tech is gonna fall down.
In other words, it’s more like Big Tech has been hot and the other stuff is gonna start to keep pace.
It’s not so much that big tech is gonna slow down, which is interesting if you think about to your point how well they’ve been doing so far.
It’s been such a, like, you know, the skeptics have been pounding on that so hard narrow rally, narrow rally, although a rally can be narrow for a while.
Yeah, we’re looking at that 37th record close today.
All Right.
Taking a look at Carvana Need Needham, upgrading that one to a buy sign, the belief of the company’s ability to grow its market share and sales.
The online used car retailer rising in today’s trade.
Needham does go to a buy price target 160 says, uh, it is a secular gross story with a cyclical recovery kicker Julie.
Sure.
I mean, this stock has been very volatile.
It’s up 100 and 46% year to date.
Nearly 300% over the past 12 months.
Yes.
But you know, you know, the thing I always go to when I see a game like this is that a short squeeze and this stock 20% of the float is shorted.
So, yes, friends.
It is at least in part a short squeeze because an analyst upgrade does not typically result in, you know, a, a huge gain, but that is what we’re seeing.
And I know after a move like that, it’s not surprising that most in the street are, are on the sidelines with neutral but not need them.
Uh They say bye but yeah, I guess they’re fingered.
Hey, you know what?
Uh not all the good news is priced in.
Let’s talk about one more call here today, Bank of America Securities, downgrading Visa and mastercard giving both stocks a neutral.
We’ve got the analyst behind that note with us.
Now, Jason Kuperberg, he’s senior pay payments analyst at B of A securities good to see you Jason.
So um the and as you acknowledge in this note, you say, well, maybe I’m in the minority here in terms of this downgrade.
So talk us through why you’re going, what was the sort of catalyst was for you to go neutral in these names?
Thanks for having me today.
Really two components to today’s call.
The first is a little bit less confidence in the multi year top line growth algorithm for Visa and Mastercard.
And we deconstruct the various components of their top line.
In our note, the core business, some of their newer lines of business value added services, new payment flows.
We think we’re a little bit further along in the global conversion of cash to card.
And so there was also pull forward during COVID.
And so hypothetically, we think that it’s become a little bit more plausible.
The top line growth may end up being a little bit below 10% rather than being in the low digit range as was the case prior to the pandemic.
So that’s number one, number two is that the level of regulatory and litigation activity surrounding Visa and Mastercard has escalated recently, particularly in the US and most recently related to some of the long standing litigation that Visa and Mastercard and their card issuing banks have had versus uh the US merchants.
And there were some recent unexpected developments there in that a legal settlement that had been agreed upon back in March was unexpectedly um overturned or I should say uh declined by the presiding judge leaving a wider range of outcomes now potentially in place.
So collectively, those two dynamics made us a little bit more cautious and we went to neutral A and Jason, you also mentioned, it looks like you’re elevated regulatory activity and crowd positioning.
You, you call that those as kind of potential challenges.
Just elaborate on those two points first.
Yeah, so regulatory and litigation, we would kind of put in one larger bucket.
And so again, this litigation versus the merchants that was thought to be resolved and is now not resolved.
Uh creates a little bit more uncertainty.
We’re also awaiting a final decision from the Federal Reserve on how much they’re going to cut the level of us debit interchange rates in the US.
So that’s pending as far as the positioning, what we were referring to there is just investor positioning and, and our data shows that Visa and Mastercard are both effectively consensus loans in that they’re widely owned already.
And so, um making a little bit harder in theory to find incremental buyers for the stocks.
Jason, what about the sort of outlook for consumer spending in the read through for these guys?
Is there anything?
Um you know, I know you talk about macro pressures a little bit here, but how does that play into your thinking?
The general message we’ve heard from all payments companies in the last couple of months, including Visa and mastercard has been that they’re seeing stability in underlying overall payment volume.
So we’re not suggesting that there’s gonna be some big miss here on earnings, but nor do we see particular upside.
So I do think that there is, uh, some general, uh, risk as you move into the back half of the year.
Maybe things soften a little bit.
We’ve seen some employment reports, obviously that um, have looked a little bit more cautious.
Right?
And so I think, um, hypothetically if unemployment starts to creep up a little bit more, then, you know, you start to worry a little bit more about underlying consumer payment volumes.
But again, we don’t see hard data of that happening just yet, could be a little bit of a threat more in the second half of the year.
So Jason, uh le let’s up here, you know, we know the names.
You’re, you’re not so crazy about we’re on the sidelines now.
What, what are some names you, you that you think are more attractive here, Jason, what are some buys fis is our top pick.
We also um feel pretty strongly right now on the long side about global payments GP N as whether as well as uh block.
We think all three of those names are undervalued.
Jason.
Good to see you.
Thanks for joining us.
Thank you coming up.
We’re taking to the skies in our investor playbook.
Find out which names one analyst believes are best positioned to capitalize on record summer travel demand.
That’s next on market domination.
Airline travel is breaking records.
The TS A screening more than 3 million passengers on July 7th.
That was a new record as summer holiday travel is in full swing.
But that sky high demand has not translated to record province for airlines.
The most profitable US Airline Delta is set to report results.
tomorrow.
Analysts are expecting the firm’s quarterly adjusted earnings will be 11% lower than the year prior.
We’re looking at how to navigate the big picture with the Yahoo finance playbook and joining us now city managing director, Steve Trent Steve.
It’s always good to see you here in studio.
Thanks for coming in.
Thanks for having me.
So I know you are a Delta fan from an investment perspective, but maybe you can help us with this puzzle that we have been witnessing all year, which is this huge travel demand that we’re seeing that is not always translating to the bottom line of these airlines.
Yeah.
No, that’s absolutely right.
Um And as we look over this quarter and the coming quarters, uh we have pivots that are are occurring from a seat mile cost perspective.
So certainly, uh you had this honeymoon period, for example, during the pandemic where there was not a lot of maintenance.
Uh You are now getting into a cycle of some heavy maintenance for some carriers uh that they were, you know, the, the entire group was able to delay for some time.
Um On top of that, you’ve got uh labor coming in.
Um, pilots agreements, mechanics agreements that are, uh have fully spooled up and create in some cases modestly difficult year ago.
Comps, but big picture broad picture, you know, we’re still constructive.
Uh Delta’s verticals are firing on all cylinders and we like the fact that it gets more than half of its revenue from outside a main cabin and and Steve just your ticket prices like what are we seeing there in terms of trends?
I mean, versus like six months ago or 12 months ago.
Yeah, so a little bit of a tale of two cities, so to speak on that one.
So domestic market uh relative to last year, uh you do have some pockets where uh you ostensibly have some over capacity.
So Florida, for example, which for a long time was the only place people seem to be going.
Um Nowadays, of course, uh you have uh plenty of capacity there.
Uh you have air traffic control limitations.
Um And then lower end consumer is still under some pressure.
Uh interest rates haven’t come down yet.
But when we think about international long haul, you know, that largely still looks very good with the noted caveat, maybe we look at the transatlantic, we get a little bit of unit revenue toughness with the Paris Olympics because business travel kind of dries up.
Um aside from that one item, you know, the international long haul side still looks very good.
So in general, sounds like demand is still holding up.
It is more on the cost side.
That is an issue, say more if you will about that outside of main cabin comment you made about Delta and our other.
What does that mean?
Where does, what does that entail?
And are other airlines also capitalizing on that?
Yeah, absolutely.
So the network airlines absolutely are.
So if you’re at Delta or, or United, for example, uh you have economy plus, uh your business class cabin is doing very well.
International long haul is due nicely.
Um And then on top of that uh loyalty program revenue, co branded car remuneration.
Um air cargo hasn’t been so hot lately, but maybe it’s also gonna make a swing back, you know, on the opposite end of the spectrum.
If you’re a domestic airline, it’s a little bit of a tougher ball game if most of your top line is main cabin.
Um and that’s been kind of a piece of the pie relative to those other verticals uh where short term unit revenue is maybe uh not as strong as as as what you’re gonna see with the, you know, the network majors, Steve a lot of times when people book a flight, of course, they book it, you know, they want the loyalty programs, right?
Of course, are there certain names that do it better than others in your coverage universe?
Yeah, on the loyalty side and co branded card side, uh you know, Delta is a monster on, on that side of the fence.
I say that in a good way.
Um You know, if one looks at the um uh co branded car remuneration that it receives from American Express or as a partner with American Express, uh they did seven some odd billion dollars last year.
Um And that was, uh really represents a very good trajectory versus what they’ve done over the previous years.
And certainly what this all looked like on a pre penn basis.
Uh United is also doing quite well.
Names like Alaska Air also doing a pretty good job.
Those network airlines, uh full service airlines that can offer uh global capital to their frequent flyers and their co branded card holders.
Uh There’s from the customer standpoint, much better optionality uh from being one of those programs uh versus a domestic low cost that has a relatively limited network, for example.
Right.
And delta as your uh pick, it’s, it’s up to what, 17% so far this year.
So it’s done pretty well so far.
I wanna ask you about something else.
Uh Another prism through which to view the airlines because you wrote about it recently and that has to, with climate change, temperature heat.
Um, is there a one airline that you can pick that’s better poised in that sense and one that is not as, and what do does it have to do with where people are traveling because of the weather?
Does it have to do with on time performance at the airports if you can just succinctly tell us how you’re thinking about that?
Yeah, absolutely.
Um And this is kind of such a deep topic and of the several layers where you can see, uh let’s say a long term impact from all of this.
I think one of the most important effects uh could be uh what happens to demand uh in regions that just keep getting hit with too much extreme weather, heat waves that get worse heat waves that last a lot longer um weather events that sparked forest fires that really screw up air quality for weeks on top of the heat.
Um So if one looks at the overall risk from heat to the population today, it’s thankfully not a massive one.
Uh but heat kills more people in the United States than hurricanes, floods and tornadoes combined.
So that’s primarily more vulnerable members of the population, the elderly, uh the, the homeless and what have you.
But on a long term basis, you know, if this all goes downhill, uh Airlines are going to eventually pull capacity out of some of these places because there’s just less demand for travel, especially during the hottest months.
Uh And when you have um high temperatures, there are some elements of uh flight operations that get much more difficult uh aircraft take off rate goes down.
Uh One has to start worrying about uh jet fuel flash points.
You’ve actually had one airline cancel a flight uh in, in Las Vegas because uh the temperature and the jet fuel uh uh started giving off a warning light in the car.
Well, we’re gonna have to have you come back and talk much more about this because I think it’s a really interesting topic.
Thanks so much for joining us.
Always.
We appreciate it.
Thanks for having me while wrapping up today’s market domination.
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