>> IT'S 9 A.M. HERE IN NEW YORK CITY. I'M SEANA SMITH ALONGSIDE BRAD SMITH. AND THIS IS YAHOO FINANCE'S FLAGSHIP SHOW THE MORNING BRIEF. WE'LL STOCK FUTURES ARE MOVING TO THE UPSIDE HERE THIS MORNING RECOVERING SOME OF THE LOSSES FOLLOWING THE WORST SESSION THAT WE SAW IN MORE THAN A YEAR FOR THE DOW. YOU'VE GOT THE DOW ON PACE TO DROP ABOUT 2.5% FOR THE WEEK. >> AND WE'RE LOOKING AT TWO MAG SEVEN MEMBERS THIS MORNING NVIDIA AND TESLA NVIDIA POISED TO HIT A FRESH RECORD HIGH. AND THIS COMES AS REUTERS REPORTS NVIDIA'S OVERSUPPLY OF ITS AI CHIPS PROMPTED THE COMPANY TO CUT PRICES IN CHINA. MEANWHILE TESLA REPORTEDLY SLASHING PRODUCTION AT ITS SHANGHAI PLANT FOR ITS MODEL Y VEHICLE. WE'LL DIVE INTO THOSE STORIES THIS HOUR. LET'S GET RIGHT TO IT WITH THE THREE THINGS THAT YOU KNOW ON THIS FRIDAY MORNING, YOUR ROADMAP FOR THE TRADING DAY AS WE'VE GOT YAHOO FINANCE'S JARED BLIKRE, JENNIFER SCHOENBERGER AND INEZ FORREST STANDING BY WITH MORE STOCK FUTURES MOVING HIGHER THIS MORNING AS THE DOW LOOKS TO RECOVER FROM ITS WORST SESSION SINCE MARCH 2023. >> ONE YEAR AGO, STOCKS HAVE BEEN FEELING THE PRESSURE THIS WEEK AFTER THE FED MINUTES REIGNITED CONCERNS OVER THE PATH OF INTEREST RATES. AND WITH PROGRESS STALLING ON INFLATION, GOLDMAN SACHS IS PUSHING BACK ON THE TIMING FOR A POTENTIAL RATE CUT FROM JULY TO SEPTEMBER. >> THE SEC APPROVED A RULE CHANGE LATE THURSDAY THAT PAVES THE WAY FOR A SPOT ETHEREUM ETF APPROVAL. THE NEXT STEP REGULATORS WILL NEED TO GIVE FUND MANAGERS APPROVAL BEFORE THEY CAN LAUNCH ETF PRODUCTS, THOUGH THE TIMING OF THAT REMAINS UNCLEAR. >> AND WE'RE ON FULL ELON MUSK WATCH THIS MORNING, THE EV GIANT TESLA REPORTEDLY SLASHING PRODUCTION AT ITS SHANGHAI PLANT FOR ITS MODEL Y VEHICLE, THIS COMING AMID CONCERNS OF WANING DEMAND IN THE ELECTRIC VEHICLE MARKET. AND MUSK PUSHES BACK ON A REPORT OF DISCUSSIONS OVER SELLING EXISTING SHARES OF SPACE X AT AN UNDISCLOSED PRICE THAT COULD VALUE THE COMPANY AT $200 BILLION. >> WELL, GOOD MORNING EVERYONE, AND A HAPPY PRE-HOLIDAY WEEKEND TO YOU. WE'RE TAKING A LOOK AT SOME PRE-MARKET MOVES AHEAD OF THIS LONG HOLIDAY WEEKEND. THURSDAY A CHOPPY SESSION FOR STOCKS, BOEING DRAGGING THE DOW TO ITS WORST SESSION SINCE MARCH OF 2023. THE NVIDIA BUMP ALSO BEING CALLED INTO QUESTION AS STRONG ECONOMIC DATA REINFORCES. THE GOOD NEWS IS BAD NEWS NARRATIVE HERE. SO FOCUSING IN ON SOME OF THE FUTURES ACTIVITY HERE THIS MORNING YOU ARE SEEING JUST A LITTLE BIT OF A MOVE HIGHER FOR THE DOW FUTURES BY ABOUT 2/10 OF A PERCENT. AND THEN ADDITIONALLY ATTEMPTING A LITTLE BIT OF A REBOUND FROM YESTERDAY S&P 500 AND THE NASDAQ 100 ALSO IN POSITIVE TERRITORY RIGHT NOW. >> YEAH BRAD THIS IS GOING TO BE REALLY INTERESTING TO WATCH BECAUSE LIKE YOU SAID YESTERDAY, A LOT OF THAT MOVEMENT TO THE DOWNSIDE. THE WORST DAY THAT WE'VE SEEN FOR THE DOW IN OVER A YEAR THAT WAS ATTRIBUTABLE TO THAT MASSIVE DECLINE THAT WE SAW IN BOEING YESTERDAY, FALLING JUST AROUND 7% I BELIEVE. SO AGAIN, A CLOSE IT'S IMPORTANT TO KEEP A CLOSE EYE ON THAT NAME. WHEN WE TALK ABOUT SOME OF THAT MOVEMENT THERE FALLING JUST ABOUT 7.5% YESTERDAY. TODAY YOU CAN SEE THIS MORNING UP JUST ABOUT 6/10 OF A PERCENT AHEAD OF THE OPEN. BUT WE WILL SEE WHETHER OR NOT WE WILL SEE A BOUNCE BACK IN SOME OF THOSE DOW COMPONENTS HERE TODAY. AND THEN ALSO ANOTHER BIG STORY THAT'S GOING ON IN THE MARKET. IT'S GOING TO BE CRITICAL HERE IN TODAY'S SESSION IS THE MOVEMENT THAT WE'RE SEEING A LOT OF THESE LARGER CAP NAMES, ESPECIALLY WHAT WE'RE SEEING PLAY OUT IN THE TECH SECTOR. BECAUSE LIKE YOU CAN SEE ON YOUR SCREEN, THERE WAS CERTAINLY A LOT OF RED ACROSS THE BOARD YESTERDAY. NVIDIA ACTUALLY THE ONLY MAG SEVEN NAME TO CLOSE OUT THE DAY WITH GAINS. AND YOU'RE LOOKING AT A POP OF JUST ABOUT 9. SO NVIDIA WASN'T ENOUGH FOR THE BROADER MARKET, BUT IT WAS ENOUGH FOR INVESTORS TO STILL FIND REASON TO BUY THAT NAME ON THE HEELS OF EARNINGS. >> YOU GOTTA IMAGINE A LOT OF THE TALK AROUND THE GRILL THIS WEEKEND IS GOING TO BE AROUND NVIDIA. THE STOCK SPLIT AND THE ABSOLUTELY MASSIVE RUN THAT WE'VE SEEN OVER THE COURSE OF THIS YEAR FOR NVIDIA. IF YOU NEED A FAST FACT TO TOSS OUT THERE TO FOLKS AND TRY TO IMPRESS SOME OF YOUR FRIENDS AND FAMILY, JUST REMEMBER UP OVER 100% YEAR TO DATE FOR NVIDIA. >> ALL RIGHT. WELL, THE RATES DEBATE SURGES ON IN THE HIGHER FOR LONGER NARRATIVE ISN'T GOING AWAY JUST YET. ATLANTA FED PRESIDENT RAPHAEL BOSTIC NOTING THE PROGRESS ON INFLATION IS STILL SLOW, EVEN IF IT HAS RESUMED FALLING NOW. GOLDMAN SACHS ECONOMIST ALSO WEIGHING IN ON RACE JARED BLIKRE HAS THE DETAILS ON THAT. JARED >> THAT'S RIGHT. RAPHAEL BOSTIC IS THE LATEST OF A PLETHORA OF FED SPEAKERS THIS WEEK TO COME OUT SAYING THAT THE FED MAY HAVE TO KEEP RATES HIGHER FOR LONGER. THAT DOESN'T SOUND LIKE ANYTHING NEW, BUT THERE ARE SOME NEW DETAILS HERE BECAUSE THE FED IS IN DANGER OF BEING ON THE WRONG SIDE OF INFLATION ONCE AGAIN WITH EVERYBODY REMEMBERS THE TRANSITORY EPISODE FROM A FEW YEARS AGO. AS FAR AS INTEREST RATES, BOSTIC HAS SUGGESTED THAT THE FEDERAL RESERVE MAY NEED TO DELAY CUTTING RATES, POTENTIALLY KEEPING THE CURRENT RATE, WHICH IS FIVE AND A QUARTER TO 5.5% LONGER THAN EXPECTED BECAUSE THE U.S. HAS NOT PASSED THAT CRITICAL POINT AT WHICH INFLATION, WE CAN SAY, IS IN THE REAR VIEW MIRROR AND YESTERDAY, IT WAS ONLY YESTERDAY THAT WE GOT THE COMPOSITE PMIS. THOSE ARE PURCHASING PURCHASING MANAGERS, MANAGER INDEX SURVEYS. THOSE CAME OUT AT THE HIGHEST LEVEL SINCE APRIL OF 2022. THAT'S IMPORTANT FOR A NUMBER OF REASONS. THIS IS A SMALL REPORT THAT DOESN'T USUALLY MOVE THE MARKET. BUT IT SUGGESTS ACCORDING TO S&P, THAT WHAT'S WHAT'S INTERESTING AND THIS IS A QUOTE FROM S&P. WHAT'S INTERESTING IS THAT THE MAIN INFLATIONARY IMPETUS IS NOW COMING FROM MANUFACTURING RATHER THAN SERVICES. SO GETTING BACK TO BOSTIC, ANOTHER THING THAT HE SAID WAS INTERESTING, THAT I THOUGHT WAS INTERESTING, WAS THE FED IS GOING TO CONDUCT A NEW FRAMEWORK REVIEW OF ITS INFLATION TARGET IN 2025. THAT'S NEXT YEAR. CURRENTLY, THAT TARGET IS 2. BUT THE FED HAS BEEN MAKING THE CASE VERY SLOWLY THAT MAYBE, JUST MAYBE THAT NEEDS TO RISE. GUYS >> ALL RIGHT JARED THANKS SO MUCH. WELL AGAIN TAKING A LOOK AT THE MAJOR AVERAGES HERE. YOU HAVE FUTURES MOVING TO THE UPSIDE. IT'S LOOKING TO REGAIN SOME OF THAT MOMENTUM THAT IT LOST YESTERDAY. THE DOW COMING OFF ITS WORST DAY OF THE YEAR. NOW THE MOVE LOWER YESTERDAY COMING DESPITE THE FACT THAT NVIDIA ONCE AGAIN POSTING ANOTHER RECORD BREAKING EARNINGS REPORT. IT WAS NOT ENOUGH THOUGH TO KEEP THAT MARKET RALLY INTACT . SO HERE TO BREAK IT ALL DOWN WHERE WE COULD SEE MAYBE POCKETS OF STRENGTH GOING FORWARD. WE WANT TO BRING IN KEITH LERNER. HE'S TRUIST CO-CHIEF INVESTMENT OFFICER AND CHIEF MARKET STRATEGIST. KEITH, IT'S GREAT TO SEE YOU. SO TALK TO ME ABOUT HOW YOU'RE LOOKING AT SOME OF THE LOSSES THAT WE SAW YESTERDAY AND WHETHER OR NOT THE NARRATIVE SURROUNDING NVIDIA AND SOME OF THAT EXCITEMENT HAS FADED JUST A BIT WHEN WE TALK ABOUT THE BROADER MARKET ACTION. >> YEAH. WELL FIRST SEANA AND BRAD ALWAYS GREAT TO BE WITH YOU ESPECIALLY OUT OF THIS LONG WEEKEND. HOPEFULLY YOU GUYS GET SOME DOWNTIME AS WELL. SO YOU KNOW OUR VIEW IS THIS FIRST OF ALL WE DID UPGRADE EQUITIES IN LATE APRIL WHEN WE WERE DOWN ABOUT 5% BECAUSE WE THOUGHT THE RISK REWARD HAD IMPROVED. NOW WE MOVED UP 7% EXPECTATIONS INTO THAT. NVIDIA PRINT WAS REALLY HIGH, AND IT ALMOST SEEMED LIKE THE ANTICIPATION OF THIS REPORT FELT LIKE A CPI EMPLOYMENT DAY. AND IF YOU KNOW, YOU HAVE BEEN DOING THIS FOR A LONG TIME, THAT ON THOSE DAYS, REGARDLESS OF THE NUMBER, THE MARKET OFTEN ACTS DIFFERENTLY THAN YOU WOULD HAVE EXPECTED. AND I THINK THAT'S THE CASE YESTERDAY. BUT I ALSO THINK WHAT'S KIND OF HAPPENING NOW IS THAT WE'RE MOVING PAST EARNINGS SEASON, ONE OF THE MOST STEADY THINGS IN OUR WORK HAS BEEN FORWARD. EARNINGS ESTIMATES HAVE BEEN MOVING HIGHER, BUT NOW THAT YOU MOVE PAST EARNINGS SEASON, THE MARKET HAS TO NOW START FOCUSING AGAIN ON WHAT IS THE FED GOING TO DO. AND INFLATION AND EACH ECONOMIC DATA. SO THAT JUST MAKES FOR A MORE VOLATILE MARKET. OUR UNDERLYING MESSAGE IS WE STILL THINK THE PRIMATE TREND IS HIGHER. I THINK NEAR-TERM THE MARKET WILL BE SEARCHING FOR A CATALYST, WHICH LIKELY MEANS THAT WE'RE IN MORE OF A CHOPPY PERIOD AFTER THAT 7% RIP UP. BUT AGAIN, WE THINK THE PRIMARY TREND IS STILL ONE THAT IS POSITIVE. >> WHAT DO YOU THINK IS THAT NEXT CATALYST THAT COULD EMERGE? KEITH. >> WELL, I THINK, YOU KNOW, FIRST OF ALL, I'M GONNA GO THROUGH THE SUMMER MONTHS. SO I MEAN, EVEN JUST KIND OF GOING THROUGH BACK AND FORTH, IS ACTUALLY, I THINK, FINE. I THINK THE CATALYST FOR THE MARKET, IS, IS PROBABLY THE START SEEING MORE DISINFLATIONARY PRESSURES, WHICH AS, AS JARED JUST MENTIONED, WE GOT ALMOST THE OPPOSITE OF THAT YESTERDAY. SO FOR THE MARKET TO ACTUALLY MOVE HIGHER IN A MEANINGFUL WAY, WE LIKELY NEED RATES TO ACTUALLY BREAK BELOW THIS 430 LEVEL ON THE TEN YEAR TREASURY AND THE MARKET. GET MORE COMFORTABLE ABOUT THAT. THERE'S MORE DISINFLATIONARY PRESSURES THAT WILL ALLOW THE FED LATER THIS YEAR TO AT LEAST CUT, YOU KNOW, ONCE OR OR TWICE. I DON'T THINK IT MATTERS IF IT'S JUNE OR SEPTEMBER. I THINK THE MAIN, MOST IMPORTANT THING FOR THE MARKET IS THAT IT'S MORE LIKELY THAT THEY CUT. IF THE MESSAGE REALLY STARTS TO CHANGE, THAT THEY HAVE TO RAISE RATES, WHICH IS NOT OUR BASE CASE. I THINK THAT WOULD BE THE BIGGEST CONCERN FOR THE OVERALL OVERALL MARKET. >> KEITH, ARE YOU SEEING ANY SIGNS OF EXUBERANCE IN THE MARKET AT THIS POINT WHEN YOU TAKE A LOOK AT VALUATIONS AND WHERE WE ARE TODAY? >> WELL, SO I THINK THERE ARE SOME SIGNS IN THE LAST WEEK OR SO. I MEAN, WE SAW SOME SIGNS AS FAR AS THE MEME STOCKS, WE SAW SOME STRATEGISTS ON THE STREET REALLY JUST LIFT THEIR TARGETS, YOU KNOW, PRETTY MEANINGFULLY IN A SHORT PERIOD OF TIME. IF YOU LOOK AT THE OPTIONS MARKET, THERE'S ALMOST NO DEMAND FOR DOWNSIDE PROTECTION, SO I THINK THAT'S MORE OF A SHORTER TERM. I DON'T THINK IT'S, YOU KNOW, EXUBERANCE. I JUST THINK THAT IT'S ONE OF THOSE THINGS WHERE YOU WHERE, WHEN YOU HAVE THOSE TYPE OF THINGS HAPPEN, IT'S NOT UNUSUAL TO HAVE A LITTLE BIT OF A, OF A GUT CHECK OR GUT GUT CHECK IN THE OVERALL MARKET. AND THAT'S WHAT I THINK WE'RE HAVING. AND I ALSO THINK, LISTEN, WHEN WE GET BACK FROM MEMORIAL DAY, YOU GET INTO JUNE, YOU'RE GOING TO START SEEING THE PRESIDENTIAL ELECTION, AND I THINK PEOPLE ARE GOING TO START FOCUSING ON THAT. THAT'S GOING TO ADD ANOTHER DYNAMIC AS FAR AS JUST THIS KIND OF MORE OF A TWO WAY TRADE, EVEN WITHIN THAT UPTREND THAT WE STILL THINK IS INTACT WHEN THERE ARE THOSE POCKETS OF VOLATILITY. >> KEITH, WHERE ARE SOME OF THE TOP DIP BUYING OPPORTUNITIES EMERGING FROM YOUR PURVIEW? >> WELL, YOU KNOW, I ACTUALLY STILL THINK THAT LIKE TECH AND COMMUNICATIONS IS STILL LEADERSHIP. IN FACT, YESTERDAY ONE THING WE LOOK AT IS RELATIVE PRICE MOMENTUM AND RELATIVE TRENDS, OF EACH SECTOR TO THE OVERALL MARKET. AND WHAT WE DID YESTERDAY AT AN NVIDIA PRINT, WHICH MAKES SENSE, IS WE BROKE OUT TO AN ALL TIME HIGH AFTER CONSOLIDATING. SO WHAT THAT TELLS US IS TECH REMAINS LEADERSHIP. WE'VE BEEN OVERWEIGHT. THAT REAFFIRMS OUR OVERWEIGHT. THE OTHER THING THAT WE LOOK AT IS THE EARNINGS MOMENTUM FOR THE OVERALL SECTOR IS STILL MUCH STRONGER THAN THE OVERALL MARKET WHEN THAT HAPPENS. HISTORICALLY, TECH REMAINS LEADERSHIP AND I WILL SAY, YOU KNOW, IF YOU LOOK INTO THE SURFACE, YOU KNOW, WHILE THE S&P BROKE OUT TO NEW HIGHS AND WE'RE STILL POSITIVE BELOW THE SURFACE, WE DIDN'T SEE THE FOLLOW THROUGH FROM MID-CAPS OR SMALL CAPS OR SOME OF THESE INTEREST RATE SENSITIVE AREAS. SO WE WOULD REALLY BE FOCUSED MORE ON THAT LARGE CAP SPACE AND REALLY STILL LIKE TECH AND COMMUNICATIONS AS TWO OF OUR FAVORITE SECTORS. >> YOU KNOW, KEITH, AS WE LOOK OUT TO NEXT WEEK, WE'RE ALSO GOING TO GET ONE MORE BIG EARNINGS REPORT HERE COMING IN THE FORM OF SALESFORCE. NOW, NVIDIA IS ALSO BEEN CALLED THEY'VE ALREADY BEEN DUBBED THE DE FACTO AI PLAY BY GOLDMAN. BUT IS SALESFORCE ALMOST BREWING AS MAYBE A DE FACTO JUNIOR AS IT RELATES TO SOME OF THE SOFTWARE SERVICES SIDE OF THIS BUSINESS AND THE ELEMENTS THAT CAN IMMEDIATELY KIND OF BE TANGIBLY TOUCHED WITHIN WORKPLACES. >> YEAH, I THINK I THINK THAT'S THAT'S FAIR. I MEAN, I THINK I THINK THE SALESFORCE, YOU THINK ABOUT ORACLE, WHAT YOU WANT TO SEE IS, IS THE AI BENEFIT ACCRUING BEYOND, YOU KNOW, ONE BIG COMPANY. RIGHT. AND I THINK THAT FROM A MARKET PERSPECTIVE YOU DO WANT TO SEE IT IT BROADEN OUT TO BE BEYOND THAT. AND IF YOU HAD SOMETHING THAT WAS REALLY WEAK THERE, THEN AGAIN, I THINK ON A SHORTER PERIOD, TECH IS THE BIGGEST SECTOR THAT COULD WEIGH ON THINGS. BUT OVERALL I STILL THINK IF YOU KIND OF ZOOM OUT A BIT, YOU KNOW, OUR PERSPECTIVE ON ARTIFICIAL INTELLIGENCE AND ALSO THE EARNINGS TRENDS, I THINK AS FAR AS YOU KNOW, THE SPEND ON THAT IS WE'RE STILL PRETTY EARLY CYCLE, EVEN IF THE ECONOMY SLOWS DOWN, EVEN IF THERE'S ALL THESE UNCERTAINTY, I THINK COMPANIES WILL HAVE TO CONTINUE TO INVEST IN AI AND TECH. OTHERWISE THEY'RE GOING TO BE LEFT BEHIND. SO I THINK THERE IS A TAILWIND, BIGGER PICTURE. BUT AS YOU MENTIONED, I THINK IN A WEEK NEXT WEEK AS WE WINDING DOWN EARNINGS, THAT WILL BE AN IMPORTANT REPORT. YEAH >> EVEN AS I'M SITTING HERE PREVIEWING SALESFORCE'S EARNINGS AND CALLING THEM DE FACTO JUNIOR FOR I IMAGINE THE META PLATFORMS AND MICROSOFT ARE SOMEWHERE SAYING, HOLD MY BEER. WE'VE GOT A LOT THAT WE'RE DOING IN THIS AREA, TOO. KEITH LERNER, GREAT TO SEE YOU. THANKS SO MUCH FOR TAKING THE TIME. >> GREAT TO BE WITH YOU. >> TAKE CARE. ABSOLUTELY. THE SEC APPROVING A RULE CHANGE, PAVING THE WAY FOR SPOT ETHEREUM ETF APPROVAL. THE NEXT STEP FOR FUND MANAGERS NEED APPROVAL FROM THE AGENCY BEFORE THEY CAN LAUNCH ETF PRODUCTS. NOW THE TIMELINE ON THAT IT'S STILL UNCLEAR. SO FOR MORE ON THIS, WE'VE GOT THE PERSON TO BRING US SOME CLARITY ON THIS. YAHOO FINANCE REPORTER JENNIFER SCHOENBERGER HERE WITH US. HEY JENNIFER. >> GOOD MORNING BRAD. THAT'S RIGHT. THE SEC GIVING A GREEN LIGHT TO THE NEW YORK STOCK EXCHANGE AND THE NASDAQ TO BEGIN LISTING EXCHANGE TRADED FUNDS THAT HOLD ETHER. BUT IT HAS YET TO GIVE APPROVAL TO MONEY MANAGERS THAT WANT TO ISSUE THESE NEW FUNDS. THE MOVE MARKS THE FIRST STEP TOWARDS ALLOWING THESE ETFS TO TRADE. THE SEC WOULD NEED TO OFFER APPROVAL, THOUGH, FOR THE MONEY MANAGER'S FILINGS FOR THOSE ACTUAL FUNDS TO BEGIN TRADING, THOUGH THE REGULATOR HAS NOT GIVEN ANY INDICATION OF WHEN THAT COULD HAPPEN. THE COHORT SEEKING APPROVAL FOR THESE ETHER ETFS INCLUDE SOME OF WALL STREET'S BIGGEST NAMES FROM BLACKROCK, FIDELITY AND FRANKLIN TEMPLETON TO A NUMBER OF FIRMS BETTER KNOWN IN THE CRYPTO WORLD, INCLUDING GRAYSCALE AND BITWISE. THIS DECISION, COMING ROUGHLY FOUR MONTHS AFTER THE SEC APPROVED SPOT BITCOIN ETFS FOR THE FIRST TIME. AFTER YEARS OF DENYING APPROVAL. SEC CHAIR GARY GENSLER, SPEAKING AT A CONFERENCE HERE IN WASHINGTON EARLY ON THURSDAY MORNING AHEAD OF THE ORDER, SAID THAT THE SEC IS VERY DEEPLY COMMITTED TO FOLLOWING THE LAW AND HOW COURTS INTERPRET THE LAW THAT THE SEC HAD PICKED UP FORMALLY ON WHAT THE PREVIOUS SEC CHAIR, CLAYTON, WAS DOING IN THIS FIELD AROUND EXCHANGE TRADED PRODUCTS. BUT AFTER HE SAYS TWO DOZEN ORDERS FROM THE COMMISSION, THE RULING FROM THE D.C. CIRCUIT COURT OF APPEALS TOOK A DIFFERENT VIEW. AND THE SEC HAS NOW TAKEN TT INTO CONSIDERATION AND PIVOTED. HENCE WHY WE'RE SEEING THE GROUNDWORK HERE LAID FOR AN EATH SPOT ETF. OF COURSE, THE RACE IS ON IN TERMS OF SPECULATING FOR WHEN WE COULD SEE APPROVAL FOR THOSE ACTUAL MONEY MANAGERS, WE'LL BE KEEPING AN EYE ON THAT. EVE HAS BEEN PRETTY VOLATILE ON THE BACK OF THIS DOWN ABOUT, I THINK, 4% LAST I CHECKED, STILL TRADING AROUND 3700 GUYS. >> JENNIFER, THANKS SO MUCH FOR TEEING UP THIS NEXT CONVERSATION. FOR MORE ON THE ETHER ETF NEWS, WE BRING IN JAMES SEIFERT, WHO IS THE BLOOMBERG INTELLIGENCE ETF RESEARCH ANALYST. GREAT TO HAVE YOU HERE WITH US AND THANKS FOR HOPPING ON THIS MORNING. I MEAN, HOW SIGNIFICANT IS THIS FOR ETHEREUM AND HOW MANY OF THE OTHER PERHAPS ALTCOINS OUT THERE COULD BE WATCHING THIS AND SAYING, HEY, WE GOT A SHOT. MAYBE. >> YEAH, THANKS FOR HAVING ME, BRAD, I DON'T THINK THE OTHER ONES HAVE THAT MUCH OF A SHOT IN THE NEAR TERM, LOOK, THE BITCOIN ETFS GOT APPROVED BECAUSE WE HAVE A REGULATED A FEDERALLY REGULATED CME BITCOIN FUTURES MARKET. AND BASICALLY THE SEC SAID WE'RE NOT GOING TO APPROVE ANYTHING UNLESS WE HAVE A MARKET THAT WE CAN SURVEIL, AND THAT WE CAN MAKE SURE THERE'S NO FRAUD AND MANIPULATION GOING ON. SO THAT WAS BASICALLY WHAT THE D.C. CIRCUIT COURT THAT SHE WAS JUST TALKING ABOUT ALLOWED FOR THE BITCOIN ETFS TO GET APPROVAL. ETHEREUM IS THE ONLY OTHER DIGITAL ASSET THAT HAS A FEDERALLY REGULATED FUTURES MARKET THAT TRADES WITH ENOUGH SIZE AND ENOUGH FREQUENCY THAT THEORETICALLY, THE SEC COULD LOOK FOR SOME SORT OF FRAUD AND MANIPULATION THAT DOESN'T REALLY EXIST ANYWHERE ELSE. THAT SAID, THINGS ARE MOVING VERY FAST. THE POLITICAL WINDS HAVE SHIFTED. I MEAN, OVER JUST ABOUT A WEEK AGO, WE DIDN'T THINK THIS WAS GOING TO HAPPEN, BUT EVERYTHING REALLY CHANGED. ON MONDAY. THERE WAS A COMPLETE 180 AS FAR AS WE'RE CONCERNED FROM DC AND THE SEC ON THIS TOPIC. WE THINK THAT THEY WERE LIKELY GOING TO DENY THESE THINGS UNTIL SOMETIME LATE LAST WEEK. >> JAMES, WHAT DO YOU THINK WON? WHAT CHANGED? AND TO WHAT DO YOU THINK DEMAND IS GOING TO LOOK LIKE THEN FOR THESE POTENTIAL SPOT, ETHER ETFS? >> YEAH. I MEAN, WHAT CHANGED IS POLITICAL WINDS SHIFTED. I MEAN, IF YOU JUST LOOK AT WHAT HAPPENED IN DC, THERE'S BEEN IT'S ALMOST KIND OF INSANE TO LOOK AT WHAT'S HAPPENED OVER THE LAST COUPLE OF WEEKS. RIGHT. YOU HAD TRUMP SAYING HE WAS PRO CRYPTO. YOU HAD THE SAB 121 VOTES IN CONGRESS, WHICH WE DON'T NEED TO GET THE WEEDS THERE. BUT THAT'S ALSO A PRO CRYPTO, LEGISLATION AT THE SENATE HAD A BUNCH OF DEMOCRATS, INCLUDING, THE MAJORITY LEADER, CHUCK SCHUMER, SIDE WITH THE CRYPTOS, VOTE, AND YOU HAD SAME SIMILAR THINGS HAPPEN WITH FIT 21, WHICH IS ANOTHER CRYPTO BILL. NANCY PELOSI SIDED WITH THAT 71 DIFFERENT DEMOCRATS. THIS WAS SEEMED TO BE A, PARTIZAN DECISION. RIGHT? IT SEEMED TO BE DEMOCRATS VERSUS REPUBLICANS. REPUBLICANS WERE MORE PRO. SOME DEMS WERE STILL PRO CRYPTO. BUT FOR THE MOST PART, THAT ALL SHIFTED THE MINUTE THAT TRUMP BASICALLY SAID HE WAS PRO CRYPTO. AND I THINK THE THERE'S BEEN A LOT OF THINGS CHANGING IN DC OVER THE LAST FEW WEEKS, AS FAR AS THE BAN GOES, IF YOU LOOK AT ETHEREUM COMPARED TO BITCOIN, JUST THE ASSET, THE MARKET CAP OF ETHEREUM IS AROUND 30% OF BITCOIN. SO IF YOU TAKE THAT INTO ACCOUNT YOU JUST TRANSLATE THAT TO ETFS. AND YOU LOOK AT OTHER ETFS AROUND THE WORLD. SO THE US IS NOT THE FIRST ONE TO HAVE AN ETHEREUM AND BITCOIN ETFS. THE DEMAND IS GOING TO BE A LOT LESS THAN WHAT WE SAW FOR BITCOIN. SO WE'VE SEEN ABOUT $13 BILLION OF FLOWS TO THE BITCOIN ETF SINCE THEY LAUNCHED ON A NET BASIS, SO IF YOU TAKE IN THAT 30, I THINK THERE'S GOING TO BE EVEN LESS THAN THAT, 3,030% OF INTEREST. ONE, THESE THINGS ARE NOT GOING TO ALLOW TO STEAK, WHICH IS LIKE A NATIVE YIELD THAT YOU WOULD GET IN ETHEREUM. THERE'S A LOT MORE UTILITY YOU LOSE BY JUST STICKING ETHEREUM INTO AN ETF AND NOT ALLOWING TO USE IT. SO THE DEMAND WILL PROBABLY, IN OUR VIEW, BE A LITTLE BIT LESS THAN THAT 30% RATIO. SO IT DEPENDS WHO YOU TALK TO. BUT IT WILL STILL BE LIKELY BILLIONS OF DOLLARS THAT WE'RE EXPECTING TO GO IN HERE. SO IT SHOULD BE A MONSTER SUCCESS IF AND WHEN WE GET WELL, NOT IF WHEN WE GET THOSE FINAL APPROVALS FROM FROM THE SEC FOR THE ISSUERS TO ACTUALLY LAUNCH THESE THINGS. >> WHAT IS THE TIMELINE LOOK LIKE ON THAT? DO WE KNOW THERE? >> I MEAN, ANYONE WHO TELLS YOU THEY KNOW IS LYING OR THERE AT THE SEC AT THIS POINT, AS FAR AS I'M CONCERNED, THERE THERE'S A HUGE GAP, RIGHT? SO THIS CAN TAKE AS LONG AS FIVE MONTHS. THERE'S EXAMPLES OF THIS TAKING FIVE MONTHS BEFORE THIS GETS THROUGH, I THINK THE BITCOIN ETFS IS PROBABLY THE MORE APT ANALOGY. AND THAT TOOK ABOUT THREE MONTHS. AND A LOT OF THE LANGUAGE AND CONCERNS AND ISSUES THAT HAD TO BE IRONED OUT BETWEEN THE SEC ON THESE RISK DISCLOSURES. WHAT THESE THESE OFFERING DOCUMENTS NEED TO LIKE DISCLOSE TO THE PEOPLE INVESTING IN THEM. A LOT OF THAT'S BEEN IRONED OUT WITH THE ETHEREUM FUTURES ETFS AND THE SPOT BITCOIN ETFS. SO WE THE BITCOIN ETFS TOOK 90 DAYS. I THINK IT WILL PROBABLY BE LESS THAN 90 DAYS. I THINK IT COULD BE WEEKS. BUT IT ALSO COULD BE MONTHS. SO LIKE WE DON'T REALLY KNOW. MY GUT TELLS ME IF THEY WENT AND BASICALLY TRULY DID A 180 LIKE WE THINK LATE LAST WEEK, THAT MEANS THEY TOOK THREE DAYS TO GET THESE 19 B4 APPROVALS AFTER. USUALLY IT TAKES 240 DAYS OF WORK BEFORE THEY ACTUALLY GET THIS STUFF DONE. THEY CAN ACCELERATE THIS. SO I'M THINKING IT WILL BE MEASURED IN WEEKS, MULTIPLE WEEKS MOST LIKELY AT THE VERY LEAST. BUT IT COULD BE MONTHS. THERE'S NO WAY TO KNOW. >> SO NOW WITH CRYPTOCURRENCIES AND SPECIFICALLY THE MAJORS BITCOIN AND ETHEREUM HAVING THEIR ETF ASSET CLASS MOMENT DOES THE UTILIZATION VALUE PROPOSITION OR USE CASE MATTER ANYMORE, I THINK IT DOES BECAUSE IT'S STILL WHAT MATTERS IS WHAT'S ACTUALLY HAPPENING IN THE ECOSYSTEM OF THESE ASSETS. RIGHT IT'S THE ETFS ARE NICE. THEY'RE GOOD. GREAT FOR PEOPLE WHO WANT FINANCIAL EXPOSURE, PARTICULARLY IF THEY'RE LOOKING TO DO THINGS IN LIKE A TAX ADVANTAGED ACCOUNT LIKE AN IRA OR THEY HAVE MONEY IN A BROKERAGE PLATFORM AND THEY WANT TO MAKE SURE THEY GET EXPOSURE. WHAT THIS IS GOING TO PROVIDE IS FINANCIAL EXPOSURE TO THE ASSET INVESTMENT EXPOSURE, IF YOU WANT OTHER IF THERE'S OTHER REASONS WHY YOU WOULD WANT ACCESS TO THESE THINGS, WHICH THERE ARE PLENTY, THERE'S PLENTY OF PEOPLE DOING THINGS WITH ETHEREUM IN THE, IN DECENTRALIZED FINANCE ON THESE DIFFERENT DECENTRALIZED PLATFORMS, SAME WITH BITCOIN. THERE'S SOVEREIGN STORE OF WEALTH. YOU CAN KIND OF DO WHAT YOU WANT WITH IT. YOU CAN TAKE YOUR OWN, CUSTODY OF YOUR OWN ASSET, WHICH YOU CAN'T REALLY DO WITH MUCH ELSE, THOSE THINGS ALL STILL EXIST. BUT WHAT THIS PROVIDES IS IT TAKES THOSE ASSETS FROM THE, THE DEFI WORLD AND PUTS THEM ON THE TRADITIONAL FINANCIAL RAILS IN A VERY UNIQUE WAY. SO THERE'S THIS THING GOING ON RIGHT NOW WITH A LOT OF THESE ASSET MANAGERS. IT'S GOING BOTH DIRECTIONS, RIGHT? THEY'RE THEY'RE TAKING THESE DIGITAL NATIVE ASSETS AND PUTTING THEM IN THESE WRAPPERS OF THE TRADITIONAL FINANCIAL WORLD. BUT THERE'S ALSO EXAMPLES OF THEM TAKING TRADITIONAL FINANCIAL ASSETS, THINGS LIKE MONEY MARKET FUNDS AND WRAPPING THEM IN, TOKENIZING THEM AND PUTTING THEM ON THE DECENTRALIZED FINANCE WORLD. SO A LOT OF THESE ASSET MANAGERS, THESE BANKS ARE PROBABLY GOING TO PLAY A LOT AT THIS INTERSECTION BETWEEN THESE TWO THINGS, AND IT'S GOING TO BE FASCINATING TO WATCH OVER THE COMING YEARS. >> REALLY GREAT CONTEXT AND INSIGHT. JAMES SEAFORD, WHO IS THE BLOOMBERG INTELLIGENCE ETF RESEARCH ANALYST, JAMES, THANKS SO MUCH FOR TAKING THE TIME. THANKS FOR HAVING ME. CERTAINLY WE'RE JUST GETTING STARTED HERE ON THE MORNING BRIEF. COMING UP, TESLA REPORTEDLY SLASHING PRODUCTION OF ITS MODEL Y IN SHANGHAI. THAT IS ACCORDING TO REUTERS. WHAT DOES THIS MEAN FOR THE COMPANY'S WANING SHARE IN CHINA? AND LIVE NATION IS THE LATEST TARGET FOR THE JUSTICE DEPARTMENT. THE U.S. SUING TO BREAK UP LIVE NATION AND TICKETMASTER OVER ALLEGED ANTITRUST VIOLATIONS. WE DISCUSS THE IMPACT ON THE COMPANY, ALL THAT MUCH MORE COMING UP. TESLA. DIALING BACK IN CHINA, THE EV MAKER REPORTEDLY SLASHING PRODUCTION OF ITS MODEL Y IN SHANGHAI. THIS COMES AMID CONCERNS OF WANING DEMAND IN THE ELECTRIC VEHICLE MARKET. LET'S PUT ONE BIG NUMBER ON THIS. 20% POTENTIALLY HERE IS WHAT'S THE PRODUCTION CUT FROM MODEL Y AT GIGA SHANGHAI. COULD LOOK LIKE BETWEEN MARCH AND JUNE OF 2024. AND IT SEEMS LIKE, ACCORDING TO A FEW REPORTS OUT THERE, THIS IS ALSO BEING CROSS-REFERENCED UP AGAINST SOME OF THE INFORMATION OR DATA FROM THE CHINA ASSOCIATION OF AUTOMOBILE AUTOMOBILE MANUFACTURERS. YEAH BUT I THINK THIS ALL JUST BOILS DOWN TO THAT WANING DEMAND THAT WE'VE BEEN TALKING ABOUT TIME AND TIME AGAIN. >> SO TESLA TRYING TO RIGHTSIZE THE BUSINESS THERE ARE AT LEAST BETTER MATCH WHAT DEMAND LOOKS LIKE WHEN IT COMES TO SUPPLY. AS A RESULT, THEY'RE CUTTING JUST ABOUT 20% OF THAT PRODUCTION OUTPUT. AGAIN, THAT'S ACCORDING TO THE LATEST NUMBERS I'VE BEEN CRUNCHED HERE BY REUTERS. BUT WHAT MORE SPECIFICALLY THIS POINTS TO ONE. OBVIOUSLY, THIS IS HAPPENING IN THE MIDST OF THIS PRICE WAR THAT'S BEEN GOING PLAYING OUT NOT ONLY IN CHINA, BUT ALSO WHAT WE'VE BEEN SEEING ACROSS THE WORLD. AND THEN TO JUST TESLA IS UP AGAINST IS FACING AN UPHILL BATTLE WHEN IT COMES SPECIFICALLY TO THE CHINA MARKET. YOU TALK ABOUT THE INCREASING POPULARITY AND THE INCREASING MARKET SHARE THAT YOU HAVE. BYD YOU HAVE A NUMBER OF THOSE DOMESTIC PLAYERS THAT ARE CONTINUALLY PUTTING MORE PRESSURE ON TESLA, MAKING IT TOUGHER TO COMPETE WITHIN THAT REGION, WITHIN THAT COUNTRY. AND THEN ALSO JUST THE GEOPOLITICAL TENSION BETWEEN THE U.S. AND CHINA CLEARLY COULD BE A POTENTIAL CHALLENGE NOT ONLY FOR TESLA, BUT A NUMBER OF U.S. LARGER U.S. AUTOMAKERS HERE OVER THE COMING QUARTERS, OVER THE COMING YEARS. SO AGAIN, WITH ALL THAT IN CONTEXT HERE, YOU SEE TESLA MAKING SOME ADJUSTMENTS TO THEIR PRODUCTION NUMBERS, AT LEAST IN CHINA. BUT WE'LL SEE WHAT THE MATERIAL IMPACT IS GOING TO BE ON THEIR SALES IN THE QUARTERS TO COME. >> I MEAN, YOU'RE SPOT ON AND IT'S HARD TO COMPETE WHEN YOU'VE GOT ONE OF YOUR BIGGEST COMPETITORS IN THAT REGION THAT'S RECEIVING SUBSIDIES FROM THE NATION AS WELL. AND SO FOR CHINA AND THE SUBSIDIES THAT THEY'VE BEEN ABLE TO PASS THROUGH TO BYD FOR TESLA, REGARDLESS OF THE RELATIONSHIP THAT THEY'VE TRIED TO STRENGTHEN WITHIN THAT REGION, NOT JUST AMONG REGULATORS AND AMONG SOME OF THE BROADER OFFICIALS AND FIGUREHEADS THERE, BUT ALSO AMONG THE CONSUMER. THE CONSUMER MINDSET ALSO SHIFTING TO AND IT'S GOING TO COME ON A PRICE POINT BASIS AS WELL HERE, ESPECIALLY IF YOU ARE RECOGNIZING MORE OF THOSE COST SAVINGS ON SET AS A CONSUMER IN BUYING A BYD VERSUS A TESLA, THEN YOU'RE NATURALLY GOING TO GRAVITATE TOWARDS ONE OF THOSE OTHER OPTIONS. AND OH YEAH, THE BROADER INDUSTRY IS FACING THAT SLOWDOWN AND WAITING DEMAND, AS YOU WERE MENTIONING TOO HERE. ALSO, LET'S STAY IN THE CAR LANDSCAPE, STICKING TO STRESS IN THE EV SPACE AS I, SO COINCIDENTALLY ENDED ON THEIR LUCID ANNOUNCING A RESTRUCTURING PLAN TO OPTIMIZE THE COMPANY'S OPERATING EXPENSES. THE COMPANY IS LOOKING TO TRIM ITS WORKFORCE BY APPROXIMATELY 400 EMPLOYEES. SHARES RIGHT NOW ARE UP BY ABOUT 1.1, BUT YOU HATE TO SEE POPS THAT ARE REALLY FOR THIS COMPANY, ESPECIALLY IF YOU LOOK AT THE BROADER TERM HERE. YEAH, PAST TWO DAYS. BUT IF WE TOSSED UP A YEAR TO DATE CHART FOR LUCID, IT WOULD BE A MUCH DIFFERENT PICTURE HERE. AND EVEN OVER THE PAST 52 WEEKS, SLIPPAGE YEAR TO DATE DOWN 35% HERE. AND IT COMES AS THE TIME WHERE THEY'RE ALSO IN THE BROADER KIND OF EV DEMAND LANDSCAPE. THEY'RE ON THE ULTRA LUXURY SIDE OF THAT TWO HERE. AND SO TRYING TO WOO SOME OF THE BIG MONEY OUT THERE TO BUY INTO THAT LUXURY EXPERIENCE COULD BE EVEN TOUGHER. OH YEAH. AND YOU'VE GOT MORE COMPETITION FROM THE LIKES OF MERCEDES AND SOME OF THE EV OFFERINGS THAT THEY'RE PUTTING OUT THERE, AS WELL AS STILL TESLA TOO. >> YEAH, EXACTLY. AND THIS IS JUST ANOTHER BYPRODUCT OR ANOTHER EFFECT HERE OF THE SLOWDOWN THAT WE'VE SEEN IN THE ADOPTION OF THE GROWTH RATE FOR EVS. AND AS A RESULT, A NUMBER OF THESE COMPANIES FACING THESE TOUGH DECISIONS. AND WE IT'S ALSO IMPORTANT TO POINT OUT THAT LUCID IS FAR FROM ALONE WITHIN HAVING TO ANNOUNCE LAYOFFS HERE OVER THE LAST COUPLE QUARTERS. EVEN WHEN YOU TAKE INTO ACCOUNT WHAT HAS HAPPENED IN THE LAST COUPLE OF MONTHS, YOU HAVE TESLA ANNOUNCING LAYOFFS THAT IT WOULD CUT ABOUT 10% OF ITS WORKFORCE. ALSO, RIVIAN HAVING MULTIPLE LAYOFFS THIS YEAR. SO AGAIN, LUCID THE LATEST TO JOIN THAT. AND WHY IS IT HAPPENING. IT'S HAPPENING BECAUSE OF THAT UPTAKE RATE THAT YOU HAVE BEEN TALKING ABOUT. THE FACT THAT CONSUMERS ARE FEELING PRESSURE. MANY CONSUMERS ARE OUT THERE MAKING THOSE BIGGER TICKET PURCHASES RIGHT NOW BECAUSE RATES ARE HIGH AND LIKELY TO STAY HIGH FOR LONGER HERE. WHEN YOU TAKE A LOOK AT THE RECENT COMMENTARY THAT WE'RE GETTING OUT FROM FED OFFICIALS HERE, THIS WEEK. SO ALL THAT TAKEN INTO CONTEXT, IT'S LEADING TO WEAKENING DEMAND HERE IN THE U.S. FOR A LOT OF THESE EV, VEHICLES. AND AS A RESULT, THESE EV MANUFACTURERS HAVING TO MAKE ADJUSTMENTS TO THEIR BUSINESS AND UNFORTUNATELY, HAVING TO LAY OFF HUNDREDS OF WORKERS AS A RESULT HERE IN AN EFFORT TO CUT COSTS. BUT WHEN IT COMES TO THIS RESTRUCTURING EFFORT, LUCID SAYING THAT IT'S GOING TO INCUR CHARGES OF ABOUT 21 TO 25 MILLION FROM THIS RESTRUCTURING PLAN, THE BULK OF THIS IS GOING TO BE RECOGNIZED HERE IN THE CURRENT QUARTER. WOW. ALL RIGHT, ALL RIGHT. WELL, LET'S TAKE A LOOK AT INTUIT. SHIFTING GEARS JUST A BIT. THE COMPANY MISSING WALL STREET EXPECTATIONS FOR ITS FOURTH QUARTER PROFIT FORECAST. ALSO, THOUGH, RAISING ITS FULL YEAR REVENUE OUTLOOK, ALTHOUGH NOT ENOUGH FOR THE STREET. AND YOU'RE LOOKING AT LOSSES OF JUST ABOUT 6. DIGGING INTO THIS REPORT JUST A BIT, A COUPLE OF KEY THINGS I WANTED TO HIGHLIGHT HERE, BRAD, WHEN IT COMES TO THE CEO OF ITS CREDIT KARMA BUSINESS, THEY WILL BE RETIRING AT THE END OF THE YEAR. SO AN EXECUTIVE CHANGE, THAT'S SOMETHING THAT ANALYSTS ARE MAKING. NOTE OF HERE THIS MORNING. AND THEN ALSO WHEN IT COMES TO TURBOTAX, THEIR HIGHER PRICED TURBOTAX CLIENTS THAT DID HELP BOOST SALES DURING THE TAX SEASON. BUT THE COMPANY DID SEE A DECLINE IN THE LOWER END CUSTOMERS. BARCLAYS CALLING IT OUT, AND THEY'RE QUICK REACTION TO THIS PRINT, SAYING THAT COMPETITION FOR THESE LOWER PAYING AND FREE CUSTOMERS RAISES SOME QUESTIONS THAT COULD CONCERN INVESTORS HERE DOWN THE LINE. SO I THINK THAT'S ONE OF THE REASONS, IN ADDITION TO THAT GUIDANCE FALLING JUST A BIT SHORTER, NOT AT LEAST NOT ENOUGH TO EXCITE THE STREET. ONE OF THE REASONS WHY WE'RE SEEING THAT STOCK UNDER PRESSURE HERE THIS MORNING, I MEAN IT'S A $35 BILLION MARKET TOTAL ADDRESSABLE MARKET THAT THEY WERE TALKING ABOUT ON THE EARNINGS CALL LAST NIGHT. >> AND FOR TURBOTAX, I MEAN, THEY HAVE BEEN A HOUSEHOLD NAME FOR DECADES. WHEN IT COMES TO FILING YOUR TAXES. BUT COMING BACK TO YOUR POINT HERE, IT REALLY DOES BOIL DOWN TO WHERE SOME OF THOSE CORE USERS, EVEN OVER THE YEARS, ARE SAYING, WAIT A MINUTE, I CAN GET THIS DONE FOR FREE, EITHER BY THE GOVERNMENT IN SOME CASES OR JUST FINDING OTHER CHEAPER SERVICES HERE. WHY NOT LEAN INTO THAT? SO THAT'S ONE OF THE POTENTIAL HITS THAT WE COULD SEE IN THIS NEAR-TERM, AT LEAST IN THE INVESTOR SENTIMENT. AND THE CREDIT KARMA PIECE IS INTERESTING, ESPECIALLY AT A TIME WHERE SO MANY CONSUMERS, AS WE'RE LOOKING ACROSS HOUSEHOLD BALANCE SHEETS AND CONTINUE TO TALK, ESPECIALLY ON WEALTH, SMALL PITCH ABOUT THE AMOUNT OF PEOPLE WHO ARE TAPPING OR SWIPING THEIR CREDIT CARDS AND HOW CREDIT CARD DEBT IS AT HIGH LEVELS RIGHT NOW. ALL TIME HIGH LEVELS THAT WE'VE BEEN TRACKING UP AGAINST, THE NUMBER OF PEOPLE THAT ARE TRYING TO FIGURE OUT, OKAY, HOW DO I MAKE SURE THAT MY CREDIT IS IN GOOD STANDING ON THE OTHER SIDE OF THIS ECONOMIC CYCLE? IF WE DO SEE A RECESSION AND THE CONSUMER SENTIMENT SURVEYS AND THE DATA THAT CONTINUES TO COME OUT SHOWCASES EXACTLY WHERE, MORE CONSUMERS ARE TRYING TO PREPARE FOR THAT. IF WE DO SEE A RECESSION SOON, SOMETHING FOR YOU ANYWAY. YOU KNOW WHAT? WE'RE ALREADY IN. WE'RE IN THE OPENING BELL. YOU KNOW WHY? BECAUSE THAT GUY WITH THE COWBOY HAT HIT THE BUTTON AT THE NASDAQ. THERE. YOU'RE TAKING A LOOK AT. I MEAN, THAT IS WE WOULD CONSIDER THAT A COWBOY HAT , RIGHT? YEAH, IT'S UP FOR DEBATE, COWBOY WITH THE CROSS WITH, LIKE, A FEDORA. IT'S COWBOY. JASON. COWBOY FEDORA. JASON. COWBOY CHIC. SOMETHING LIKE THAT. ANYWAY YOU'VE GOT SOME BELL RINGERS AT THE NASDAQ MEMORIAL DAY, FOUNDATION. I THINK IT WAS, EXCELLENT GROUP OF FOLKS OVER THERE. AND THEN ADDITIONALLY, YOU SAW THE OPENING BELL AT THE NYSE. WELL, HERE'S THE MARKET'S ACTIVITY OUT OF THE GATE THIS MORNING. WE'RE SEEING GREEN ACROSS THE SCREEN. OH, MAN. THAT'S GOOD. ALL RIGHT. DOW JONES INDUSTRIAL AVERAGE. THAT'S UP BY ABOUT ONE TENTH OF A PERCENT S&P 500 UP 3/10 OF A PERCENT. AND THE NASDAQ ROUNDING OUT THE HAT TRICK. WE'RE UP BY ABOUT 3/10 OF A PERCENT THERE. >> YOU'RE SEEING A BIT OF A REBOUND FROM YESTERDAY'S SELLOFF A LOT OF THAT YOU HAD THE DOW SUFFERING ITS WORST DAY THAT WE HAD SEEN IN JUST OVER A YEAR. A LOT OF THAT WAS BECAUSE OF THAT DROP THAT WE SAW IN BOEING. WITH SHARES CLOSING OFF JUST ABOUT 7.5% HERE AT THE OPEN. BOEING IS OPENING JUST SLIGHTLY TO THE UPSIDE HERE. SO AGAIN A COUPLE OF KEY NAMES TO KEEP IN MIND THROUGHOUT TODAY'S TRADING DAY. BUT JARED BLIKRE HAS A CLOSER LOOK AT WHAT IS MOVING HERE AT THE OPEN. AND STANDING BY WITH THAT, JARED. >> THAT'S RIGHT. SEAN I'M LOOKING AT THE WI-FI INTERACTIVE. WE HAVE THE S&P 500 ALL FIVE DAYS HERE. YOU CAN SEE A SLIGHT DECLINE FOR THE WEEK IF YOU TAKE A LOOK AT THE DOW. IT'S MORE PRONOUNCED DOWN 2. AND THE NASDAQ ACTUALLY UP TWO THIRDS OF A PERCENT. SO A MIXED BOARD FOR THE WEEK. I DID WANT TO FOCUS FOR A MINUTE ON YESTERDAY'S CANDLE. NOW IF YOU LOOK AT CANDLESTICKS, THAT'S JUST A WAY OF CHARTING THE DAY'S PRICE ACTION. BUT THAT BIG RED CANDLE RIGHT THERE THAT COULD HAVE SOME OMINOUS IMPLICATIONS. THERE'S A LOT OF FOCUS ON TWITTER ABOUT IT, SOME PEOPLE CALLING IT A BEARISH ENGULFING. IS IT THAT CANDLE? THAT'S A TECHNICAL MATTER. BUT THE SUFFICE TO SAY THAT WE'VE SEEN THESE BEFORE. SOMETIMES THESE CANDLES DO PRECIPITATE A DECLINE. AND SO THAT'S WHAT PEOPLE ARE LOOKING AT. ALSO WANT TO SHOW THE VIX WHICH IS PERKING UP HERE. THE VIX I THINK OPENED YESTERDAY AT A AT THE LOW OF THE YEAR. I'M GOING TO SHOW YOU A YEAR TO DATE. THERE WE GO. LOW OF THE YEAR. AND THEN IT CLIMBED THROUGHOUT THE DAY. SOMETIMES THAT KICKS OFF A RALLY IN IN THE VIX THAT LASTS A FEW DAYS. SO WE'LL HAVE TO SEE IF THAT CONFIRMS THE EQUITIES WEAKNESS THAT WE SAW YESTERDAY. AND ALSO I DO WANT TO HIT ON ELI LILLY REAL QUICKLY BECAUSE WE GOT SOME NEWS OUT OF THE WALL STREET JOURNAL. LET ME JUST GET TO THAT. ELI LILLY IS GOING TO SPEND 5.3 BILLION TO MAKE MORE MANJARO AND ZIP BOUND AND THIS IS TO BOOST THEIR MANUFACTURING CAPACITY FOR ITS HOT SELLING ANTI-OBESITY DRUG, Z-BAND, AND ITS DIABETES DRUG, MANJARO. THIS IS A WSJ. THIS IS A WALL STREET JOURNAL SCOOP. SO WE WILL BE FOLLOWING THAT. AND YOU'RE LOOKING AT THE SECTOR ACTION HERE. YOU CAN SEE EVERYTHING IN THE GREEN FOR THE WEEK. AND LET'S SEE IF WE CAN GET AN ELI LILLY QUOTE. HERE'S OUR RPX SCREEN. AND WELL LOOK AT THAT. IT IS EXACTLY FLAT. SO THERE YOU GO GUYS. >> ALL RIGHT JARED THANKS SO MUCH. NOT TOO MUCH MOVEMENT HERE ON THE NEWS THAT WAS JUST BROKEN HERE BY THE WALL STREET JOURNAL. BUT BRAD WHY THIS IS SIGNIFICANT AND WHY WE'RE TALKING ABOUT THIS IS JUST THIS UNPRECEDENTED DEMAND THAT WE'VE SEEN FOR THESE WEIGHT LOSS DRUGS, FOR THESE DIABETES DRUGS AND THESE COMPANIES. ELI LILLY, WHEN YOU TAKE A LOOK AT NOVO NORDISK DOING EVERYTHING IT CAN TO KEEP UP WITH THAT DEMAND, TRYING TO EXPAND THEIR MANUFACTURING CAPACITY. SO AGAIN, THIS NEWS HERE FROM ELI LILLY, THE FACT THAT THEY ARE EXPANDING THE MANUFACTURING OF THAT KEY INGREDIENT FOR THEIR WEIGHT LOSS AND DIABETES SHOTS, AND THAT KEY INGREDIENT, IS TRANSPORTED. THE FACT THAT THEY ARE DOING THAT IS SOMETHING THAT INVESTORS HAVE WANTED TO SEE, SOMETHING THAT INVESTORS HAVE ASKED EXECUTIVES ABOUT, AND MOST RECENT EARNINGS CALLS, JUST IN TERMS OF THEIR ABILITY TO BOOST PRODUCTION AND BOOST IT IN A VERY TIMELY MANNER. SO AGAIN, YOU WOULD THINK NEWS LIKE THIS WOULD LIKELY AT LEAST PLEASE ANALYSTS AND PLEASE INVESTORS, JUST IN TERMS OF THE FACT THAT IT'S GOING TO HELP THEM GET MORE OF THAT MEDICATION OUT THE DOOR QUICKLY. >> YEAH. ONLY TWO THINGS THAT THAT ONE BIG NUMBER, $100 BILLION, IS WHAT GOLDMAN SACHS IS ANTICIPATING THIS BUSINESS COULD BE OR THIS BROADER INDUSTRY COULD BE IN THE ADDRESSABLE MARKET BY 2030. YOU LOOK EVEN FURTHER OUT AND THEN WE MIGHT EVEN HAVE MORE ABOUT THE EFFICACY IN OTHER ELEMENTS OF LIFE. AND THIS BRINGS ME TO MY SECOND POINT, WHERE YOU'RE SEEING SOME OF THE ADDITIONAL HEALTH BENEFITS, KIDNEY FUNCTIONING MORE PROPERLY, POSITIVE EFFECTS ON COGNITION. SO ALL OF THESE THINGS, IN ADDITION TO THE WEIGHT MANAGEMENT MARKETABILITY OF SOME OF THE DRUGS HERE, THAT'S WHERE WE MIGHT HAVE BETWEEN NOW AND 20, 30. BY THE TIME WE GET TO THAT $100 BILLION ADDRESSABLE MARKET, EVEN MORE DATA TO SHOW THE EFFECTIVENESS. AND I THINK BY THEN WE COULD BE LOOKING AT A WHOLE DIFFERENT TYPE OF PICTURE IN TERMS OF THE NUMBER OF COMPANIES, WHETHER EXISTING OR NEWER, THAT ARE PLAYING WITHIN THE SPACE RIGHT NOW. >> YEAH. AND THIS NEWS JUST RELEASED BY ELI LILLY, ELI LILLY SAYING THAT IT'S INCREASING MANUFACTURING INVESTMENT TO 9 BILLION AT ITS NEWEST INDIANA SITE IS BOOSTING API PRODUCTION FOR TIRZEPATIDE LIKE WE WERE JUST TALKING ABOUT. AND ALSO PIPELINE MEDICINE. SO AGAIN, JUST A NAME TO KEEP IN MIND DURING TODAY'S TRADING DAY, WE'VE GOT MUCH MORE OF YOUR MARKET ACTION AHEAD. STAY TUNED. YOU'RE WATCHING MORNING BRIEF. WELL. STOCKS OPENING HIGHER FOR THE DAY. THIS FOLLOWS YESTERDAY'S SELLOFF, WITH THE DOW LOOKING TO REBOUND FOLLOWING ITS WORST DAY THAT WE'VE SEEN SINCE IN OVER A YEAR. BUT STILL THOUGH, HEADING FOR A WEEKLY LOSS. AND WE TAKE A LOOK AT THE NASDAQ HERE TODAY UP JUST ABOUT 4/10 OF A PERCENT. THE NASDAQ IN THE GREEN. SO CHECKING IN ON NVIDIA. ONE OF THE BIG DRIVERS OF THAT TECH MOVEMENT HERE OVER THE LAST SEVERAL MONTHS, SEVERAL QUARTERS IS JUST AROUND THE FLAT LINE TODAY. BUT WE DO WANT TO POINT OUT THAT NVIDIA CLOSED THE DAY YESTERDAY UP JUST ABOUT 9, WAS ACTUALLY ONE OF THE ONLY OR THE ONLY MAG SEVEN NAME TO CLOSE OUT YESTERDAY IN THE GREEN. SO LET'S TALK ABOUT WHAT THIS MEANS FOR THE BROADER MACRO PICTURE. FOR THAT WE WANT TO BRING IN MIKE KNELL. HE IS UBS ASSET MANAGEMENT SENIOR PORTFOLIO MANAGER. MIKE, IT'S GREAT TO HAVE YOU HERE AT THE DESK. SO TALK TO US JUST ABOUT HOW YOU'RE LOOKING AT THIS MOVEMENT, THIS EXCITEMENT THAT WE'VE BEEN SEEING IN NVIDIA SURROUNDING THESE CHIP NAMES AND WHAT THAT SIGNALS FOR THE BROADER MARKET. >> WELL, NVIDIA OBVIOUSLY IS THE LEADER IN AI PROCESSING. THEY HAVE A TECHNOLOGY CALLED A GPU GRAPHICS PROCESSING UNIT, WHICH THEY'VE EVOLVED INTO AN AI PROCESSING UNIT OVER TIME. AND THEY'VE SPECIALIZED INSTRUCTIONS AND CAPABILITIES IN THOSE CHIPS THAT HAVE MADE THEM THE LEADER IN THE SPACE. THEY ALSO HAVE A SOFTWARE INTERFACE CALLED CUDA THAT ALLOWS PEOPLE TO EASILY PROGRAM THE CHIPS FOR THESE AI APPLICATIONS AND OTHER APPLICATIONS THAT ARE WHAT THEY CALL HEAVILY PARALLELIZABLE. AND SO IT'S A IT'S A GREAT STORY THAT NVIDIA HAS THEIR REVENUE GROWTH HAS BEEN STUPENDOUS. THEIR PROFIT GROWTH HAS BEEN EVEN BETTER. AND, BUT THERE'S A LOT OF COMPETITION COMING. WHEN YOU HAVE A MARKET THAT'S, THAT'S AS PROFITABLE AS THIS, IT SORT OF DRAWS A BULL'S EYE FOR ALL THE COMPETITION. AND SO THERE'S A NUMBER OF OTHER COMPANIES THAT ARE COMING AFTER THEM, INCLUDING AMD. AND, WE'VE ALSO BEEN OWNING STOCKS THAT, SUPPORT THE CHIPS. BUT THINGS LIKE MEMORY CHIPS, YOU NEED LOTS OF MEMORY BANDWIDTH TO MAKE THESE CHIPS WORK. AND SO THAT'S BEEN ANOTHER THEME THAT'S BEEN WORKING PRETTY WELL. >> WE HEAR WARREN BUFFETT ALWAYS TALK ABOUT MOATS, HOW DEEP OR ENTRENCHED IS THE MOAT THAT NVIDIA HAS EVEN IN THE FACE OF THAT COMPETITION THAT YOU'RE MENTIONING ON THE AI FRONT, IT DEPENDS WHO YOU ASK. >> IF YOU ASK NVIDIA, THEY THINK IT'S A YOU KNOW, SOLID MOAT THAT CANNOT BE PENETRATED, AND IT IS VERY SOLID, I THINK. BUT IF YOU ASK INTEL AND AMD THERE ARE WAYS TO GET AROUND THE CUDA INTERFACE, THERE ARE THIRD PARTY AND OPEN INTERFACES THAT ARE BEING DEVELOPED THAT THEY'RE SUPPORTING, AND THEY'RE DOING EVERYTHING THEY CAN TO HELP THE CUSTOMERS MIGRATE THEIR SOFTWARE FROM CUDA TO THESE OPEN PLATFORMS. THAT WILL TAKE TIME. IN THE MEANTIME, NVIDIA IS GOING TO HAVE QUITE A RUN, I THINK. >> SO YOU TALK ABOUT QUITE A RUN. ARE WE JUST STILL IN THE EARLY INNINGS OF THIS EXCITEMENT SURROUNDING AI? AND THEN WHEN WE TALK ABOUT REAL LIFE APPLICATIONS, HOW MUCH OF THIS HYPE AND EXCITEMENT HAS TO DO WITH WHAT IS HAPPENING CURRENTLY VERSUS WHAT COULD HAPPEN IN THE NEXT SEVERAL YEARS? >> I THINK A LOT OF IT'S ALREADY BASED ON WHAT COULD HAPPEN. YOU HEAR PEOPLE TALK NOT SO MUCH ABOUT APPLICATIONS FOR AI, BUT WHAT THEY CALL USE CASES. AND THE USE CASE IS MORE OF A THEORETICAL APPLICATION. IT'S NOT ONE THAT'S THERE'S PROVEN DEMAND FOR TODAY, BUT THERE ARE THINGS THAT ARE LIKELY TO DEVELOP OVER TIME. SO A LOT OF THIS IS SPECULATIVE. EVERYBODY'S GOT A FEAR OF BEING LEFT BEHIND. SO IT'S EVERYTHING FROM COMPANIES. EVEN GOVERNMENTS ARE BUYING THESE CHIPS SO THAT THEY CAN HAVE AN AI CAPABILITY WITHIN THEIR COUNTRY. AND A LOT OF IT'S ON SPECULATION, BUT IT DOESN'T SEEM TO BE, AT THIS POINT, QUITE AS EXAGGERATED AS THE INTERNET BUBBLE. I STARTED AS AN ANALYST BACK IN 1998, SO I LIVED THROUGH THAT AND THAT WAS DIFFERENT. VALUATIONS WERE REALLY, REALLY, REALLY STRETCHED DURING THAT PERIOD. NOT SO MUCH THIS TIME, I THINK. >> AND SO THERE WAS A MASSIVE FALLOUT OF A MULTITUDE OF COMPANIES WHO WERE TRYING TO LATCH ON TO THE DOTCOM FERVOR. WILL WE SEE THE SAME HERE WITHIN THE AI LANDSCAPE? >> I THINK SO, YOU KNOW, THERE'S FUNNY STORIES ABOUT, YOU KNOW, JUST COMPANIES THAT ANNOUNCED THAT THEY HAD AN INTERNET CAPABILITY BACK IN 1999 AND CAUSED THE STOCK TO GO UP TREMENDOUSLY. I THINK YOU'LL PROBABLY SEE SOME EXAMPLES OF THAT WITH AI THAT PROBABLY WITH HINDSIGHT, WON'T MAKE SO MUCH SENSE. BUT BUT EVERYBODY'S KIND OF GETTING IN THERE. THE THE BEST AREAS I THINK TO FOCUS ON FOR INVESTMENT ARE WHAT PEOPLE CALL LIKE THE PICKS AND SHOVELS AREA. SO THAT WOULD BE THE SEMICONDUCTOR COMPANIES LIKE NVIDIA AND OTHERS, BUT ALSO THE APPLICATIONS THAT ARE REAL TODAY. SO THINGS LIKE, SOCIAL MEDIA AD TARGETING OR SEARCH, THOSE ARE AREAS WHERE AI IS ALREADY PROVEN ITSELF. >> MIKE NELL, UBS ASSET MANAGEMENT SENIOR PORTFOLIO MANAGER MIKE, THANKS SO MUCH FOR JOINING US IN STUDIO TODAY. THANK YOU. GREAT COMING UP, EVERYONE. THE DOJ HAS FILED AN ANTITRUST LAWSUIT AGAINST CONCERT TICKET PROVIDER LIVE NATION. WE'LL HAVE THE DETAILS ON THE OTHER SIDE. GOOD NEWS IF YOU'RE A SPECTRUM CABLE TV CUSTOMER. YESTERDAY, SPECTRUM'S PARENT COMPANY, CHARTER COMMUNICATIONS, ANNOUNCED A NEW MULTIYEAR DISTRIBUTION AGREEMENT FOR PARAMOUNT'S FULL PORTFOLIO OF LINEAR CABLE NETWORKS. CBS OWNED AND OPERATED BROADCAST STATIONS, AND DIRECT TO CONSUMER STREAMING SERVICES. FOR MORE, WE BRING IN OUR OWN ALLIE CANAL. HEY, ALLIE, WHAT DO WE KNOW? >> HEY, RED. YES, PARAMOUNT SUCCESSFULLY AVOIDING A BLACKOUT OF ITS CHANNELS ON CHARTER, WHICH, IF YOU REMEMBER, THAT'S WHAT HAPPENED WITH DISNEY LAST SEPTEMBER. SO A BIG WIN THERE, ESPECIALLY AS THESE CHARTER NEGOTIATIONS WERE VIEWED AS A POTENTIAL OVERHANG FOR THE COMPANY, CLOUDING SOME OF THOSE M&A PROSPECTS AS PARAMOUNT SEEKS A BUYOUT WITH SKYDANCE MEDIA AND POSSIBLY APOLLO GLOBAL AND SONY. NOW, THERE ARE STILL SOME UNKNOWNS SURROUNDING THIS DEAL, INCLUDING WHAT CHARTER PAID. BUT WE DO KNOW THAT CHARTER WILL CONTINUE TO CARRY ALL OF PARAMOUNT'S NETWORKS, INCLUDING SHOWTIME, CBS AND PARAMOUNT PLUS, AND A SUBSCRIBERS TO CHARTER'S LARGEST TIER, ALONG WITH ITS SPANISH LANGUAGE TIER, WILL RECEIVE THE AD SUPPORTED VERSIONS OF PARAMOUNT PLUS AND BET PLUS AT NO ADDITIONAL COST. NOW, MOFFETTNATHANSON HAD A GOOD POINT HERE THAT THIS AGREEMENT IS A BIG DEAL, SINCE PARAMOUNT'S TV MEDIA DIVISION IS LARGELY DRIVEN BY THE LINEAR NETWORKS. THAT'S A BIG DRIVER OF EBITDA, A BIG DRIVER OF REVENUE. SO HAVING THOSE CHANNELS ON CHARTER IS IMPORTANT. THERE HAVE BEEN SOME EXPECTATIONS COMING INTO THESE NEGOTIATIONS THAT SOME OF PARAMOUNT'S LONGER TAIL NETWORKS COULD GET DROPPED. SO AGAIN, A WIN, BUT WE'LL HAVE TO SEE WHAT THE CARRIAGE RATES ENDED UP BEING. AND HOW THE PAYMENTS WERE ULTIMATELY ALLOCATED TO DETERMINE THE LONG TERM FINANCIAL IMPACT HERE. THERE MIGHT ALSO BE SOME CANNIBALIZATION ON THE SUBSCRIBER FRONT, BUT WE SHOULD SEE SOME MOVEMENT ON A BIGGER STRATEGIC ACTION OR A POSSIBLE DEAL. NOW THAT THIS HAS BEEN DETERMINED, YOU'RE SEEING PARAMOUNT SHARES UP ABOUT 1% SHORTLY AFTER THE OPENING BELL. >> ALL RIGHT, ALI, THANKS SO MUCH FOR BREAKING THAT DOWN FOR US TURNING TO ANOTHER STORY THAT WE'RE FOLLOWING HERE AT YAHOO FINANCE, THE U.S. GOVERNMENT HAS FILED A SWEEPING LAWSUIT AGAINST LIVE NATION, THE PARENT COMPANY OF TICKETMASTER. NOW, THE DOJ, ALONG WITH 30 STATE AND DISTRICT ATTORNEYS GENERAL, ALLEGE THAT LIVE NATION HAS AN UNLAWFUL DOMINANCE OVER THE INDUSTRY. THE COMPANY CONTROLS ABOUT 70% OF THE TICKETING FOR LIVE EVENTS NOW. LIVE NATION RESPONDED TO THE SUIT SAYING, QUOTE, THE DEFINING FEATURE OF A MONOPOLIST IS MONOPOLY PROFITS DERIVED FROM MONOPOLY PRICING. LIVE LIVE NATION IN NO WAY FITS THE PROFILE. FOR MORE, WE WANT TO BRING IN JASON BAZINET. HE'S THE CITY'S MANAGING DIRECTOR, COVERING LIVE NATION'S A STOCK. JASON, WHEN WE TALK ABOUT THIS SUIT THAT WE HAVE FROM THE DOJ AGAINST LIVE NATION, HOW STRONG DO YOU THINK THIS ANTITRUST LAWSUIT IS? >> I DON'T THINK IT'S PARTICULARLY STRONG, I GUESS I WOULD I WOULD MAKE TWO POINTS. THE FIRST IS THERE IS SORT OF A BIGGER PICTURE, ALMOST. IDEOLOGICAL THING THAT'S GOING ON HERE THAT HAS NOTHING TO DO WITH THE COMPANIES. AND THAT IS FOR, MOST OF THE 30S, 1940S. 50S 60S, ANTITRUST LAW WAS REALLY GOVERNED BY A MINDSET THAT WAS UNDERPINNED BY WHAT, WHAT LAWYERS WOULD CALL STRUCTURALISM, WHICH IS BIG FIRMS ARE BAD. WHY BECAUSE THEY'RE BIG. AND WHAT HAPPENED IN THE 80S AND 90S, YOU KNOW, UNTIL TODAY, REALLY HAS REALLY BEEN THE PRICE THEORY OF COMPETITION, WHICH SAYS THAT UNLESS A FIRM CAUSES CONSUMER PRICES TO RISE, IT'S NOT REALLY ANTI-COMPETITIVE. AND THIS ADMINISTRATION IS TRYING TO GO BACK TO STRUCTURALISM. THAT'S WHAT'S UNDERPINNING A LOT OF THE ANTITRUST ACTIONS THAT THEY'RE PURSUING. AND SO THAT THAT'S DIFFICULT, I THINK, FOR THE JUDGES TO UNDERSTAND, BECAUSE THEY NOW HAVE 40 PLUS YEARS OF CASE LAW THAT SAYS THIS IS REALLY ALL ABOUT PRICE. AND THAT'S WHY YOU SEE LIVE NATION IN THEIR RESPONSE, FOCUSING ON PRICE. >> IF THEY ARE FORCED TO BREAK UP WITH THIS, REALLY HAVE ANY MATERIAL IMPACT ON PRICES PAID. LET ME JUST I DON'T THINK SO, LET ME JUST START WITH JUST SOME BASICS. I'M JUST GOING TO SAY A HYPOTHETICAL TICKET. LET'S SAY THAT, COSTS $100, LIVE NATION, MAKES ABOUT $1 FOR PROMOTING THAT SHOW, THE ARTIST WOULD GET $99. AND THEN WHEN YOU, WHEN YOU CHECK OUT, WHEN YOU ACTUALLY BUY THE TICKET, YOU'RE GOING TO SEE ALL OF THESE FEES. AND THOSE ARE TYPICALLY ABOUT FOR $100 TICKET WOULD BE ABOUT $30. AND WHAT MOST OF THAT MONEY GOES TO IS THE RENTAL FEE FOR THE VENUE. AND THEN TICKETMASTER ON THE TICKETING SIDE IS GOING TO GET ABOUT 20% OF THAT $30, SO $6. SO AT THE END OF THE DAY, YOU CHECK OUT, YOU'RE GOING TO PAY AS A CONSUMER. $140 LIVE NATION'S TOTAL REVENUE IS $1 FOR PROMOTING THE CONCERT, AND ABOUT $6, FOR TICKETING THE CONCERT. SO THEY'RE GOING TO GET $7, SO NO MATTER WHAT YOU DO TO LIVE NATION, I'M NOT SURE THAT YOU'RE GOING TO SEE A DEMONSTRABLE CHANGE IN THE PRICE CONSUMERS PAY TO GO TO A CONCERT. >> JASON DOES THIS SUIT, THOUGH. >> HOW MUCH OF AN OVERHANG DO YOU EXPECT THIS TO BE ON THE STOCK, OR DO YOU THINK IT'S GOING TO AT LEAST ADD A LITTLE BIT OF VOLATILITY TO THE STOCK PRICE, AT LEAST HERE IN THE SHORT TERM, I THINK THE VOLATILITY HAS ALREADY HAPPENED, WE'VE GONE THROUGH THE MATH OF WHAT A BREAKUP WOULD IMPLY, AND IT SUGGESTS SOMETHING IN THE HIGH 80S. AND SO WHAT YOU SAW IS THE MARKET WAS VERY CONFIDENT THAT THE DOJ WAS GOING TO FILE THIS LAWSUIT. AND SO IT'S BEEN PUTTING PRESSURE ON LIVE NATION'S SHARE PRICE. AND NOW I THINK AT LEAST BASED ON THE CONVERSATIONS WE'VE HAD WITH CLIENTS, WHAT IT'S GOING TO GO BACK TO THE FUNDAMENTALS. THIS IS GOING TO BE STUCK IN THE COURT FOR YEARS AND YEARS AND YEARS. IF THE STOCK PRICE DOES WELL AT LIVE NATION, IT'S BECAUSE THE FUNDAMENTALS ARE GOOD. IF THE STOCK DOES POORLY, IT'S REALLY MORE BECAUSE THE FUNDAMENTALS ARE BAD. BUT I THINK THE MARKET IS BAKED IN AS WE SIT HERE TODAY. VERY HIGH PROBABILITY, THAT THE SUIT IS SUCCESSFUL. >> JASON, THANKS SO MUCH FOR HOPPING ON WITH US HERE TODAY. JASON BAZINET CITI MANAGING DIRECTOR TALKING ALL THINGS LIVE NATION, TICKETMASTER, WE'RE GOING TO BE TRACKING THIS DOJ SUIT AND EVERYTHING TO COME AROUND IT JASON. APPRECIATE IT. YOU BET. THANKS WE'VE GOT ALL YOUR MARKETS ACTION AHEAD EVERYONE STAY TUNED. YOU'RE WATCHING MORNING BRIEF. BURGER KING IS REPORTEDLY LAUNCHING A NEW $5 MEAL. THEN THEY'RE NOT THE ONLY ONES. A SLEW OF FAST FOOD CHAINS LIKE MCDONALD'S AND WENDY'S LAUNCHING VALUE OFFERINGS OF THEIR OWN. AFTER SEEING CONSUMERS PULL BACK ON SPENDING THIS WEEK, WE SPOKE TO SALAD AND GO CEO CHARLIE MORRISON ON THE SUSTAINABILITY OF THESE OFFERINGS. TAKE A LISTEN. >> CHAINS ARE TAKING LOTS AND LOTS OF PRICE WHEN THEY FEEL LIKE THEY CAN. AND THEN WHEN THE CONSUMER STARTS TO PUSH BACK, WE GO RIGHT BACK INTO THE CYCLE OF VALUE ORIENTATION. WHAT DOESN'T SEEM TO BE WORKING IS THE IDEA OF SUSTAINING AN EVERYDAY LOW PRICE AND A PRICE THAT CONSUMERS CAN AFFORD. >> AND SO AS WE'RE WATCHING EVEN MORE OF THESE VALUE OFFERINGS EMERGE, IT TYPICALLY DOES COME AT A TIME WHERE MANY OF THE CONSUMERS ARE TRYING TO LOOK FOR VALUE HACKS. AND SO THESE VALUE MENU DEALS WHERE EVEN IF YOU LOOK BACK TOWARDS THE GREAT RECESSION OR THE GFC, A LOT OF THE PROMOTIONS WERE CENTERED AROUND FOR MCDONALD'S AND THE GOLDEN ARCHES. IT WAS, HEY, HERE'S THE $1 MENU, AND THEN YOU START TO SEE SOME OF THESE THINGS. SUNSET OVER TIME AS THEY THEN KIND OF MOVE AND MIRROR WITH THE ECONOMIC CYCLE AND TRY TO PROMOTE OTHER HIGHER VALUE MENU ITEMS THAT THEY CAN PERHAPS TAKE A LITTLE BIT MORE PRICE ON. >> YEAH, BUT THIS JUST COMES AS CONSUMERS ARE UNDER PRESSURE. A LOT OF THESE COMPANIES ARE TRYING, DOING, TRYING TO DO EVERYTHING THEY CAN TO BOOST THEIR PROFITS, ESPECIALLY ON THE HEELS OF WHAT WE'VE SEEN FROM A NUMBER OF THEIR COMPETITORS. WHEN YOU TAKE A LOOK AT WHAT MCDONALD'S IS DOING, WHEN YOU TAKE A LOOK AT WHAT WENDY'S IS DOING, BURGER KING SEEMS LIKE AT LEAST FEELING THE NEED TO JUMP IN ON THIS VALUE TREND THAT WE HAVE SEEN AND OFFER THAT TO CUSTOMERS IN ORDER TO TRY AND BOOST THEIR FOOT TRAFFIC. AND WHEN YOU TAKE A LOOK AT EXACTLY THE PRESSURE THAT THESE FOOD COMPANIES HAVE BEEN UNDER, MCDONALD'S AND THEIR MOST RECENT REPORT HERE MISSING PROFIT ESTIMATES FOR THE FIRST TIME IN TWO YEARS THIS PAST QUARTER. AND THEY SAID THAT THEY ARE SEEING CONSUMERS STARTING TO PULL BACK. SO THERE REALLY IS THIS EMPHASIS ON VALUE THAT HAS BEEN ONE OF THE THEMES THAT WE'VE BEEN TRACKING REALLY THROUGHOUT THE SEASON, AND IT'S BEYOND AND A NUMBER OF THESE FAST FOOD CHAINS, EVEN WHEN YOU TALK ABOUT SOME OF THE COMMENTARY THAT WE'VE GOTTEN OUT FROM WALMART, FROM TARGET, EVEN FROM SOME OF THESE OFF PRICE DISCOUNT RETAILERS, PEOPLE ARE LOOKING FOR VALUE. THEY'RE LOOKING FOR CHEAPER OPTIONS RIGHT NOW AS THEY ARE BEING A LITTLE BIT MORE DISCERNING ABOUT WHAT THEY'RE SPENDING ON AND HOW THEY ARE SPENDING. SO YOU WOULD THINK A DEAL LIKE THIS WOULD AT LEAST BOOST FOOT TRAFFIC. I THINK THE QUESTION IS, WHAT KIND OF PRESSURE COULD THIS ULTIMATELY MAYBE PUT ON MARGINS HERE, AT LEAST IN THE SHORT TERM, DEPENDING ON HOW LONG THESE DEALS ARE AVAILABLE FOR. >> AND IN THAT MARGIN EQUATION, TOO. IF YOU'RE SAYING HELLO TO VALUE, YOU MIGHT BE SAYING GOODBYE IN THE NEAR TERM TO MENU INNOVATION. TO THE EXTENT THAT COMPANIES TALK ABOUT THAT IN THE AMOUNT OF MONEY THAT THEY PUT INTO SPENDING ON NEW CREATIVE PRODUCTS, THAT THEY'RE ABLE TO LIST ON THE MENU, DRIVE EVEN MORE OF THE FOOT TRAFFIC. NOW IT'S OKAY, LET'S STICK TO WHAT WORKS, SEE HOW WE CAN REBUNDLE IT, OR REPACKAGE IT IN THE SAME GREAT BURGER OR SANDWICH THAT YOU'VE TRIED BEFORE, WHETHER IT BE SPICY CHICKEN OR WHETHER IT BE A TRIPLE QUARTER POUNDER, WHOPPER, WHATEVER YOU'RE NAMING IT HERE, IT COULD JUST BE VARIATION IN WHAT THEY'RE CALLING THE BURGERS OR CALLING THE DIFFERENT MENU ITEMS AT THIS JUNCTURE, AND HOW IT'S BEING MARKETED. AND IN THE FRANCHISEE MINDSET, THEY'RE GOING TO BE LOOKING FOR EVEN MORE OF THAT DIRECTIVE TO COME DOWN FROM SOME OF THESE COMPANIES, WHETHER IT BE MCDONALD'S, WHETHER IT BE RESTAURANT BRANDS AND HOW THEY'RE WORKING WITH THEIR FRANCHISEES TO MAKE SURE MORE OF THE MARKETING ELEMENTS ARE CONTINUING TO ENGAGE WITH MORE CUSTOMERS WHO ARE LOOKING FOR THOSE DEALS. >> CERTAINLY. ALL RIGHT. WE'LL KEEP RIGHT HERE ON YAHOO FINANCE . COMING UP, THE LATEST READING ON CONSUMER SENTIMENT THAT'S OUT IN JUST A FEW MINUTES. WE'LL BREAK DOWN THE NUMBERS AND EXACTLY WHAT THIS REPORT COULD SIGNAL FOR THE FED. PLUS I DISRUPTING THE ENERGY LANDSCAPE. WE WILL BE SPEAKING WITH THE CEO OF A SAM ALTMAN BACKED NUCLEAR ENERGY COMPANY THAT'S COMING UP ON CATALYST NEXT. IT'S 10 A.M. HERE IN NEW YORK CITY. I'M SEANA SMITH, ALONGSIDE BRAD SMITH FOR ANOTHER HOUR HERE ON YAHOO FINANCE. LET'S DIVE INTO THE CATALYST THAT'S MOVING THE MARKETS HERE TODAY. >> THAT'S RIGHT. STOCKS ARE HIGHER REBOUNDING FROM THURSDAY'S SELL OFF. HAWKISH FED SPEAK AND REPORTS SHOWING A RESILIENT ECONOMY CONTRIBUTING TO THOSE MARKET JITTERS WHILE STRONG DATA CONTINUE. THE GOOD NEWS IS BAD NEWS MANTRA HERE. >> AND PRICE CUTS COMING FOR THE CHIP SECTOR. >> NVIDIA REPORTEDLY SLASHING THE PRICE OF ITS MOST ADVANCED AI CHIPS FOR THE CHINESE MARKET AS PRESSURES FROM COMPETITOR HUAWEI MOUNT. COULD THIS BE A DOWNSIDE RISK FOR NVIDIA STOCK AND CRACKS IN THE CONSUMER ARE GROWING. >> RETAILERS REPORT THAT STICKY INFLATION AND HIGH INTEREST RATES ARE WEIGHING ON SHOPPERS. WE'LL GET A FRESH READ ON THE CONSUMER IN JUST A MOMENT HERE. ALL RIGHT. >> WELL LET'S GET RIGHT TO THAT. READING ON THE CONSUMER BECAUSE WE'VE GOT UNIVERSITY OF MICHIGAN'S CONSUMER SENTIMENT INDEX JUST RELEASED RIGHT NOW. YOU TAKE A LOOK AT THE NUMBERS. SENTIMENT FELL TO 69.1 BUT IS COMING IN HIGHER THAN WHAT THE STREET HAD ANTICIPATED. THE INDEX HAD BEEN AT 77.2 IN THE PRIOR MONTH. CURRENT ECONOMIC CONDITIONS INDEX, THAT ACTUALLY FALLING TO 69.6 VERSUS 79 THE PRIOR MONTH. EXPECTED CHANGE IN MEDIAN PRICES DURING THE NEXT YEAR ROSE TO 3.3, VERSUS 3.2% LAST MONTH. GOING ON WITH THE INFLATION NARRATIVE, STICKY INFLATION THAT WE'VE BEEN TALKING ABOUT HERE AT YAHOO FINANCE FOR QUITE SOME TIME, EXPECT TO CHANGE A MEDIAN PRICES DURING THE NEXT 5 TO 10 YEARS. THAT REMAINS UNCHANGED HERE, BRAD. JUST AROUND 3. >> YEAH. THIS IS PRETTY REMARKABLE HERE. THIS AS THEY MENTIONED IN THE SURVEY OF CONSUMERS DIRECTOR JOANNE SCHUH SAYING THIS IS A STATISTIC. REALLY. OH MY GOSH, STATISTICALLY SIGNIFICANT CHANGE HERE IN THE DECREASE BRINGING THE SENTIMENT TO ITS LOWEST READING IN ABOUT FIVE MONTHS. NOW, HERE'S WHAT YOU SHOULD ALSO FOCUS IN ON THE YEAR AHEAD OUTLOOK FOR BUSINESS CONDITIONS THAT SAW A PARTICULARLY NOTABLE DECLINE. HERE THEY MENTIONED VIEWS ABOUT PERSONAL FINANCES, LITTLE CHANGE, CONSUMERS EXPRESSING PARTICULAR CONCERN OVER LABOR MARKETS. THAT'S A LITTLE NEW HERE. AND ALSO EXPECTING UNEMPLOYMENT RATES TO RISE AND INCOME GROWTH TO SLOW HERE TOO. SO THAT IS PARTICULARLY NOTEWORTHY HERE, ESPECIALLY IN OUR NEXT CONVERSATION. HERE IS HIGH PRICES AND HIGH INTEREST RATES ARE WEIGHING IN ON THE CONSUMER, WEIGHING ON THE CONSUMER. AND THE FED MEMBERS ARE THROWING COLD WATER ON HOPES THAT RATES COULD BE COMING DOWN ANYTIME SOON. WE GOT A FLOOD OF FED SPEAK THIS WEEK, ALL CAUTIONING PATIENCE WITH RATE CUTS, ATLANTA FED PRESIDENT RAPHAEL BOSTIC SAYING ON THURSDAY. WE'VE GOT TO BE A LITTLE MORE PATIENT AND MORE CERTAIN THAT INFLATION IS ON ITS WAY TO 2% BEFORE MAKING A MOVE ON RATE CUTS. SO HOW CAN WE EXPECT THE FED'S POLICY TO IMPACT THE CONSUMER GOING FORWARD? JOINING US NOW WE'VE GOT ANDREW HOLLENHORST WHO IS THE CITI CHIEF U.S. ECONOMIST HERE. ANDREW, I MEAN, SO MANY FED SPEAKERS THIS MORNING, IT ALMOST GIVES EVEN MORE CREDENCE TO WHAT LIZ ANN SONDERS OVER AT CHARLES SCHWAB CALLED THEM. THE FEDERAL OPEN MOUTH COMMITTEE, OF COURSE WE'RE GOING TO GET THAT PRINTED ON T SHIRTS THAT IS YET TO COME. AND ON THE YAHOO FINANCE MERCH WEBSITE YET TO BE ESTABLISHED. ALL THAT CONSIDERED, WHAT DO YOU MAKE OF THIS FED SPEAK THAT WE GOT IN DROVES THIS WEEK? >> I THINK THIS IS REALLY WHAT WE SHOULD EXPECT AT THIS POINT IN THE CYCLE, WHICH IS A DIFFICULT POINT IN THE CYCLE FOR FED OFFICIALS. AND YOU'RE MAKING ALL THE RIGHT POINTS HERE THAT WE HAVE STICKY INFLATION ON THE ONE HAND. ON THE OTHER HAND, WE HAVE LABOR MARKETS THAT LOOK TO BE SOFTENING AND CONSUMER THAT'S PULLING BACK. SO THEY'RE TRYING TO THREAD THE NEEDLE BETWEEN THE PRICE MANDATE AND THE EMPLOYMENT MANDATE, TRYING TO TACKLE INFLATION IN TRYING TO KEEP THE UNEMPLOYMENT RATE LOW. AND THAT'S JUST A DIFFICULT THING TO DO. SO WHAT DO YOU HEAR FROM FED OFFICIALS. INFLATION HAS BEEN STRONGER. SO THEY'RE GOING TO SAY PATIENCE PATIENCE. WE'RE NOT GOING TO CUT YET RIGHT UP UNTIL THE POINT WHEN WE SEE THE DATA REALLY WEAKEN IN A SIGNIFICANT WAY. AND THEN YOU'LL GET THE CUT. SO IT'S REALLY THE DATA THAT'S GOING TO MATTER HERE. NOT WHAT WE HEAR FROM FED OFFICIALS. >> ANDREW, HOW ARE YOU LOOKING AT THAT PMI REPORT YESTERDAY. BECAUSE BUSINESS ACTIVITY THERE ACCELERATING THE FASTEST PACE THAT WE'VE SEEN IN TWO YEARS. SO STRONGER THAN EXPECTED REPORT HERE REKINDLING JUST SOME OF THE CONCERNS SURROUNDING INFLATION. MAYBE IT'S GOING TO BE EVEN TOUGHER THAN THE MARKET HAD ANTICIPATED THAN HAD INITIALLY ANTICIPATED, OR ANY FORECASTERS HAD INITIALLY ANTICIPATED IN TERMS OF TAMING INFLATION. DO YOU SEE ANY TRUTH TO THAT, OR DO YOU THINK MAYBE THE NUMBERS WEREN'T AS STRONG AS WHAT THEY LOOKED LIKE ON THE SURFACE? >> YEAH. SO I THINK THE ECONOMY DOES NEED TO COOL DOWN IF YOU'RE GOING TO COOL DOWN INFLATION. I'M NOT THAT WORRIED ABOUT THE PMI NUMBER SHOWING THAT THE ECONOMY IS ACCELERATING. IF YOU TAKE IT VERY LITERALLY, THAT IS KIND OF WHAT IT SHOWS, BUT YOU WANT TO LOOK AT IT IN THE CONTEXT OF ALL THE DATA. THIS IS ONE SURVEY WHERE YOU ASK FIRMS ARE YOU EXPANDING? ARE YOU CONTRACTING? WE HAVE HARD DATA. WE HAVE HARD DATA ON THE CONSUMER. WE SEE RETAIL SALES THAT ARE WEAKER. YOU WERE TALKING IN THE PREVIOUS SEGMENT ABOUT RETAILERS, RESTAURANTS THAT ARE CUTTING PRICES TO ATTRACT CONSUMERS. SO I'M REALLY NOT SEEING IT IN THE BROAD SWATH OF DATA. YES, THOSE PMIS WERE STRONGER. IT'S SOMETHING TO NOTE, BUT I DON'T THINK IT'S THE STORY OF THE ECONOMY RIGHT NOW. >> WHAT IS THE STORY OF THE ECONOMY? >> WELL I THINK IT'S A LOT OF THESE FACTORS THAT WE'VE BEEN WAITING FOR TO COME THROUGH AND SLOW THE ECONOMY, THAT FINALLY ARE WHERE WE HAVE HIGH INTEREST RATES, WE HAVE PRICES THAT HAVE RISEN VERY SIGNIFICANTLY OVER THE PAST FEW YEARS, AND THAT JUST HADN'T SLOWED THE ECONOMY AS MUCH AS MOST FORECASTERS, OURSELVES INCLUDED, WOULD HAVE EXPECTED. AND PART OF THAT WAS BECAUSE THERE WAS SO MUCH EXCESS SAVINGS IN THE ECONOMY, THERE WAS SO MUCH SPENDING POWER, AND THAT JUST KEPT THE US ECONOMY RESILIENT AND RUNNING. AND NOW WE'RE FINALLY SEEING THAT THAT SLOWING. AND THAT MEANS THE DATA IS GOING TO BE A LITTLE BIT MIXED, RIGHT. WE'RE GOING TO GET SOME OF THESE REPORTS THAT LOOK WEAKER, SOME THAT LOOK STRONGER. BUT THE TREND IS TOWARDS A SLOWING ECONOMY. NOW >> SO ANDREW WHAT DOES THAT THEN TELL US ABOUT RATE CUTS THIS YEAR. >> THEN LOOKING OUT TO 2025, MORE SPECIFICALLY THE RATE OF THOSE CUTS POTENTIALLY NEXT YEAR. >> SO WE HEARD A LOT FROM FED OFFICIALS THIS WEEK, MAYBE MOST NOTABLY FROM GOVERNOR WALLER, WHO SAID IN HIS VIEW, INFLATION WILL SLOW. BUT SO GRADUALLY THAT YOU MAYBE HE WOULD SUPPORT A RATE CUT LATE THIS YEAR, MAYBE EARLY NEXT YEAR. AND WHAT THAT'S TELLING US IS THAT STICKY INFLATION IS MAKING IT HARDER FOR FED OFFICIALS TO CUT RATES, AND THAT JUST PUTS MORE EMPHASIS FOR ME ON THE EMPLOYMENT MANDATE AND WHAT WE'RE GOING TO SEE THERE. IF THE JOBS NUMBERS HOLD UP, THEN IT COULD BE A FED THAT STAYS ON HOLD FOR LONGER. I THINK WE ARE GOING TO SEE SOFTER JOBS NUMBERS. WE JUST SEE THAT IN SO MUCH OF THE FORWARD LOOKING DATA. NOW, IF THEY SEE THAT, THEN ALL OF A SUDDEN WE'LL HAVE THIS PIVOT TO THE EMPLOYMENT MANDATE. WE'LL HAVE THE FED CUTTING THIS YEAR. AND I DO THINK THAT ONCE THEY START CUTTING, IT WILL BE A SERIES OF CUTS. WE ACTUALLY HEARD THAT FROM GOVERNOR WALLER WHO SAID, YOU KNOW, THIS IS NOT JUST GOING TO BE ONE RATE CUT. AND THEN WE WAIT FOR SIX MONTHS. THIS WILL BE A SERIES OF RATE CUTS ONCE WE GET STARTED. >> I MEAN, ANDREW, LOOK, WE CAME INTO THIS YEAR, I PICTURED BY THAT AT THIS POINT, MEMORIAL DAY WEEKEND WITH ALL THE CUTS THAT WERE SOLD TO ME, I'D BE SITTING AROUND ON SOMEBODY'S LAWN, MAYBE WITH SOME FLIP FLOPS ON, AND WE'D HAVE 2 OR 3 CUTS ALREADY BY THIS JUNCTURE. AND THEN THAT WOULD LEAVE TO QUESTION FOR THE REST OF THE YEAR. OKAY, WHERE DOES THE CONSUMER MINDSET MOVE? WHERE DOES THE EMPLOYMENT SITUATION MOVE? RIGHT NOW, WE'RE HEARING A LITTLE BIT MORE FROM THE CONSUMER WHO ARE CONCERNED. AND RIGHT NOW OVER THE LABOR MARKETS, EXPECTING UNEMPLOYMENT RATES TO RISE AND INCOME GROWTH TO SLOW. WHAT WILL THAT DO IN TERMS OF THE PASS THROUGH EFFECTS TOWARDS THE FED? ACTUALLY GETTING TOWARDS THEIR INFLATION TARGET AND READING TARGETS IN ORDER FOR THEM TO SEE REASON TO CUT? >> YEAH. SO YOU THOUGHT WE WOULD BE THERE BY NOW. >> MARKETS THOUGHT WE WOULD BE THERE BY NOW AND FED OFFICIALS THOUGHT THAT. AND THEY WERE LOOKING AT THE END OF 2023 AT 2% CORE PCE INFLATION FOR SIX MONTHS. AND SO THEY REALLY THOUGHT THAT MAYBE THEY TACKLED INFLATION. MAYBE THERE WOULDN'T BE THIS LAST MILE PROBLEM. ALL OF A SUDDEN WE GOT THE Q1 DATA IN AND IT BECAME VERY CLEAR TO EVERYONE THERE IS A LAST MILE PROBLEM. THE ECONOMY HAS TO SLOW TO SLOW INFLATION. AND THAT PUTS THE FED IN A MUCH MORE DIFFICULT SCENARIO BECAUSE THEY CAN'T BE PREEMPTIVE. THEY CAN'T EXACTLY WHAT YOU'RE SAYING, WHAT THEY WOULD LIKE TO DO IS TO CUT RATES BEFORE THE CONSUMER SLOWS DOWN, BEFORE THE UNEMPLOYMENT RATE MOVES UP. WELL, NOW THE UNEMPLOYMENT RATE IS MOVING UP. THE CONSUMER IS SLOWING DOWN, AND WE'RE STILL WAITING FOR INFLATION TO COME DOWN. SO IT'S THAT TRADE OFF THE CLASSIC MACROECONOMIC TRADE OFF BETWEEN GROWTH AND INFLATION. AND THE LONGER RATES STAY HIGHER THE MORE RISK THERE IS OF A SHARPER SLOWING IN THE ECONOMY. >> ALL RIGHT ANDREW HOLLENHORST ALWAYS GREAT TO TALK TO YOU. THANKS SO MUCH FOR HOPPING ON WITH US THIS MORNING. CITI'S CHIEF U.S. ECONOMIST. WE APPRECIATE IT. HAVE A GOOD WEEKEND. >> THANK YOU. >> WELL, STOCKS ARE HIGHER TODAY AS DATA SHOWS THAT CONSUMERS HAVE TEMPERED FEARS SURROUNDING INFLATION. YOU'RE LOOKING AT THE DOW UP JUST ABOUT A 10TH OF A PERCENT. THE NASDAQ NOW UP ABOUT A HALF OF A PERCENT. NOW THE MOVE HIGHER THIS MORNING COMING AFTER MARKETS FELL YESTERDAY WHEN NVIDIA WAS UNABLE TO CALM SOME OF THE FEARS SURROUNDING HIGHER FOR LONGER RATES. SO WHAT'S AHEAD FOR THE MARKET AND WHAT'S GOING TO BE THE BIGGEST DRIVER FOR THOSE MOVES? WE WANT TO BRING IN MATTHEW PALAZZOLO. HE IS AT BERNSTEIN PRIVATE WEALTH MANAGEMENT SENIOR INVESTMENT STRATEGIST. MATTHEW IT'S GREAT TO HAVE YOU. SO I'M CURIOUS HOW YOU LOOKED AT THE ACTION THAT WE SAW YESTERDAY AND REALLY WHAT THAT SIGNALS HERE FOR THE MARKET'S MOMENTUM GOING FORWARD. BECAUSE IN THE PAST WE'VE SEEN LOTS OF EXCITEMENT SURROUNDING NVIDIA'S BLOWOUT RESULTS. YET WHEN YOU TAKE A LOOK AT YESTERDAY'S DECLINES, YOU SAY YOU HAVE NVIDIA CLOSING UP 9% YET. THE MARKET'S SOLD OFF A BIT OF A REVERSAL TODAY. SO WHAT DOES THAT TELL YOU JUST ABOUT THE NARRATIVE RIGHT NOW OF THE MARKET? >> I THINK IT BASICALLY SHOWS YOU THE TUG OF WAR THAT THAT'S OCCURRING IN INVESTORS MINDS BETWEEN EARNINGS GROWTH, WHICH OVER THE LAST FEW QUARTERS CERTAINLY HAS BEEN SOLID. BUT THEN ALSO THE INFLATION DATA, WHICH DEPENDING ON THE DATA POINTS THAT YOU'RE LOOKING AT, HAS BEEN MORE DOVISH OR HAS SHOWN SOME ACCELERATION, CERTAINLY IN THE FIRST QUARTER THAT WAS THE BACKDROP. SO I THINK THE LAST COUPLE OF DAYS ARE JUST EVIDENCE TO THAT, THAT INVESTORS ARE GRAPPLING WITH THESE TWO SOMEWHAT OPPOSING FORCES AND TRYING TO GET A SENSE FOR WHETHER OR NOT WE'RE GOING TO CONTINUE TO HIT HIGHS IN THE S&P 500 OR HAVE TO GIVE SOME BACK ON SOME PROFIT TAKING. >> AND IF THERE IS SOME PROFIT TAKING THAT MEANS PERHAPS WE SEE A LITTLE BIT OF VOLATILITY, A LITTLE BIT OF DIPS. WHERE WHERE DO YOU THINK EVEN WITHIN THAT PROFIT TAKING INVESTORS MIGHT FIND OTHER AREAS TO REALLOCATE. >> YEAH. SO YOU KNOW WE HAVE TO LOOK AT IN THOSE SITUATIONS AS INVESTORS, THE AREAS THAT CAN NAVIGATE THROUGH A SOFTER ECONOMY. SO ON THAT SCORE, OUR PORTFOLIO MANAGERS LIKE HEALTH CARE. THEY LIKE STAPLES. THEY'RE SOMEWHAT PROTECTIVE IN A IN A DOWNTURN. AND IF YOU LOOK AT VALUATIONS FOR THOSE SECTORS TODAY, THEY WOULD SUPPORT A DOWNTURN IN SOME ADDITIONAL VOLATILITY. AND THEN IF SOME OF THAT INFLATION CONTINUES TO RISE THEN THERE ARE AREAS LIKE ENERGY AND OTHERS THAT WOULD BE ABLE TO MAYBE APPRECIATE OR HOLD THEIR VALUE IN SOME OF THAT VOLATILITY. SO ACROSS THE BOARD WE'RE ALWAYS LOOKING FOR QUALITY COMPANIES NO MATTER THE SECTOR. AND WE'RE HAVING GREAT OPPORTUNITIES TODAY GIVEN VALUATIONS ON SOME SECTORS OUTSIDE OF TECHNOLOGY WHERE YOU CAN GET HIGH QUALITY BUSINESSES THAT THAT HAVE GOOD SOLID BALANCE SHEETS, GOOD TOP AND BOTTOM LINE GROWTH THAT AREN'T EXPENSIVE. >> MATTHEW, I'M CURIOUS, HOW ARE YOU LOOKING AT THE TIMING OF RATE CUTS, JUST IN TERMS OF CLEARLY, WE'VE BEEN TALKING ABOUT IT A LOT, BUT HOW MUCH DOES IT ACTUALLY MATTER TO THE MARKETS MOMENTUM AND GAINS HERE, AT LEAST IN THE SHORT TERM? >> YEAH, I THINK WHAT MATTERS MORE THAN WHEN THAT FIRST CUT OCCURS IS THAT THEY'VE STARTED AND THE DIRECTION OF TRAVEL FROM THERE. SO WE LIKE EVERYBODY ELSE, HAVE HAVE CHANGED. OUR FIRST CUT TO FURTHER OUT IN THE YEAR. WE'VE NOW PENCILED IN A FOURTH QUARTER CUT. PERHAPS AT THAT LAST MEETING IN DECEMBER, BUT FROM THERE THROUGH THE END OF 2025, WE'VE GOT ROUGHLY 100 BASIS POINTS OF CUTS BAKED IN. SO I THINK THAT IS MORE IMPORTANT THAT THEY'VE STARTED. AND THEN THE MAGNITUDE OF THE CUTS OVER THE NEXT 12 MONTHS OR SO. AND I THINK IF THAT ENDS UP BEING THE CASE, WHICH AND THAT'S OUR BASE CASE, THEN FROM THERE THAT SHOULD BE SUPPORTIVE OF EARNINGS GROWTH AND ALSO SUPPORTIVE OF INVESTOR SENTIMENT. >> DOES DOES A CUT THEN KIND OF REPOSITION OR DOES THAT CHANGE THE PLAYBOOK FOR INVESTORS. >> I DON'T THINK IT SHOULD. YOU KNOW THE CONSENSUS OBVIOUSLY IS AROUND TWO OR MAYBE THREE DEPENDING ON THE DAY CUTS OVER THE BALANCE OF THIS YEAR AND THEN INTO 2025. MORE TO COME. SO IT SHOULDN'T CHANGE THE BELIEF AMONGST INVESTORS ALL THAT MUCH. AGAIN, I THINK IT'LL JUST BE A SIGH OF RELIEF FOR INVESTORS THAT THE FED HAS STARTED, THAT THEY FEEL LIKE THEY HAVE AIR COVER, GIVEN THE INFLATIONARY BACKDROP AT THAT POINT IN TIME, TO BEGIN THAT PROCESS OF EASING FINANCIAL CONDITIONS. AND THEN FROM THERE, THE MARKETS WILL THEN FOCUS MORE ON THE EARNINGS BACKDROP AND THE LABOR BACKDROP, WHICH WE BELIEVE SHOULD CONTINUE TO BE SUPPORTIVE. EARNINGS CAN GROW MID TO HIGH SINGLE DIGITS OVER THE NEXT HANDFUL OF YEARS, AND WE DON'T THINK THE LABOR MARKET IS GOING TO SOFTEN ALL THAT MUCH THAT IT WILL END UP BEING DISRUPTIVE TO THE ECONOMY. >> MATTHEW PALAZZOLO, WE REALLY APPRECIATE YOU TAKING THE TIME TO JOIN US HERE THIS MORNING. BERNSTEIN'S PRIVATE WEALTH MANAGEMENT SENIOR INVESTMENT STRATEGIST. HAVE A GREAT WEEKEND. THANK YOU. WE'VE GOT MUCH MORE OF YOUR MARKET ACTION AHEAD. STAY TUNED. YOU'RE WATCHING CATALYSTS. >> IT'S A JAM PACKED HOUR FOCUSING ON THE BIGGEST MOVERS AND SHAKERS ON WALL STREET. THIS IS MARKET DOMINATION. >> AND HERE EVERY DAY IS GAME DAY. >> WE HAVE ONE HOUR LEFT UNTIL THE MARKET CLOSES. >> IT'S GAME TIME FOR INVESTORS TO MAKE THEIR FINAL PLAYS. >> THE CLOCK IS TICKING AND WE'VE GOT YOU COVERED WITH OUR QUARTER BY QUARTER PLAYBOOK. >> WE'RE BRINGING YOU IN ON ALL THE MARKET ACTION WITH STEP BY STEP ANALYSIS OF OUR BIGGEST TRENDING TICKERS AND EXPERT INSIGHT INTO THE DAY'S BIGGEST HEADLINES. >> WE'LL BRING YOU THE CLOSING BELL AND GET YOU TO THE FINISH LINE. >> THIS IS MARKET DOMINATION. >> TUNE IN DAILY FROM 3 TO 4 P.M. EASTERN. >> TESLA CEO ELON MUSK SAYS HE OPPOSES U.S. TARIFFS ON CHINESE ELECTRIC VEHICLES. YAHOO FINANCE SPOKE EXCLUSIVELY WITH PRESIDENT BIDEN AFTER THE ANNOUNCEMENT TO RAISE THE TARIFF FROM 25% TO 100. AND THIS IS WHAT POTUS HAD TO SAY. >> IF WE ALLOW THEM TO CONTINUE WHAT THEY'RE DOING TO FLOOD THE MARKET WITH EVS THAT ARE INCREDIBLY CHEAP, THEY'RE NOT MAKING ANY MONEY ON THEM DELIBERATELY DOING IT TO PUT OTHER PEOPLE OUT OF BUSINESS. FOR MORE ON THIS, YAHOO FINANCE'S VERY OWN AKIKO FUJITA IS HERE. >> HEY, AKIKO. >> HEY THERE BRAD. WELL, THOSE COMMENTS FROM ELON MUSK CAME AT A TECH CONFERENCE OVER IN PARIS. AND SPECIFICALLY, HE SAID HE WAS SURPRISED WHEN THE U.S. MADE THIS ANNOUNCEMENT, SAYING THAT THINGS THAT INHIBIT FREEDOM OF EXCHANGE OR DISTORT THE MARKET ARE NOT GOOD. NOW, IT MARKED A BIT OF A SHIFT IN TONE FROM MUSK'S COMMENTS BACK IN JANUARY. REMEMBER BACK THEN, HE ARGUED THAT TARIFFS WERE NECESSARY, SAYING THAT WITHOUT THEM, CHINESE CARMAKERS WOULD DEMOLISH , IN HIS WORDS, MOST OTHER CAR COMPANIES IN THE WORLD. NOW, ALL OF THIS STEMS FROM CONCERNS ABOUT CHEAP CHINESE VEHICLES FLOODING GLOBAL MARKETS, SQUEEZING OUT COMPETITORS WHILE CHINA DOES REMAIN THE LARGEST EV MARKET, CHINESE CARMAKERS HAVE INCREASINGLY BEEN MAKING BEEN MAKING PUSHES INTO NEW COUNTRIES AS THEIR HOME MARKET SLOW DOWN, SLOWS DOWN AND THEY'VE BEEN MAKING INROADS, PARTICULARLY IN EUROPE. THEY INCREASE THEIR MARKET SHARE OVER IN THE EU TO 20% OF THE EUROPEAN EV MARKET LAST YEAR. THAT WAS UP FROM 16% THE PREVIOUS YEAR. AND THEY DID THAT LARGELY BY PRICE, WITH CHINESE CARMAKERS COMMANDING A 30% COST ADVANTAGE OVER EUROPEAN RIVALS. NOW YOU'VE GOT THE EUROPEAN COMMISSION CONSIDERING TARIFFS ON CHINESE CAR IMPORTS THAT BY SOME ESTIMATES, CAN RANGE FROM 15 TO 20. THE RHODIUM GROUP PUT OUT A STUDY ESTIMATING THAT TARIFFS WOULD NEED TO BE AS HIGH AS 55% TO CURB INFLATION IMPORTS, AND THE CONCERN IS THAT SOMETHING SIMILAR COULD HAPPEN HERE IN THE US AS WELL. NOW ELON MUSK SAYING HE DOESN'T NECESSARILY WANT TARIFFS. THAT'S SOMETHING WE'VE HEARD FROM OTHER CAR CEOS AS WELL. STELLANTIS CEO CARLOS TAVARES SAYING THAT TARIFFS AREN'T NECESSARILY THE ANSWER BECAUSE CAR MAKERS COMPETE IN A GLOBAL MARKET. JUST A FEW DAYS AGO, HE WAS INTERVIEWED BY REUTERS, SAYING THAT HE BELIEVES THESE TARIFFS ARE IN HIS WORDS, A MAJOR TRAP FOR THE COUNTRIES THAT GO ON THAT PATH AND THAT ULTIMATELY WESTERN CARMAKERS WOULD NEED TO FIND A WAY TO RESTRUCTURE TO BE ABLE TO MEET THE CHALLENGE FROM LOWER COST CHINESE MANUFACTURERS, SPECIFICALLY, TAVARES SAID. WHEN YOU FIGHT AGAINST THE COMPETITION TO ABSORB 30% OF COST COMPETITIVENESS, EDGE IN FAVOR OF THE CHINESE, THERE ARE SOCIAL CONSEQUENCES AND THE BOTTOM LINE IS THIS, GUYS, WHEN YOU THINK ABOUT WHAT CHINESE CARS OR CHINESE EVS ARE SELLING FOR, YOU'VE GOT A PRICE TAG OF ROUGHLY $10,000. IF YOU LOOK AT SOMETHING LIKE BYD SEAGULL, EVEN WITH THE TARIFFS, THEY CAN STILL BE COST COMPETITIVE. SO THAT'S EXACTLY WHAT THOSE LIKE ELON MUSK POTENTIALLY, BUT ESPECIALLY STELLANTIS CEO, HAS BEEN HITTING ON SAYING, YOU'VE GOT TO HAVE A RESTRUCTURING REALLY RETHINK ABOUT HOW THESE CAR COMPANIES ARE STRUCTURED BECAUSE THE CHINESE CARMAKERS ARE GOING TO CONTINUE TO MAKE A PUSH INTO NEW MARKETS. THEY WILL HAVE TO GO HEAD TO HEAD WITH THEM AT THESE VERY LOW PRICE POINTS, REGARDLESS OF WHERE THOSE TARIFFS LAND. >> CERTAINLY. >> INTERESTING STUFF. ALL RIGHT, AKIKO, THANKS SO MUCH FOR BREAKING THAT DOWN FOR US HERE THIS MORNING. WELL, ELON MUSK'S SPACEX MIGHT BE IN DISCUSSIONS ABOUT SELLING EXISTING SHARES, ACCORDING TO BLOOMBERG. BUT MUSK SEEMINGLY REFUTING THOSE CLAIMS ON X, SAYING THAT THE COMPANY HAS NO NEED FOR ADDITIONAL CAPITAL AND WILL ACTUALLY BE BUYING BACK SHARES. FOR MORE ON THIS, WE WANT TO BRING IN YAHOO FINANCE REPORTER INES FARIA. NESS WHAT'S THE LATEST. >> YEAH. SEANA. AND SO THE REPORT BY BLOOMBERG CITES PEOPLE FAMILIAR SOURCES FAMILIAR WITH THE MATTER. AND WHAT THEY'RE SAYING IS THAT THERE'S THIS TENDER OFFER THAT THE THAT SHARES COULD BE PRICED AT ANYWHERE BETWEEN $108 OR $110 PER SHARE, AND THAT THIS WOULD VALUE SPACEX AT MORE THAN $200 BILLION. YOU MENTIONED THAT TWEET FROM ELON MUSK SAYING THAT SPACEX HAS NO NEED FOR ADDITIONAL CAPITAL AND WILL ACTUALLY BE BUYING BACK SHARES AND HE ALSO SAID THAT WE DO LIQUIDITY ROUNDS FOR EMPLOYEES AND INVESTORS EVERY SIX MONTHS. BUT JUST TO TAKE A STEP BACK, IN OCTOBER OF 2021, AT THE HEIGHT OF THE MARKETS, REALLY THIS COMPANY, THIS PRIVATE COMPANY WAS WORTH ABOUT $100 BILLION. SO IT HAS SINCE DOUBLED IN VALUE SINCE THEN, JUST IN DECEMBER OF LAST YEAR, IT WAS WORTH $180 BILLION. IT HAS BEEN GOING UP IN VALUE. IT HAS NUMEROUS CONTRACTS WITH NASA FOR THE ES. THE MOON, ITS STARLINK PROGRAM, ITS SATELLITE PROGRAM TERM WITH A GOVERNMENT CONTRACTS FOR THAT AS WELL. SO IT CERTAINLY IS A COMPANY THAT HAS NO LACK OF CONTRACTS FROM DIFFERENT GOVERNMENTS AROUND THE WORLD. AND DOING SO MUCH WORK IN THE SPACE INDUSTRY, ARTIFICIAL INTELLIGENCE STARTUP X I AS WELL. >> AND AS IS SET TO COMPLETE A FUNDING ROUND IN JUNE, AND THAT COULD PUT THE COMPANY'S VALUE AT $24 BILLION, ACCORDING TO REPORTS. CAN YOU TELL US MORE ABOUT THAT? >> YEAH. SO X X I THAT'S A COMPETITOR TO OPENAI. I THEY HAVE THE CHAT BOT THAT'S CALLED GROK. AND THAT WAS INTRODUCED LAST YEAR. AND THAT CHATBOT IS GOING TO IS USING DATA FROM X. SO THAT'S VERY IMPORTANT FOR THEIR MODELS, AS FAR AS THIS ROUND OF FUNDING, IT IS REPORTED THAT THE COMPANY IS, IS CLOSE TO SECURING OR ABOUT TO SECURE A $6.5 BILLION. THAT'S MORE THAN WHAT THEY ACTUALLY HAD SET OUT TO GET IN THAT FUNDING. AND REPORTEDLY, SOME OF THE BACKERS ARE LIGHTSPEED VENTURE PARTNERS, SEQUOIA CAPITAL, TRIBE CAPITAL. SO IT'S ON TRACK TO HIT THAT TARGET, AND IF SO, THIS WOULD VALUE THE COMPANY AT MORE THAN $24 BILLION. ELON MUSK HAS SAID IN THE PAST THAT HE WANTS THIS, MODEL FROM GROK, FROM OPENAI TO BE TRANSPARENT, TO BE TRUTH SEEKING AS POSSIBLE. HE'S CRITICIZED OPENAI. HE'S CRITICIZED OTHER MODELS BEFORE BECAUSE HE SAYS THAT THEY'RE TOO POLITICAL, POLITICALLY, POLITICALLY CORRECT. BUT LOOK, MAKE NO MISTAKE ABOUT THIS, I IT'S BEEN AT THE FOREFRONT CENTER, FRONT AND CENTER. AND GIVEN MUSK'S TRACK RECORD WITH SPACEX, WITH TESLA, YOU CAN IMAGINE THAT THERE'S A LOT OF INTEREST IN THIS COMPANY. >> CERTAINLY IS. ALL RIGHT, INES, THANKS SO MUCH FOR BREAKING THAT DOWN FOR US HERE. >> WE WANT TO TURN NOW TO THE FINANCIAL SECTOR. A NUMBER OF BANKS ARE SHIFTING THEIR RULES AROUND REMOTE WORK. THAT'S ACCORDING TO A REPORT OUT FROM BLOOMBERG HERE WITH THOSE DETAILS, YAHOO FINANCE'S DAVID HOLLERITH, DAVID SEANA CITIGROUP HSBC AND BARCLAYS BANK HAVE EACH SENT WORD TO MORE OF THEIR STAFFERS IN RECENT DAYS ASKING THEM TO RETURN TO THE OFFICE FIVE DAYS A WEEK. >> NOW CITI HAS HAS BEEN HAS ASKED ABOUT 600 MORE EMPLOYEES AS TO CHANGE ITS POLICY AND TO RETURN TO THE OFFICE. HSBC HAS ASKED ABOUT 530 AND BARCLAYS IN IN THEIR CASE IS ASKING, THOUSANDS OF THEIR, STAFFERS IN THE INVESTMENT BANK ACROSS THE WORLD. AND THAT'S ACCORDING TO BLOOMBERG. SO THIS IS NOTABLE. THIS IS A NOTABLE CHANGE GIVEN THAT THESE ARE BANKS THAT ARE KNOWN FOR HAVING MORE FLEXIBLE WORK FROM HOME POLICIES. AND ONE MAJOR PART OF THIS, REASON FOR THE ALL THESE MEMOS AND CHANGE IN POLICIES HAS BEEN A RULE FROM, WHAT'S THE US'S MAIN, WATCHDOG ON, BROKERS, FINRA? FINRA IS REINSTATING A POLICY THAT IT HAD SORT OF SUNSETTED DURING THE PANDEMIC, WHICH IS GOING TO BE ASKING FOR PERIODIC WORKPLACE INSPECTIONS, AND THAT'S GOING TO THAT THAT SORT OF CREATES A STICKING POINT TO WHERE THESE BANKS CAN EITHER KIND OF REGISTER WORK FROM HOME OFFICES OR, OR, THEIR EMPLOYEES OFFICES IN SOME CASES, OR THEY CAN ASK THE WORKERS TO COME BACK IN NOW BECAUSE THEY'RE PERIODIC, BANKS DON'T REALLY WANT TO MESS WITH THIS. AND, AND AS, AS BLOOMBERG HAS REPORTED, IT'S BECOME A BIT OF A SITUATION WHERE THEY'D PREFER TO BE SAFE THAN SORRY. AND ALSO COULD END UP COSTING THEM A LOT MORE IF THEY WERE HAD TO SORT OF DEAL WITH ALL THESE, WORK FROM HOME OFFICES, IT'S ALSO INTERESTING, GIVEN THAT, YOU KNOW, BANKING IN PARTICULAR IS AN AREA WHERE, THE RETURN TO WORK, WORKING REMOTE, SORT OF TOPIC SINCE THE PANDEMIC HAS BEEN PRETTY DIVISIVE, JPMORGAN CHASE AND GOLDMAN SACHS HAVE BOTH BEEN NOTABLE LEADERS IN, RETURNING BACK TO THE OFFICE IN OTHER CASES, SMALLER FIRMS HAVE HAVE BEEN ABLE TO ATTRACT MORE TALENT, BY ESSENTIALLY USING WORK FROM HOME POLICIES AS, AN EXTRA PERK. SO THIS IS AN AREA THAT'S ALWAYS KIND OF CHANGING, BUT IT GOES BACK TO THE FACT THAT THERE ARE SO MANY DIFFERENT KINDS OF JOBS IN FINANCIAL SERVICES AND EVEN IN BANKS, AND BECAUSE OF THAT, YOU KNOW, YOU HAVE THIS SITUATION WHERE SUMMER ARE HIGHLY REGULATED AND THEREFORE IT'S MUCH EASIER FOR THEM TO BE MANAGED IN OFFICE. >> YEAH. LOOK I'M OLD ENOUGH TO REMEMBER WHEN THE PERK WAS, HEY, YOU DON'T HAVE TO WEAR A SUIT EVERY DAY. AND THAT WAS ONE OF THE TALENT ACQUISITION TYPE OF STRATEGIES THAT THEY PUT OUT THERE. SO IT'S BEEN INTERESTING TO SEE HOW THIS HAS CONTINUED TO NAVIGATE, BE NAVIGATED AMONG THE BANKS WITH RETURN TO OFFICE, A HEAVY TOPIC OF CONTENTION AMONG THE EMPLOYEE AND EMPLOYER RELATIONSHIP. DAVID, THANKS SO MUCH FOR BREAKING THIS DOWN. APPRECIATE IT. WELL, OIL PRICES ARE SET FOR A WEEKLY LOSS AMID LINGERING CONCERNS SURROUNDING FUTURE FUEL DEMAND. AND WHILE TRADERS ALSO LOOK AHEAD TO THE OPEC PLUS OUTPUT POLICY MEETING IN JUNE, HERE TO DISCUSS THIS AND MORE, WE'VE GOT TOM KLOZA, WHO IS THE OPUS GLOBAL HEAD OF ENERGY ANALYSIS. TOM, GREAT TO HAVE YOU HERE WITH US AND THANKS FOR JOINING THE SHOW. FIRST, AS WE THINK ABOUT WHAT THE DISCUSSION MIGHT BE AT THIS NEXT MEETING HERE, WHAT ARE YOU GOING TO BE WATCHING FOR? MOST NOTABLY AT THIS NEXT OPEC+ GATHERING? >> WELL, I THE CONSENSUS VIEW IS THAT THEY'RE GOING TO ROLL OVER THEIR PRODUCTION CUTS THROUGH ANOTHER QUARTER, MAYBE THROUGH THE END OF THE YEAR. I WOULD SUBMIT THAT THEY NEED TO DO THAT OR THEY NEED TO DO MORE BECAUSE THE OIL MARKET HAS BECOME VERY, VERY SLOPPY IN THE LAST MONTH OR SO. THE STRUCTURE OF THE MARKET SEEMS TO INDICATE THAT, THAT THERE'S A LITTLE BIT TOO MUCH OIL AND, YOU KNOW, IT'S BEEN DISAPPOINTING. GASOLINE DEMAND, IN THE UNITED STATES RUNNING ABOUT ONE AND A HALF OR ONE POINT, AND THREE QUARTERS PERCENTAGE BEHIND LAST YEAR. >> SO, DON, WHAT DOES THAT THEN TELL US ABOUT THE LIKELY PRICING ACTION AHEAD. AND THEN WHEN THAT'S GOING TO TRICKLE DOWN TO THE PRICE OF GAS THAT SO MANY CONSUMERS ARE PAYING RIGHT NOW. >> YOU KNOW SEANA ACTUALLY WE'VE SEEN GASOLINE PRICES DROP BY AS MUCH AS A DOLLAR A GALLON IN THE LAST 40 DAYS OR SO. BUT THE RETAILERS HAVEN'T NECESSARILY PASSED THAT ALONG. SO YOU'VE SEEN A TRANSFER OF WEALTH FROM REFINING COMPANIES TO MARKETING COMPANIES. AND IT'S REALLY A GOOD TIME TO BE SELLING GASOLINE AT THE PUMP FOR INVESTORS THAT ARE TRYING TO GAME OUT HOW THEY CAN PLAY THE OIL AND ENERGY LANDSCAPE, HOW SHOULD THEY BE KIND OF EXECUTING THEIR STRATEGY GIVEN SOME OF THE MACRO FACTORS THAT YOU JUST MENTIONED? WELL, YOU KNOW, THE BIG THING THAT'S GOING TO HAPPEN THIS SUMMER IS GOING TO BE WHETHER JUNE, JULY AND AUGUST. I MEAN, IF WE GET HURRICANE THREATS IN THE GULF OF MEXICO, THE GULF OF MEXICO IS NOW THE SECOND MOST CRUCIAL CHOKE POINT IN THE WORLD. AND SO I WOULD SUBMIT THAT PROBABLY BY AUGUST, WE'LL SEE STRONGER OIL PRICES AND STRONGER GASOLINE PRICES. THE PROBLEM WILL BE IN THE LAST 100 DAYS OF THE YEAR. IT'S A LOT EASIER TO MAKE GASOLINE. THERE'S A LOT MORE CRUDE COMING OUT FROM GUYANA, BRAZIL, CANADA AND THE UNITED STATES. SO, I THINK THEY'RE OKAY FOR THE NEXT 90 DAYS. I THINK THAT OIL STARTS TO GET TESTED AND FLIRTS WITH SOME, LOWER NUMBERS. REALLY, IN THE LAST QUARTER OF THE YEAR. HOW MUCH LOWER? >> TOM, I THINK THAT PROBABLY MOST PARTS OF THE UNITED STATES, BY ELECTION DAY, AND IT HAS NOTHING TO DO WITH THE ELECTION, WILL BE, FLIRTING WITH $3 OR LESS. >> INTERESTING. OKAY AND SO, I MEAN, THAT REALLY CASCADES INTO THE MIND OF THE CONSUMER AND WHERE CONSUMERS ARE LOOKING ACROSS GAS PRICES, LOOKING ACROSS SOME OF THE MOST CYCLICAL PURCHASES THAT THEY MAKE AND THE ONES THAT THEY CAN'T AFFORD NOT TO. SO HOW DOES THAT PLAY INTO THE CONSUMER SENTIMENT AND MINDSET AS WELL HERE, WHERE WE'RE GETTING A FRESH READING ON THAT TODAY, LONGER TERM, IF WE DO HIT SOME OF THE TARGETS THAT YOU'RE TRACKING, I THINK THE CONSUMER'S DOING PRETTY WELL AND GASOLINE DOESN'T REALLY ALTER IT TOO MUCH. >> NOW, IF YOU'RE IN WESTERN STATES WHERE YOU'VE GOT $5.50, IT'S A LITTLE BIT DIFFERENT. BUT, YOU KNOW, IT'S MORE MYTHICAL THAN REAL. THIS NOTION OF A DRIVING SEASON THAT BEGINS THIS WEEK. AND I THINK IT WILL HAVE A LOT TO DO WITH THE COST OF HOTELS AND THE COST OF EATING OUT. THAT'S WHERE INFLATION IS STILL REARING ITS UGLY HEAD. GASOLINE PRICES PROBABLY THE FOURTH MOST EXPENSIVE MEMORIAL DAY WEEKEND EVER, BUT REALLY, NOTHING COMPARED TO SORT OF THE 2022 NUMBERS WHERE WE WERE AROUND $5 ITS NATIONAL AVERAGE. >> TOM KLOZA, OPUS GLOBAL HEAD OF ENERGY ANALYSIS TOM, THANKS SO MUCH. GREAT TO SEE YOU, NICE TO BE HERE. >> HAVE A GOOD WEEKEND. >> YOU TOO. >> WELL, THE WORLD IS EXCITED ABOUT ARTIFICIAL INTELLIGENCE, BUT WHAT'S GOING TO POWER IT? WE'RE GOING TO EXPLORE AN ALTERNATIVE ENERGY THAT MIGHT BE POWERING AI IN THE FUTURE. COMING UP ON THE OTHER SIDE. >> IT'S A JAM PACKED HOUR FOCUSING ON THE BIGGEST MOVERS AND SHAKERS ON WALL STREET. >> THIS IS MARKET DOMINATION. AND HERE EVERY DAY IS GAME DAY. >> WE HAVE ONE HOUR LEFT UNTIL THE MARKET CLOSES. >> IT'S GAME TIME FOR INVESTORS TO MAKE THEIR FINAL PLAYS. THE CLOCK IS TICKING AND WE'VE GOT YOU COVERED WITH OUR QUARTER BY QUARTER PLAYBOOK. WE'RE BRINGING YOU IN ON ALL THE MARKET ACTION WITH STEP BY STEP ANALYSIS OF OUR BIGGEST TRENDING TICKERS AND EXPERT INSIGHT INTO THE DAY'S BIGGEST HEADLINES. >> WE'LL BRING YOU THE CLOSING BELL AND GET YOU TO THE FINISH LINE. >> THIS IS MARKET DOMINATION. >> TUNE IN DAILY FROM 3 TO 4 P.M. EASTERN. >> I TAKES A LOT OF POWER. THE INTERNATIONAL ENERGY AGENCY FORECASTS THE GLOBAL ENERGY DEMAND FOR CRYPTO AND AI WILL DOUBLE BY 2026. BUT WHERE'S THAT ENERGY ALL GOING TO COME FROM? OKLO IS CREATING CLEAN ENERGY FROM FISSION REACTORS. THIS IS WHERE THE ATOM IS SPLIT IN A REACTOR. AND THEN IT MIGHT BE WHAT EVENTUALLY POWERS AI AND CRYPTO. WELL, AT LEAST THAT'S WHAT IT'S BANKING ON. AND IT HAS THE BACKING OF OPENAI CEO SAM ALTMAN AS ITS CHAIRMAN, JOINING US FROM THE NEW YORK STOCK EXCHANGE, WE'VE GOT JAKE DEWITT, WHO IS THE OKLO CO-FOUNDER AND CEO. JAKE, THANKS SO MUCH FOR TAKING THE TIME. FIRST, JUST BREAK DOWN FOR US. IN A NUTSHELL , HOW THIS HAPPENS. >> YEAH, THANKS FOR HAVING ME. >> I MEAN, IT'S PRETTY COOL. LIKE, RIGHT, TAKING A NEXT GENERATION NUCLEAR TECHNOLOGY THAT HAS A HUGE AMOUNT OF PROMISE AND POTENTIAL THAT CAN LITERALLY POWER THE PLANET FOR, FRANKLY, A BILLION PLUS YEARS WITH PROVEN RESERVES OF MATERIALS AND TECHNOLOGY. THAT'S BEEN DEMONSTRATED. SOMETHING I FELL IN LOVE WITH WHEN I WAS A KID, SOMETHING THAT GOT ME REALLY EXCITED TO WANT TO WORK IN THIS SPACE. AND IT WAS WHAT LED US TO START THE COMPANY BACK, YOU KNOW, 11 YEARS AGO AND KIND OF WHAT WE'RE WORKING TOWARDS NOW IS, YES, SORRY, I DIDN'T MEAN TO JUMP IN THERE, BUT I'M CURIOUS, JUST WHEN YOU TAKE A STEP BACK, JUST TALK TO US JUST ABOUT THE SIZE OF THIS OPPORTUNITY, ESPECIALLY WHEN YOU TAKE INTO ACCOUNT THE ENERGY THAT'S GOING TO BE NECESSARY TO POWER AI DEPLOYMENT TO POWER. >> THESE PRODUCTS HAVE YET TO COME ONLINE TO. >> YEAH, I MEAN, IT'S AN IT'S THE OPPORTUNITY SET IS SO HUGE RIGHT NOW. YOU'VE GOT A COUPLE THINGS GOING ON TOO. RIGHT. WE OBVIOUSLY TALKED ABOUT THE AI PIECE, WHICH IS MASSIVE. AND THAT BUILDS ON TOP OF THE ENERGY TRANSITION DRIVE THAT'S HAPPENING AS WE SPEAK AND HAS BEEN GOING ON FOR A FEW YEARS. THAT'S BEEN A LOT OF EXCITEMENT ABOUT WHAT THAT LOOKS LIKE AS WE TRANSITION TO SORT OF A CLEANER, MORE SUSTAINABLE FUTURE AND ELECTRIFYING EVERYTHING FROM TRANSIT TO EVERYTHING, HOW WE HEAT OUR HOMES. AND NOW YOU HAVE THIS MASSIVE PULL ON THE AI SIDE, AND THE AMOUNT OF ENERGY INCREASE RIGHT ON A PER AI USE. IT'S STILL SORT OF BEING SETTLED OUT IN A LOT OF CASES, BUT IT'S SEVERAL TIMES LARGER THAN JUST A SIMPLE QUERY. AND I THINK AS WE GET MORE AND MORE USE OF AI, IT BECOMES MORE AND MORE GENERALLY LIKE ACCESSIBLE. IT'S ONLY GOING TO INCREASE. IT'S SUCH A WORK FORCE AND SORT OF PRODUCTIVITY MULTIPLIER THAT YOU NEED TO DRIVE A TON OF ENERGY. AND WHAT WE'VE SEEN ON THE DATA CENTER SIDE IS A MASSIVE UPTAKE, WHERE THEY'RE BASICALLY TRYING TO GRAB ALL THE CAPACITY THEY POSSIBLY CAN, AND THERE'S A LOT OF INTEREST IN SAYING, HEY, WELL, WHAT CAN WE BRING TO GENERATE WITH US? SO, FOR EXAMPLE, BRINGING OUR REACTORS, BUILDING THEM NEXT TO OR WITH WHERE THESE DATA CENTERS ARE BEING DEVELOPED, OR IN SOME CASES WHERE WE'RE ALREADY BUILDING, BRINGING THE DATA CENTERS TO BUILD AROUND US. AND WHAT'S GREAT ABOUT THAT IS OBVIOUSLY THEY'LL TAKE THE POWER OFF THAT HELPS US SCALE AND GROW FORWARD AND DEPLOY MORE PLANTS, BUT ALSO OPEN THE DOOR TO SORT OF BRING IT TO OTHER MARKETS AS WELL. BUT THE AI PIECE IS JUST STAGGERING IN THE DEMAND. AND FRANKLY, THE NUMBERS ARE KIND OF, EYE WATERING IN SIZE. AND THEY JUST KEEP LIKE, KEEP GETTING BIGGER. >> AND SO WITH THAT IN MIND, WHAT IS THE REVENUE MODEL? HOW HOW CAN OKLO GET TOWARDS PROFITABILITY AND SUSTAIN THAT OVER TIME? >> YEAH, THIS IS A BIG THING WE FOCUS ON. WHEN WE STARTED THE COMPANY, IT WASN'T ABOUT SORT OF THE TRADITIONAL MODEL THAT NUCLEAR HAS. IT WAS ABOUT OFFERING SOMETHING THAT MAKES IT A LOT EASIER FOR CUSTOMERS TO BUY THE POWER THEY WANT FROM NUCLEAR SYSTEMS. IN OTHER WORDS, THE CLEAN, RELIABLE, SAFE POWER THAT NUCLEAR NATURALLY PRODUCES, WE JUST WANTED TO MAKE IT EASY FOR THEM TO BUY. SO WE DESIGN, OWN, OPERATE THOSE PLANTS AND SELL THE POWER THROUGH LONG TERM OFFTAKE AGREEMENTS. BASICALLY, POWER PURCHASE AGREEMENTS, VERY SIMILAR TO WHAT YOU SEE IN A LOT OF OTHER SORT OF ENERGY GENERATION TECHNOLOGIES, ESPECIALLY RENEWABLES. AND THAT ALLOWS, FOR EXAMPLE, A DATA CENTER COMPANY TO THEN ENTER INTO A LONG TERM POWER PURCHASE AGREEMENT, BUY POWER FROM OUR SYSTEMS WILL THEN BUILD THE PLANT, PRODUCE THE POWER THEY BUY IT OVER. OFTEN A 20 YEAR PERIOD, SOMETIMES MORE, MAYBE SOMETIMES LESS TO POWER THEIR DATA CENTER. AND THEN WE CAN ADD MORE FACILITIES WHERE WE GO TO SUPPORT THEIR GROWTH AS WELL. NOW THAT RECURRING REVENUE IS FANTASTIC BECAUSE THEN WE CAN PROJECT FINANCE AGAINST IT, WHICH IS HUGE. AND ON TOP OF THAT, WE HAVE ACCESS TO THE FANTASTIC INVESTMENT TAX CREDITS THAT EXIST, ALL OF WHICH ARE GREAT AMPLIFIERS FOR US, BUT NOT ENTIRELY NEEDED JUST TO BE SUCCESSFUL. BUT IT'S A BIG DEPARTURE FROM WHAT NUCLEAR IS TYPICALLY DONE IN TERMS OF BEING WHAT CUSTOMERS WANT, BUT ALSO HAVING THE BENEFITS ON THE BUSINESS SIDE OF THOSE RECURRING REVENUES FROM THOSE POWER SALES. AND THAT'S A MASSIVE DIFFERENTIATOR RIGHT NOW. WE STAND PRETTY UNIQUE IN THAT SPACE, OFFERING THAT KIND OF DYNAMIC. >> AND JAKE, WHAT ARE YOU HEARING JUST IN TERMS OF INTEREST AND HOW THOSE DISCUSSIONS THAT YOU'RE HAVING WITH THE AI AND DATA CENTERS, HOW THOSE TALKS ARE PROGRESSING AT THIS POINT? >> YEAH. SO WE'RE EXCITED. YOU KNOW, YESTERDAY AFTERNOON WE ANNOUNCED THE PARTNERSHIP WITH, WYOMING HYPERSCALE DATA CENTER PARTNER, VERY NEAT OPPORTUNITY THERE AS THEY LOOK AT DRIVING HIGH COMPUTE DENSITY, SORT OF ADVANCED LIQUID COOLING TECHNOLOGIES. ONE BIG THING WITH AI IS OBVIOUSLY DRIVING A MUCH HIGHER COMPUTE DENSITY ON A PER RACK BASIS AT THE DATA CENTER LEVEL, WHICH OPENS THE DOOR FOR A LOT OF ADVANCED COOLING TECHNOLOGIES, WHICH ACTUALLY OPENED THE DOOR FOR SOME INTERESTING INTEGRATIONS, NOT JUST ON THE ELECTRIC POWER SIDE WE CAN PRODUCE. SO THERE'S SOME COOL THINGS WHERE YOU CAN ACTUALLY USE HEAT FROM THE SYSTEM TO HELP DRIVE COOLING. THAT SOUNDS WEIRD, BUT IT'S ACTUALLY DOABLE, AND COMBINED, THOSE ARE SOME REALLY, YOU KNOW, PROMISING FEATURES OF NEXT GENERATION DATA CENTERS. SO WE'RE EXCITED ABOUT THAT ONE. WE HAVE MORE IN THE WORKS. THE PIPELINE HAS BEEN, VERY BUSY FOR US, IT FEELS LIKE THERE'S A LOT MORE DEMAND FOR POWER THAN CAN BE BROUGHT ONLINE, SO I THINK WE'RE GOING TO HAVE OUR HANDS FULL FOR QUITE A LONG TIME. JUST MEETING THE ENERGY NEEDS THERE, NOT TO MENTION ALL THESE OTHER OPPORTUNITIES THAT ARE COMING ON THE BROAD ENERGY TRANSITION PIECE. THE DATA CENTER SIDE IS OBVIOUSLY VERY, VERY EXCITING. BUT YOU ALSO HAVE TO LOOK AT THE FACTORY SIDE AS WE REINDUSTRIALIZE THE INDUSTRIAL BASE IN AMERICA. THEY NEED POWER TO DRIVE THESE THINGS, INCLUDING, BY THE WAY, MAKING THE CHIPS FOR AI. AS WE LOOK AT BRINGING THAT CHIP MANUFACTURING BACK INTO THE US. SO THERE'S JUST A HUGE AMOUNT OF OPPORTUNITY, ESPECIALLY IN WHERE WE'RE WE'RE SEEING THE INDUSTRIALIZATION OCCUR, ESPECIALLY IN STATES LIKE TEXAS, FOR EXAMPLE, OR OHIO, AND SO WE'RE PRETTY EXCITED ABOUT WHAT THAT OPPORTUNITY LOOKS LIKE AND ARE NOW VERY HAPPY TO BASICALLY BE ON THE TRACK TO TRY TO BUILD AS MANY THINGS AS WE CAN AS QUICKLY AS WE CAN. >> WE LOOK FORWARD TO KEEPING HOPEFULLY THIS CONVERSATION GOING HERE AND HAVING YOU BACK IN THE FUTURE. OKLO COFOUNDER AND CEO JAKE DEWITT, THANKS SO MUCH FOR JOINING US HERE. >> THANK YOU SO MUCH. >> WELL, OPENAI EXECUTIVES ADDRESSING EMPLOYEE CONCERNS AFTER A SLEW OF CONTROVERSIES, ACCORDING TO BLOOMBERG, THE COMPANY APOLOGIZING FOR SECTIONS OF ITS CONTRACT TYING FORMER EMPLOYEES EQUITY TO AN AGREEMENT TO NOT DISPARAGE THE COMPANY. NOW, THE WORDING HAS SINCE BEEN CUT OUT FROM ITS CONTRACT AND ADDRESSING ALSO ALLEGATIONS BY SCARLETT JOHANSSON THAT SHE'S SAYING THAT THE COMPANY USED A VOICE QUOTE EERILY SIMILAR TO HER OWN IN ITS AI VOICE ASSISTANT TOOL IN OPENAI CEO SAM ALTMAN, SAYING THAT HE NEVER INTENDED THE VOICE TO SOUND LIKE THE SA. AND THIS AFTER SHE REJECTED AN OFFER BY ALTMAN TO BE A PART OF THE PROJECT. SO LOTS OF REPORTING GOING ON ABOUT THIS HERE, BRAD AND I WAS JUST LOOKING AT A WASHINGTON POST ARTICLE HERE, PUSHING BACK ON THAT NOTION, SAYING OPENAI ISSUED A CASTING CALL LAST MAY FOR A SECRET PROJECT TO FIND THIS HUMAN VOICE. THE FLIER, I GUESS, IN TERMS OF THE REQUEST, SAYING THAT THEY WERE LOOKING FOR ACTORS SHOULD BE NONUNION. THEY SHOULD SOUND BETWEEN THE AGES OF 25 AND 45 YEARS OLD, AND THEIR VOICES SHOULD BE, QUOTE, WARM, ENGAGING AND CHARISMATIC. AND THE AND SO LOTS OF CONTROVERSY JUST AROUND MANY PEOPLE ARE SAYING THAT VOICE SOUNDS A LOT LIKE SCARLETT JOHANSSON'S DID IN HER. IT IS SIMILAR. YOU'VE GOT A SMIRK ON YOUR FACE. >> YEAH, BECAUSE THE MOVIE COMES TO MIND. HER I MEAN, THAT'S WHAT THEY WERE LEANING DIRECTLY INTO. AND IT'S ALSO, I MEAN, WORTH NOTING THAT SO MANY ACTORS, ACTRESSES, FILM WORKERS WERE PUSHING BACK AGAINST ARTIFICIAL INTELLIGENCE AND HOW THAT COULD THREATEN THEIR JOBS IF THEY DIDN'T WITHIN THE COLLECTIVE BARGAINING AGREEMENTS. AND THE WAVE OF DIFFERENT CBAS AND UNION RENEGOTIATIONS AND TALENT RENEGOTIATIONS THAT TOOK PLACE LAST YEAR, MAKING SURE THAT THEY WOULDN'T BE UPENDED BY ARTIFICIAL INTELLIGENCE, REPLACING THEIR NAME, IMAGE OR LIKENESS OR PERFORMATIVE ELEMENTS AS WELL HERE. AND SO, THIS, THIS AGAIN, WHERE SCARLETT JOHANSSON, I THINK HAS THE RIGHT TO AND, AND FULLY HAS THE RIGHT TO PUSH BACK ON WHAT SOUNDS EERILY LIKE HER VOICE, AND THERE'S KIND OF SOME CROSSOVER IN THE USE OF HER IN THIS ENTIRE DISCUSSION. BUT AT THE END OF THE DAY, IT'S A LARGER QUESTION OF FOR OPENAI FOR ALL OF THE OTHER ASSISTANTS THAT THEY WANT TO CREATE OR ANY ARTIFICIAL INTELLIGENCE GENERATIVE AI TYPE OF APPLICATION WANTS TO CREATE, HOW THEY ALSO HAVE TO MAKE SURE THAT THEY ARE, YOU KNOW, AVOIDING ANY POTENTIAL PITFALLS IN THE CREATION OF THAT AND SOUNDING TOO CLOSE TO SOME OF THE OTHER ACTORS OR ACTRESSES OUT THERE. AND IT SOUNDS LIKE THEY TRIED TO DO THAT AT LEAST WITH THE KIND OF OPEN CALL FOR TALENT TO AUDITION. YEAH, MAYBE. >> AND THEN YOU ALSO HAVE THIS OTHER HUGE ISSUE THAT YOU'LL. I'LL AUDITION. >> WHY NOT? THEY DIDN'T CALL ME. >> MAYBE NEXT TIME. >> NEXT TIME. YEAH. >> NEXT ITERATION. >> I MEAN, THIS IS THIS IS .40, RIGHT? SO I'LL BE ON DOT FOUR FIVE. YOU GOT A LOT OF. >> EXACTLY. AND THEN ALSO IT'S IMPORTANT TO POINT OUT WHAT ELSE IS GOING ON WITHIN THE COMPANY BECAUSE THAT IS TO DO WITH FORMER EMPLOYEES. A STARTUP. IT'S CHANGING POLICIES FOR OUTGOING EMPLOYEES. OPENAI APOLOGIZED FOR SOME OF THE RESTRICTIONS THAT THEY HAVE HAD IN THEIR EXIT CONTRACT, SAYING THAT, QUOTE, WE ARE SORRY FOR THE DISTRESS THAT THIS HAS CAUSED PEOPLE WHO HAVE WORKED FOR US. THIS IS CHIEF STRATEGY OFFICER JASON KWAN, WHAT HE SAID IN A STATEMENT, WE'VE BEEN WORKING TO FIX THIS AS QUICKLY AS POSSIBLE. WE WILL WORK EVEN HARDER TO BE BETTER, SO WE'LL SEE WHETHER OR NOT THAT'S ENOUGH TO SATISFY THOSE EMPLOYEES OUT THERE. ALL RIGHT. WELL, COMING UP, HOW DO INVESTORS KNOW WHAT RETAIL STOCKS TO INVEST IN? OUR NEXT GUEST HAS THE TRENDS THAT YOU SHOULD WATCH TO SEPARATE THE STRONG NAMES FROM THE WEAK. AND SOME OF THE COMMON THEMES THAT YOU SHOULD BE LOOKING FOR. WE'LL BE RIGHT BACK. >> FROM CREATING GRAPHICS CARDS FOR GAMING TO BECOMING ONE OF THE WORLD'S LEADING AI CHIP COMPANIES, IT'S SAFE TO SAY NVIDIA IS OFFICIALLY ONE OF THE TECH GIANTS. IN 2023, THE COMPANY GENERATED NEARLY $27 BILLION IN REVENUE, AND ITS MARKET VALUE IS WELL OVER $1 TRILLION. LET'S TAKE A CLOSER LOOK AT WHAT LED TO NVIDIA'S BOOM WITH BEYOND THE TICKER, WHERE WE DIVE INTO THE COMPANY'S BIGGEST MOMENTS. NVIDIA WAS FOUNDED ON APRIL 5TH, 1993, BY JEN-HSUN HUANG, CHRIS MALACHOWSKY, AND CURTIS PRIAM WITH A VISION TO BRING 3D GRAPHICS TO THE GAMING INDUSTRY. IN 1997, NVIDIA LAUNCHED ITS FIRST HIT PRODUCT, THE ENV3. IT WOULD LATER GO ON TO SELL A WHOPPING 1 MILLION UNITS IN ITS FIRST FOUR MONTHS OF AVAILABILITY. ON JANUARY 22ND, 1999, NVIDIA WENT PUBLIC VIA IPO AT $12 PER SHARE, AND IN 2000, MICROSOFT CHOSE NVIDIA TO DEVELOP THE GRAPHICS HARDWARE FOR THE FIRST XBOX CONSOLE. FIVE YEARS LATER, MICROSOFT'S RIVAL SONY CHOSE NVIDIA'S HARDWARE TO POWER THE PLAYSTATION THREE. IN 2010, NVIDIA BECAME THE GRAPHICS CHIP SUPPLIER FOR AUTO MAKER AUDI, AND IN 2015, THE COMPANY LAUNCHED ITS NVIDIA DRIVE CHIP FOR POWERING DRIVER ASSISTANCE TECHNOLOGIES. IN 2016, NVIDIA KICKED OFF ITS AI EFFORTS WITH THE LAUNCH OF THE DGX ONE. TWO YEARS LATER, THE COMPANY DEBUTED NVIDIA RTX, THE FIRST GPU CAPABLE OF REAL TIME RAY TRACING. THAT SAME YEAR, GOOGLE ANNOUNCED IT WAS USING NVIDIA'S TESLA P4 GRAPHICS CARDS FOR ITS GOOGLE CLOUD PLATFORM. IN 2022, NVIDIA DEBUTED ITS H100 GRAPHICS CHIP FOR AI, WHICH STILL STANDS AS ONE OF THE WORLD'S MOST POWERFUL CHIPS FOR ARTIFICIAL INTELLIGENCE APPS. AND IN MAY 2023, NVIDIA ECLIPSED THE $1 TRILLION MARKET CAP MARK, JOINING THE RANKS OF MEGA COMPANIES LIKE APPLE AND MICROSOFT. THE STOCK CONTINUES TO SURPASS ITS ALL TIME HIGHS OVER THE PAST MONTH, AND IS CURRENTLY TRADING AT OVER $700 PER SHARE FROM A COMPANY OF THREE ENGINEERS WORKING ON GRAPHICS CARDS TO THOUSANDS OF EMPLOYEES WORKING ON CHIPS THAT WILL POWER THE AI SUPERCOMPUTERS OF THE FUTURE. NVIDIA REMAINS AT THE TOP OF THE TECH INDUSTRY. >> WE'VE HEARD FROM MOST OF THE MAJOR RETAILERS THIS EARNINGS SEASON. A COMMON THEME AMONG THESE COMPANIES, WHETHER THEY MEET, BEAT, OR MISS EXPECTATIONS AND THE WEAKENING CONSUMER. SO HOW CAN INVESTORS TAKE THIS KNOWLEDGE INTO ACCOUNT WHEN CONSIDERING ADDING RETAIL NAMES TO THEIR PORTFOLIO? JOINING US NOW LIVE IN LIVING COLOR. WE'VE GOT ERIC FISH, HSBC, U.S. HEAD OF RETAIL AND APPAREL. GREAT TO SEE YOU HERE TODAY. >> YOU TOO. >> THANK YOU. SO INVESTORS WANT TO KNOW HOW CAN THEY EFFECTIVELY KNOW IF A COMPANY IS STRONG ENOUGH TO WEATHER THE STORM OF SOME OF THE FADING CONSUMER SENTIMENT THAT WE'VE SEEN, EVEN AS EVIDENCED THROUGH TODAY'S UNIVERSITY OF MICHIGAN SURVEY? >> ABSOLUTELY. SO I THINK WHAT WE'VE SEEN OVER THE LAST COUPLE OF YEARS IS COMPANIES GET LEANER IN THE RETAIL SPACE. SO REDUCE INVENTORY, CUT EXPENSES AND REALLY CONCENTRATE ON THE HIGHEST MARGIN LINES THAT THEY HAVE. SO THAT'S WHAT I WOULD BE LOOKING FOR. MOST OF THE RETAILERS HAVE DONE EXACTLY THAT. INVENTORIES COME DOWN. MARGINS HAVE COME UP AND THEY'RE POSITIONING THEMSELVES TO NOT GET TOO HURT AS CONSUMERS ADJUST SENTIMENT. THE REAL QUESTION IS CAN THOSE RETAILERS POSITION THEMSELVES FOR GROWTH IF STOCK IS SO LOW, SO ARE THEY POISED FOR THE REBOUND. >> AND ERIC, HOW DO THEY WALK THAT FINE LINE. RIGHT. BECAUSE THEY WANT TO MAKE SURE OBVIOUSLY THAT THEY DON'T HAVE INVENTORY BALLOONING. BECAUSE THEN THAT OF COURSE LEADS TO POTENTIALLY MORE PROMOTIONAL ACTIVITY AHEAD. BUT THEY ALSO DON'T WANT IT TO WEIGH ON GROWTH AS WELL. AND JUST IN TERMS OF NOT BEING ABLE TO STOCK THE SHELVES. >> YEAH, IT'S A VERY FINE LINE. THESE PRODUCTS HAVE VERY LONG LEAD TIMES. SO YOU HAVE TO MAKE A DECISION NOW ABOUT HOLIDAY AND EVEN INTO SPRING. AND SO IT'S ABOUT STOCKING THE CORE STYLES ITEMS THAT, YOU KNOW, YEAR IN AND YEAR OUT. PERENNIAL PERENNIALLY WILL BE POPULAR. AND THEN MAKING, TAKING RISKS ON FASHION PRODUCTS AND HOPEFULLY NOT GETTING TOO HURT. >> THAT MEANS MY CLOSET IS NOT TAKING A TON OF RISKS, RIGHT NOW. I MEAN, IT'S JUST IT'S BASIC COLORS AND TEXTURES, FABRICS. IT'S LOOKING KIND OF BLAND. I'M TRYING TO, YOU KNOW, INSERT A LITTLE BIT MORE CREATIVITY INTO THERE. BUT WHAT DOES THIS MEAN FOR THE COMPANIES RIGHT NOW AND WHO IS BEST POSITIONED FROM YOUR PURVIEW. SURE. >> SO IN THIS INDUSTRY WHAT YOU HOPE FOR IS A CHANGE IN PEOPLE'S LIFESTYLE STYLE. SO LOCKDOWN, WE ALL ADJUSTED AND BOUGHT MORE PAJAMAS AND EVERYTHING ELSE EVERY DAY OR A CHANGE IN TREND. SO DENIM AS AN EXAMPLE IT WAS A SKINNY SILHOUETTE FOR A DECADE PLUS. AND NOW WE'RE GETTING A LOOSER STYLE, A LIGHTER MATERIAL , AND ALL OF A SUDDEN PEOPLE ARE TURNING OVER THEIR WARDROBES. AND SO THAT'S A GREAT POSITION FOR DENIM. >> HOW CRITICAL IS THAT PRODUCT INNOVATION? AND JUST DRAWING ON THE NEWS THAT WE HAD OUT EARLIER THIS WEEK, LULULEMON LETTING GO THEIR CHIEF PRODUCT OFFICER. LOTS OF QUESTIONS AND LOTS OF TALK JUST ABOUT WHAT ULTIMATELY THAT MEANS. THEN FOR LULU'S DESIGN, THEN GOING FORWARD WHEN IT COMES TO THAT CRITICAL PIECE OF INNOVATION, WHAT DOES THAT MEAN? HOW IMPORTANT IS THAT IN ORDER JUST TO DRIVE THOSE SALES GOING FORWARD? >> YEAH, IT'S PRETTY KEY. AND THERE'S TWO AREAS I WOULD SAY OF INNOVATION. THERE'S STYLE INNOVATION. RIGHT. BEING AT THE BLEEDING EDGE OF THE TREND, BUT ALSO THAT MATERIALS INNOVATION, EVERYONE WANTS COMFORT. AND SO THAT'S PERMEATED EVERY ITEM WE HAVE, WHETHER IT'S THESE BLAZERS OR DENIM. AND SO CONTINUING TO SEE BOTH OF THOSE WORK IN PARALLEL COMFORT ALONG WITH TREND COMPANIES THAT ARE ABLE TO INTERSECT THOSE TWO ARE THE MOST SUCCESSFUL. >> WHAT ABOUT PROMOTION? WHAT ARE WE EXPECTING OF THE PROMOTIONAL ENVIRONMENT AS CONSUMERS ARE LOOKING FOR VALUE HACKS, LOOKING FOR DEALS RIGHT NOW? >> YEAH. SO AT THE REGULAR PRICE, PRODUCT PROMOTIONS ARE GOING TO BE STRATEGIC. SO THERE'S NOT THAT MUCH EXTRA PRODUCT OUT THERE. AND SO COMPANIES ARE GOING TO USE IT AS A TOOL TO GET SHOPPERS IN AT THE VALUE END OF THE CHAIN. SO OFF PRICE, THAT'S WHERE A LOT OF CONSUMERS HAVE REALLY BEEN ATTRACTED OVER THE LAST FEW YEARS. MORE TO OFF PRICE, LOOKING FOR BRANDS THAT THEY LIKE AT MUCH REDUCED PRICES. AND SO THAT'S A GREAT OPPORTUNITY BOTH FOR INVESTORS BUT ALSO FOR CONSUMERS. >> AIRFISH GREAT TO HAVE YOU HERE ON SET WITH US. HSBC'S U.S. HEAD OF RETAIL AND APPAREL. THANKS SO MUCH. >> THANK YOU. >> I WANT TO BRING YOU THE LATEST ON NVIDIA REPORTEDLY SLASHING THE PRICE OF ITS MOST ADVANCED AI CHIPS FOR THE CHINESE MARKET AS PRESSURES FROM COMPETITOR HUAWEI MOUNT. THIS IS ACCORDING TO A LATEST REPORT OUT FROM REUTERS. AND IT COMES AS NVIDIA SAYS THAT IT IS SEEING SALES IN CHINA DOWN TO A MID SINGLE DIGIT PERCENTAGE OF ITS DATA CENTER REVENUE. SO AGAIN, SOME PRESSURE HERE FROM DOMESTIC PLAYERS WHEN IT COMES TO HUAWEI'S CHIP. NOW IN THIS REPORT, BRAD REUTERS SAYING THAT NVIDIA HAS BEEN SELLING ITS H20 CHIP IN CHINA, HAS BEEN SOLD AT A MORE THAN 10% DISCOUNT RELATIVE TO ITS RIVAL, HUAWEI'S ASCEND 910 B YEAH, AND THAT IS THE MOST POWERFUL AI CHIP THEY NOTE FROM A CHINESE COMPANY, ACCORDING TO SOURCES THAT WE'RE SPEAKING WITH REUTERS AS WELL, WHO DECLINED TO BE IDENTIFIED. >> BUT ONE OF THE OTHER HUGE THINGS IS JUST THE SIZE OF THIS AI INDUSTRY. IT'S PROJECTED TO GET BY 2035 TO EXCEED 30. IN TERMS OF CHINA'S GLOBAL SHARE OF THE AI INDUSTRY. AND THAT'S FROM A CHINESE MARKET RESEARCH FIRM, SEASIDE CONSULTING. SO THIS IS AN INCREDIBLY IMPERATIVE REGION FOR NVIDIA AND OTHER CHIP MAKERS TO GET RIGHT IN TERMS OF THE PRICING AND THEN THE LONG TERM CUSTOMER LIFETIME VALUE, THE CLV FOR WHERE THEY'RE SELLING THEIR CHIPS INTO AS WELL. >> YEAH, ONE OF THE RISKS ASSOCIATED WITH NVIDIA, TO SOME EXTENT, HAS BEEN THE CRACKDOWN ON U.S. CHIPS SOLD IN CHINA. AND THIS BACK AND FORTH TIT FOR TAT THAT WE'RE SEEING PLAY OUT BETWEEN THE U.S. AND CHINA WHEN IT COMES TO THAT GEOPOLITICAL RISK. EXACTLY WHAT THAT MEANS FOR NVIDIA, FOR AMD, FOR A NUMBER OF THE NAMES THAT YOU SEE ON YOUR SCREEN THERE, AND THEN JUST THEIR ABILITY TO COMPETE WITHIN CHINA, WHICH IS A CRITICAL REGION FOR MANY OF THESE U.S. PLAYERS HERE GOING FORWARD. BUT AGAIN, NVIDIA, WHEN YOU TAKE A LOOK AT THESE RESULTS, AT LEAST THE DEMAND THAT THEY ARE SEEING ELSEWHERE CLEARLY OUTWEIGHING THOSE RISKS, AT LEAST FOR NOW. AND YOU'VE GOT NVIDIA SHARES STILL TRADING ABOVE A THOUSAND BUCKS A SHARE. ABSOLUTELY. >> WELL COMING UP EVERYONE, WE'VE GOT SOME WEALTH FOR YOU DEDICATED TO ALL YOUR PERSONAL FINANCE NEEDS. HEY THAT GUY BRAD SMITH, HE'S GOT YOU FOR THE NEXT HOUR OF ME SPEAKING. THIRD PERSON. LOOK AT ME. IT'S LIKE A HOLIDAY WEEKEND IS RIGHT AROUND THE CORNER. STAY TUNED. WELCOME TO WEALTH, EVERYONE. I'M BRAD SMITH AND THIS IS YAHOO FINANCE'S GUIDE TO BUILDING YOUR FINANCIAL FOOTPRINT. OUR COMMUNITY OF EXPERTS WILL GIVE YOU THE RESOURCES, TOOLS, TIPS AND TRICKS THAT YOU NEED TO GROW YOUR MONEY ON TODAY'S SHOW. BIG NEWS ON THE HOUSING FRONT. MORTGAGE RATES CLOCKING IN BELOW 7% FOR THE FIRST TIME IN OVER A MONTH, WE'LL BREAK DOWN WHAT IT'LL MEAN FOR THE SPRING HOME BUYING SEASON AND ON THE ROAD AGAIN, HITTING THE ROADS THIS WEEKEND, WE'LL REVEAL THE GAS PRICES THAT YOU'LL BE PAYING OVER THE HOLIDAY WEEKEND, PLUS SUMMER TRAVEL. WE'LL BREAK DOWN HOW AMERICANS ARE PLANNING TO SPEND ON THE HOLIDAY OVER THE NEXT FEW MONTHS HERE. ALL THAT AND MUCH MORE COMING UP DURING TODAY'S SHOW. BUT LET'S GET BACK TO THOSE MORTGAGE RATES. THEY DID DIP BELOW 7% FOR THE FIRST TIME IN OVER A MONTH. SO IS IT TIME FOR BUYERS WHO WERE ON THE SIDELINES TO JUMP BACK IN THE GAME? JOINING US NOW WE'VE GOT MELISSA COHN, THE REGIONAL VICE PRESIDENT OF WILLIAM REEVES MORTGAGE. JOINING US HERE. GREAT TO HAVE YOU HERE WITH US MELISSA. SO PEOPLE NATURALLY HEAR OH WAIT WE'RE BACK BELOW 7. IS THIS THE TIME TO STRIKE? >> WELL THE ANSWER TO THAT IN MY EYES IS YES, BECAUSE WHEN AS RATES CONTINUE TO DROP AS WE HOPE THEY WILL THROUGH THE YEAR, MORE BUYERS ARE GOING TO COME BACK INTO THE MARKETPLACE. SO IF YOU WANT TO BE ABLE TO TAKE ADVANTAGE OF WHERE PRICE POINTS ARE TODAY, THEN NOW IS THE TIME TO BUY AND TAKE ADVANTAGE OF THESE RATES. WHEN RATES ARE LOWER, MORE BUYERS WILL COME BACK INTO THE MARKETPLACE BECAUSE OF THE INCREASED AFFORDABILITY AND PRICES ARE LIKELY TO GO UP NOT TO DISAGREE WITH YOU AT ALL, BUT TO MERELY ASK THE QUESTION DOES IT MATTER IF PEOPLE ARE GOING TO JUST LOOK TO REFINANCE LATER ON DOWN THE LINE? >> ANYWAY? >> IF YOU THINK ABOUT IT, IT'S REALLY A QUESTION OF DOING THE MATH. YOU KNOW, IF YOU HAVE TO PAY 3 OR $400 A MONTH MORE ON A MORTGAGE TODAY, BUT YOU WOULD HAVE TO PAY $10,000 OR $20,000 MORE FOR THAT HOUSE IN A YEAR, $400 A MONTH IS $5,000 A YEAR. IT'S PROBABLY CHEAPER TO BUY NOW AND THEN REFINANCE NEXT YEAR. >> CERTAINLY. OKAY SO WHERE COULD SOME OF THE HOT SPOTS REALLY EMERGE BASED ON WHERE WE'VE SEEN SOME OF THE BUYING ACTIVITY OR BIDDING ACTIVITY STILL REMAIN STRONG, YOU KNOW, I'VE SEEN A LOT OF, SORT OF IN THE OVER MILLION DOLLAR PRICE POINT. THERE SEEMS TO BE A LOT OF ACTIVITY THERE. YOU KNOW, HIGHER PRICE POINT, BORROW BUYERS THAT HAVE GREATER INCOME WILLING TO STEP IN AND PAY THE HIGHER MORTGAGE RATES TODAY TO TAKE ADVANTAGE OF WHAT THEY FEEL ARE LOWER REAL ESTATE PRICES. YOU KNOW, IN TODAY'S MARKET, YOU KNOW, THERE ARE ALSO A LOT OF PEOPLE THAT ARE JUST MOVING, PEOPLE WHO ARE RELOCATING FOR WORK, PEOPLE WHO WITH LIFE CYCLES ARE HAVING KIDS. THEY CAN NO LONGER STAY IN THEIR SMALLER HOME AND NEED TO MOVE AND THOSE PEOPLE ARE MOVING. >> WE SAW IN THE DATA FROM FREDDIE MAC THAT ALTHOUGH THIS WEEK'S DATA ON PREVIOUSLY OWNED HOME SALES SO EXISTING HOME SALES SHOWED A DECLINE, TOTAL INVENTORY OF BOTH NEW AND EXISTING HOMES IS UP AND FOCUSING IN ON THAT NEW HOMES ELEMENTS TO HAVE AS THAT'S TAKING ON EVEN MORE OF A PERCENTAGE THAN THAT THAN WE'VE SEEN IN HISTORICAL STANDARDS AND AVERAGES OF THE OVERALL HOME BUYING MARKET, HOW DOES THAT ALLEVIATE NOW, SOME OF THE PRESSURE ON PRICING? >> WELL, WHAT A LOT OF THESE NEW HOME BUILDERS ARE DOING IS THAT THEY'RE OFFERING INCENTIVES WITH REGARDS TO THE FINANCING. THEY'RE OFFERING TO PAY POINTS TO BUY DOWN THEIR RATES, OFFERING LOWER INITIAL RATE, MAKING IT MORE AFFORDABLE FOR SOMEONE TO BUY INTO THESE NEW HOMES. IF YOU'RE BUYING AN EXISTING HOME, A SELLER DOESN'T HAVE THE SAME ABILITY NECESSARILY TO GIVE YOU A LOWER RATE FOR YOUR MORTGAGE. >> WITH THAT IN MIND, AND WE'RE TAKING A LOOK AT SOME OF WHERE HOME SALES FELL IN APRIL ON SCREEN. ACCORDING TO THE NAR AND CENSUS BUREAU DATA, ONE OF THE OTHER AREAS THAT A LOT OF HOMEOWNERS ARE TRYING TO FIGURE OUT IS WHEN DOES IT FEEL LIKE THE RIGHT TIME TO LIST, ESPECIALLY AS THEY'RE TRACKING MORTGAGE RATES AS WELL? >> WELL, YOU KNOW, THAT'S A REALLY GOOD QUESTION. YOU KNOW, IF YOU ARE GOING TO BE ABLE TO, YOU KNOW, DO YOU NEED TO SELL NOW OR CAN YOU WAIT? YOU KNOW, IF YOU THINK THAT RATES WILL REALLY COME DOWN STRONGLY OVER THE COURSE OF THE NEXT YEAR AS WE ALL HOPE THEY WILL AND PRICES WILL GO UP? IF YOU CAN WAIT, DO YOU WANT TO WAIT TO LIST, YOU KNOW, IF YOU'RE GOING TO BE MOVING AND YOU HAVE A LOW INTEREST RATE, YOU KNOW YOU HAVE TO FIND THE HOME AT THE RIGHT PRICE. SO IF YOU'RE GOING TO WANT TO BUY LOWER TODAY, YOU'RE GOING TO HAVE TO SELL TODAY, AND IT'S REALLY JUST A QUESTION OF WHERE YOU'RE GOING TO FIND THAT HAPPY MEDIUM FOR YOU AS A SELLER. BECAUSE AS A SELLER, YOU'RE PROBABLY GOING TO BE A BUYER AS WELL. >> AND JUST LASTLY, RENTING VERSUS BUYING RIGHT NOW WITH MORTGAGE RATES SURE, COMING DOWN BELOW 7% BUT STILL SITTING RIGHT NOW AT A 30 YEAR, 6.94, DOES THAT KIND OF PLAY INTO FOR RENTERS OUT THERE? DOES THAT TO YOU SIGNAL THAT WE COULD SEE PEOPLE COME OFF THE SIDELINES IN DROVES WHO ARE CURRENTLY RENTING? >> I MEAN, THE ANSWER TO THAT SHOULD BE YES. >> AND IF YOU BUY NOW, TODAY AND YOU EXPECT THAT MORTGAGE RATES, LET'S SAY OVER THE COURSE OF THE NEXT TWO YEARS, COULD BE AS MUCH AS 2% LOWER THAN THEY ARE TODAY, THEN THE COST OF THAT HOME OWNERSHIP WILL ONLY DECLINE OVER THE COURSE OF THE NEXT FEW YEARS, AND YOU'LL HAVE THE ABILITY TO REFINANCE AND TO LOCK INTO A MUCH LOWER RATE, YOU KNOW, RENTAL WHEN YOU RENT, YOU HAVE NO EQUITY. YOU'RE ALL YOU'RE DOING IS YOU'RE BASICALLY, YOU KNOW, YOU'RE GIVING YOUR MONEY TO YOUR LANDLORD AND YOU'RE NOT BUILDING ANY EQUITY OR INVESTMENT FOR YOURSELF. >> YEAH. >> WELL, THANKS FOR REMINDING ME. MELISSA COHN, WHO IS THE REGIONAL VICE PRESIDENT OF WILLIAM RAVEIS MORTGAGE, THANKS SO MUCH FOR. LIKEWISE, THE POWER OF AI HYPE SPILLING FROM THE TECH WORLD INTO THE HOUSING MARKET OF SILICON VALLEY. AS ARTIFICIAL INTELLIGENCE BOOMS, SO TOO DOES THE DEMAND FOR LUXURY HOMES HERE WITH THE DETAIL WE'VE GOT YAHOO FINANCE'S REBECCA CHEN. HEY REBECCA. >> HEY BRAD. SO WE'VE SEEN LUXURY HOUSING DOING EXTREMELY WELL IN SILICON VALLEY LATELY. DATA IS SHOWING US THAT THERE'S BEEN AN 80% INCREASE IN THE NUMBER OF LUXURY HOMES SOLD IN SILICON VALLEY. AND BY LUXURY, I MEAN HOMES OVER $5 MILLION. I'VE ALSO CHATTED WITH LOCAL AGENTS WHO ARE SAYING THAT THEY'VE BEEN SEEING THEIR LUXURY LISTINGS, OR MANY OF THEIR LUXURY LISTINGS ARE GOING UNDER CONTRACT WITHIN SEVEN DAYS, AND MANY TIMES WITHOUT ANY CONTINGENCIES. SO WE'VE BEEN WONDERING WHY THIS HAS BEEN THE TREND AND WHY ALL OF A SUDDEN, ONE OF THE MARKET ANALYSTS WE SPOKE WITH SAID IT'S BECAUSE OF THE AI BOOM. WE ALL KNOW THAT AI BOOM IS HAPPENING RIGHT NOW, AND NASDAQ HAS A LOT OF STOCK THAT IS GOING UP IN PRICE, GOING UP IN PRICES. AND THESE EMPLOY EMPLOYEES WHO WORK IN SILICON VALLEY, HAS BEEN DOING EXTREMELY WELL. AND THAT IS WHAT'S MAKING THEM HAVING THE CONFIDENCE AND ALSO THE MONEY TO PURCHASE THESE HIGHER END PRICED REAL ESTATES, SO YOU KNOW, THIS HASN'T BEEN LIKE SOMETHING NEW IN SILICON VALLEY. WE'VE SEEN IN THE PAST THAT THERE HAS BEEN MANY BOOMS AND BUSTS IN, IN THE AREA. GIVEN HOW TECH HAS BEEN DOING. AND MANY TIMES THE REAL ESTATE TREND OFTEN FOLLOWS WHAT HAS BEEN HAPPENING DURING THE 2000 OR THE 1990S, 1995 TO 2000, WHEN THERE WAS THAT WHOLE INTERNET BOOM, HOW HOUSING PRICES ALSO INCREASED DURING THAT TIME AND THEN AGAIN BETWEEN 2014 AND 2020, WHEN SOCIAL MEDIA COMPANIES LIKE FACEBOOK AND INSTAGRAM WERE DOING EXTREMELY WELL, HOUSING AGAIN WENT UP DURING THAT TIME. SO NOW THIS TIME, WE BELIEVE THAT THE AI BOOM IS GIVING THE LUXURY MARKET ANOTHER BOOST IN SILICON VALLEY, AND PEOPLE ARE JUST GIVING HOW WELL AI HAS BEEN DOING. AND FROM THE LOOKS OF IT, IT WILL CONTINUE TO BE DOING PRETTY WELL GOING FORWARD, A LOT OF PEOPLE JUST IN THE AREA JUST HAVE CONFIDENCE, FOR THESE REAL ESTATE MARKETS. >> ALL RIGHT. >> ARTIFICIAL INTELLIGENCE, IT'S GIVING AS THE, AS THE YOUTH OUT THERE WOULD SAY LUXURY HOME MARKET BOOST. ULTIMATELY WE'LL SEE WHAT HAPPENS AND WHAT PRICES AS WELL THAT APPRECIATES THAT. THANKS SO MUCH REBECCA. BREAKING THAT DOWN FOR US. EVERYONE WE'LL BE RIGHT BACK WITH MUCH MORE WEALTH HERE ON YAHOO FINANCE. STAY TUNED. >> IT'S A JAM PACKED HOUR FOCUSING ON THE BIGGEST MOVERS AND SHAKERS ON WALL STREET. >> THIS IS MARKET DOMINATION. AND HERE EVERY DAY IS GAME DAY. >> WE HAVE ONE HOUR LEFT UNTIL THE MARKET CLOSES. >> IT'S GAME TIME FOR INVESTORS TO MAKE THEIR FINAL PLAYS. >> THE CLOCK IS TICKING AND WE'VE GOT YOU COVERED WITH OUR QUARTER BY QUARTER PLAYBOOK. >> WE'RE BRINGING YOU IN ON ALL THE MARKET ACTION WITH STEP BY STEP ANALYSIS OF OUR BIGGEST TRENDING TICKERS AND EXPERT INSIGHT INTO THE DAY'S BIGGEST HEADLINES. >> WE'LL BRING YOU THE CLOSING BELL AND GET YOU TO THE FINISH LINE. >> THIS IS MARKET DOMINATION. >> TUNE IN DAILY FROM 3 TO 4 P.M. EASTERN. >> YOUR FAVORITE COLLEGE ATHLETES COULD START GETTING PAID IN THE NEAR FUTURE. THE NCAA HAS AGREED TO A SETTLEMENT WHICH WILL CLEAR THE WAY FOR COLLEGE ATHLETES TO BE PAID DIRECTLY FOR THE FIRST TIME. SO LET'S GET INTO SOME OF THE DETAILS HERE. AS PART OF THE AGREEMENT, THE NCAA IS SETTLING THREE FEDERAL ANTITRUST LAWSUITS AND WILL PAY $2.77 BILLION IN DAMAGES OVER THE NEXT TEN YEARS. THIS PAYOUT WILL BE OPEN TO ALL DIVISION ONE ATHLETES GOING BACK TO THE YEAR 2016. OH, BY THE WAY, THERE'S BEEN ABOUT 14,000 CLAIMS FROM ATHLETES SINCE THEN. THE CATCH IS THAT ANY ATHLETE WHO RECEIVES A SHARE AGREES TO NOT BE PART OF ANY ANTITRUST LAWSUITS AGAINST THE NCAA IN THE FUTURE, ACCORDING TO ESPN. THE NCAA WILL BE HIRING A SPORTS ECONOMIST TO BUILD A FORMULA OUT TO FIGURE OUT HOW TO DIVIDE THE ALMOST $3 BILLION. BUT THAT'S ONLY HALF THE STORY ALSO ANNOUNCED YESTERDAY. THE NCAA AND THE FIVE LARGEST CONFERENCES, SOMETIMES REFERRED TO AS THE POWER FIVE, AGREED IN PRINCIPLE TO A REVENUE SHARING AGREEMENT WHICH WILL ALLOW EACH SCHOOL TO PAY THEIR ATHLETES. THE SCHOOLS WILL PAY 22% OF THEIR AVERAGE ATHLETIC DEPARTMENT REVENUE, WHICH COMES OUT TO ABOUT 21 TO $22 MILLION ANNUALLY. BUT HOW DID THEY CALCULATE THAT NUMBER? ACCORDING TO DOCUMENTS OBTAINED BY OUR COLLEAGUES AT YAHOO SPORTS, THEY TOOK THREE OF THE MOST SIGNIFICANT REVENUE STREAMS IN AN ATHLETIC DEPARTMENT TV CONTRACTS, TICKET SALES AND SPONSORSHIPS TO GENERATE AN AVERAGE FOR THE 69 POWER SCHOOLS. AND THAT AVERAGE CAME OUT TO ABOUT $100 MILLION. NOW, ALL OF THESE AGREEMENTS STILL NEED TO BE APPROVED BY THE JUDGE PRESIDING OVER THE THREE CASES, AND IT COULD BE MONTHS UNTIL EVERYTHING IS SETTLED. ALL THAT TO MEAN IF YOU'RE EXPECTING YOUR FAVORITE COLLEGE ATHLETES TO ALL GET PAID THIS FALL, YOU MIGHT BE DISAPPOINTED. SCHOOLS ARE EXPECTING TO START SHARING REVENUE IN FALL OF 2025. WELL, WITH THE LONG WEEKEND JUST ABOUT HERE, IF IT HASN'T STARTED FOR YOU ALREADY, TRIPLE A IS PROJECTING THAT OVER 43 MILLION AMERICANS WILL BE TRAVELING A DISTANCE OF OVER 50 MILES OVER THE NEXT FEW DAYS, MOST OF WHOM WILL BE DRIVING HERE TO LET YOU KNOW WHAT TO EXPECT AT THE PUMP THIS WEEKEND. WE'VE GOT OUR VERY OWN INEZ HAYNES. >> YEAH, BRAD. >> AND SIMPLY PUT, WELL, OIL PRICES HAVE BEEN DECLINING OVER THE LAST MONTH. WHEN WE TALK ABOUT GASOLINE PRICES, LET'S TAKE A LOOK AT WHERE WE'RE AT WITH THE AVERAGE. TODAY WE ARE LOOKING AT $3.61 PER GALLON. THAT IS AN AVERAGE BECAUSE IN OTHER PLACES YOU ARE SEEING PRICES A LITTLE BIT HIGHER, A LITTLE BIT LOWER THAN THAT. BUT LOOK FROM A MONTH AGO, PRICES ARE DOWN ABOUT $0.05 FROM A YEAR AGO. THEY ARE UP ABOUT $0.05 ON AVERAGE. NOW. ANDY LIPPO OF LIPPO ASSOCIATES HAD TOLD ME EARLIER THIS WEEK THAT HE EXPECTS TO SEE PRICES COMING DOWN BY ABOUT $0.05 OVER THE NEXT SEVERAL DAYS. PART OF THIS IS BECAUSE THE WHOLESALE PRICES HAVE BEEN COMING DOWN, AND PART OF IT IS ALSO BECAUSE OIL PRICES HAVE BEEN COMING DOWN, BUT NEVERTHELESS, AGAIN, THESE ARE AVERAGES. YOU DO HAVE DIFFERENT AVERAGES IN DIFFERENT STATES, ESPECIALLY ON THE WEST COAST, WHERE YOU TEND TO SEE THE PRICE. THE PRICIEST GASOLINE PER GALLON, AS FAR AS THE REST OF THE YEAR IS CONCERNED, THOUGH, LOOK, THE EXPECTATION THE EIA HAD SAID THAT EXPECTATION IS THAT THEY COULD YOU COULD SEE A 10% BUMP IN PRICES FOR AN% AVERAGE OF ABOUT $3.70 PER GALLON FOR THE DRIVING SEASON THIS YEAR. THERE ARE SOME ANALYSTS THAT THINK THAT THAT'S A LITTLE BIT HIGH. THEY'RE EXPECTING IT TO BE AROUND THE THREE MID THREES LEVELS, BUT REALLY WHAT IS GOING TO DETERMINE A LOT IS THE HURRICANE SEASON LATER THIS SUMMER. YOU COULD SEE PRICES SPIKE DUE TO THAT IN THE SUMMERTIME. >> YEAH THAT'S SYNONYMOUS WITH WHAT OPUS ENERGY PARTNERS WAS TELLING US EARLIER IN TODAY'S SHOWS HERE AS WELL. UNLESS TALKING ABOUT THE IMPACT OF WEATHER, THEY'RE EXCELLENT BREAKDOWN. YAHOO FINANCE HIS OWN VANESSA FORAY ON ALL THINGS OIL AND GAS. APPRECIATE IT. >> THANK YOU. >> WELL, THE SEC IS TAKING ITS FIRST STEP TOWARDS ALLOWING ETHER ETFS TO TRADE THE SECURITIES AND EXCHANGE COMMISSION, APPROVING APPLICATIONS FOR EIGHT ETHEREUM ETFS. HOWEVER THERE ARE FURTHER APPROVALS THAT ARE NEEDED BEFORE PRODUCTS CAN LAUNCH. BUT LET'S BACK UP FOR ALL OF SOME OF THE CRYPTO CURIOUS INVESTORS OUT THERE WHO ARE JUST STICKING THEIR FOOT OR TOES IN THE WATER HERE. WHAT IS ETHER? WITH A MARKET CAP OF OVER $450 BILLION? RIGHT NOW, IT'S THE SECOND LARGEST CRYPTOCURRENCY BEHIND BITCOIN. AND IT'S USED TO POWER THE ETHEREUM BLOCKCHAIN. BUT ETHER AND BITCOIN THEY DIFFER IN SEVERAL WAYS HERE. THE MOST IMPORTANT DIFFERENCE IS THAT THE ETHER AND BLOCKCHAIN AND BITCOIN BLOCKCHAINS RUN ON TWO DIFFERENT FRAMEWORKS USED TO POWER CRYPTO TRANSACTIONS ETHER. IT RUNS ON PROOF OF STAKE BITCOIN, PROOF OF WORK FOR BITCOIN TRANSACTIONS ARE VERIFIED BY COMPUTERS USING ELECTRICITY, SO-CALLED CRYPTO MINERS, WHILE FOR ETHERS NETWORK, THOSE SAME TRANSACTIONS ARE VERIFIED THROUGH A PROCESS KNOWN AS STAKING. NOW, STAKING IS LIKE PUTTING YOUR MONEY IN THIS CASE YOUR ETHER, INTO A POOL TO HELP KEEP THE NETWORK SECURE AND THEN VALIDATE TRANSACTIONS. AND IN RETURN FOR THIS, YOU HAVE A CHANCE TO GET MORE ETHER. THINK OF IT ALMOST LIKE INTEREST. THE SEC APPROVED 11 SPOT BITCOIN ETFS EARLIER THIS YEAR, AND HYPE AROUND THE CURRENCY LED TO BITCOIN REACHING AN ALL TIME HIGH HIGH OF OVER $73,000 BACK IN MARCH. THE SEC HAS JUST CLEARED THE WAY FOR EIGHT ETHER ETFS TO TRADE, PENDING SOME FURTHER APPROVALS, AND THIS DEVELOPMENT IS THE LATEST EXAMPLE OF SOME OF THE SUCCESS THE CRYPTO INDUSTRY IS HAVING IN WASHINGTON AS IT PUSHES FOR FRIENDLIER REGULATION AND GREATER FREEDOM TO LAUNCH NEW PRODUCTS. FOR YEARS, THE SEC DENIED APPLICATIONS TO CREATE SUCH ETFS TIED TO CRYPTOCURRENCY. SOME OF THOSE WINDS CHANGING. WE'VE GOT MUCH MORE ON WEALTH AFTER THE BREAK. YOU'RE WATCHING YAHOO FINANCE. WE'RE HEADING INTO MEMORIAL DAY WEEKEND AND INTO THE SUMMER, WHEN 72% OF AMERICANS PLAN TO TRAVEL. ACCORDING TO A NEW BANK OF AMERICA SURVEY. JOINING ME NOW IN STUDIO WITH SOME NEW FINANCIAL INSIGHTS INTO THE SUMMER TRIPS. WE'VE GOT MARY HEINZ DROEGE, WHO IS THE HEAD OF CONSUMER PRODUCTS AT BANK OF AMERICA. GREAT TO HAVE YOU HERE IN STUDIO WITH US. >> WELL, THANKS FOR HAVING ME. >> ABSOLUTELY. LET'S DIVE INTO THIS. I MEAN, HUGE EXPECTATIONS. EVERYBODY IS JUST TRYING TO MAKE SURE THAT THEY GET SOME R&R, GET SOME VACATION OVER THE COURSE OF THIS SUMMER. BUT HOW CAN THEY DO SO? AND WITH THE UNDERSTANDING OF WHERE THEY NEED TO FINANCIALLY PLAN ADEQUATELY? WHAT ARE SOME OF THE EXPECTATIONS HERE? >> YEAH, I MEAN, AS YOU SHARED, 72% OF AMERICANS ARE GOING TO HAVE A SUMMER VACATION THIS YEAR. ACCORDING TO THE BANK OF AMERICA SUMMER SURVEY. AND IN ORDER TO DO THAT EFFECTIVELY, THEY NEED TO HAVE A BUDGET, BECAUSE VACATIONS ARE EXPENSIVE. PEOPLE WANT TO GET OUT, AND WE HAVE LOTS OF SUGGESTIONS ON HOW TO DO THAT. I MEAN, 84% OF PEOPLE SAY THEY'RE GOING TO HAVE A BUDGET, BUT WHAT'S HARD IS ACTUALLY STICKING TO IT. AND ONE OF THE WAYS THAT YOU'RE ABLE TO DO IT IS REALLY LAYING OUT ALL THE DIFFERENT ASPECTS OF A VACATION. IT'S NOT JUST ABOUT TRANSPORTATION AND ACCOMMODATIONS. THINK OF EXCURSIONS AS SOUVENIRS. EATING OUT, AND THEN HOW CAN YOU MITIGATE SOME OF THE COSTS FOR THINGS THAT ARE LESS IMPORTANT TO YOU? FOR EXAMPLE, DINING CAN BE REALLY EXPENSIVE, SO WHY DON'T YOU SAVE THOSE EXPENSIVE MEALS FOR NIGHT AND BE A LITTLE LOW COST ON BREAKFAST? >> YOU KNOW, YOU TALK ABOUT WITHIN THE SURVEY PLANNING THE TRIP AS EARLY AS POSSIBLE, LIKE WHAT'S THE WHAT'S THE BEST RULE OF THUMB FOR PEOPLE TO ADEQUATELY FINANCIALLY PLAN AND PLAN AS EARLY AS POSSIBLE IN TERMS OF WHAT THAT TIME SPAN AHEAD OF THE VACATION SHOULD LOOK LIKE? >> WELL, WHAT OUR SURVEY SHOWED THAT IN APRIL, 36% HAD ALREADY PLANNED THEIR VACATION. AND WHAT'S REALLY IMPORTANT IN PLANNING TENDS TO BE TRANSPORTATION AND ACCOMMODATION. THOSE ARE THE THINGS, IF YOU WAIT TILL THE LAST MINUTE, GET REALLY, REALLY EXPENSIVE, BUT YOU CAN BE A LITTLE BIT MORE FLEXIBLE ON SOME OF THE OTHER THINGS. WAIT TILL YOU GET TO THE LOCATION AND DECIDE WHAT EXCURSIONS THAT YOU WANT TO HAVE. BUT PLANNING IS JUST IMPORTANT TOO, BECAUSE SOME THINGS ALSO SELL OUT. YEAH, YOU DON'T WANT TO GO TO THIS DREAM PLACE AND NOT GET TO DO THE ONE THING YOU WANTED TO DO. AND SO THE EARLIER PLAN, THE BETTER. >> AND SO WHERE ARE WE SEEING THE APPETITE FOR INTERNATIONAL VERSUS DOMESTIC? >> RIGHT NOW WE HAVE ABOUT TWO THIRDS OF TRAVEL PLANS ARE IN THE UNITED STATES, AND THEN ABOUT 38% OUTSIDE OF THE UNITED STATES. AND SOME PEOPLE ARE DOING BOTH. AS YOU CAN SEE, THOSE ADD UP TO ABOVE 100. WHEN WE LOOK AT INTERNATIONAL. WELL, WHAT'S REALLY POPULAR RIGHT NOW IS JAPAN. AND THAT'S REALLY WHEN YOU LOOK AT THE YEN RELATIVE TO THE STRENGTH OF THE DOLLAR, IT'S MAKING IT REALLY ATTRACTIVE ON SOMEBODY'S BUDGET, BUT ALSO CONTINUE TO SEE TREMENDOUS INTEREST IN CRUISES. OVERALL, ACCORDING TO THE BANK OF AMERICA INSTITUTE, TRAVEL SPEND THIS YEAR OVER LAST YEAR IS DOWN 1.5. HOWEVER CRUISES ARE UP 12. THESE ARE ESPECIALLY POPULAR WITH BOOMERS AND ENABLES YOU TO SEE A LOT OF INTERNATIONAL COUNTRIES AND ISLANDS AT A REALLY AFFORDABLE RATE. >> YOU KNOW, WE TALK OFTEN ABOUT THE GREAT WEALTH TRANSFER AND WHERE FUTURE GENERATIONS ARE GOING TO PERHAPS EVEN CHANGE THE FABRIC OF THE TYPE OF VACATIONS THAT WE'RE TAKING. WHAT ARE SOME OF THE ANTICIPATIONS THERE TO YEARS OUT FROM NOW? HOW THE TYPES OF VACATION OR EXPERIENCE ECONOMY AT WHOLE COULD SHIFT AS A RESULT OF NEW GENERATIONS COMING INTO MORE WEALTH? >> YEAH. WHAT'S INTERESTING, AND THIS IS A LOT OF THE HANGOVER FROM THE PANDEMIC, PEOPLE ARE PRIORITIZING EXPENSES AGENCIES OVER EVERYTHING ELSE. WE'RE SEEING, YOU KNOW, LOWER RETAIL SALES, LOWER ELECTRONIC PURCHASES. IT'S ALL ABOUT THOSE MEMORIES THAT THEY CAN DO WITH OTHER PEOPLE. AND WHEN YOU LOOK AT OUR YOUNGER GENERATION, THEY ARE MORE AND MORE DOING THINGS IN GROUPS AND REALLY GOING TO THOSE OUT OF THE NORM VACATION, SOMETHING UNIQUE. THEY CAN SHARE ON SOCIAL MEDIA, RIGHT? >> WERE THEY AT A GIRAFFE WALKING UP TO THE WINDOW AS THEY'RE EATING BREAKFAST? THINGS LIKE THAT? >> EXACTLY. YEAH. AND OUR CLIMBING A MOUNTAIN WITHOUT ROPES, LIKE ALL SORTS OF CRAZY THINGS. OH, NO. AND THAT TAKES A LOT OF MONEY. AND SO THE MORE THAT YOU SEE THAT WEALTH TRANSFER, THE MORE ENABLES IT. THERE'S ALSO SOME GREAT WAYS, EVEN BEFORE THAT WEALTH TRANSFER , THAT THINGS CAN BE MORE AFFORDABLE FOR THE YOUNGER GENERATION. YOU KNOW, I MENTIONED LIKE 28% OF PEOPLE TAKE THEIR TRIPS WITH FRIENDS BY DOING THINGS IN GROUPS. YOU CAN SHARE THE COST. SURE. YOU KNOW, INSTEAD OF HAVING INDIVIDUAL HOTEL ROOMS, WE'RE IN A HOUSE TOGETHER. IT MAKES IT A LOT MORE AFFORDABLE. >> JUST LASTLY, MARY, WHILE WE HAVE YOU HERE, THERE'S WAYS TO TAP INTO CREDIT CARD BENEFITS, TOO. I MEAN, YOU BUILD UP THE REWARDS FOR A REASON. SO HOW MANY PEOPLE ARE ACTUALLY PUTTING THOSE POINTS TO WORK CORRECTLY AS THEY'RE PLANNING THEIR VACATIONS OUT? >> OH, I MEAN, IT'S REALLY TREMENDOUS, AS WE SEE IN OUR OWN DATA, THAT THE VAST MAJORITY MAJORITY OF REWARDS REDEMPTION IS GOING TOWARDS TRAVEL. YOU KNOW, ABOUT 70% OF PEOPLE SAY THAT THEY WILL USE CREDIT CARDS WHILE THEY'RE TRAVELING, AND ABOUT A THIRD ARE PRIORITIZING THEIR TRAVEL REWARDS CARD. I'M GOING TO GREECE FOR TWO WEEKS WITH MY FAMILY, AND I AM USING THOSE REWARD POINTS TO OFFSET MY TRAVEL PURCHASES THAT I YOU KNOW, I EARN THOSE POINTS IN OUR CUSTOMIZED CASH REWARDS CARD, AND IT JUST MAKES YOU FEEL IT'S NOT FREE BECAUSE, RIGHT, YOU HAD TO SPEND TO GET THEM, BUT IT JUST MAKES IT YOU FEEL LIKE YOU'VE REALLY GOTTEN A GREAT DISCOUNT. AND THEN YOU, YOU KNOW, HAVE A MUCH NICER VACATION IF YOU GUYS NEED A VACATION PHOTOGRAPHER OR SOMETHING LIKE THAT. >> I GOT THREE LENSES. I CAN TOSS THEM IN THE BAG. OH, DONE. DEAL DONE. DEAL. GOT YOU COVERED, MARY HINES. JOSH, WHO'S THE HEAD OF CONSUMER PRODUCTS OVER AT BANK OF AMERICA. GREAT TO SEE YOU HERE. GREAT. >> THANKS FOR HAVING ME. >> ABSOLUTELY. THAT'S IT FOR WEALTH EVERYONE I'M BRAD SMITH, THANKS SO MUCH FOR WATCHING. GUESS WHAT. COMING UP WE'VE GOT STOCKS IN TRANSLATION. YES YAHOO FINANCE HOST JARED BLIKRE JOINED BY INFRASTRUCTURE CAPITAL ADVISORS CEO JAY HATFIELD ALONGSIDE YAHOO FINANCE REPORTER BROOKE DE PALMA TO DISCUSS GLOBAL MARKETS. STAY TUNED. >> WELCOME TO STOCKS AND TRANSLATION. YOUR ESSENTIAL CONVERSATION. CUTTING THROUGH THE MARKET. MAYHEM. THE NOISY NUMBERS AND HYPERBOLE TO BRING YOU THE INFORMATION YOU NEED FOR YOUR PORTFOLIO. TODAY I AM JOINED BY JAY HATFIELD. HE IS INFRASTRUCTURE CAPITAL ADVISORS CEO AND ALSO THE CIO OF TICKER SCAP AND BROOKE DE PALMA YAHOO FINANCE. HIS OWN. THANK YOU FOR JOINING US HERE TODAY, HERE'S WHAT WE'RE GOING TO TALK ABOUT ON THE DOCKET. WE'RE GOING TO TALK ABOUT CENTRAL BANKS. DON'T FIGHT THE ECB. GUESS WHAT? THAT'S WHAT OUR GUEST JAY SAYS. AND OUR WORD OF THE DAY IS LIQUIDITY KIND OF A LOADED TERM. THAT CAN MEAN A LOT OF THINGS. AND WE'RE GOING TO BREAK DOWN AS MUCH AS POSSIBLE, ALSO THIS EPISODE IS BROUGHT TO YOU BY THE NUMBER TWO. AND THAT'S BECAUSE THE 2% THAT'S THE FED'S INFLATION TARGET. AND WE'RE GOING TO ASK, IS IT RIPE FOR DISRUPTION NOW, JAY, WE WANT TO FOCUS ON CENTRAL BANKS HERE. SO TELL US WHERE DO YOU THINK WE ARE GLOBALLY. BECAUSE THIS IS A GLOBAL PHENOMENON. ALL THESE CENTRAL BANKS ACT INDEPENDENTLY. BUT THEY DO CONFER WITH EACH OTHER. AND THE ECB YOU'RE SAYING THE ECB MIGHT MOVE FIRST? >> YES. THANKS, JARED. AND BROOKE IT'S GREAT TO BE ON. SO WE HAVE A TOTALLY DIFFERENTIATED VIEW OF ECONOMICS AND THE MARKET BECAUSE WE FOCUS ON THE MONEY SUPPLY. AND SURPRISINGLY THE FED DOES NOT. IN FACT, THE FED CHAIR SAID IT DOESN'T MATTER. AND SO WHY THAT'S IMPORTANT. NORMALLY YOU CAN IGNORE THE MONEY SUPPLY BECAUSE IT JUST SORT OF MOVES UP WITH GDP, NOMINAL GDP. BUT WHEN THE FED INTERVENES LIKE IT DID DURING THE PANDEMIC, YOU HAVE TO FOLLOW THE MONEY SUPPLY. SO IF YOU DID THAT, BY THE WAY, YOU WOULD HAVE TRADED THE MARKET ABSOLUTELY PERFECTLY. AND IF YOU GO BACK AND LOOK, MOST OF OUR CALLS WERE PRETTY SPOT ON BECAUSE WE WERE LOOKING AT MONETARY POLICY AND THE FED WAS NOT. SO THEY WERE CALLING IT TRANSITORY. SO THAT'S THE MOST IMPORTANT THING, IS TO FOCUS ON THAT. RECENTLY THOUGH, REMEMBER WE HAD A BIG RUN UP IN INTEREST RATES LAST YEAR IN OCTOBER, WE STARTED TO GET A LITTLE BIT SMARTER BECAUSE WE TRIED TO ADAPT TO THE MARKETS AND SO WHAT WE DID IS SAID, WELL, WHY ARE RATES GOING SO HIGH? AND WHAT WE REALIZED IS THE ECB HAD ACTUALLY TAKEN 700 MILLION OF LIQUIDITY OUT WITHIN A WEEK OR SO, AND THEY NEED TO DO I MISSED THAT. YES. WELL EVERYBODY DID. IN FACT WE JUST UNCOVERED IT BY LOOKING AND THEN WE STARTED PUBLISHING THE GLOBAL MONETARY BASE, WHICH YOU CAN ONLY FIND ON OUR WEBSITE. ALL IT IS, IS ADDING ALL THE MONEY SUPPLIES THROUGHOUT THE WORLD. AND SO, SO SINCE THEN WE REALLY STARTED FOCUSING ON EUROPE. AND OUR REAL THESIS WAS THAT YOU KNOW, EVERY TIME THERE'S A FED TIGHTENING CYCLE, SOMETHING BREAKS, RIGHT? WE CAN ALL REMEMBER PARTICULARLY ME WHO'S OLDER LIKE ALL THE BREAKS. SO YOU HAD THE DOTCOM ETC. SAVING AND LOANS. THAT'S WHAT HAPPENS. YEAH TYPICALLY BUT SO OUR THESIS ACTUALLY FOR QUITE A WHILE HAS BEEN WHAT'S GOING TO BREAK IS EUROPE. AND THAT'S ACTUALLY SORT OF I MEAN NOT TO WISH THEM POORLY. THAT'S ACTUALLY GOOD FOR THE US BECAUSE IT'S DEFLATIONARY. AND THAT'S REALLY WHAT'S HAPPENED. THEY HAVE BASICALLY ZERO GROWTH. SO THEY'RE GOING TO CUT IN FACT LAGARDE SO THEY NEED TO CUT IT. SO THEY HAVE TO THEY HAVE THREE THREE OF THEIR MAJOR COUNTRIES THAT ARE IN RECESSION. SO IT'S A LITTLE BIT DIFFERENT THAN THE US WHERE PRETTY HOMOGENEOUS. IT'S NOT TRUE THERE. SO LAGARDE YESTERDAY EVEN REPEATED THAT SHE'S ESSENTIALLY CUTTING I MEAN THE WAY CENTRAL BANKERS SAY LIKE IT'S ALMOST 100% CERTAIN. AND SO THAT MAKES SENSE BECAUSE THEIR INFLATION IS PLUMMETING. AND SO THE RECENT DATA AND I DIDN'T EVEN KNOW THIS OR HADN'T MEMORIZED AT LEAST, IS THAT THE ECB IS ACTUALLY 30% OF THE GLOBAL MONETARY BASE. SO IS THAT BIGGER THAN THE FED. >> YEAH IT'S BIGGER. >> THE US IS ONLY 23. SO THE REASON WHY THIS IS AN INTERESTING OR SHOULD BE AN INTERESTING CONVERSATION IS THAT IT'S EASY AND PROPER REALLY, TO IGNORE THE REST OF THE WORLD WHEN IT COMES TO EQUITIES. LIKE NVIDIA IS GOING TO DRIVE THE CHINESE TECH MARKET TOMORROW. >> AND ADMITTEDLY, THAT'S WHAT WE'RE DOING HERE. AND BY THE WAY, THIS IS GOING TO BE RELEASED AFTER THE NVIDIA EARNINGS. SO WE'RE NOT GOING TO TRY TO TALK ABOUT IT THAT MUCH. BUT YOUR POINT TAKEN HERE WE'RE VERY US FOCUSED HERE IN THE US BECAUSE THAT'S WHERE THE TECH ACTION IS. RIGHT. >> AND IT DRIVES THE REST OF THE WORLD LIKE I'VE BEEN IN EUROPE TRADING STOCKS. OH MY GOSH. THE YOU KNOW EUROPEAN MARKETS GETTING SMASHED I BETTER HEDGE MY US PORTFOLIO. AND THEN THE US MARKET OPENS AND THEY DON'T CARE WHAT WAS GOING. >> VOLATILITY RECORD HIGHS. >> THEY DON'T YEAH THEY'RE NOT FOCUSED ON THAT. BUT YOU CAN'T DO THAT WITH BONDS. AND THE MONEY SUPPLY BECAUSE THEIR BONDS ARE VERY SIMILAR TO OURS. YOU KNOW THEY DON'T HAVE ANY TECH STOCKS LIKE OURS. BUT THEIR BONDS LIKE UK GILTS ARE THE SAME ESSENTIALLY AS YOU AS US TREASURIES. SO YOU HAVE TO LOOK AT THE GLOBAL MARKET WHEN IT COMES TO INTEREST RATES. WE'RE VERY FIXED INCOME FOCUSED. SO WE CARE A LOT ABOUT INTEREST RATES. AND SO THE ECB IS ABSOLUTELY GOING TO CUT. AND THE SECOND THING THAT NO ONE EVER TALKS ABOUT. AND THIS ALSO WE FOCUSED ON THIS BECAUSE I HAVE SOME HEDGE FUND FRIENDS AND I'M LIKE OH I DON'T CARE IF THE FED CUTS 25. IT'S IRRELEVANT. BUT THERE'S NO DIAL IN THE NEW YORK FED TO LOWER RATES. IN OTHER WORDS, THEY HAVE TO INJECT LIQUIDITY INTO THE BANKING SYSTEM TO LOWER THE OVERNIGHT RATE. >> YEAH, YEAH. >> GO AHEAD BROOKE, BREAK DOWN FOR PEOPLE. MAYBE THIS IS A FIRST TIME HEARING IT HERE. DOES IT MATTER WHO GOES FIRST AND HOW DOES THAT THEN IMPACT WHAT HAPPENS HERE. >> RATE CUTS. WHO'S CUTTING. >> YEAH. SO YOU KNOW NORMALLY WE WOULDN'T EVEN HAVE THIS CONVERSATION BECAUSE THE US DRIVES THE WHOLE REST OF THE. YEAH 100. >> LIKE YOU'RE SAYING THE OPPOSITE. >> YEAH. WELL RIGHT. SO THIS IS THE FIRST TIME IN HISTORY I MEAN THE ECB IS NOT THAT OLD, BUT THE FIRST TIME IN HISTORY WHERE SOMEBODY ELSE WILL LEAD LIKE JUST TO TAKE THE EXTREME EXAMPLE, YOU KNOW, HONG KONG HAS A DOLLAR PEG. SO IF WE RAISE OR CUT THEY DO IT LIKE 10S LATER BECAUSE THEY JUST HAVE TO BECAUSE THEY'RE, YOU KNOW, THEY'RE PEGGING AGAINST THE DOLLAR. BUT EVERYBODY IS KIND OF PEGGING AGAINST THE DOLLAR BECAUSE YOU DON'T WANT YOUR CURRENCY TO GET SMASHED. AND THAT'S HIGHLY INFLATIONARY. BUT IN THIS CASE, THE ECB IS GOING TO MOVE FIRST, WHICH SHOULD CAUSE THE DOLLAR TO APPRECIATE, EVEN THOUGH IT HASN'T REALLY BEEN APPRECIATED RECENTLY. BUT ONCE THEY ACTUALLY DO IN THAT LIQUIDITY IS COMING IN, THE DOLLAR SHOULD STRENGTHEN. WHICH IN EFFECT, EXPORTS DEFLATION TO THE US. >> OKAY. AND FOR THE FOR THE RECORD, I MEAN US HAS BEEN EXPORTING DEFLATION TO THE REST OF THE WORLD FOR DECADES NOW, RIGHT. JUST BECAUSE OF US DOLLAR HEGEMONY. I REALLY LIKE WHERE THIS CONVERSATION IS GOING. I WAS JUST WONDERING IF YOU COULD GIVE US MORE OF AN OVERVIEW OF SOME OF THE DIFFERENT MECHANISMS BY WHICH THE CENTRAL BANKS OPERATE, BECAUSE YOU SAID THE NEW YORK, THE NEW YORK FED DOESN'T HAVE A BUTTON THAT SAYS LOWER RATES. BASICALLY, THEY HAVE TO TARGET THE MONEY SUPPLY. THIS IS SOMETHING THAT VOLCKER DID BACK IN THE DAY. HE DID IT EXPLICITLY, BUT THESE THE TRANSMISSION MECHANISM IS THE FEDERAL RESERVE IS GOING TO BUY BONDS OR THEY'RE GOING TO SELL THEM, LET THEM ROLL OFF. AND THAT'S REALLY WHAT'S AT PLAY HERE. RIGHT. >> AND SO THE ONLY COMPLEXITY TO THAT IS THEY CAN DO LONG TERM BONDS OR SHORT TERM. SO THEY'RE ALWAYS DOING SHORT TERM. IT'S CALLED OPEN MARKET OPERATIONS. THEY'RE ALWAYS MANIPULATING. WELL THAT'S PROBABLY TOO STRONG A WORD. BUT I THINK IT'S MANAGING. YEAH. MANAGING THE FED FUNDS RATE TO BE IN THE IN THE CENTER OF THE OF THE RANGE. SO THEY'RE ALWAYS TRADING WITH THE STREET. AND IN FACT THIS IS A SURPRISING IT HASN'T HAPPENED BEFORE EITHER. THE FED WAS INJECTING SO MUCH LIQUIDITY BY BUYING LONG TERM BONDS. YOU KNOW WE GOT BULLISH WHEN THEY ANNOUNCED THAT. BUT THEY DID IT SO MUCH THEY ACTUALLY HAD TO NEUTRALIZE IT BY BORROWING IT BACK FROM SHORT TERM. SO THEY WERE DOING THIS LONG SHORT TERM TRADE. SO THAT'S THE ONLY THING YOU HAVE TO WATCH IS JUST WHAT PART OF THE BALANCE SHEET ARE THEY USING TO INJECT THE LIQUIDITY WITH. >> THAT REMINDS ME OF SOMETHING THAT I NOTICED EARLY ON. WELL, THIS IS ACTUALLY AFTER THE FACT, BUT IT WENT ON DURING THE GLOBAL FINANCIAL CRISIS THAT THE SUMMER OF 2008. OKAY, LET ME TAKE US BACK. BEAR STEARNS HAD FAILED, BUT LEHMAN BROTHERS HAD NOT FAILED YET. AND EVERYBODY AROUND THE WORLD WAS THINKING, ALL RIGHT, US IS GOING TO RAISE RATES, THEY'RE GOING TO DRIVE THE BUS, AND WE'RE GOING TO EMBARK ON THIS INTEREST RATE HIKING CYCLE NOW. BUT IT TURNS OUT THE FED WASN'T DONE BECAUSE THEY HAD, THEY HAD ENACTED ALL THESE EMERGENCY LENDING FACILITIES. AND THERE WAS 300 BILLION SHOVELED OVER HERE. BUT THEN THEY HAD TO TAKE 300 BILLION OVER HERE. SO THEY WERE SELLING TREASURY BILLS THAT HAD A HUGE LIQUIDITY DRAINING EFFECT. AND THE NET NET IS THAT WHILE LEHMAN BROTHERS FAILED, WAS IT DIRECT? I DON'T KNOW, BUT THERE WAS A LIQUIDITY CRISIS RIGHT AFTER EVERYBODY THOUGHT THINGS WERE GOING TO BE OKAY. RIGHT. AND I'M WONDERING, DOES THAT APPLY NOW, WELL, I THINK THAT THE FIRST THING I'D SAY IS THAT VERY FEW PEOPLE APPRECIATE THAT THE FED, WITH THEIR 2% TARGET, MADE THE GREAT FINANCIAL CRISIS DRAMATICALLY WORSE. AND THERE'S NOW RESEARCH PAPERS THAT DEMONSTRATE THAT. SO THE 2% TARGET WAS WAY TOO LOW. SO WE ALL KIND OF FORGOT. BUT THE FED RAISED RATES 17 TIMES IN A ROW BECAUSE INFLATION WAS AT RIGHT AT THE TARGET. SO IT DIDN'T USED TO BE AN AVERAGING TARGET. IT WAS THE LIMIT. SO THEY DID CREATE A LIQUIDITY SQUEEZE. AND TO YOUR POINT, WE DO BELIEVE WE'VE BEEN VERY BULLISH ABOUT THE ECONOMY OVER THE LAST THREE YEARS BECAUSE OF THE CYCLICAL INDUSTRIES. HOUSING AND AUTOS HAD HAD A SHORTAGE. BUT NOW THERE ISN'T A SHORTAGE AND IT'S STARTING TO ROLL OVER. SO WE DO BELIEVE, WHICH IS A BIT NON-CONSENSUS THE FED DOES NOT CUT RATES AND INCREASE LIQUIDITY , THAT WE WILL HAVE A MILD RECESSION NEXT YEAR AS AUTOS AND HOUSING CONTINUE TO MODERATE, WHICH DOES FEED THROUGH TO ALL THE LOWS AND THE OTHER SUPPLIERS TO THE HOUSING SECTOR. NOW, WE THINK THEY ARE GOING TO CUT. SO WE'LL BE OKAY. BUT THE GLOBAL ECONOMY IS SLOWING. IF YOU LOOK AT THE DATA, LABOR MARKET IS SOFTENING UP. SO WE THINK THE LIQUIDITY IS NEEDED AT THIS POINT. IF YOU JUST KEEP PUTTING LIQUIDITY IN, LIKE IN 2021, YOU GET A LOT OF ANOMALIES LIKE MEME STOCKS. AND YEAH BITCOIN GOING TO FOREVER. SO YOU DON'T WANT TO DO IT AT THE WRONG TIME WHICH THEY WERE. JAY WE THINK YOU NEED IT NOW REALLY QUICKLY. >> WHERE DOES THAT 2% TARGET COME FROM. >> YES. >> SO THAT'S A GREAT QUESTION. IT WAS COMPLETELY MADE UP BY THE NEW ZEALAND FED IN THE IN THE 70S. I DID NOT KNOW IT CAME FROM NEW ZEALAND. RIGHT. SO THEY JUST ARBITRARILY SAID, WELL IT'S GOT TO BE ABOVE ZERO. SO WE'LL PICK TWO. AND IT'S REALLY PROVEN TO BE A DISASTER, SINCE THAT WAS ENACTED IN THE MID 2000, IT'S TERRIBLE FOR THE MIDDLE CLASS. THEY DON'T WANT 10% INFLATION. JUST TO BE CLEAR, THAT WAS HORRIBLE. PARTICULARLY WHEN IT'S WHEN IT'S BECAUSE IT PUNISHES SAVERS. IT DOES. AND ALSO IT PUNISHES PEOPLE WHO DON'T OWN THEIR OWN HOMES. AND YOU'RE SEEING THAT NOW WHERE THE LOW INCOME CONSUMER CONSUMER WHICH IS. YEAH. WELL IT'S I HAVE A FLOATING RATE MORTGAGE SO I GET SQUEEZED. BUT MOST PEOPLE HAVE FIXED RATE MORTGAGES. SO HOMEOWNERS WE'RE CRUSHING IT. THEY'RE LIKE, OKAY, MY HOUSE, YOU KNOW, MY HOUSING PRICES ARE UP 20. YEAH. BUT I'M NOT PAYING ANY MORE MONEY. BUT MOST OF THE LOW INCOME PEOPLE DON'T OWN THEIR OWN HOUSE. OBVIOUSLY THERE'S A FEW THAT DO. SO THEY'RE REALLY GETTING SMASHED. SO 10% IS AWFUL. BUT 3 OR 4 IS GREAT BECAUSE YOU NOMINAL RATE WAGES GO UP, GIVES YOU MORE DISCRETION. AND SO IN OTHER WORDS YOUR WAGES GO UP AND IT GIVES YOU SOME DISCRETION. EVEN IF CHICKENS HIRE YOU CAN BUY SOMETHING ELSE. SO NOMINAL WAGES GOT SMASHED. AFTER THAT 2% TARGET WAS ENACTED. >> WHERE DO YOU THINK WE'RE AT NOW IN TERMS OF INFLATION, IN TERMS OF EVERYDAY AMERICANS BEING ABLE TO AFFORD THESE GOODS? I MEAN, WE'RE WE'RE HITTING ON THIS BEEF IS UP EVERYDAY. GROCERIES ARE STILL UP. THEY'RE STILL MOVING AT A HIGHER RATE. SO WHAT DOES THAT SIGNAL FOR THE FED HERE. >> RIGHT. WELL THE PROBLEM IS THE AVERAGE CONSUMER IS NOT AN ECONOMIST. SO AND WHAT I MEAN BY THAT IS THAT A PROBLEM I DON'T KNOW PROBABLY END UP WITH A LOT OF ECONOMISTS. PROBABLY GOOD. BUT THE POINT BEING THAT SO WE MEASURE INFLATION OVER THE LAST 12 MONTHS, BUT OVER THE LAST TWO YEARS OR THREE YEARS NOW, IT'S BEEN HORRIBLE. SO IF YOUR WAGES SO IF YOU WERE IN ARIZONA AND YOUR RENTS WENT UP 30% AND YOUR WAGES WENT UP 15, IT DOESN'T REALLY MATTER THAT IT STALLED OUT AND IT'S NOT GOING UP THAT MUCH. YEAH. SO THAT'S I THINK WHAT THE TALE OF TWO CITIES IS, IS THAT FROM AND THIS IS A POLITICAL ISSUE TOO, OF COURSE, BECAUSE A LOT OF LOWER INCOME CONSUMERS ARE EXTREMELY UNHAPPY. >> J I'M GOING TO ASK YOU TO PAUSE RIGHT THERE. REAL QUICK. WE NEED TO TAKE A BREAK. BUT COMING UP, YOU DON'T WANT TO MISS ANOTHER SCINTILLATING EPISODE OF WHO WORE IT BETTER. WE ARE TALKING INFLATION. WE'RE TALKING PCE VERSUS CPI. YOU WERE JUST EXPLAINING THE DIFFERENCE IN HOW SOME OF THE HOUSING COMPONENTS, SOME OF THE SHELTER COMPONENTS IN PCE, WHICH IS THE FED'S PREFERRED GAUGE, ARE DIFFERENT FROM CPI. AND THAT'S KIND OF WHAT I WANT TO EXPLORE RIGHT NOW. THOSE THOSE DIFFERENCES BECAUSE CPI GETS THE HEADLINES. AND TO BE FAIR IT'S RELEASED TWO WEEKS EARLIER THAN PCE. SO THERE'S A LITTLE BIT MORE DATA THAT WE HAVE FOR PCE. BUT WHAT ARE THE EFFECTS THAT THE WHAT'S THE EFFECT THAT THE FED FOLLOWING PCE CLOSER HAS ON THE MARKET, WELL, WE THINK THAT THE FED'S THE FED NEEDS TO BE REFORMED, THAT THEIR METHODOLOGY, NOT JUST THE 2% TARGET, BUT JUST LOOKING AT PCE CORE IS A MISTAKE. AND ALSO TO BE SO PRECISE, LIKE WHY NOT 2 TO 3. THEY'RE ALREADY DOING AVERAGING. AND THIS NOTION THAT THEY CAN SORT OF PERFECTLY LANDIS AT 2% IS LITERALLY RIDICULOUS. WE THINK. SO THAT'S THE FIRST PROBLEM. THE ISSUE WITH PCE. IT'S KIND OF INTERESTING. IN FACT, THE FED CHAIR TOLD US WHAT LAST MONTH. HE TOLD US WHAT PCE WOULD BE A WEEK BEFORE. AND IF YOU NOTICED THAT HE SAID IT'S GOING TO BE FLAT. YEAH, I MISS THAT. RIGHT. SO BUT THE REASON FOR THAT IS THAT AND YOU KNOW WELL I'M NOT ANYBODY CAN DO IT. BUT WE DO. IT IS IT'S NOT THAT HARD IS YOU JUST TAKE THE COMPONENTS OF CPI AND PPI AND THEN YOU WEIGHT THEM DIFFERENTLY. AND YOU CAN PREDICT PCE CORE WITHIN 0.2 OR SO. LIKE WE DON'T THINK IT'S GOING TO BE THAT GREAT. IT'S GOING TO BE 0.35 BASED ON WHAT'S ALREADY COME OUT. SO THAT'S THAT'S STRANGE. BUT THE BAD PART ABOUT IT, IT'S SORT OF GOOD BECAUSE IT'S A LITTLE BIT LESS SHELTER, BUT WHICH IS GOOD BECAUSE SHELTER IS JUST DISTORTED 42% IN PC HEADLINE AND IT'S ABOUT 15% IN CORE. SO THAT'S GOOD. BUT WHEN YOU TAKE 7% AND MULTIPLY IT TIMES SEVEN, WHEN IT'S REALLY ZERO, THAT DOES RAISE THE CORE RATE BY ABOUT 1. AND THAT'S WHY WE THINK INFLATION IS CONTAINED, EVEN THOUGH, IT'S NOT REPORTED THAT WAY. AND THE BLS NUMBER IS USED IN PCE JUST AT A DIFFERENT WEIGHT, I SHOULD ADD, THERE'S A LOT OF CONTROVERSY OVER THE WAY INFLATION IS MEASURED, AND I FOLLOWED SHADOWSTATS BY JOHN WILLIAMS OUTFIT BACK IN THE DAY DURING THE GLOBAL FINANCIAL CRISIS. >> AND, YOU KNOW, IF YOU MEASURE THINGS A LITTLE BIT DIFFERENTLY, YOU CAN COME UP WITH SOME PRETTY DIFFERENT RESULTS. AND IT'S A HOT BUTTON ISSUE BECAUSE IT AFFECTS PEOPLE'S POCKETBOOK. AND THAT'S WHAT WE'RE TALKING ABOUT HERE. I WANT TO MOVE ON TO LIQUIDITY BECAUSE THAT IS OUR WORD OF THE DAY. AND THERE ARE TWO MAIN MEASURES OF LIQUIDITY HERE. LET ME JUST GET TO THE INVESTOPEDIA DEFINITION AND I'LL PULL THAT UP FOR YOU RIGHT IN A SECOND, I APOLOGIZE FOR THIS. THERE WE GO. INVESTOPEDIA SAYS LIQUIDITY REFERS TO THE EFFICIENCY OR EASE WITH WHICH AN ASSET OR SECURITY CAN BE CONVERTED INTO CASH INTO READY CASH WITHOUT AFFECTING ITS MARKET PRICE. AND THAT'S KIND OF KEY THERE. WE CAN GO INTO THE DIFFERENT LIQUIDITY TYPES AND HOW IT'S USED. BUT I JUST WANTED TO GET YOUR FIRST BLUSH, IMPRESSED HERE ON LIQUIDITY. >> WELL, I THINK THE MOST RECENT EXAMPLE OF TERRIBLE LIQUIDITY WAS THE PANDEMIC. SURE SO DURING THE PANDEMIC, WE WOULD TRADE CERTAIN RIGHTS. THEY'D BE TRADING LIKE, YOU KNOW, $100 STOCK WOULD BE TRADING LIKE FOUR BUCKS WIDE. SO LIQUIDITY DID MELT DOWN DURING THE PANDEMIC. AND IN FACT, I USUALLY CRITICIZE THE FED, BUT IT WAS GREAT THAT THEY INTERVENED AND INJECTED ALL THAT CAPITAL BECAUSE WE WERE GOING TO CRASH LIKE WE WERE HEADED TO LIKE, I MEAN, THE ECONOMY WAS SHUT DOWN. THAT WAS A CERTAINTY. I MEAN, THE MARKET WAS PANICKING. EVERYBODY WAS SELLING. I MEAN, WE WERE GOING TO GO TO 1100 ON THE S&P. SO THEY DID NEED TO INTERVENE BECAUSE LIQUIDITY WAS HORRIBLE AND ALL MARKETS, YOU KNOW, EVEN LARGE LISTED NEW YORK STOCK EXCHANGE. NOW I THINK THERE IS A LITTLE BIT SOME LIQUIDITY ISSUES IN THE TREASURY MARKET. SOME OFF THE RUN SIDE. BUT THE EQUITY MARKETS ARE FUNCTIONING WELL. AND, YOU KNOW, HAVING YOU KNOW, ALL THESE THESE, YOU KNOW, INSTITUTIONS A LOT OF THEM IN NEW YORK, THESE HEDGE FUNDS DOING TRADING. EVERYBODY SORT OF HATES IT. BUT IT DOES PROVIDE A LOT OF LIQUIDITY TO THE MARKETS, WE HAVE DIFFERENT TYPES OF LIQUIDITY. SO HERE'S WHAT I WANTED TO HIGHLIGHT, SO WE HAVE IT IN ORDER FLOW. SO YOU WERE TALKING ABOUT BUYING AND SELLING STOCKS, YOU'RE THE INSTRUMENTS YOU WERE, WERE TRADING WERE 3 TO $4 WIDE. THAT MEANS WE'RE TALKING ABOUT SPREADS HERE. AND I WOULD BET THAT THOSE SPREADS ARE NORMALLY A COUPLE PENNIES SO THAT YOU'RE PAYING BASICALLY SOMEBODY ELSE THAT SPREAD THAT DIFFERENCE, FOR JUST EXECUTING THE, THE TRADE. AND IF YOU'RE ON THE OTHER SIDE AND YOU'RE A MARKET MAKER, THAT MIGHT WORK OUT WELL FOR YOU. BUT AS THE AS THE PERSON WHO WANTS TO OWN THAT THING, IT COULD BE A PROBLEM. AND I THINK WHEN WE TALK ABOUT CENTRAL BANK LIQUIDITY, CENTRAL BANKS WANT TO MAKE SURE THERE'S ENOUGH CASH IN THE SYSTEM. AND WE'VE BEEN TALKING ABOUT THAT. AND THEN EVEN IN THE CAPITAL MARKETS, WE TALK ABOUT LIQUIDITY EVENTS. WELL, GUESS WHAT THAT IS? THAT'S AN IPO. THAT'S WHEN COMPANIES BRING THEIR STOCK TO MARKET SO THAT THE INSIDERS OF WHATEVER UNICORN CAN GET OUT, THEY HAVE THEIR LIQUIDITY. THEY GET CASH FOR THEIR SHARES WHILE THE PUBLIC STARTS OWNING THE SHARES, JUST WONDERING WHAT YOU'RE OBSERVING IN THE MARKET RIGHT NOW. HOW DO YOU THINK, STOCK LIQUIDITY IS FOR INVESTORS? WE JUST SAW MEME STOCKS, YOU KNOW, KIND OF EXPLODE. SO MAYBE IT'S GOOD. IS THAT A GOOD THING? >> WELL, 11. TO MAKE IS THAT I THINK THE EXPLOSION OF ETFS IS REALLY AROUND THIS LIQUIDITY ISSUE BECAUSE ETFS HAVE MARKET MAKERS WHO ARE ARBITRAGING THE NET ASSET VALUE. AND SO WHAT THEY DO IS THEY WILL WHEN A STOCK TRADES ABOVE PAR OR FAIR VALUE, THEY WILL SELL IT TO WHOEVER WANTS TO BUY IT. AND THEN THEY'LL GO AND BUY ALL THE UNDERWRITERS AND THEN TRADE WHERE ETF ISSUERS. SO THEY'LL DO A TRADE WITH US TO OFFSET IT. SO IF YOU LOOK AT OUR ETFS, EVEN THE SMALLER ONES, THEY'LL TRADE LIKE 4 OR $0.05 WIDE WITH HUGE LIQUIDITY ON BOTH SIDES. AND THAT'S PROVIDED BY THE ETF PROVIDERS. SO BECAUSE OF THAT INNOVATION OF ETFS THE MARKET'S BECOME MUCH MORE LIQUID. AND ALSO INVESTORS GET LESS NERVOUS BECAUSE IT USED TO BE LIKE IF ALL OF YOUR FUNDS WERE VANGUARD AND YOU WANTED TO PULL THE PLUG, YOU KNOW, YOU PUT THE ORDER IN, IT DOESN'T GET EXECUTED UNTIL THE END OF THE DAY. SO I THINK THAT ETF MARKET, WHICH NOW KIND OF DOMINATES THE CAPITAL MARKET, HAS MADE THE MARKET SIGNIFICANTLY MORE LIQUID, AND PARTICULARLY FOR STOCKS THAT ARE IN THE INDICES, HAS IMPROVED LIQUIDITY. >> IS THERE ANY TYPE OF LIQUIDITY THAT'S NOT WIDELY DISCUSSED THAT YOU THINK OUR VIEWERS SHOULD BE WATCHING? >> WELL, THE FIXED INCOME LIQUIDITY IS STILL A PROBLEM. AND YOU WERE JUST ALLUDING TO THAT. YEAH. SO AND SO IT'S POWELL I THINK AT VARIOUS TIMES OVER THE LAST FEW YEARS. BUT BUT YOU KNOW, BONDS TRADE OTC. SO THEY'RE JUST MARKET MAKERS. THEY DON'T HAVE TO POST THEM. NOT ON A CENTRALIZED EXCHANGE LIKE STOCKS. AND SO THE INVESTMENT BANKS WILL USUALLY MAKE MARKETS THAT ARE A WHOLE DOLLAR WIDE. SO YOU CAN SORT OF TELL THEY'RE LESS LIQUID RIGHT. BECAUSE THAT'S LIKE, YOU KNOW, 1% OF $100 BOND. SO BONDS ARE LESS LIQUID, ALTHOUGH THE MARKET IS TO TRADE BONDS, ABOUT 15 YEARS AGO FOR A LARGE HEDGE FUND. AND THE LIQUIDITY WAS TERRIBLE THEN BECAUSE THERE WAS NO ETFS, THERE'S NO BOND ETFS. NOW, THE MARKET MAKING IN THE ETF BONDS CREATES A LOT OF MORE LIQUIDITY, A LOT MORE LIQUIDITY IN THE BOND MARKET. SO YOU GET SORT OF SHADOW LIQUIDITY THROUGH THE ETF MARKET. BUT IT IS DIFFICULT TO TRADE INDIVIDUAL BONDS. THE PREFERRED'S THAT WE HAVE IN OUR FUNDS, THEY'RE LISTED. SO THEY'RE BETTER, BUT THEY'RE BUT ACTUALLY OUR ETF IS MUCH EASIER TO TRADE THAN THE INDIVIDUAL PREFERRED'S. AND SO PREFERRED'S ACT A LITTLE BIT LIKE THESE OTC BONDS WITH WIDER BID ASK SPREADS AND LESS LIQUIDITY. >> IT IS TIME NOW FOR WHO WORE IT BETTER. AND WE HAVE BEEN TALKING ABOUT INFLATION. SO GUESS WHAT WE'RE GOING TO TALK ABOUT HERE. CONSUMER PRICE INFLATION. SOMETHING WE'VE DISCUSSED IS MEASURED BY THE BUREAU OF LABOR STATISTICS. WHILE PERSONAL CONSUMPTION EXPENDITURES PCE IS COMPUTED BY THE BUREAU OF ECONOMIC RESEARCH. IT ACCOUNTS FOR SHELTER THESE COMPONENTS A LITTLE BIT DIFFERENTLY. WE'VE BEEN DISCUSSING THAT, BUT WE'VE ALSO SEEN BOTH OF THESE INFLATION MEASURES TICK DOWN CONSIDERABLY FROM THEIR PANDEMIC HIGHS. SO YOU TAKE CPI. IT PEAKED AT 9.1% IN 2022. IT IS DOWN TO 3.4. PCE, THE FED'S PREFERRED GAUGE, TOPPED OUT AT 5.6. REMEMBER, CPI WAS 9.1, PCE TOPS OUT AT 5.6% AND IS NOW 2.8% VERSUS CPI 3.4. SO AMID ALL THESE NUMBERS I'M THROWING OUT, I JUST WANT TO KNOW FROM YOU, JAY, TO THIS. HI, THE ANSWER TO THIS HIGHLY LOADED QUESTION WHO HAS WARNED THE DROP IN INFLATION BETTER? IS IT CPI OR PC? PCE >> WELL, JUST ONE BACKGROUND COMMENT ON INFLATION. SURE THAT MOST PEOPLE DON'T FOCUS ON. I THINK THAT ALMOST ALL INFLATION CAN BE EXPLAINED BY EXCESSIVE MONETARY GROWTH AND SUPPLY SHOCKS, WHICH ARE USUALLY ENERGY SUPPLY SHOCKS. >> AND WE DIDN'T TALK ABOUT THAT YET. >> RIGHT. BUT SO NOW WE DID HAVE A PANDEMIC. SO WE STILL HAVE A PRICE SHOCK GOING ON IN AUTOS, AUTO INSURANCE UP 20. REPAIRS IS UP ALMOST 20. SO THAT IS ONGOING. SO THAT IS A PROBLEM WITH INFLATION. AND IN PCE IT'S ACTUALLY A LITTLE BIT MORE HIGHLY WEIGHTED. SO TO THAT THAT AUTO SECTOR. SO THAT DOES RAISE IT. AND IT'S LOWER WEIGHTED TO SHELTER. SO IT'S A BIT OF A GRAB BAG. BUT THE PRIMARY PROBLEM WITH BOTH IS WHAT I ALREADY DESCRIBED, WHICH IS YOU KNOW, THE, THE, YEAH, THE BLS NUMBERS ARE USED BY BOTH AGENCIES BY THE BIA AS WELL. SO IT'S NOT LIKE THEY GO AND SAY, OH, YOU KNOW, THAT TERRIBLE AGENCY, THEY WAIT SIX MONTHS AND THEY JUST TAKE THE DATA BECAUSE THEY DON'T HAVE MILLIONS OF PEOPLE TO GO DO THIS TWICE. RIGHT IT WOULD BE STUPID, IN FACT. AND SO THAT'S THE PRIMARY PROBLEM, IS THAT SHELTER JUST FLAT OUT MISMEASURED IT WAS CHANGED DELIBERATELY TO LOWER INFLATION IN 1982. THEY TOOK THEY USED TO BASICALLY USE HOUSING PRICE CASE STUDY. RIGHT SO IT WAS REALLY A POLITICAL THAT'S WHY IT'S DELAYED SIX MONTHS IS SO IT SMOOTHS IT OUT. BUT IT MAKES THE FED TERRIBLE AT THEIR JOB BECAUSE THEY WHICH IS THE OPPOSITE. YEAH THEY LOOK AT IT LIKE WE WERE SCREAMING YOU KNOW TO YOUR COMPETITORS AND SAYING LOOK INFLATION IS SKYROCKETING. THEY WANT TO HEAR ABOUT IT. BUT IT WAS PRETTY OBVIOUS PPI IS RUNNING AT TEN. AND THOSE OTHER TWO MEASURES ARE RUNNING 4 OR 5. THAT'S BECAUSE THE SHELTER COMPONENT WASN'T FEEDING IN. >> CAN I GET CAN I GET AN ANSWER CPI OR PCE. >> BECAUSE IT DOESN'T SOUND LIKE EITHER OF THEM WERE BETTER. >> I MEAN I WOULD THE OTHER THING IS CORE VERSUS HEADLINE. >> I WOULD SAY NOBODY'S WEARING IT. >> NO. YOU KNOW, I HAS THEY'RE BOTH FUNDAMENTALLY FLAWED. >> AND I THINK REALLY WHAT SHOULD HAPPEN IS, MOST PEOPLE PROBABLY DON'T REMEMBER GREENSPAN AS THE FED CHAIR. I REMEMBER HIM, BUT HE USED THIS THING CALLED JUDGMENT. SO HE WOULD JUST LOOK AT THE MARKET AND SAY, OH MY GOSH, THIS IS A TERRIBLE EVENT. HE WOULD CUT RATES OVER THE WEEKEND BECAUSE THE MARKETS WERE DOWN. SO HE WAS USING. MAYBE THAT'S TOO MUCH JUDGMENT, BUT WHAT REALLY THE FED SHOULD DO IS LOOK AT PPI, CPI, PC, DO WHATEVER ADJUSTMENTS ARE NEEDED. IF IT'S POORLY CALCULATED, HAVE A WIDER RANGE. THEY SHOULD BE CUTTING RIGHT NOW BECAUSE WE'RE AT RISK. WE THINK WE'LL HAVE A RECESSION NEXT YEAR IF THEY DON'T, BUT THEY DON'T USE JUDGMENTS. THEY'RE EASY TO PREDICT BECAUSE THEY'RE VERY RIGID. SO I KNOW THEY WON'T CUT OR I BELIEVE THEY WON'T CUT IN JUNE, MAYBE JULY, BECAUSE WE CAN TELL THAT OR OUR ESTIMATES AT LEAST ARE THAT PC CORE ROLLS DOWN TO ABOUT 2.6. IT'S PROBABLY NOT ENOUGH FOR THEM. THEY PROBABLY WANT 2.5. BUT IF THE LABOR MARKET IS WEAKENING, THEY'LL CUT. BUT SO THEY'RE EASY TO PREDICT, BUT THEY'RE BASICALLY BUREAUCRATIC ROBOTS. AND SO THEY CAN LEAD US INTO SIGNIFICANT PROBLEMS LIKE THEY DID IN 21. >> ALL RIGHT. >> WITH THAT WARNING ON THAT NOTE, WE'RE GOING TO HAVE TO CLOSE THE SHOW HERE, WE'RE GOING TO TALK ABOUT, CPI ANOTHER DAY. REALLY APPRECIATE YOU STOPPING BY HERE. JAY HATFIELD AND BROOKE DE PALMA AS WELL.
