Hello and welcome to Market Domination. I'm Julie Hyman. That's Josh Lipton, 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 you up to speed. One hour before the closing bell rings on Wall Street. >> Airlines incentives are really aligned with the interests of shareholders and in fact, he has delivered on those very lofty thresholds from the compensation plan. And so, you know, I think what you're seeing is the overwhelming support of retail investors for this. And really, he just needed a fraction of support from institutional investors, which it appears that he has he has gotten the balance, unfortunately, is in favor of them being too late and the economy is slowing more than it should. >> And small businesses and low income households being hit particularly hard. You ask, what is that probability? I put it at 35. There's a 35% probability that they may end up too late. >> The fed will be fine about taking a couple of years to get all the way down to 2.0 on their preferred measure, the core. The PCE deflator. But what they want to make sure is that they're not getting stuck at three. >> We got one hour to go until the market closed. So we're taking a look at the major averages here. We got a mixed picture here today. Things kind of muddling along as investors are still kind of digesting what we heard from the Federal Reserve. And of course also digesting wholesale price data that came in this morning, also showing some deceleration. So we're seeing right now the Dow down about 43.5 points, just about a 10th of 1. The S&P 500 up a fifth of 1. The Nasdaq up a third of 1. A reminder on each of those if they close higher at all, they will close at records again in today's session. So we'll see if they hold on to those gains. I also want to take a look at what's going on in the bond market here. We've got the ten year coming down another five basis points or so. So if you combine that with the move that we saw yesterday following the Federal Reserve and of course the CPI data in the morning, you have a pretty substantial pullback in yields that we have been watching. Taking a look at the sectors in the S&P 500 right now. We've got industrials and communication services that are lagging a bit. Real estate and tech in the top position once again, which we saw a couple of days ago as well, which has been quite interesting. And then want to take a look at the Nasdaq because once again here we have some really interesting activity going on amongst large cap tech. I want to call out Nvidia again, up 3.3% here. So the stock continuing its climb here further in market cap as well. And now it is trading at a record again today as well. You know while we're talking about market cap just a quick check here. We got Nvidia 3.18 trillion. Apple though still hanging on to its top spot above Microsoft. Josh all right Julie the countdown is on for Tesla shareholders to put in their final votes on Elon Musk's pay package, the EV giant's annual meeting to reveal the final verdict on that $56 billion question hanging over this company. >> Yahoo Finance's Alexis Keenan and prize Sumanene. Joining us here with the very latest prize. Let's start with you big picture my friend. What is in store now for this shareholder meeting. >> I mean you just said it man. The big things are going to be that vote on Musk's pay package. Also the sort of re domestication of the company to Texas from a corporate governance point of view. But yeah, that that big shareholder vote we're talking about that. You know Musk earlier last night tweeted about how the trends for the votes are going his way, that it's basically a fait accompli when they have the meeting at 430 later today about what will happen. But, you know, it's not it's not without any drama here. You had chair Robyn Denholm kind of arguing for shareholders to vote for his pay package. You had different investor groups for and against it, as you can see in that graphic, there. So a lot going on there from a battle point of view. But it seems as though potentially that Musk will likely get his pay package. >> All right. Well we'll see how it actually ends up turning out. Of course he said he got it. But then people can vote until the voting closes. So we have been talking a lot about the rationale back and forth in this pay package debate. Alexis, I know that you have been looking at this as well. So give us some more color here as we get down to the wire. >> Okay. So we talked about this a little bit already. But let's just kind of go over what would be the yes votes. The people that want this to happen. So you have things like incentivizing Musk to stay at Tesla and run the company as CEO. He's the key man there a lot of people think he goes away. That's a big problem for Tesla. Also though, avoiding litigation, a big one here, no matter which this which way this vote goes, the thinking is that somebody is going to be unhappy. If it is a yes, shareholders unhappy if it's a no, maybe shareholders unhappy and then if it's a no. Musk of course, unhappy. He could sue too. Right. So he could have all flurry of litigation on top of that. You know you just have to look at the last time around 2018, despite the conflict at the heart of the litigation that voided this pay package, you still had 73% of disinterested shareholders voting for this deal, a high number there. So that is important to consider in all of this. And also just looking at the stock price, the thinking is if this is a no, that the stock price is going to suffer as it has been over the course of this litigation. So a lot to take a look at here. And certainly we'll be waiting and watching for what happens. >> And just one quick precision here. You mentioned 73% of disinterested shareholders voted for it last time. Disinterested meaning like Elon Musk is not voting today to approve his own pay package vote on some of the proposals that are coming from management and shareholders. >> But he cannot vote on his own pay package. He's going to have to sit that one out as our other interested shareholders. So it's not going to be everybody casting a vote here. >> Gotcha. All right Alexis Prize thank you guys. >> Appreciate it. And be sure to tune in at 430 today for our special coverage of the Tesla shareholder meeting, including a conversation with Ark invest CEO Cathie Wood. >> We're getting closer to the results from that Tesla shareholder vote here to help us break down the latest and what to expect. We're bringing in Nancy Tengler, CEO and CIO of Laffer Tengler Investments, and Lou Bassanese, president and chief market strategist at MDB Capital Holdings. Thanks to you both for being here and just to be clear where both of you are situated, Nancy is a Tesla shareholder. She has voted yes, Lou, not a fan of Tesla shares, doesn't hold the stock, I believe. In fact, it was the subject of goodbye or goodbye. It was the. >> I'm a fan of Nancy though, so no farewell here. Of course. >> No it's not. It's not personal. Lou, you're here with us in studio. Get to you first. Sure, as you look at this whole drama unfolding, does it make you more convinced that you don't want to hold Tesla shares? Yeah, I try and avoid drama in all aspects of my life. >> I think drama is the right word for this because, look, this is the first time in my life I will empathize or sympathize with Musk because he's having to renegotiate a pay package that was already approved. I mean, you shouldn't be tried for a crime twice. You shouldn't have to renegotiate a pay package twice. And at the end of the day, shareholders, it's in their best interest to vote for this because they have their principal at work and at risk. If Musk isn't incentivized, then their capital is at risk. So I think whether you think it's egregious or two too generous of an offer, it doesn't matter. It's a pay for performance package. He has to deliver on the share price. What's happened in the past doesn't matter. It's what happens in the future. For Musk, he's willing to put that on the line. >> Well, actually, in this particular case, it's only about what happened in the past. >> He already hit most of the benchmarks, right. He has to now hold. He can't exercise his options for another five years. But even if the stock went nowhere from today, as I understand it, hopefully I'm understanding it correctly. Even if it didn't go anywhere today, he still would cash out big. >> Yeah, five years from now. >> Ask any CEO if they if they feel confident they can hold their stock price stable for five years. That's a feat in its own, especially when you think about the market that they're in. You have declining sales, declining demand, declining margins. That's a that's a Herculean task, to say the least, to be able to think you can do that for five years. Let them try it. Otherwise it's nothing, you know, nothing lost, nothing gained. >> Nancy, I want to bring you in. You here as well. You are Tesla shareholder. Nancy, as I understand it, you voted, you know, for this pay package. How come? Nancy. >> Well, I think for the reasons you've been discussing. I mean, Josh, he earned it. He. These were ludicrous targets at the time. They were set, and he achieved them and surpassed them. And so here's a guy who's made a lot of money for shareholders over the years, I think investors I think it's interesting that the individual investors are the ones that kind of carried this over the line. And I think they understand that not only, you know, has he changed the value of the company, but he's changing society. So this is somebody who deserves to be taken seriously, you know, we've heard concerns from some who say, well, it gives one shareholder too much control. Well, you tell me, who has the voting control at Meta and Google in those two share classes, the only way you can express your opinion is to vote with your feet, which is what investors did when Mark Zuckerberg pivoted to the metaverse. So there's a lot of irony in this for me. And the last thing I'll say is, you know, we don't really sit back and critique professional athletes, pay packages, let's take a LeBron James who's earned almost 500 million, in his career. Is that too much? Is it not enough? >> Well, well, we don't invest alongside LeBron James. We don't share in the profits from LeBron James. >> This is someone who you're investing in. >> And so you should have a say in what they make because you're the shareholder. >> So Nancy what I want to ask you though as you as you look at this, even if you think he deserves it, he hits the targets, etc, what do you say about the critics who say the board is too close to him? The rubber stamping, what he does? I mean, there's a whole host of various other allegations about his behavior for, you know, there was just the Journal article about SpaceX and some of his behavior with women on staff. There you know, how do you reckon with all of that, even if you think that he hit the targets and he deserves the money? >> I don't think that comes into the equation. Julie, I'm sorry, I I'm not I'm not approving of that behavior. I think we've we've got a long list of folks that can get in line in front and behind Elon on that. The issue is whether or not there was a contract in my view. Did he deliver on his objectives? He did. >> But was the contract entered in good faith? If the board is so close to him that they couldn't sort of see it in a clear headed fashion, that's a different issue. >> I think that the courts should take that up with the board, but if we have courts now, second guessing is the dividend payout too high? Are the that the board said, or is the share buyback program too big? I think the deal was done, he delivered and whether or not they were too close or not, there certainly much less conflicted than they used to be. But that may not be the right benchmark, but I think this this is someone who has, not only developed technologies that are really changing the world, but has delivered profitability. And for many years, no one cared about profitability at Tesla. And now he's actually delivering earnings. Growth is going to accelerate next year free cash flow. So these other issues to me are kind of strawman. And I think you have to as an investor, you have to take the financial aspects and the fundamentals of the company at heart. If I had to pass judgment on every CEO, I'd probably own two stocks. >> Lou, I want to bring you back in here as well. One thing that interests me about this conversation when we talk about Musk is I can think of very few CEOs who are tied so closely to the company. How how just how foundational is he? Because we, you know, our buddy Dan is over at Wedbush. Dan will always say, hey, you know, Musk is Tesla. Tesla is Musk. Is that how you see it? >> I totally agree with that. I mean, you used to think that Steve Jobs was Apple, but you had Tim Cook in the shadows. That was really learning the business and could implement and execute. >> And it turns out, Tim Cook kind of Mount Rushmore of American business. Absolutely. >> But does Musk have that protege underneath the bench? I don't believe so. If he did, he wouldn't be three timing it at three companies as the leader. So I think they're inextricably linked. I agree with Nancy here that we should get over the concentration of voting power or ownership. That's symptomatic of every major tech company with Zuckerberg. But, you know, it's really the cure for all ills. Here is a higher stock price. You won't hear a lot of this noise and chatter if Tesla is performing. >> In other words, the fact that it's gotten shelled like this is part of the issue. I agree. >> Yeah, I think that's absolutely part of it. >> Well, so Nancy, let's talk about that then. Are we are we going to get a higher stock price? I mean yeah the stock's popping today on this. But fundamentally the business has some issues. >> Yeah. Well it's trading like an EV company. And EV demand is slowing the margins are shrinking. We've seen this with every great product I mean go back to coach if you want to with Hand-bags. You know as soon as the margins became well known, they had a number of competitors. So the thing to me that's attractive about the company is the Megapack business, which is the electric utility grade battery packs that's growing faster and is more profitable than the car business. Yes, autonomous is also of interest. I live in Phoenix half the year, and I can't go a quarter of a mile without seeing a Waymo. I think this is going to be the wave of the future. And then all of the AI initiatives that he will now stay under if the court ratifies this, by the way, it still has to be ratified by the Delaware court, but that will stay with under the Tesla umbrella. And I think that's where the value, the future value of the firm is. So don't expect the stock to continue to appreciate like it is today. This is a 3 to 5 year time horizon holding. But I think the technology is there. And yeah I agree with Lou. There are some succession issues. There have always been succession issues and there have always been board issues. So I think that that is stipulated and I agree with all of you, but there's still money to be made in the stock. >> And with you here, put aside the shareholder meeting. Let's just kind of pull on Nancy's argument. Just talk about the fundamentals. How do you see it near intermediate term? >> I mean I look big picture fundamentally every new technology goes through the same adoption cycle. You get early adopters, the first 20% of market share, and then you've got to cross that chasm into mainstream adoption. And what we're seeing, price points an issue reliably is an issue. I just don't see Tesla leading that charge across the chasm. I think you see bigger competitors in the automotive space that have a proven track record of operating longevity, with margins at scale, that are going to take over and dominate the next wave of growth in the EV market. But that being said, never count out Elon. He's a bit irrational a bit. You know, he can cast a vision, which I think is what Nancy is alluding to. There's AI, there's autonomous driving, there's a lot of things that could lead to future share price appreciation and business fundamental strength. But right now I just don't see it so well. >> And given picking up on that sort of sometimes irrational behavior, capriciousness, what have you. Nancy, how confident are you that even if the pay package gets approved, even if Delaware lets it stand, that he keeps the AI at Tesla? Or could something else piss him off and he says, guess what? I'm gonna do something. Pull something else away from Tesla. >> Well, I don't know. >> We could say that on the air, Julie. I don't know either, but I just said, now, Nancy, listen, I owned the stock many years ago before there were earnings on a relative price to sales ratio basis. It was trading at 180 bucks a share. I don't know what that is post split, but this was when Elon was sleeping on the floor of the factory. He was smoking whatever with Charles Rogan on the Charles Rogan Show and drinking whiskey at the same time. And I looked at this and I said, this is. And by the way, the turnover then was much greater and the board was even less independent. And so I sold my shares and I got a double, and the stock went up six fold. So I disagree with Lou rarely, but I will disagree on this. This company has the best margins. And he's been he's been reducing the margins voluntarily to take share. Free cash flow is about to accelerate. Earnings growth is about to accelerate. And he has the vision. And he will figure out how to converge all these technologies. I'm I'm not you know this isn't a personality contest for me. There's a lot of CEOs and companies that I own the stock. And I don't actually like the CEO, or how they operate, but they're good at their business. And as an investor, that's my job for my clients. >> Fair enough. Very much so. All right. We're going to say thank you to Lou. We're going to keep Nancy around because we want to get her thoughts on another story that we are covering here today. And that has to do with Broadcom. It's one of the top trending tickers on Yahoo Finance. The stock has been soaring on earnings. And the ten for one stock split. And Nancy back in December you were on Yahoo Finance. You actually picked Broadcom as your top stock to watch. And those shares are up 12% today. On the back of those strong AI fueled earnings I'm curious. Let's leave let's leave Tesla aside for a little bit I'm curious if Broadcom is still at the top of your list and is still one that you would add to even after the big upside it's had. >> Yes. Julie >> So we call it the poor man's Nvidia in our firm. And it's a member of our 12 Best Ideas portfolio. By the way, Hock Tan is the highest paid CEO in the country, and I'm willing to pay that as a shareholder because he's earned me about almost 1,000% since when we since we added the name. But they are in the sweet spot. They did. They did integrate the VMware transaction, effectively. And it's accretive. That's what he always does. He did that with computer Associates. And so you have a company that is in the sweet spot of, of generative AI computing has a strong relationship with Nvidia in the enterprise space, but is also almost 50% exposed to software. So it sort of smooths out the cyclical aspects of the semiconductor business. So we continue to like it. I mean it they're growing the dividend as they always have. They're buying back shares. But most importantly they're growing the underlying business, the poor man's Nvidia I think if I ever meet Hock Tan I'm not using that one. Nancy, I got to tell you. But there was, there was sort of this interesting ripple across some other AI hardware names. Nancy, at least early in the trading day. So Marvell, Arista, Supermicro besides Nvidia and Broadcom. Nancy, are there any other ways you're kind of playing that AI theme right now? >> Yeah, it's. Josh, that's a great question. It's at the center of our portfolio. So we're buying old economy companies that are embracing the new technologies. And I've talked about that a lot. So think Walmart as the poster child of, you know, utilizing robotics, generative AI, cloud computing, and, digitization. So that that's one of our themes and then the other are the underlying providers. And so in the, in the hardware space, we like lam research. We own Nvidia I'm sorry. Broadcom. We do not own Nvidia as I mentioned. And we had said a couple of weeks ago when software was selling off. Look the hedge funds the hedges are selling because they're focused somewhere else. They'll come back. And I think they're coming back to many of the names we own, like ServiceNow, we'll see what Adobe reports today. But certainly Microsoft and other members of the enterprise cloud, Amazon, you know, the hyperscaler part of the business. That's where we're focused. Oracle big holding of ours. >> Nancy. We'll catch up with you again soon. Thanks for being a good sport. And thanks for being with us today. Really appreciate it. >> Thank you Julie. Thanks, Josh. >> We're just getting started here on market domination. Coming up later in our special coverage of the Tesla shareholder meeting. We'll be tracking the voting live and bringing you up to the minute news on the fate of Elon Musk's pay package, as well as a conversation with Ark Invest CEO Cathie Wood to get her take on the latest with the Tesla CEO. Stay tuned. More market domination coming after this. >> Investors. Looking to shrug off a mixed news week headlined by cooling inflation and a Federal Reserve pull back on interest rate cuts. Let's dive right into what's been moving the markets here with Megan Horneman, the CIO at Vernon's Capital Advisors. Megan, it is good to see you so, you know, let's start there. Megan with the fed I'm interested to get your take. Of course we heard from Jay Powell yesterday and they signaled one cut for 2024. Megan did that surprise you, no, actually, that's been our view all along that there's been way too many rate cuts priced into the market. It did surprise me a little bit that he did come out and delivered kind of a hawkish tone in that meeting, because he's been dovish in the past few meetings. And our concern is that it's been fueling this optimism around rate cuts for this year. We came into this year thinking it would be a second half of the year story, not a march story like most people did. And right now we're still thinking that the fed is probably needs, as they said yesterday, they need more consistent data that's showing that inflation is officially behind us. >> Megan. Even though you read his comments as more hawkish and a lot of folks did at the same time, the market didn't seem to either not read them as hawkish or not react to them as though they were hawkish. What do you make of that? >> Unfortunately, I think the market is seeing what it wants to see and they want rate cuts. And that's what this we're seeing in the bond market, we're seeing in the equity market. I mean, the rally we've seen in bonds is, is telling you that, you know, they're they want these rate cuts. And, and investors want to see rates come lower. But I think that it's a little I'm afraid that the market's getting a little complacent around what we can see in the second half of this year and what they have the ability to do from a rate cutting perspective. >> Also, just Megan, just in the near term here. What do you see as potential catalysts ahead for this market? Megan is you know actually Fed Day is now come and gone. Earnings are in the rear view mirror near-term. What do you see I don't see really what any potential upside catalysts are. >> And that's that's the problem. That's why we're a little cautious here on the market. I see more catalysts to the downside. And you can see from a political standpoint what's going on over in Europe right now. Let's not forget we have a presidential election coming up. The evaluations in the market are a bit frothy. We've gotten one month of good inflation data, but we still have a long way to go before we can say that that's behind us. And the fed can start a rate cutting cycle. >> And so given that if you're more cautious in the market, sort of how are you expressing that we have an overweight cash rate now we're not overweight these tech heavy growth names or even the sectors we look within value in the market. >> But we are an overweight cash in our overall allocation. So that we can take advantage of opportunities. Because it's been a long time since we've had a correction in this market. We had, you could say modest pullback this year, but we think we could be in for a correction in the second half of this this year. So if there was a correction there, Megan. >> And you wanted to put money to work where would you be looking. What where would you be opportunistic, honestly, if you look at the small and mid cap space, that area hasn't really participated as much in this rally. I'd like the opportunity to put some money to work in that space, but that's also very cyclical and it can be interest rate sensitive. So we're we're cautious there. But that's where we will look at the pullback at the correction. Is it pricing in all of those risks that they may we may see from an economic standpoint going forward. So we like that side of the market. We think that's been the most unloved area. >> Do you think that rates need to get cut in order for that to really pay off? >> Typically that's when the fed has to come in and cut rates. That's because the economy is doing worse. You want to be able to get. That's when those those small and mid-cap stocks, that's when they tend to get hurt. And but on the way out, out of it, out of the recession or out of the economic downturn, they're also the ones that rally the most. So we're okay being a little bit early to it. If the valuations are pricing in that downside risk because they will rally the most coming out of it. >> Megan, thanks so much. Good to see you. >> Thank you. >> All right. Let's check in on some trending tickers here. Shares of Signet Jewelers are sliding that move after reporting earnings and second quarter guidance fell short of expectations. This was an interesting one, Julie, because apparently here's what happened. So during the earnings call CFO says now you usually stick to your script. Right. That's what you do in your executive. It's all been vetted by IRR and Coms, but the CFO says, and I think here's the line that caused a bit of a freak out says heightened competitive discounting may pressure margins into the back half more than we expected. At the beginning of the year, investors clearly did not like the sound of that CEO. The CEO then gave an interview, which sounds like she tried to kind of walk people back from the edge of the cliff, but clearly the fears of discounting really spooked folks. >> Yeah, it seems that way. I mean, if you look at the numbers that they gave last quarter, the earnings per share came in beating estimates, right. The company also, you know, sales were in line with forecasts. But if you look at how the numbers are sort of going same store sales down 8.9. The company says in the second quarter, its current second quarter, same store sales are going to be down 2 to 6. So, you know, the margins are a concern for investors, clearly. And that discounting issue. But you know, sales are not going up right now. So the question is whether, investors believe them when they say they're not going to be doing all of that discounting. >> Yeah, I mean, they did say, listen, we're going to reaffirm our guidance for this fiscal year running through, I guess January. And the CEO saying, listen, I'm we're assuming that guidance that the independent jewelers continue, I think they put significant discounting. But clearly, you know, managing this so far has been tough for them. >> And we know what the consumer environment is like. Right now, right where we are seeing lower income consumers be cautious. So yeah, you know, what effect does that having on this kind of a business for sure. See let's talk about Virgin Galactic as well. Those shares are trending and they are falling after an announced plans for a one for 20 reverse stock split. Now, I got to pause here because we've been talking a lot about stock splits lately where if you have one share, you get 20 shares. This is the opposite of that. If you have 20 shares, they sort of consolidate into one share. And a company does this in many cases because it's at risk of being delisted. If the stock if the individual share price gets too low, it can trigger thresholds. If it's below that certain price for a certain period of time, say six months to a year. And so then the company comes in and does something like this to try to avoid that kind of a delisting. >> Yeah. I was reading reports that the company recently performed its last space flight of the year, and then they have this pause. And I guess the pause, Julie, is so they can kind of develop this new class of space plans, but, business of space. Not easy. Yeah. At least for this name. >> And the stock is down almost 70% this year, right. Yeah. Let's look at another story that we're watching, Disney's battle with Florida Governor Ron DeSantis. It's finally over. Joining us now to explain Yahoo Finance's own Alexandra Canal. Hey, Alex. >> Hey Julie. Yeah. So it's been years since this battle first began. And it's all ending with the $17 billion development plan for Orlando's Walt Disney World Resort. Now let's take take a quick step back here, because Disney and DeSantis have been fighting over Disney's special tax district. This was previously known as the Reedy Creek Improvement District, and it allowed Disney to operate as a self-governing entity since its inception, so no government involvement whatsoever. However DeSantis seize control of the district last year following Disney's opposition to the state's so-called don't say gay law. Now, this law forbids instruction on sexual orientation and gender identity from kindergarten through third grade. Now, at the time of that takeover, DeSantis removed Disney's hand-picked board members. He invalidated agreements between Disney and the district, and then he went and appointed five new people to call the shots here. So essentially, he took control over this board. This led to a lot of back and forth lawsuits at both the state and federal level, especially as it relates to free speech. But that all ended last night after a unanimous vote approved a 15 year plan to expand Walt Disney World under this new agreement, Disney will be able to build a fifth theme park along with other smaller theme parks like Water parks, for example. You also have the opportunity for Disney to expand its hotel offerings, its retail and office space. So at the end of the day, Disney got what it wanted, and that's the ability to expand these parks without state or local government interference. So at least for the next 15 years, that that is protected. >> And so and we were talking about this, Alex. So basically for investors listening right now, the big takeaway is what you've fundamentally done is just at least at the very least removing a distraction for Disney C-suite. Yeah, that's what I think. >> Since I've been covering this, it hasn't really moved the needle in terms of the stock price, but it was a distraction. It was something that Bob Iger had to bring up at shareholder meetings over the past few years. So I think related to that proxy battle that we recently saw the conclusion of this was another battle that was an overhang for the company. So I think it's good news that we finally have reached the conclusion. >> Right, Ali. Thank you. Appreciate it. Still to come at 430 today. It's our special coverage of the Tesla shareholder meeting. Going to be speaking with Cathie Wood from Ark invest. Just as that meeting will be kicking off. Stay tuned for more market domination on the other side. >> The oil and gas industry has seen a wave of dealmaking. >> Now, the offshore oil drilling sphere is getting in on the action. Noble Corporation among the latest names eyeing an acquisition. The offshore drilling contractor putting in a cash and stock deal to acquire diamond Offshore Drilling and Noble Corporation CEO Robert Eifler is joining us now for a closer look at consolidation in the energy sector. Robert, thank you for being here. >> It's great to be here. Thank you so much for having me. >> So you guys recently announced this acquisition, $1.6 billion to buy diamond Offshore. And this would bring up the number of offshore rigs that you guys have. Talk to me about sort of economies of scale in your business. And this is not the first acquisition you've made in the past few years. Why it has been a good idea to try to get bigger. Yeah >> That's great. Thank you very much, look, scale is really important right now, and I think throughout all of the energy space, as well as, as in services, investors are rewarding scale. And our business specifically in offshore drilling, we have a, a large number of very sophisticated customers across the globe. So we drill for some of the largest companies in the world, and they have a lot of needs. And in order to meet those needs globally, we need to have enough assets so that we can spread our investments, around technology and innovation across a bigger base. And so we've been on a journey here for the last few years where we've made, three major mergers and acquisitions, culminating this week with, with the diamond acquisition, that really has given us a new level of scale that's letting us, do a lot of really interesting things for our customers across the globe. >> Robert, I am curious, with this acquisition, any concern for regulatory risk, in your opinion? >> Well, we've announced a closing date of first quarter next year and perhaps even a little bit quicker than that, and so we're very confident around that timeline. Of course, we will, apply with, a handful of regulators around the world, but this is still a very competitive, business, it remains fragmented and, we're very confident around, around the path forward, as I mentioned earlier, Robert, this is not the first acquisition you've made. It's not even the biggest one. You bought a maersk drilling back in 2022, after Diamond. You done or is there still room to grow after that? >> Well, look what we said when we did the mayor's deal is, we said that this is the transformative merger for us. And it really has been and I think I think the results have proved that. But we also said that if we were to do a deal after that, that we would be very picky and we would make sure that it was the exact right deal, for, for our shareholders, among a number of potential deals out there, and so I think when we announced this deal earlier this week, we've been extremely pleased with the results from that. In fact, I think the entire sector traded up the day we announced it, and including ourselves, of course, so I guess what I would say is, like, like any company, we will continue to look at things that are accretive for our shareholders, but we will get ever pickier each time. >> Robert, I want to get your take on a headline, that made some news here from the IEA saying global oil demand. They forecast to peak by 2029, and that's going to begin to contract the following year, they say, as the U.S, other non-OPEC countries add to supply. Is that what you see, Robert? Does that sound accurate to you? >> Yeah. Look, what I would say is that, for sure, we see an expanding market for the next five plus years, and then from there it is extremely difficult to predict. That's one of the unique features, I think, of the energy industry right now, is that the range of predictions past around 2030, and particularly when you get out to 2045 or 2050, is massive. You've got everything from OPEC and others, predicting that, that that oil demand could be up by 10 or 15% from today, to other outcomes where it could be down at 25% of current, and so, look, we're a service business, we have, scale to, to, to last through cycle, and, we have some of the best assets in the world in our fleet. So we're positioned, for whatever range of outcomes might come, but it is it is, remarkable just how wide the set of predictions is. >> And there are some predictions as well, that as we see growth in the shale region in the US start to taper a little bit, that we'll see more demand for offshore, exploration and production. >> You know, I was taking a look at the offshore rig count just globally as tracked by Baker Hughes. And you know it's rebounded. But we still see lower than where it was pre-pandemic. Do you think that in general you're going to see more of an expansion in your industry? As we see the demand for oil and gas persist and the need to look in different places to get it kind of persists as well? >> Are we do we think we think we'll see demand increase, particularly in the Deepwater segment of our business, all of the leading indicators for our business are up. So our customers budgets have been increasing sequentially year on year, FIDs, which is kind of a predictor, you know, sanctioned projects, which is a predictor of, of future years are up and are predicted to continue to go up. You've got, things like subsea tree orders that that show positive signs for the future and just looking more specifically at our own business, our backlog of tenders, our open tenders, I think is the highest it's been in ten years. So we are seeing a return to offshore drilling, and we are seeing deepwater, increase get increased focus here, and we expect that to continue. >> Robert, thanks so much for your time, I appreciate it. >> Well, it's great to be here. Thank you very much, for having me back, it's, especially on a really nice occasion, like this week for us. >> Yeah, well, we'll catch up with you again maybe when the deal closes. >> Thanks a lot. >> Sounds great. Thank you. >> Coming up on the other side, what's the biggest issue facing the banking industry right now? And how can investors best position themselves in that sector? We're going to break it down in today's Yahoo finance playbook. Stay tuned. The stock market rally has once again become tech centric. But strategists believe this could change in the second half of the year. Here with more Yahoo Finance's Josh Shafer. So the broadening another call for broadening another call for broadening. >> So it is about the middle of June which means it's time for a lot of strategy teams to come out with their second half of the year outlook. Right. So I've attended two of these so far this week. One was with T Rowe Price and Charles Schwab. Today was JP Morgan Asset Management. And one theme emerged in both of those, and it's a theme we heard a lot in people's 2024 outlooks, which is there's going to be a broadening of the stock market rally. We're not going to be talking about just the Mag seven. And I think notably right now, as this is coming at a time where we've really shifted back to that Mag seven rally. And here's sort of the main base case people are pointing out this is earnings estimates for the rest of the year. You can see in purple it's magnificent seven in light blue. It's your other 493. The key Josh is sort of the end there. When we get to 17% and 17% converge aging right. So what you're seeing is earnings declining for Mag seven earnings coming up for the other 493. Now I asked Gabriella Santos today at the JP Morgan Asset Management conference okay I've seen this graph before. We've talked about this graph before. When does it start getting priced in and is it priced in. And she said she thinks we're already part of the way there. I mean you look at utilities, for instance, the rally that we saw, it's up 9% on the year. It's not outperforming the S&P 500, but you're starting to get a bid. And she thinks really what you need now is probably just these earnings to actually come through in the second quarter. Like yes we're looking at estimates and estimates are supposed to grow and we're supposed to catch up. But in the first quarter it wasn't fully there. Kind of depends on what sector you look at. Not to mention tech did better than people even thought. So is that going to start to happen a little bit more in second quarter earnings season? I think is going to be a big topic of conversation over the next month as we lead into it and one other thing they highlighted that was interesting because I know you guys had a conversation recently with Michael Kantrowitz about a two way football player and sort of Iron Man defense and offense. Right Playing both sides of the ball like you probably did. Josh totally, absolutely. >> Just bring me right back to high school. >> Josh and so Kantrowitz had mentioned utilities, right. And he said utilities can be defensive, but they also have an AI play. JPM today was mentioning healthcare in sort of the hype trade themes that you can get in healthcare right now with Glp1. People also think AI is going to help them. And then there's perhaps, maybe a defensive aspect to that as well, sort of two sided. There which I thought was kind of interesting. >> Yeah. Another Iron Man maybe. >> Yeah. We're gonna everyone's gonna be an Iron Man football player all of a sudden. Yeah. And then people get tired and then that's not good. >> I can I get one last question, because you're in this room with these very smart, important people. Just very quickly. I mean, what was their take on the economy? Is this kind of a soft landing camp crowd? >> Yeah, it was interesting. Their chief global strategist, David Kelly, kept talking about the fact that we're currently in position for a soft landing, which whenever someone sort of keeps hammering that point, it stands out to me given the recent data, he said. What we saw from the inflation prints over the last two days was really just a more extreme version of the trend we've been seeing. Rent has been coming down right, but for rent and CPI to come down as much as it did and for auto insurance to come down as much as it did, is perhaps just a preview for the rest of 24. And they think the economy can overall hold up with inflation coming down and we're still on that narrow path for the soft landing. >> All right smart group of folks. Thank you Joshua. Appreciate it. As Fed Chair Jerome Powell sees it the banking industry is doing pretty well. >> We had the turmoil early last year. But you know banks have been focusing on on bringing up their liquidity, bringing up their capital and having a risk management plans in place. So the banking system, you know, seems to be seems to be in good shape with only one rate cut projected from the FOMC in the year ahead. >> We're taking a look at the risks higher for longer rates posedto banks, and which names are best positioned in our investor playbook. And joining me now Chris Whalen Whalen Global Advisors chairman. And Brian Mulberry, Zacks Investment Management client portfolio manager. Guys, welcome both to the show. Thank you for being here. And Brian, I'll start with you. So, Jay Powell speaking on the banking system likes what he sees Brian solid strong he says well capitalized seems to be in good shape. Is that how you see it Brian. >> Well I think evidence backing up that statement is that we haven't had another wave of bank failures. I think what you saw were poorly managed banks that were overexposed to bad assets get punished. And since then, we've seen the banking community kind of, you know, rally to the point where we've seen lots of liquidity. Good. I think structures and I think scale is going to matter the most for the banks to be successful in this higher rate environment, you have to have a bit of a diversity to the streams of revenue that you generate. So I think there are really high quality names out there. That doesn't mean there isn't distress somewhere in the system, but there are definitely good opportunities out there that you can find, Chris, it's Julie here. Good to see you. So when you look at these areas of stress within the system, what do you think investors need to be paying attention to and sort of how they should be screening or what criteria they should be looking for, if they're considering investing in banks. >> Well, you have to look at the banks that actually perform well, which is why we created that index I showed you earlier, the way I look at it is the commercial side of the equation. In the US, economy is going to crash land. There is no soft landing here. It is a horrific, destruction of value. But it's largely behind closed doors. These are institutional markets. You're only going to hear about a few of the bigger default events, and the rest of it's going to be restructured in private. So you may know we have this private credit trade that's very topical lately. A lot of that exposure is being sold to retail investors as we speak. But you know, the consumer side is still okay. If you look at banks, the net defaults on residential mortgages, I'll, you know, large prime mortgages that they own arezero, in fact, loss given default is zero compared to 100% for multifamily assets owned by banks. So we have this dichotomy between consumer and commercial that I think will disappear by next year. Okay. >> So Brian, back to you. You know, Chris, they're talking about what he describes as kind of the dichotomy we're seeing commercial and consumer. Is that how you're seeing it? Brian >> Well, again, quality and scale are the two biggest things that we're looking at when we look at some of the bigger banks and their exposure to commercial real estate as a percentage of their total loan portfolio, JP Morgan has 1.4 trillion of a loan portfolio, but only 12% of that is exposed to commercial real estate. Citibank only has 4% of its nearly trillion dollar portfolio, so there are definitely some lenders out there that have substantially higher rates. Like New York Community Bank is one of those that has about 54. And so managing that exposure, looking at the ability to offset those potential defaults and losses, is going to be a really big thing in the next couple of quarters. And I think we're going to learn a lot more about that in the next 6 to 12 months as well. >> Chris, there is another go ahead. >> You can go ahead and respond to what Brian, I agree with my colleague, but I think there are other banks like, Wells and Bank of America that have large exposures to commercial and this narrative that says it's a small bank problem is largely a function of the fact that you don't see hedge funds trying to short. >> Bank of America, even though fundamentally, that bank has got a lot of issues, the by you know, the managers by it, it goes up it's a second weighted stock and KB, you know, the KBW ETF right now. So you know it's a function of size more than quality right now. And I think for investors that want to last through this year as credit becomes a bigger and bigger issue, I think you want to pick managers of banks who know how to deal with with credit, and who have very low realized losses, even though they may have big NPL portfolios, as long as they have the income and the wherewithal to restructure, they'll be okay. It's the ones that don't take this seriously. And to your earlier point, what happened over the last year, we hid the ball. The banks moved enormous amount of available for sale securities, low coupon securities to help the maturity. We're just going to hide the problem. So that's going to affect earnings. Even if the banks can keep those assets and not be forced to sell, which may happen, it's still going to be showing up in earnings and equity returns. >> And Chris, I want to ask about another type of debt that you also are paying attention to. And that's auto loans on bank balance sheets, which isn't something that's gotten nearly as much attention as CRE. Is it a problem? >> It's back to normal. In other words, the default rates loss given default on autos, which typically is 8,090% of the original loan amount, is back to where it was during Covid. It went to zero because there were no cars. So when you had a car repoed and put out on the market, you made money. It was quite striking. All of these asset classes were affected enormously by the fed. So now we're back to normal. We're kind of back to 2019. Levels of default on autos owned by banks, which are prime piece of paper by and large. But they're still getting rid of them because of the new capital rules coming at them. And I think also they just want to raise liquidity, you know, as my colleague was saying earlier, they want to raise cash, but I would not say the big guys are out of the woods at all on commercial. You're going to hear a lot about that. >> Chris, I'm sorry. Brian, final one to you, in terms of auto loans, are you seeing those kind of same themes and trends play out? >> Yeah. In general, auto loans are back to a very normalized trend in terms of defaults being relatively low and payments being made on time. And that's really kind of the point that we're trying to make in terms of a diversity of revenue streams. As long as you have a different exposure and you're not overly dependent on one particular product or one particular region to drive most of your revenue, hopefully you'll be able to offset the coming stress. We absolutely agree that there will be stress in this particular sector because of higher for longer interest rates. We have not gotten the type of rate cuts that the market wanted back at the beginning of the year, and it certainly is adding stress into this particular sector. I don't want to sidestep that. I'm just simply saying that the scale of a Bank of America or a JP Morgan Chase, they have enough different product lines, even credit cards at this point in time are still being relatively paid on time and more than just the interest. And if you're able to book, you know, anywhere between 8 to 20% on that revolving debt, that's a pretty good income stream that offsets other potential losses elsewhere. Obviously, if there's a major turn in the economy downward into more of a hard landing type of a recession, then that takes, you know, a lot more risk and shifts it into this particular sector in a different way. We just simply don't see that developing at this point in time. Much to your earlier conversation, Brian. >> Chris, thanks a lot. A complicated issue, but you helped us shed some light on it. I appreciate it. Thank you. Well, we're wrapping up today's market domination. >> Don't go anywhere. We've got you covered with all the action following the closing bell, including the latest earnings coming from Adobe. >> And at 430, it's our special coverage of the Tesla shareholder meeting the track in the voting live and bringing you up to the minute news on the fate of Elon Musk. Pay package and much more. Stay tuned for market domination, overtime after this. >> There's the closing bell on wall Street. >> And now it's market domination. Overtime, we are joined by Jared Blikre to get you up to speed on the action from today's session. Let us start with where the major averages ended up. We saw the Dow still lower on the session, but kind of climbing from the lows throughout the course of the day off by a 10th of 1. When all was said and done by about 66 points. But guess what? Records again are records again for the S&P 500 and the Nasdaq, as we have this sort of melt up, so to speak, and markets continue here, up another quarter percent. And I joke. But I mean it's interesting that we are seeing this sort of day after day hit new records for the major averages, or at least for the S&P and for the Nasdaq as well, up a third of 1. So that's something we continue to watch, even as we have been talking about the yields have been coming in. And before I send it to Jared and Jared can correct me if I'm wrong here. I believe we have another hat trick here today. Jared. If I'm not mistaken, record and Nvidia record in Microsoft record in Apple on a closing basis because I think all three of them closed at records yesterday and they're up again today as Ed McMahon used to say. >> You are correct. We got the hat trick there. Apple Microsoft, Nvidia all record highs, as is the entire chip index affiliate chick chip index. That's also called the Socks along with Microsoft CLA. So a lot of chip stocks really reaching new highs today. And as you can see behind me it's not all green. We also have some red here. Alphabet Amazon each of those down more than one and a half. Meta down 1. So mag seven definitely not moving as a group . Also want to point out that Tesla had been up as much as 6% today. That's ASML. Let's bring up Tesla. So Tesla had been up 6, gave up some of those, but still waiting on that vote. And the final word on that. And also look at Broadcom. Broadcom another record high up 12% today. That's after earnings released yesterday after the bell. And let's check in on those sectors where we have tech and real estate once again outperforming. Interesting sector action there to the downside. We have energy down almost 1. Communication services. That's the alphabet and meta losses we are looking at. And industrials also off 7/10 of a percent. If we take a look at some of our leaders you notice we got more red than green here. Solar cannabis small oil. And it looks like what is we got transportation as well on the bottom row. All of those down more than 1.5% or more to the upside. It was all about New York Fang. Those are some of those mag seven names along with Sox record high. There again and momentum. This is the first record high for momentum. Excuse me since 2021 I believe. Here's a five year chart. And there you go. Just broke out today. So another day of records guys. >> All right Jared thank you. Tech heavy Nasdaq closing at a new record. Meanwhile investors weigh the two way pull of cooling inflation and the Fed's pull back on interest rate cuts. For more on investors appetite let's get right to Mark Lehman, head of citizens, JMP securities. Mark, it is good to see you. So as you point out, tech's been leading the way. Mark. Do you expect it to continue leading the way? Do you want to be overweight tech here? >> We have been overweight and I think it has led the way because I think the definition of tech has has enhanced, from that basic definition we remember from even five, ten years ago. So tech has become much more of a horizontal than a vertical. And the people taking advantage of that and the multiple expansion we're seeing that, obviously in semiconductors and other places is alive and well. >> Mark, I find that concept interesting here. So expand upon that a little bit. What do you mean when you say tech is sort of expanded here? What what is under the tech umbrella? Now? >> I think you look across the domains of healthcare. You look across, frankly, real estate, what you're seeing in the data center world where there's used to be kind of valuation. Valuations were more like real estate companies or health care. Was valuation more like a health care company, which are somewhat smaller than the tech multiples we've seen historically. And the companies that have more of that tech within them are getting more of a tech multiple. And you're seeing that over and over again. You're seeing that in media, which, again, has not garnered the kind of multiples that we would expect the tech companies to have. But the more tech within them, the higher their multiple. And I think that's not going to change anytime soon. And that specter of AI, which will enhance that, will raise multiples, it will raise profitability and those who win are going to win that much bigger. >> Mark, you saw the fed yesterday what they did and said anything surprise you Mark. >> No I listen I think you're still going to have the debate. And I think one data point is never going to take everybody's, pulse and say that now we figured it all out and everhing's fine, I'm actually at a conference that citizens is hosting with a lot of venture funds and a lot of other funds, and, all of them are talking optimistically about their potential to put more money to work. I've yet to hear anybody at this conference. We have over 100 people here talk about how things are not, are slowing down about how they're not seeing valuations that are stretched, how most of the people are optimistic, and the rate backdrop obviously helps all that do you think that they're missing any of the economic signals are out there, or do you think we're sort of more than ever living in an economy that is in different tranches? >> I listen, I think the Fed's got a really hard job to do. >> And I always say hindsight's 2010. It's a lot better than 2020. So we're going to talk about this six months from now and say I told you so either way. And I think the worst thing they can do is probably overcut the market sort of taking care of that themselves in terms of the way rates have gone down in the last couple of weeks. So you'll see a lot of that. But I just don't expect them to not really think long and hard about the right timing for those cuts and the right number of those cuts, because the last thing you want to do is go too quickly. That being said, I think the market corrects much more quickly on its own, and we've seen that kind of higher for longer to get comfort within the investor public. And I think when we see the turn lower for rates, I think the market's already pricing some of that in. >> Mark, we talked about some of the sectors, you know, that you think are attractive right now. What are what are sectors. You're less enthusiastic about in the US stock market. >> Hey listen I think the consumer is resilient here. I think the high end consumer is doing well. But some of the lower end consumers are going to have a harder time. I think as as we've seen that some of their savings are being sopped up a little bit. And I think we've seen that and some of the pricing of some of the consumer discretionary stocks and some of the other consumer stocks, I also think the real estate, and especially in commercial is just going to take longer than people want. We'd like to take our medicine here. We like fast solutions here in the stock market and here in the, in the states. And this is not going to be quick. I think it's well contained. I think people are getting the time rates will help that if it goes down. So I think that quick, like you pointed out today, that quick rise in the in the REIT index and some of those indexes which have been so far behind, it's just going to take longer. But I think it's can I'm one of the few people who think it's contained. I think it's going to the people who have told you what it is they're seeing that sequentially, slightly improve. And as long as it's not getting worse, I think that's as positive as you can say about it. >> And, Mark, I want to get you out of here on this. You just spent a week in Israel, which is interesting, meeting with all kinds of tech companies. What did you kind of see? And hear and learn, Mark, about how that economy and tech community is faring? >> Well, let's start with the obvious. It's a difficult time there. It's a difficult time in the region. And I'll talk about the companies and the venture investors that we talked to. We met with over 100 of them, and I won't talk specifically about politics because I don't think this is the right forum. But there's a lot of pain, obviously, in the region. And the people I met with that being said, let's let's do the arithmetic. Israel's got 0.1% of the world's population, and at its peak had 4% of the venture investment and 10% of the unicorns. So you get a pretty good flavor about what's going on there. And I would say, despite what's what has been a really tough backdrop, I think the entrepreneurial spirit there is alive and well, and there's a lot of funds that are being created to double down on that. Remember, they have compulsory military because of what they experienced with all the enemies around them, shall we say. And, those people are bonded at 18 and 19 years old and form these bonds that are everlasting. And then they form companies together. So that entrepreneurial spirit, both on the capital side as well as on the company side, where they're creating these companies, is alive and well. And I would say, the stocks have come back as well. Some of the great companies there, like Wix and Fiverr and some other great companies there. There was a couple Mbna's while actually we were over there, that entrepreneurial spirit is alive and well and, we're going to see a lot of those companies going public someday. >> We'll keep an eye on all of that. >> Thanks for giving us that that insight and that color from your trip there really appreciate it. Mark Lehman, and it's good to see you. Thanks for being with us. >> Thank you. Appreciate it. >> We've got some earnings now sticking with tech by the way Adobe just reporting here. The company beating estimates pretty much across the board and raising its forecast. And you see that reflected in the 12% boost that we are seeing quickly in the share. So let me run through the numbers quickly here. Second quarter adjusted earnings per share $4.48 $0.08 above estimates. Revenue coming in at $5.31 billion. That is 10% growth on a year over year basis. So that's the backward looking. And then there's the company's forecast of for the full year here revenue predicted to come in at 21.4 to $21.5 billion. That's an increase over the prior forecast in particular at the lower end of that forecast. And for the full year, digital media net, new, annual recurring revenue should be about $1.95 billion. So market likes this one. >> Yeah. Look at that initial reaction. I see a statement here from CEO Shantanu Narayen saying Adobe achieved a record revenue of 5.31 billion, I points out, driven by strong growth across Creative Cloud, Document Cloud and Experience Cloud goes on to say, our highly differentiated approach to AI and innovative product delivery are attracting and expanding universe of customers and providing more value to existing users. It was interesting, Julie, because, you know, sentiment around this one was not great. Heading into this print, the stock was down about 20% this year, and I think we were kind of broader concerns just about the general backdrop for software, which as we know, has been kind of choppy. But then also for Adobe, as we've talked about before, this kind of concerns about gen AI and how much it would disrupt this company's business. I know some bulls were pounding the table. That was overblown in their opinion. At least right now, though, at least look at that reaction. 13% in the after hours. Yeah. >> In particular, when we saw OpenAI come out with Sora, which is their image and video, machine, if you will, for lack of a better word, creative, software. That's when we saw, really a lot of questions about Adobe. Now, Adobe came out with its own answer to that, called Firefly, and so I, I'm guessing there'll be some questions on the call about what kind of further demand and uptake they are seeing for those kinds of tools. >> Yeah, I mean, fans of this name have always said, listen, Shantanu has a long history of innovating with traditional AI. And now Gen AI, at least initially in the after hours. He has some some fans. Yeah. All right. Coming up shares of Tyson falling in today's trade. Find out why. On the other side of the break. Tyson Foods announced today that it is suspending CFO John Tyson after being arrested for driving while intoxicated in Arkansas. Here, with all the details is Yahoo Finance's own Brooke De Palma Brooke. Yeah. >> Good afternoon to you both CFO John Tyson. Back in the headlines this morning after the 34 year old was arrested at 1:00 this morning for allegedly driving while intoxicated, as well as in improper turn, careless driving. And now the suspended CFO will have to appear in court. He was released around 11 a.m. today. In a statement, Tyson Foods did say that they had suspended him, but this is now the second arrest for John Tyson. Back in 2022, right after he was named CFO. He was arrested for criminal trespass and public intoxication after he was found in a stranger's home. He apologized to investors following that and did plead guilty to those charges now. Tyson Foods did not name Kurt Callaway, interim CFO. In the meantime, Callaway did most recently serve as a CFO for Tyson Foods, prepared foods division, and a person familiar with the matter did tell Yahoo Finance that Callaway was responsible for the company's merger and acquisitions, as well as corporate development efforts . But one analyst that I did speak to said that there is some justified concern among the investor community, and at a certain point, the board is going to have to decide when enough is enough. And now, in after hours trading, the stock roughly flat. But it did close down 1.5. >> Yeah, and the five year chart that we're showing shows some declines as well. Thank you Brooke appreciate it. Shares of Selah Realty Trust rising in their very first day of trading, the REIT listing on the New York Stock Exchange via direct listing. Joining us now, Selah Realty Trust CEO Michael Seaton, thank you so much for coming and talk to us, Julie. >> Josh, thank you for having me. >> So Selah and owner of Medical Properties. But that's all you do. You just own them. You don't operate them. So talk to me a little bit about the business model here. >> So we're a real estate investment trust. We're a passive owner of real estate. We lease properties to health care operators. We lease them on a long term basis. So we really look for properties to own, which have durable and predictable income streams. Ultimately, that benefits our stockholders because our stockholders get the benefit of that current income, but also the predictability of that income. >> I'm also interested, Michael, just how you kind of manage and navigate this higher rate environment. >> We've actually done a fantastic job, and it's a real testament to folks at the company, including the CFO. We've managed it predominantly through hedging all of our debt. So our debt today is 100% hedged. Also, with respect to keeping a pretty low leverage profile on a comparable basis to the REIT space. So overall, our leverage on an equivalent basis is about 20. Typically, you see REITs between 40 to 50. And that helps certainly in a rising rate environment. So obviously leverage works very well going up not great coming down. So we've never had that issue and we've just positioned the company extremely well. >> We have been seeing big growth in outpatient settings right. Not hospitals but hospital adjacent type services, sort of in-between type services. What has that meant for your business? Has there been a big demand, and is that an area where you guys really sit? >> As you mentioned, we've definitely seen the customer, which is the patient, go more to outpatient settings because they're less costly. They're less costly for the government under their programs, less costly for insurers. What it's really created is an opportunity to own more of those types of buildings. So we've seen certainly over the last really 10 to 20 years more development in those arenas. But those arenas have also become in those asset types have become more robust in terms of the volumes they see. For instance, in terms of patients. In addition to that, physicians generally like to practice in those types of settings. They tend to be newer, they tend to be less busy and patients like to go to them because of those same reasons. >> I'm interested, Michael, just what the competitive landscape is like for all, for you all, and just how it also has been evolving. >> Josh, that's a great question, three years ago, you know, before essentially we saw a rise in interest rates. It was a very competitive market. We were probably slightly less active because we're very disciplined with our capital and very conscious of capital allocation over the last really couple of years, particularly, we've seen a tremendous opportunity to acquire real estate and the reason is because there are so many competitors out there and companies who are sort of triaging themselves, triaging themselves with respect to the performance of their portfolio, with respect to their balance sheet, they might be over leveraged. Selah is incredibly well positioned because we are low leverage. We have a very strong portfolio, so candidly, much less competition today. So it's a it's a tremendous opportunity for us to acquire very high quality real estate with less competition in this marketplace. All right, Michael, thanks for joining us and congrats again to you and the firm. >> Big day. Thank you very much for having me. Moving on. Former President Donald Trump just wrapping up a meeting with dozens of CEOs in Washington. And it comes as the Biden administration starts rolling out some details of how it's going to address the expiration of the Trump tax cuts. Yahoo finance senior columnist Rick Newman is here. Rick. >> Hey, guys. >> Well, let's remember some of the tax cuts from 2017 are permanent and some are temporary. So the business tax cuts that lowered the corporate tax rate to 21, that's permanent. That is not going to change unless somebody changes it. What expires in at the end of 2025 are all the individual tax cuts, and what Biden wants to do is let them go back to their prior levels for everybody except people who are in under $400,000, households with under $400,000, that is, that's Biden's threshold. You hear that a lot under $400,000. I think they picked that because it includes almost everybody in the United States falls under that threshold. So Biden can go around saying, I don't want to raise anybody's taxes except for the wealthy. And that's people who make over $400,000. This battle is already underway. I mean, lobbying groups are saying it would be a disaster if they expire. It would be a disaster if they stayed in effect, what are the budgetary implications? It's going to, you know, it's going to add $4 trillion to the national debt. If we leave the tax cuts in place and so on. So we're going to be talking about this a lot for the next, next year and a half, so CEOs were meeting with Trump today. And you know, it's interesting when you talk about that the corporate tax rate is not going to change unless legislation comes in to change it. It doesn't expire. But you know, you had a lot of mainstream CEOs who were in that room with Donald Trump today. So talk to me about what they want or what they may be. As you said in your story that came out today, what they have to fear from him, well, so this was this was not Donald Trump calling up CEOs and saying, hey, do you want to get together? This was sponsored by the Business Roundtable, a huge business lobby. >> He invited him right. >> They invited him and they invited President Biden. So they're not playing favorites here. Biden's in Italy, so he can't go. But he Jeff Zients, his adviser, went and addressed the group was that what CEOs of big businesses want is they want that corporate tax rate to stay where it is. There are some other tax breaks they would like to get. There was one that regards the expensing of R&D costs. That is in a bill that's in that is on the Hill right now . That looks like it's not going to pass. They would like to get that I think the corporate America is pretty happy with the tax situation in the United States right now. I mean they got a big ask when Trump lowered that rate from 35% to 21. They really have been no corporate headquarters shifting overseas. The way we saw the so-called inversions that happened to just to avoid the US tax system. So that's pretty good. I think mainly they just don't want the tax rate to go up or to lose some of those tax benefits. And Biden, for his part, he would raise it to 28. That's that's that's what he's been I mean, he campaigned on that in 2020. He raised the corporate tax rate from 21 to 28, he'd probably settle for 25, but just as a reminder on that, he couldn't get that done. Even when Democrats controlled Congress. So he couldn't even get the votes for that when Democrats had the ability to do it. So I think there's a good chance 21 is going to be where it stays. But there there are going to be some other changes for sure, based on those that are going to expire. >> Well, and then there's the other stuff that Trump also is making, you know, the other things that he is pitching to the business community. And we've talked about before that he says he's going to roll back rules on EVs, which is sort of fascinating, especially considering his his budding friendship with Elon Musk. Yeah >> So this is what CEOs don't like about Donald Trump, or that some of the things that they really worry about, so Trump is saying, look, if I get another term, it's going to be low taxes and light regulation. And everybody's like, yes, that's how we love that. We love that. Great, but here's what else you want to do. He wants to add even more tariffs than he than he put on when he was president. The first time around, he floated the idea. I mean, this is not going to happen. But just to give you a sense of his thinking, he floated the idea recently of getting rid of the income tax completely. The income tax brought in $2.2 trillion in federal revenue in the last year. So he says, get rid of that and let's just make it all make up the difference through tariffs. So I just did the back of the envelope math. You'd have to add a 58% tariff on every one of $3.8 trillion worth of imports to the United States, and then you'd have massive distortions and price hikes and trade wars and stuff. And you know, Trump can't repeal the tax code. I mean, he can't repeal the individual income tax. So that's what CEOs don't like. And when you talk about electric vehicles, it's not just EVs. It's the whole green energy infrastructure. I mean, businesses are mobilizing billions and billions of dollars of dollars in capital because of the tax breaks they're getting from the, from the IRA, the Inflation Reduction Act that Biden signed in 2022. And electric vehicles are here to stay. I mean, his his buddy Elon Musk, who runs Tesla, should tell Trump, this is not these are not government vehicles. We're not the government is not forcing anybody to buy a Tesla. >> Just get passed today, Rick. All right. Then we can have a bigger discussion. He's got some. We know he can do. >> He can do more than one thing at a time. >> Lots of plates. He's yeah. >> That's right, that's right. He's spinning it all, so, so, and you know, Ford and GM and Chrysler and all the other automakers have invested many billions of dollars in electric vehicle transforming factories. They don't want Trump to come in and kill electric vehicles. They would lose a lot of money. >> Yeah. Drama continues. It will. Thank you Rick. Appreciate it. Time now for what to watch. Friday, June 14th. Starting off with the fed, we'll get some fed commentary from fed presidents Loretta mester and Austan Goolsbee, as well as Fed Governor Lisa Cook. This comes after the FOMC decision where the fed held rates steady. Fed Chair Jerome Powell saying during his news conference at the recent Consumer Price Index price index print was encouraging, but that the fed is looking for more good data to bolster confidence in inflation. >> And taking a look at the economy, the preliminary consumer sentiment reading for June coming out in the morning, economists forecasting that number to increase to 72, giving us more insight into the health of the consumer. This coming after two consecutive months of declines. >> And finally, Apple is wrapping up its Worldwide Developers Conference tomorrow, tomorrow, some of the biggest announcements so far include Apple launching an AI system of its own called Apple Intelligence, and integrating OpenAI's chat GPT into Siri voice assistants. That'll do it for today's market domination overtime. Be sure to come back tomorrow at 3 p.m. eastern for all of your coverage leading up to and after the closing bell. But right now, on the other side of the break, it is our special coverage of the Tesla shareholder meeting. >> We'll be tracking the voting live and bringing you up to the minute news on the fate of Elon Musk's pay package, as well as a conversation with Ark Invest CEO Cathie Wood to get her take on the latest with the Tesla and Musk. >> Stay tuned. >> Hello and welcome to Yahoo Finance. >> Special report Tesla shareholder meeting about to begin. And we are waiting for the final results. In a decisive vote over CEO Elon Musk's pay package and a measure to move Tesla's legal domicile from Delaware to Texas on X earlier today, Musk declaring an early victory, saying he had secured support for both measures. Now we will learn for certain. Joining us is Alexis Keenan. So Alexis, what there are more measures they're going to be considered today. But those are really the two. >> Those are the big two. >> Yes. >> Yeah. So and look both of these proposals just that this proposal stage one being a proposal and one a new proposal in the case of the reincorporation to Texas, they're already facing some legal battles. You already have a lawsuit filed last week by a Tesla shareholder saying that both of these things are invalid or should be invalid because Musk used, they say, coercive tactics, tactics in order to convince his board to put this up for votes. So already some problems there. And if you look back at the last vote, what we're going to be looking for today is, well, what of course, what is the result here? What's the outcome? But by what margin to last time in 2018, the pay vote was at 73. And in that case you had 97 million disinterested shareholders saying yes, 23 million saying no. So I'm going to be really watching for is this a similar margin? Is it going to get tighter here to try to figure out who's really in favor? What is really the mandate for this pay package? Then you have, of course, this reincorporation proposal to Texas. Now I don't know necessarily that if Elon Musk and Tesla have to relitigate this again and go up for a third vote and repropose if it doesn't pass muster here in Delaware, not really sure that Texas is going to be necessarily a more friendly state for that type of litigation. They have similar laws to Delaware, but Delaware's are considered at least on the books, a bit more lenient. >> do you think so? >> You're saying it's kind of an interesting question. If they made the move to Texas, would it kind of start a flood? Is one question that's been proposed or no, this is really a musk specific issue. Yeah. >> I mean, if we're litigating okay. So let's just agree that there's going to be more litigation. No matter which this which way this vote goes, somebody is going to be unhappy at the end of the day. Now, as this vote goes right now, that would be under Delaware law. But if it has to go then to a third proposal and rebake this whole thing all over, and if shareholders say yes, we're going to Texas now that a nude, dispute, let's say, or disputes, those would be under Texas law. So got a lot of things cooking here. Sorry for all the cooking references, but we'll be tuned in and listening for what this outcome is here. But it's not the end of the road, that's for sure. >> So, yes, it doesn't seem so. And I should mention the general counsel introduced the meeting and now the board chair, Robyn Denholm, is speaking at the meeting. So we don't have the outcomes of these votes as of yet. We are monitoring them closely. Thanks, Alexis. Well Cathie Wood has been a vocal champion of Elon Musk for years. She voted to support his pay package in today's shareholder vote, and has high expectations for Tesla's stock in the years to come. Her firm, Ark Invest, expects shares of Tesla will hit $2,600 in five years. That would be a more than 1300 percentage point increase from where the stock stands today. Cathie wood, CEO and CIO of Ark invest, is joining us now. Cathie, it's great to see you. >> Great to see you, Julie. Happy to be here. Thank you for inviting me of course. >> So you're somebody one of the main people I wanted to talk to today about this vote, because you have been very supportive and supportive of Musk. So you voted yes today. Just briefly give us your rationale for why you think this pay package is justified. And it should stand. >> Well, I should say from the outset, Elon Musk was willing to , he was willing to commit to working ten years, without any, salary bonus, stock compensation , even, unless he achieved these goals and they were tranched there were 12 tranches, but, he accomplished what at the time, 2018, most people were saying was laughably impossible. Number one. Now, we thought it was possible with brilliant execution, but most if you if you listen to the analysts and other auto manufacturers back then, they more often than not use the word, you know, possible bankruptcy, that's how much he was betting the company, and that he did and he accomplished something phenomenal. And, really at the beginning, the value of the pay package was 2.3 billion. The reason it got to 56 billion was the performance, which was outstanding. >> Kathy, I'm also interested to get your take on how. How critical you think Musk is to Tesla. Because we've had analysts come on the show, Kathy who cover Tesla and they'll they'll kind of suggest in their opinion that he is almost foundational. They'll say things like Musk is Tesla, Tesla is Musk. Do you agree with that, Kathy? >> I think, I think Tesla, Elon Musk has been incredibly important to Tesla and still is, not so much on the electric vehicle side. That's on automatic pilot. It's on the autonomous side, which is the reason we anticipate that this stock will scale to 2600. And our base case, given our research, in the next five years, in fact, the probability of autonomous has gone up dramatically here, because of breakthroughs in AI, which Elon and his team are harnessing and this is a winner take most opportunity. The first, autonomous taxi network to evolve and get people from point A to point B as safely and quickly as possible, is probably going to win the lion's share of a given market. I think this will be country by country, or maybe continent by continent. So, and we think Tesla is in the pole position certainly here in the United States. And we were very pleasantly surprised that China has invited Tesla to partner with, with Baidu on the Apollo Autonomous project. I think the signaling there is the Chinese companies are trying to go autonomous and beat us at this game, but they have been unable to do so. And just like on the electric vehicle front, they've invited Tesla in, to help them, to help show the way, I want to dig more into autonomy. But first, I want to linger on the vote for a little bit more, Kathy, because what I'm curious about is, is Musk has been quite vocal of what he wants here. He wants 25% voting control of Tesla. He has said that if the pay package didn't go through, although it seems like indications are it's going to go through, but that if it didn't go through, he was going to take some of his AI technology to one of his other, endeavors. If the pay package indeed does get passed, are you what's your level of confidence that he won't still, at some point get angry at something? He is mercurial and take that AI technology elsewhere, well, first of all, and just to finish off on the last, question, once autonomy is in place and we're almost there, anyone who has FSD full self-driving today knows that every two weeks now, we're seeing leaps in performance. And so, we do think that autonomous is almost here. And then and then you can ask me the question , after that happens, in terms of, taking, I as I strategy elsewhere, I think what many people do not understand is, Tesla is the largest AI project on Earth. Autonomous mobility is the largest AI, project. We've we see Rivian scaling in the entire ecosystem globally to 8 to $10 trillion from essentially nothing. Now, in the next 5 to 10 years. And the taxi platforms will get half of that again, country by country or region by region, so, we think that, oh, I've lost the question, Julie, I'm so sorry, it was about the package. Oh, yes. Would he take his marbles and go somewhere else? Well I think what many people don't understand is, the most important variable. Once you've got the domain expertise and the AI expertise is, is proprietary data. And Tesla has probably more proprietary data, than almost any company in the world, Elon Musk is the CEO of this age that we believe is going to best capitalize on the convergences between and among technologies, autonomous mobility is three of the platforms robotics, energy storage and artificial intelligence converging on, technologies that are going to create explosive growth. The other companies, we don't think are going to change humanity, as much or the environment, shall we say, as much as Tesla is. And, I think Elon is passionate about that topic. The other companies are AI companies is going to harness AI and, and, and create in the case of X, the everything app. We do think that's that's his plan there. But the biggest project is this one. The most challenging project is this one. And I don't think he's going to leave until he sees autonomous on, I guess you could say automatic pilot. >> And Kathy, as you're kind of suggesting there, you know, Musk is a busy guy. He's always been a busy guy, but he seems busier than ever. I mean, as you're mentioning, I mean, Tesla, Neuralink, you know, x I x are you as an investor, Kathy, are you ever concerned that he's spread too thin at this point, I am not, because, again, of this convergence idea, we almost need CEOs to become multidisciplinary , in order to understand how the world is going to work. And, Elon epitomizes that right in, in terms of AI in each of the projects, autonomous mobility here on Earth, in space, and, AI projects elsewhere. So this is really even Neuralink. There are there's AI, they're harnessing AI there as well. So I think that he is becoming a better executive from a strategic positioning point of view because of his focus on these various AI projects, Kathy, I know you have a longer time horizon. We've talked about this frequently, as that's evidenced by your, your firm's now analysis going out to 2029 for Tesla and where it should be, but Tesla's down this year, and your benchmark ark, Ark ETF is down this year, but it's also down over the three and five year periods, and so I'm just curious how you're thinking about strategy with, with regard to Tesla and more broadly, given that, well, given our price target, as you say, Julie, we have a long term time horizon, the reason Tesla is down is because EV sales are much weaker in this macroeconomic environment. And there's price discounting, many people ask us about that. We would worry more about the traditional auto manufacturers as electric vehicle prices come down below gas powered car prices, so we've got our eye on the prize. It's a five year investment time horizon. You are right, the three and five year numbers, we have not met our 15% compound annual rate of return, over a five year period, and I think I know the reason for that in this particular case was the shock, that we saw coming out of the fed a 24 fold, interest rate increase, in little more than a year, which absolutely crucified long duration assets. Ark epitomizes in the equity world, long duration. We have a five year investment time horizon, whereas most have, one I would say these days. So we understand why we think we've paid our dues in terms of, rising rates. If anything, the recent inflation data suggests interest rates will fall this year. And the number of dot plots is increasing once again, that should, accrue to the benefit of our strategy, this year, the backup or the underperformance has had a lot to do with going from six interest rate cuts expected at the end of last year to at one point, zero or, or just one. Now we're up to two, and we think as inflation continues to surprise on the low side of expectations, which we do believe because innovation is deflationary, gasoline prices are coming down now, rents are coming down in many, many cities. So we do think interest rates will follow. If we were one of the worst disadvantaged or the worst, hit, among strategies, our long duration strategy, just like long bonds, long duration, strategy, there too, they were hit harder than they have been since the 1700s. So very unusual experience, if that's the reason we had. We got hit so hard. It stands to reason. Also that as rates come down, we should benefit it, and maybe the market needs to see more from the fed in terms of rhetoric here, but we have started to outperform very recently. And we think what we've experienced in the last well, in the last few years is the most amazing concentration of performance into just a few stocks. Now, the mag six, and in fact, Goldman did a study about concentration which says this is the highest concentration ever, even worse than during the Great Depression when, when investors were seeking companies that they knew would not go bankrupt. Big cash cushions, big cash flows, much like now. Much like now. So there is still fear in the market, which has disadvantaged our strategy when risk appetites, pick up and investment time horizons extend a little bit as they do during bull markets, we should enjoy, a nice rebound. We think last year we were up 68, beating all the major benchmarks, and that was simply because of the whiff of lower inflation. Inflation I mean, interest rates, we think that that width will turn into a reality this year, Kathy, finally, as you look, have that outlook, right for the fed to start cutting rates for an improvement in the portfolio, to circle it back around to Tesla. You know, Tesla is a top holding in that ETF, at about 11% or so after the today's vote outcome, would you anticipate even adding to that stake? >> Well, we cannot add to any stake, when, a stock is at 10% or higher, we can let it run, we don't have to cut back right away, but we, if a stock is above 10, it has outperformed other stocks because we usually gone to 10. It's outperformed other stocks. And so again, we can let it run. We just can't buy any more if we're at 10% or more. >> Gotcha Kathy. Thanks a lot Kathy. >> Thank you as always for joining us. We appreciate your time. >> Thank you so much. Thank you both. And, we're looking forward to a big bull market ahead as interest rates come down. >> Thank you Kathy. >> Thank you. >> Stick around. More coverage of the Tesla shareholder meeting still to come on Yahoo finance. Tesla. Shareholder meeting. Currently in progress. Investors awaiting the final results on some key shareholder resolutions. Let's get to Yahoo Finance. Prize winning with the very latest prize. What do we know? >> Hey, he's. >> He's listening. Come on. Well yeah, I'm listening really intently here, they're going through a number of shareholder proposals right now. Right now they're going through a Dei type of proposal about, about, workers and being properly trained on harassment policies and things like that, how there's an act as a shareholder. They're talking now who runs a group that this is the usual case. >> Shareholders get up, they make their case right? Yeah. >> And you have activist shareholders coming on, not activist, but but once they come out with a with not an agenda but saying, hey, we want outlines why this is a terrible idea. Yeah. Right. And but they get the they get the pitch there. Why we should vote for this initiative. So, a person from I think from Nia, shareholder Group is talking right now, but yeah, nothing yet. The meat and meat and potatoes of the shareholder vote on the pay package and also the domestication of I's and crossing T's. >> Right now we're getting to the big one. That's what you're saying. Yeah. >> Yeah. Right. Waiting for that. Waiting for the this is this is the palate cleanser right now, if I may, our Alexis Keenan is saying that as there are shareholders speaking, there's one shareholder who says there's no promise that with the $56 billion paycheck that Mr. Musk will devote any minimum percentage of his time to Tesla or pursue any minimum amount of advanced technology. >> So as you say, we are getting you know, we're hearing these opinions from the various shareholders. It's not an indication of how the vote is going to go, but it's an opportunity for them to speak out, right, to air these things out. >> We mentioned off air about how, yes, there was no mention of the fact that in the proposal for Musk's pay package, for instance, of whether they would condition him to bring those AI AI projects in-house at Tesla, that he wouldn't go elsewhere for them and things like that. So I think we're definitely shareholders are aware of this, and they're bringing it up. And the board is hearing that Robyn Denholm is there, the board's there. So they're hearing and Musk is there too. Yeah. All right. >> We'll let you get back to it. >> Yeah. All right. >> We'll be checking back in. Prize as as we are awaiting official word on Elon Musk's pay package. What should investors from both the retail and the institutional side be looking out for right now? Well, let's welcome in Bruce Goldfarb. Goldfarb Okapi Partners CEO and president. Bruce, good to see you. Great to see you. All right. So play place your bet Bruce. Is he going to is he Elon Musk going to get his payday. >> He is going to get his payday. >> Why do you say that. >> Well when you look at even the tweet he put out yesterday sounding confident sounding confident, not the kind of material that you put out the day before a shareholder meeting. Not typically. No, not almost never. Would somebody put out that kind of tweet. And, and in our business in the investor response and proxy solicitation business, we work with companies all the time on these annual meetings. We work with investor groups on these annual meetings and you rarely would announce the results the day before. >> And so people are at a meeting like this is very for most companies, Bruce, very carefully, methodically choreographed. I mean, there's a lot of time and effort usually put in. >> There is an awful lot of time for the kind of meeting that we're watching now where there are tons of people in the room and then an audience outside of the room. This is a show this is a little bit of a circus. What's unusual here is that it's not even a contest. There's no party saying we're voting against it and asking investors to vote against it. There are certainly investors who said, we're voting against the against what? Musk is asking for. We're voting against what Tesla is requesting . But that's not an actual contest. And they've created an environment here that is beyond the average shareholder meeting. But do I think the result is going to be a surprise rising? >> No, so and to be clear and to give our viewers a bit of background, the last time you were in here talking to us, Bruce, we were talking about Disney and Trian, and you were in fact, working with Trian on its quest against Disney. So in other words, you have a lot of experience with with these kinds of proxy contests, if you will, even though, as you say, this one maybe isn't as much of a contest, it seems as though a lot of the large shareholders are going to vote for the pay package, even though it has been somewhat contentious, including in court. Given your experience. Why is that? >> Well, there's a number of reasons, Julie and I what's what's also unusual about this situation is that investors have, in some instances, already announced how they're going to vote. And before I came in here today, there were so many investors who announced how they're going to vote. I almost had to write it down. I did write it down. I came prepared, Bruce. I came prepared. But what I what I note is that active managers, people who are supportive of Elon, some of them said we're voting for him, there are unions, pensions, hedge, sorry, unions and pensions and, church and charitable groups who said we're not going to be supportive. None of this is surprising. People who like what Elon has done here have said they're supportive. We talk about Peltz. Peltz, who doesn't have shares, have said he's supportive and that all makes sense. Now. The investors who haven't said anything yet Blackrock, Vanguard, State Street, they de all voted and what's really interesting here is the retail component to this vote very similar to Disney or Starbucks campaigns that have occurred where we worked on those campaigns this year. The retail component is very significant to the outcome. And in every one of these situations and here at Tesla, the retail shareholders buy Tesla because they like what's going on. They love what Elon Musk is doing and they're going to be wildly supportive. The challenge always is how do you get retail shareholders to overcome their apathy and vote? And part of our role as a proxy solicitor is to get people to vote. And Musk has done that, and Tesla has done that. They've reached out by social media. They've reached out, sent more proxy cards, phone call, mailing, you name it, and they're going to come out strong. >> What about Bruce's other wrinkle? We've been talking guests on the show today about this, which is interesting, which is Musk has effectively warned, listen, I'm getting what I want. I mean, 25% control. Or maybe I pick up my marbles and I find another game. My AI, my robotics projects, take them elsewhere. How unusual is that? What do you make of that? >> It it is unusual, but it's not unprecedented. I mean, we worked on a campaign on behalf of starboard more than a decade ago against AOL, where Tim Armstrong threatened that he was going to leave if he didn't win. There have been a number of CEOs who said that I don't like it as a tactic. It can be successful. But here's the reality for me with Tesla, Elon Musk has 260 million shares that he's pledged as collateral for his purchase of Twitter. He's not going to go anywhere if he's going to tank those shares, but it could be he prioritized prioritizes. >> I'm not saying he leaves either, but it could be Bruce. It could be, hey, I'll put time and effort someplace else. >> He could. But the way his his enterprises are intertwined, I don't see him not putting some real priority into Tesla. Bruce good to see you. >> Thanks for coming in on this interesting day to give us your perspective on all of this. Appreciate it. Well coming up, our special coverage of the Tesla shareholder meeting continues as we await the final vote on Elon Musk's pay package. Stay tuned. For story. And I think that that's the, that's the really the nub of what she was saying here. And that's a very important point. If she were to have gone the other way that change is Delaware law dramatically in ways that were really harm all shareholders. And because you have to always have that balance between the shareholders and management. And in between is the board who's responsible not to the manager. That's the independence point. They weren't independent of him, she found, but instead their obligation is to the shareholders themselves. And that she found was lacking here. And that's the whole point. And you've got to remember, listen, there's an old joke in the law biz. Good cases make bad law, like you say. Oh, he's terrific. He's the best. Why doesn't he get it? But it's bad law and it ultimately will come around to bite all of us. I think. Had she gone the other way or should she go the other way, which I hope she doesn't. But the vote really is not that important to this case. It's much a lot of sh'bam and pizzazz and all kinds of funny things going on. TV ads flying around the world, a lot of shareholder money is being spent to convince him to give him more money. But, you know, in the end, the point is this incredibly important point of not just Delaware law, but any other state for that. >> That's what I was going to that's what I wanted to really ask you about as well, Charles, you know, obviously the vote is up today to Redomicile Tesla in Texas from Delaware to what then happened to the approval of the pay package because it happened when they're still domiciled in Delaware, it would then be absolutely nothing. >> Nothing. Absolutely nothing. In fact, there was a ruling by the judge last week that basically said that even if it's Redomiciled, she retains authority over the case. And in fact, she has the authority to negate the package which he's done, so really, it now down the road, let's say they come up with a new package and they, you know, reneged on it or not negotiate it, give it to him, shareholders vote on it. That's a different story. That would be before Texas court, but again, you're assuming that a Texas judge would view this differently. Why in the world would you say, I'm leaving Delaware, where she acted to protect all shareholders to a place where I don't think they will? That doesn't make much sense to me. And listen, because someone that you think is talented says, I want it all. That doesn't mean you give it all to them. What happens if they disappear? The threat to leave is amazing. If you think about it. His fiduciary duty is to the Tesla shareholders. That's why he is, that's his obligation to CEO. I'm just I'm going to walk the company. The board should be thinking about that, too. Listen, this country, we have a president and a vice president. Why? If something happens to the president, someone comes in. The Tesla goes way beyond Elon Musk. And at some point, there isn't going to be an Elon Musk. And what kind of company have you built if you have no great succession in place? And that's the real issue. That's what I think a thoughtful shareholder will step back, think about before they, you know, simply, respond to a great TV ad. You know, there's more to it than that. That's long term investing and long term capital growth. That's the key here. And I think people need to think about that. Charles thank you so much for joining the show today. >> I always appreciate it. >> Thank you. Take care. >> Let's welcome in Bruce Goldfarb. Copy, copy. Okay partner I'll get it. Bruce. I promise at some point, CEO and President Bruce, we're still waiting interested to get you. Just listen to Charles there. Interested to get your reaction response. Some of the points he was making. Well, Charles makes a lot of points. >> But what I think is, is an interesting point is his view that shareholder leaders don't care when a CEO threatens to leave or that they shouldn't care. And the reality is it's a very emotional issue when and as we were discussing earlier, when we talk with investors, it can be a salient point for them. More than that, investors really do care about succession and succession, even at the board level. >> I want to get into that in a moment. But we have just gotten the news that the pay package has indeed been approved, and the redomiciling to Texas from Delaware has been approved. So I just want to repeat that Tesla shareholders have approved Elon Musk's 2018 pay package that has been pegged at $56 billion. It was awarded 330 million options that are estimated at about $56 billion. Here you can see the shares rising and extended trading. And they have approved the moving of the company the corporate moving of the company legal moving of the company to Texas from Delaware. I believe the company had said that they would do that as soon as it was sort of feasible to do so. So we'll see what happens here. But again, as we have emphasized, this does not mean this is over. This does not automatically mean he is getting the money. It could still face legal challenges. Right? It absolutely. >> But as as I said, I'm not surprised by the shareholder vote. It makes a lot of sense when you analyze the shareholder composition, retail shareholders, active managers, probably many of the passive funds who hold big stakes voted in favor. Let me ask you, when you think through that, Bruce, because I totally agree with you on the retail side there there always was. >> There's a group of folks here there in Tesla, in part because they believe in Musk. Right? I mean, you should see my mentions on X when we talk Tesla. I mean, people the soldiers pile in right there is that enthusiasm for the big index funds. What was that? Now they may be they're motivated differently. Was their motivation in part. I'm just to get your take. I mean, it could be multifaceted in part. Do you think they were thinking, listen, if this guy is serious and he really might prioritize other companies, other ventures or he really might take AI and robotics to their places, I don't want to. I don't want to poke that tiger. Was that the motivation? >> It's a little more than that. Josh. When institutional investors evaluate how to vote on these kinds of situations, pay package Redomiciliation, they have to think overall about what is going to improve the value of the shares that they own. Even passive investors look through these issues. And here for a passive investor, the company did a very good job of outlining, for example, that the laws in Texas are not going to be dissimilar from Delaware. The shareholders have protection. That's what investors care about. They care about the governance. They care about the plan, the performance, the threat of loss of any of those issues were make it more likely for those investors to want to be supportive of these proposals. >> Bruce, stick around. We're going to go back to our producer, Brandon, who's been monitoring the vote here. I think it's interesting they announced that they won the vote, but then they played the Please Vote Hype video again, just to show how great everything has been since they approved that pay package. >> You take a victory lap, Julie. >> Come on. I guess that's what it is, so, we'll see it looks like maybe Elon Musk is coming out and greeting them there he is. He's out there greeting the faithful. Now after he's won this vote. >> Yeah. Looking very excited, very pumped. He got his pay at least for now right. We there's still needs to be kind of, gone through possibly the court system again, but it sounds like, they've re domestication happened, which he of course pushed for after he, after his pay package was, was denied. So now the pay vote would go through. He's on the path towards getting that, Tesla shares are obviously higher here , so, you know, I think we kind of saw this was going to happen. The question is what will the vote totals be? They didn't they didn't get divulge those yet. So that will be interesting to see how close it came. I don't think it will be so close. The question is will it be less than 2018 totals for his for his pay package? At least? And also, I'm curious what the domestication vote would be as well as you were following. >> I mean, you were following the story so closely. Are you surprised by what you heard today or no, this is how you saw it playing out. >> I mean, I thought that it was going to pass no matter what. But then we started hearing these bigger funds kind of come down and vocally say, we're not going to actually approve this pay package, given what we've seen in dilution effects and just the overall size of the award. And then on the other side, you saw people like Ron Baron and people like Cathie Wood talk about, well, it's where he's aligned with our interests. So I guess that was not surprising. But I think when the vote total comes out, maybe it will be significantly less than 73. We'll see. Maybe over half. I mean, obviously obviously after over half. But the question is how far above half will it be? So that's going to be interesting to watch. For me. >> Bruce, I want to come back to you finally on this sort of again, to come back to the idea that Musk sort of held Tesla hostage in some respects. Right When he was talkingabout taking his AI technology elsewhere to one of his other holdings. When he talked about that, he wanted 25% of voting power. How often have you seen that in your career? And what usually is the outcome? >> It's kind of interesting. It doesn't. As I said, it does not happen frequently. It tends to happen within the context of a proxy fight. If you go back to Disney, you think about the murmers that Michael, that that Bob Iger was going to quit, but it impacts some investors. It's still a good tactic. But ultimately I believe there will be campaigns coming forward where the other side is going to say, why do we really need to rely on one person? This is where I think Elon Musk is unusual, that he brings so much more to the equation than the average CEO, who is a tactician. He's a founder, he's an innovator. He's not just an operator. >> Right? Yep, yep. >> Right. And there's nobody else around him. >> Not that we've not that anyone's identified that we know exactly. >> Bruce, thanks for hanging out. Really appreciate your insight on this process. Thanks as well for keeping tabs on this for us and Tesla shareholders approving Elon Musk $56 billion pay package moments ago. We want to get some analysts reaction as well. From Craig Irwin, senior research analyst at Roth. MKM it's good to see you, Craig. So as you look at this as a financial analyst, how do you model an event like this? And the effect that it that it might have? >> Well, let's frame this out right. When Tesla when the shareholders actually originally approved this, pay package. In 18, Tesla was a $50 billion company. Today, it's a $570 billion company, Elon Musk has really been an alchemist, right, he's, really driven the success of the EV industry. And, you know, in many respects, he's a pioneer, and he's, you know, I would say replaceable, so I'm not surprised the shareholders approve the package again. It makes sense. The last thing they want to do is chase him away and tell him go, go work on something else. We don't want you at Tesla. Everybody Everybody likes him. I may be a big bear on the stock, but I think he's a highly charismatic guy, and I can really appreciate what he's done for the world. >> Craig, let me ask you this hypothetical, which I know financial analysts always love when I go there, but I'm just interested if you took out your kind of crystal ball, what if the package hadn't been approved? Craig, what do you think the reaction would have been in the stock? >> Oh, man. We could have seen dropped 20, 30, you know, I've always said, hey, Elon Musk is the most important person at Tesla. If you put him in one of his rockets and send him to Mars , he's still the most important person at Tesla. But you know, there would have been a reaction. I mean, the headlines would have been a big deal, yeah. He's put up his shares for Twitter, for the Twitter purchase. He's highly leveraged across his different companies, but man, I cannot imagine him having quite the same passion, if the shareholders first approve it and then don't approve it, when there's a wrinkle in the overall process in, in Delaware. So, you know, not surprised they're moving to Texas, you know, I can't can't imagine Delaware being very popular in Musk. In most zip code. But, you know, the right thing happened today at the shareholder meeting. And, you know, they're laying out their vision for the future. I disagree on the vision a little bit, why? I'm a bear, but, you know, he's getting what he wanted at the shareholder meeting. >> Well, and, Craig, you know, as you say, you're a bear. >> The company, despite his triumph today, the company has some underlying sort of secular issues, some of which have to do with Tesla, some of which just have to do with the market more broadly. Does the does the board have even less oversight of Musk after the vote today? And does that mean that he is less likely to address those issues that perhaps need addressing? >> Clearly, Musk controls the company, right? The board does not control the company. The board is there for governance, and it's doing its best. But Musk is such a big personality, and is such a, carries matic and, important leader, not just not just for Tesla, but I would say for the industry that it's hard to imagine the board, the board controlling him. You know, he will control this company and he will determine the future of Tesla, you know, now I just I think the board, if they were doing their job a little bit better, they would, maybe rein in some of these very aggressive statements that are being made about autonomy. And, you know, the last earnings call and he started to tap on this a little bit, before I cut over. But the whole idea of a sentient humanoid robot, on the market before the end of 2025, that conflicts with what I'm hearing from experts, right? You know, the person that put the first humanoid robot, on the space station is actually someone that I know from, working with him in another company. He's telling me what Tesla has a state of the art for 2014. So extremely aggressive claims, you know, FSD rate two and a half. But if we're going to get to 4.0, it's going to consume as much electricity as the drive train does today. That's kind of a nonstarter. So aggressive claims are not new. Hyperbole is not new to Elon Musk, he's got car company problems he needs to solve, you know, really demand. That's why they're starting to do advertising, and then he needs to take more cost out of his vehicles. He's been a leader there and cutting cost. But that's painful for investors that really want to see earnings. You know, EPs and EBITDA. So it's a tough setup, you know and the board you know they they have a role. They have a very important role. But but Musk is clearly the leader of the company. >> He is the leader. And one question you know, we were kind of batting around I want to get your take on is there anybody right now on Tesla's bench? Craig, that could take over or is even being groomed to take over at some point for Musk? >> Oh man, I was listening to Robin Denholm's, introduction. She gave the first, speech at the, shareholder meeting and she was a little shaky, she was not nearly as, confident or clear, and, you know, it seems like, you know, when you get a podium like that, you know, it's to raise the credibility of the board, and it's to, potentially elevate the, the executive, you know, if she is chairman of the board, you would expect her to be a natural fit, to jump into that seat, given that she has been a chairman of a very large company before and chief executive, I should say, of a very large company before, but she's not Musk. She's a very intelligent lady that's been successful. I don't see anyone out there that that I would I would be excited about Tesla hiring. I mean, Tesla's got some good people in there, you know, if Musk groomed someone for a number of years and, you know, appointed them and said, this is this is my choice, that might be taken a little differently by shareholders. But, you know, I don't think anyone wants to see him go. Not me. And I'm a bear, well, he's entertaining, if nothing else, Craig. But you know what would what would change your bearish thesis? >> Oh, gosh. If they really do, if they really do launch, Optimus. And it's making money, and it really is a sentient robot. That would be, you know, it's kind of like, you know, Star Trek, and then, you know, I know there's things that people have been looking at, like computing at the edge. And, you know, the hire, optical density, cameras for vehicles. So people say you really need ten, not four, and if they were able to implement these different things in a package and roll it out, for 4.0, excuse me, I think they really do need to use millimeter radar. And probably lidar as well for a credible package. But if they did something like that and were able to show that the, the energy tax and the drivetrain was not 100, if it was 10 or 20, that would actually get me pretty excited, it's a great company. They've done a tremendous job on innovation. You know, everything from their first use of silicon carbide in the drivetrain to, you know, charging to, you know, innovations on motor technology, FSD, you know, 2.5 is nothing to laugh at. I mean, that is a big accomplishment, but it's not the robotaxi that you get in and you type in an address and it brings you to grandma's. So the representation versus reality is a little bit of a match, a mismatch. And if that became a match, I would obviously take a much more bullish view. Craig it was great to have you on the show today for all that insight. >> Thanks for making time for us. >> Thank you. >> Tesla's shareholder meeting is still underway. But listen, the headline is out. Elon Musk has won the Tesla shareholder battle to keep his record breaking pay. And joining us now with the takeaways thus far we've got Yahoo Finance's Alexis Keenan and prize Sumerian. Welcome guys Alexis I'll start with you. So all right the headlines out now what what happens next. >> Yeah he kind of won the battle but not the war right. >> Because and what do you mean by that. >> Well so legal experts say that this is not the end. There's more litigation to come no matter what the result of this vote Elon Musk had. And Tesla had an appeal on the table that presumably moot. Now that doesn't seem like it has any legs. But look, you could argue this either way and say that this result, this vote itself could harm shareholders. So we could see some action from shareholders not liking whatever effect this has on the stock. But also, you know, you have to look at the big question here. And what's going to be litigated in the future is did the board meet its fiduciary duties in putting this up for a revote? Did they have an arm's length negotiation with Elon Musk? Did they disclose all of the necessary conflicts between Musk and the board member who recommended it? And also, did they benchmark this pay package against other CEO's? And yes, there's the argument out there that there is no other analog for Elon Musk that he's one of a kind, that you can't really compare what he should be compensated with to other U.S. CEOs of public companies, but that is one of the things that the courts would be looking at, most this proposal was unchanged from the last version in 2018. But for the fact that you had a board member, a one member special committee for recommending this proposal on the pay side, who did not propose back in 2018 because she was not yet on the board during that vote, and so Elon Musk, still talking at this meeting, and he did talk about the possibilities for autonomy and what it's going to do for the company. So let's listen to what he said. >> And if you just plot the points on the curve of how well autonomy is progressing and just believe the curve is, it's headed towards, unsupervised, full self-driving very quickly at an exponential pace. So and it's very clear that that will actually go to the point where it is actually far safer than a person driving the car. So I mean, obviously that's part of the longer term thesis on the company. >> But the, the, the matter at hand today was the vote. And he just made a very brief comment when he came on stage about that. >> Yeah, he mentioned the robotaxi fleet about how it's going to be partially owned by Tesla. And the other cars will be like your car, for instance, and you can rent it out and be like an Airbnb like experience. It makes money for you while you're gone. So he's kind of hyping up some of these features. But, you know, he's talking about autonomy for years now. Yeah. And talked about how it's going to be fully fledged by 2020 and then 2021 and then things like that. So now we're hearing this very quickly stat. So he's here. You know it seems to me like he's coming out got the pay. How am I gonna justify it. We're gonna get that robotaxis out. We're gonna get that autonomy out. It's gonna happen. >> Although we talked, we talked. You heard. We talked to Cathie Wood and she has, that target 2600 now. And when you talk to her, I mean, that was that was a big part of the thesis. I mean, but that has been but to Price's point, just as it's been a part of what he has touted, it's that's been a part of the thesis and it hasn't materialized. >> I mean, Tesla has achieved a lot, but rarely has it achieved what it set out to achieve on time. Certainly it does not have a good record of timeline. So yes, so her thesis, she may be right eventually he may. >> I'm just saying when you talk to when you talk to Tesla bulls, it's I'm just reading the point. It's a big part of why they're in the stock. Right. It's this bet they're they're riding along with Musk. And if you've been a retail investor, if you've ridden along with Musk, you've been you know, even even some of the critics we've had have enjoyed some nice returns, which depends on when you bought it. Absolutely. But even who we talk to Ross Gerber this week, I mean, when we pressed him, when he got it, he says 2014, right? That wasn't his issue. I forget which analyst said this, but at the moment, right now you have Waymo and you have cruise soon actually having the cars, robo taxis being deployed by Uber and other services. >> That's the next step for Tesla is are we going to see these sort of like Geofenced pure robotaxi tests happening in places like Austin or San Diego or Phoenix? That's the next big step we see that. Then it's kind of like, okay, this this path is in play. But right now a lot of it is just a lot of talk. Robotaxis coming $2,600 price target $5 trillion valuation. We haven't seen the robotaxis yet. We've seen a nice FSD. >> Is that when it comes I mean I don't know I mean I'm can we have the big event. >> Oh yeah we have the reveal of the car. >> But but when are we going to see the actual trials? I think that's the next big step that will actually prove the case. It's actually happening. >> Not to mention the sentient humanoid robots, which he also talked about today. We'll see guys, thank you so much for helping with our coverage today process and Alexis. And that wraps up our special coverage of the Tesla shareholder meeting. Be sure to tune in to Yahoo Finance tomorrow morning at 9 a.m. for insight on Tesla, including a conversation with oh, that noted bull on Tesla. Our good friend, Wedbush analyst Dan Ives. Oh my gosh, the head shot couldn't be more perfect. Have a great night everybody. >> I love that shirt.
