Stocks wobble after jobs report shocks, Big Tech results disappoint | Feb 3, 2023 Yahoo Finance

good morning ah the drama it's jobs Friday February 3rd Brad Smith has just pointed out to me it's two three two three today ladies and gentlemen on the calendar this is Yahoo finance live I'm Julie Hyman alongside the aforementioned Brad Smith as well as Brian sassy and if we take a look at Futures ahead of the January jobs numbers we see a little bit of a downdraft here following a raft of disappointing earnings from Big Tech last night we're going to get to those much later but that is the reason that you see the NASDAQ doing the worst of the three major averages before these numbers here this morning let's run through the main estimates here coming from economists economists estimating non-farm payrolls went to 189 000 in the month of January we're looking for an unemployment rate of 3.6 percent and average hourly earnings to have risen as you can see 4.3 percent year over year or 0.3 percent on a month-over-month basis and guys we each have our things that we are watching for in the jobs report size what do you got I'm still trying to wake up from that Apple earnings call I was like Brian that was a what a slog but fast for me I'm looking at a good chart from the team over at Goldman Sachs pointing out uh the the layoffs looking at from the the Challenger gray and Christmas survey you see those layoffs spiking of course big Tech but of course A lot of these job cuts are now spreading to the manufacturing space but you see that Spike up yet has not been reflected in initial jobless claims and that has some I think looking for maybe some upside in this jobs report today yeah I'm keeping an eye on of course the unemployment rate and there's a question of how much this report matters to the fed the FED of course is looking for a trend here and even this week saying from Fed chair j-pal within their press conference saying that despite the slowdown in growth the labor market remains extremely tight unemployment rate near 50-year low here job vacancies still very high and wage growth very elevated right now so with that three and a half percent unemployment rate and the expectation looking for something closer to 3.6 percent yeah we're still in the same ballpark there it's just a matter of where there does start to resemble some signs of weakness here in the employment situation yes indeed and so we also have this debate about whether there is still tightness or slack in the labor market the signs point to slack at this point point and my chart comes to us from the Fred blog which is looking at the label Force participation rate uh by age group and noting that the group that really has not recovered as much as the others is the 20 to 24 year old cohort Prime working age right for those who are not getting a higher education and yet those people have not returned to the workforce in the same numbers as 25 to 54 that's the cohort that is the closest to where it was pre-pandemic and then of course to older Americans either but this suggests because the participation rate is not still not back up overall to where it was pre-pandemic that does suggest there's still some slack right in the labor market so that's something to note as well something else just sort of a technical note I want to say about today's job support it's the Benchmark revisions report that they do annually so going back to early last year they do some revisions to those numbers so not not necessarily going to have an effect on it's not going to have an effect on what we're seeing today but just something to keep in the back your mind here also something to keep in the back your mind just listening to some of these Tech earnings calls last night notably that the one out of alphabet I think of investors thought big Tech was done cutting employees in large quantities you best think again you have now alphabet looking to close various offices various facilities spending Millions upon millions of dollars to get out of these locations and perhaps can more people who heard from meta earlier in the week it remains very focused on efficiency so I get this jobs report maybe it's a prize to the upside but we could be looking at some tough reports as the year goes along as some of these big Tech layoffs get even worse and that's what's catching so much attention that's what's making it to the the brunch table barometer I'll bring it back to you here that's what making it to those conversations is when you hear some of your favorite household Brands and names announcing that they're making these major job cuts of course apple as of right now still abated from that conversation but for many people who have been watching this across some of those consumer technology names that starts to add up in their mind it's just a matter of whether or not the Fed is saying yeah but here's the thing there's still slack to your point and it's not showing up on a more broad scale or broad basis right now one of the other things we have to watch when we look at average hourly earnings is the mix of workers that are still being added in other words as we see more workers being added on the hospitality side that are maybe lower paying jobs and not as much hiring on the higher salary information side we're probably going to see some mitigation moderation in that average hourly earnings growth which to come back to the Federal Reserve is what the FED wants but is this jobs report going to make the fed's job more complicated probably because these jobs reports have been holding up and have been relatively strong so again as we await the numbers uh 188 or 189 000 is what we're looking for from these numbers let's see what we get here as this clock strikes 8 30 and we wait for these numbers I'm looking for some of them to populate 517 000. 517 000 jobs added to the U.S economy last month let's run through some of the other numbers as I get over the shock of that 3.4 percent the unemployment rate so falling instead of rising average hourly earnings indeed coming in in line with estimates with a gain of 0.3 percent although it's 4.4 percent on a year-over-year basis so let me send that number again folks 517 000 jobs added to the US economy last month 188 was the latest estimate that we were looking for 223. so talk about making the fed's job more complex located right we heard from the FED earlier in the week that disinflation was happening that inflation is slowing down the rate of inflation is slowing down the market was overjoyed about this right we saw stocks take off this suggests the FED has more work to do so I would imagine that we are seeing stocks uh plunge down pretty quickly I don't know if we have a chart of Futures but it's not just the headline here you go down to the bottom of this job support we have upward revisions to November uh Towing thirty four thousand you have December revised up by 37 000 so not only did we have a blowout jobs report here but the prior two months are showing that the economy was perhaps stronger than people thought which to your point Julie really I think makes things tough here for the FED uh in their coming meetings some of the contexts that the FED had laid out coming into this print as well is that employment had risen by an average of 247 000 jobs per month before this this certainly going to bring that average up you look across some of the strongest job growth and they said it was widespread led by gains and Leisure Hospitality professional business services Health Care as well employment also increasing in government and partially reflecting the return of workers from a strike there but this an amazingly just outsized print and catching the markets by surprise here this morning too as you're seeing the NASDAQ futures which had been leading the charge this week down by a little bit more than one and a half percent yeah on that front I think we got usually we spend a little more time talking about this but given the shocking number that we just got Jared I think we got to take it over to you and see what we're seeing in the markets here in reaction to that blowout number sure thing I'm watching the S P 500 futures sell off a little bit but not as much as I might have thought given the strength of that number I have a three-day chart on here because I wanted to see the reaction to Powell and the fomc the FED on Wednesday we know that the FED doesn't necessarily like high stock prices and easy financial conditions going into its report and there was a lot of talk about the and consternation about the fact that Powell didn't really push back against the risk-on narrative that was prevailing he said that a soft Landing is not even his base case it's um kind of an outlier event nevertheless Marcus decided to run with it so we'll see what's happening uh we see what's happening in the s p Futures let's take a look at the NASDAQ that's off just a little bit right here and then let's get to the Futures in the treasury market as well so here's where we're seeing an outsized reaction big big move to the downside again this is a three-day chart so here's where we began on fomc day and we came back down and tested that that's going to be my reference point throughout the day this is a 10-year let's take a look at the two-year where the action is we can see that came down just about to the fomc announcement time as well so we got a reference point for the two-year and this is what I'm going to be tracking most of the day here are gold Futures gold off just a little bit here's copper copper down a little bit but really it looks like the the market is expressing itself its shock in the bond market and not necessarily equities here at least Equity Futures yes definitely that's what we're seeing especially considering that round trip we've taken yes from the FED earlier in the week yeah no it did not Jared thank you very much for that um so just to recap these numbers and the surprising nature of them that we we got just moments ago 517 000 jobs added to the US economy you see that is more than double the estimate of 188 000 the unemployment rate falling to 3.4 percent average hourly earnings ticking up by 4.4 percent on a year-over-year basis and as we were talking about some of the um some of the groups where we're seeing additions Leisure and Hospitality as we talked about continuing to add 128 000 jobs the weakest groups in terms of job gains or even seeing some job losses areas like information I.E Tech right we that's no surprise and financial services yeah and it really comes back to as well within this that labor force participation rate 62.4 percent uh employment population ratio sitting right now about 60.2 percent so slight changes there on the labor force participation rate but then again just that 3.4 unemployment rate as we were kind of having our conversation ahead of time and that was the chart that I was calling for here that was the focus here and that's going to continue as well to be the focus for a Fed that has leaned on a strong employment situation as to continue forward in their path way on policy from yeah and we've seen some divergences in past reports between the establishment and the household survey I.E non-farm payrolls and unemployment rate not so this time they're both going at least directionally in the same direction all right let's get a deeper dive into the report New York Life Investments economists and portfolio strategist Lauren Goodwin is with us and RSM Chief Economist Joe Bruce Willis whoo guys so Joe I I have to say you were flagging going to the report that you had seen some estimates that were starting to move up in dramatic fashion but not not this dramatic of a fashion what the heck okay let's all take a step back and breathe January has lots of seasonal noise attached to it this report however strong exaggerates the true underlying pace of hiring in the economy okay once you start to unpack this what you're seeing is okay wage growth is high but it's just it's decelerating okay second everybody out there in the market got on the wrong side of the fed this week this jobs report if you really want to watch the impact on the market look at the two-year yield before probably 30 minutes pass we'll go full round trip back where we were before Pal's press conference started all right second hiring is is still strong it's too strong we need to generate some labor slack in this economy to ensure that we get back to two percent inflation at one point late next year or 2025. finally too many people are going to conflate this today and they're going to overreact and I just think it's really important here we get all kinds of noise every January every once in a while you get one of these big outliers I would take this with a grain of salt focus on the underlying Trend and proceed accordingly well Lauren doesn't this raise you know just push back on this notion that I think the market priced in this week that we will get a Fed pivot I mean this is a very strong report it is a very strong report I think actually that the Market's been on the wrong side of the FED for a year it's it's been time after time after time that the FED has been frankly pretty consistent especially in the last six months with its messaging on where the terminal rate is going what they expect they'll need to do in order to bring in flight under control and the importance of bringing inflation under control for the average household this week was no exception and so I agree with what Joe's saying and that the the underlying Trend hasn't changed a whole lot and the cyclical rally that we've been seeing over the past couple of months especially in January that's been fueled by hopes for a Fed pause as well as some International growth risks moving off the table this this is a meaningful gut check and on at least one of those factors if you're Fed chair Jay pal waking up this morning you see this print you're putting on your slippers what do you think to yourself about that terminal rate at the end of the day well I think the terminal rate's going above five percent is what I think the FED pretty much told us they were going to raise rates you know three more times at the December forecast right they hiked it by 25 basis points this week they're going to do it again in March and they're going to do it again in May then maybe maybe we can take time for a strategic laws to let the economy continue to absorb those six super size rate hikes that happened last year I got to tell you guys Market's wrong all of the time the Market's really out of alignment here this actually I think is probably a good thing for the market over the over the medium term but today may be a bit painful well listen the art of alignments I mean you could say Lauren that he was sort of clumsy at the press conference if indeed you know he he was asked several times are you concerned about loosening Financial conditions and he didn't really come out and say yes I am which is what he had done in the past that slapped the markets down why do you think he wasn't more aggressive there you know to be honest I think it's just because we are getting close to the point that the FED has identified where it'll be a good idea to sit and stop and let these long and variable lags take their effect so again for months now the FED has been saying that a five to five and a half five and a quarter terminal rate target range is likely to be appropriate and that's as Joe pointed out that's a couple hikes away it's fairly typical even as atypical as this economic cycle has been it's fairly typical that the labor market would be the absolute last Domino to fall in the the trajectory of an economic cycle we actually we're running some data and saw surprised me actually that nine out of 10 of the last recession nine out of the last 10 recessions employment was still growing when the recession began and so this is this is not actually so unusual and so for pal to say Hey you know we're going to hike two more times 25 basis Points each and then it makes sense to sort of sit and and let things play out that's that's a reasonable approach I agree it could have been more direct about that but the market was going was was likely to take that as dovish no matter what sometimes it hears what it wants to hear true so part of this prize here I think is that for the past couple months all we've been hearing is about layoff announcements notably in big Tech why did they not show up here and when do they start showing up okay they're not okay there's a couple things going on here first the median duration of unemployment going into this report was eight weeks I haven't had a chance to see the report people in Tech have skill sets that are in demand across the entire economy so I live in Austin know a kid who makes 275 000 bucks she's 27 years old she works at Twitter if she gets laid off she'll find a job like that it won't pay 275 it'll pay probably close to 200 right they're getting jobs moreover they get long Severance packages some of them are doing contract work these people I mean but even even I mean as we've talked about even met most of many if not most of the companies that are laying off are also still hiring that's right yeah yeah I mean you're getting just the right sizing of the workforce in labor there was Labor hoarding because those people are impossible to get I mean these people are really in demand across the real economy and I want to come back something here pal has a remit to make policy for the real economy not for financial markets and everybody needs to understand that when we've had a historic inflation impulse that had a 20-month peak and we're now seeing some disinflation that's mostly correction in the supply chain not disinflation because the economy is you know going to have a real long-term problem yeah I understand why there's some misalignment but he needs to continue down this path Financial conditions are still roughly one and a half to two standard deviations below neutral that means it's a drag on the economy it's not as bad as it was six months ago right so everybody gets on TV and says well Financial conditions improve okay no they have not they are tight and they need to remain there so we can restore price stability because price stability is what counts in the real economy for consumers that yes many of them who are working and are looking for that price stability as well at the same time as they're looking to perhaps outpace some of where the prices have risen to at this point in time before those prices perhaps start to retreat or normalize once again you know what within the wage front here that we're seeing within this report gives them confidence that they can see wages stabilize for an extended period of time in order to weather what is still an inflation or at least disinflationary starting environment you know not a whole lot to be honest real wages have been declining since April of 2021. that's why this has been already such a challenging environment for so many families actually the number one question when I'm speaking with clients that I get when we start talking about recession is aren't we in recession already it's how it feels and that is why some of the conversation and frankly the market movement around a soft Landing I think could be misplaced I'm not not convinced that a soft economic Landing under these conditions is what makes the best economic out for for most people because recessions though painful provide a really important service which is to reduce or eliminate imbalances typically in the last couple Cycles it's been some sort of Leverage you know household leverage corporate leverage in this cycle it's inflation and that's why Powell is out there saying including in this week's press conference you know unless we are able to bring inflation under control the economy works for no one and so wage growth here persistent that's good news but not if it's continuing to continuing to fuel companies need to raise prices higher so look the we've just turning the corner on real wages they're just moving into positive terrain consumers after that 20-month shock are just getting a chance to breathe and get ahead you know I just looked at the unemployment rate out to three digits it's 3.434 that's lower than anybody's lifetime who's in this room right now I mean this is this is extraordinary stuff that's happening when we were talking about January yeah because I want to do a little impromptu Yahoo just break it down for us in simplest terms why is January weird and what like they change the populate they change the denominator right and and talk to me about what's happening it's real simple people quit jobs hiring gets reset wages get reset it's a very difficult to estimate every January every January so the seasonals are really really important here which is why yeah the labor Market's too strong but it's not that strong right what I'm really more interested in is that labor force protection participation rate the 3.4 percent unemployment rate and hey guys look at the household remember a couple months ago all the sharks in the market were like this isn't true look at the household we almost had 900 000 increase in household employment that's statistically significant that's huge Lauren um what do we do with all of this information what action do we take from here for the people who are looking ahead at 2023 and they want to make money and hopefully make back some of the money they lost last year well look I think that this this is likely to to put a tactical hit on what has been otherwise a risk on cyclical rally again not only because the market is getting a line of sight on the fed's terminal rate but also because we've seen some important Global risks at least pause for now including the energy environment in Europe China's economic reopening etc for investors that can be really tactical um yeah you know the next couple of days are likely to be a little choppy after this data but the sum of those positives for the economy still stand most investors aren't able to be so tactical and as the way that the the economic evidence is stacking it's very clear that we are going to see slowing economic growth and continuing deterior aeration and margins over the course of this year so we're actually leveraging the strength in markets recently as an opportunity to rebalance towards themes that are a little more durable focused on income generating in in the market and just an acknowledgment that as as certain as Joe and I and anybody can can come up here and sound this is an economy with a large confidence interval it's just such an uncertain environment and so why leave up to chance and Market timing what you can generate in a portfolio via income and a little more durability Joe what do you think we might hear from various fit officials in coming weeks when they hit that speaking circuit oh you're going to hear them reinforce what Powell attempted to to put forward which is the rates are going to increase we may take a pause at one point but that doesn't mean we're necessarily finished they need to finish the job here Brian I mean if they're going to get if they're going to reestablish price stability they absolutely have to err on the side of caution even if that means the FED causes a A downturn in the economy for a brief period of time it's quite mild and Lauren it looked like you I wanted to add something after that and I just want to add this on to it if you're looking at this print what is the first trade that you make after you read this report well the the first thing that I the the thing that I was going to add to what Joe's saying is that as you were discussing earlier this it might appear that this job report makes the fed's job harder I think it actually makes their messaging a lot easier a lot more straightforward it makes it makes the Market's job harder and so again if you're able to be incredibly tactical today this is a this is a moment for again a cycle back into the Improvement in value Equity over growth in investment grade credit over high yield Etc but tactical isn't for everybody so the that the medium long-term Focus we think makes sense I think all of our jobs just got a lot harder today like New York Life Investments Economist and portfolio Lauren Goodwin and RSM chief of Commerce job as well it's good to see you Paul thanks so much for the Insight tremendous view all right again non-farm payrolls Rose by 507 seventeen thousand in January the unemployment rate little changed at three point four percent really surprising markets on both accounts but coming up while it's a big day for reads on the economy it's also a big day for Tech we'll pick apart those weak alphabet earnings next [Music] [Music] foreign [Music] [Music] foreign [Music] foreign [Music] [Music] foreign [Music] foreign [Music] advertising slowdown is escalating for alphabet the tech giant posted its fourth consecutive drop in profit in Q4 falling 34 percent year over year YouTube specifically seeing a nearly eight percent decline in ad Revenue growth Capital Partners managing director Rohit Kulkarni joins us now Rohit always great to get some time with you uh is this just the start of several bad quarters for for alphabets advertising business or or was this the bottom um I would say we are in the uh sorry to use a baseball analogy here we are in the probably bottom of fourth year uh by that what I mean is we're somewhere in the middle uh as far as downward revisions to where alphabet might be going um in my opinion uh alphabet did earn a lot of incremental market share during 21 and 22. a lot of that was at Facebook's expense um because of some apple changes I feel uh that slowly changes over the next 12 months plus the economy um so I feel they are in this um kind of Middle Ground where probably they're going to lose a little bit of extra market share and uh on top of that there is the ad recession in my opinion would you be would you be concerned if your alphabet about who you're losing market share to and whether or not that market share will actually return um I think uh it remains to be seen as the pie starts growing again in my opinion uh perhaps we are not not there yet um at some point in 23 we'll start to see the evidence of uh the the digital advertising pie is growing at the clip it used to prior to the pandemic uh High single digits low double digits when it starts probably the incremental market share Google will start earning back but in the meanwhile I think right now they are in a position where people spend a lot of extra money on search and now they are they're finding better ways to find uh not just to Facebook but Tick Tock to um to even Apple search Instagram so there are more places that are more settled down right now than what uh YouTube and search seem to provide so that that's I wouldn't call it this is uh in the peak market share for Google right now but they're in this um kind of window or a tunnel where they probably are going to be losing a little bit of market share Rohit we just got a big jobs report a big big jobs report a big number of jobs being added in January of course alphabet was one of the companies that announced Cuts during the month of January are those cuts done at alphabet and or at other tech companies um I'm afraid uh in some cases like alphabet um the the signal yesterday that we got which was a little bit of a surprise from the management team is uh that they are going to slow down hiring which was not something that an investor looking into a recession was uh was willing to hear so I feel um you know there could be a change in stance um maybe two or three months down the road where a company like alphabet May needs feel the need to do additional Cuts may not may not be completely in head count but there are many different ways that these companies can save money um be it Office Buildings be it real estate be it travel and various different ways so I think there could be a combination of the ways that they would be looking to save some cash and just to kind of improve the sentiment with investors so head count reduction possibly we are almost done there could be small uh tidbits here and there in the next three months but there there would be in my opinion more cost reduction initiatives that would come out of alphabet is what I think um something else I want to ask you about is artificial intelligence because Rohit I heard one uh stat this morning that they talked about on the call they mentioned the words more than 50 times um you know I have to say I don't listen to All of alphabet's earnings calls so I don't know maybe they've been talking about this for a long time but forgive me for thinking like they're kind of jumping on the bandwagon here I mean how what's the real opportunity here in AI for an alphabet um to be honest as in uh from an investor perspective Google has been and has been a leader in AI for a for a number of years um we don't see that at the surface on the products but under the surface um kind of uh in my opinion Google has always been a leader in AI um in the last two three months once you start seeing consumer adoption of new AI products uh chat GPT um for example is touted as one of the fastest growing consumer products um that people are adopting for AI so I think Google is now forced to uh stake a claim that and remind people that hey look we've been working on this for a number of years we acquired Deep Mind many many years ago now they are going to provide more accounting uh disclosure on deep mind they talked about Ai and new applications of AI that they are going to unlock and show consumers that look you can play around with Google generated AI tools just as there are many other places that you are doing right now so I think in my opinion Google Still Remains the leader in AI it is just that they they are now forced to remind investors that uh look we have been working on this for a number of years just because a new toy or a shiny Brazil is coming along uh don't forget about us and 20 seconds Rohit will a will it a deep mine enabled Google search be able to go up against a chachypt enabled Bing um I would I would definitely put my money behind uh Google deepmind and their search capabilities Rohit thank you so much Roth Capital Partners managing director Rohit call Carney appreciate your time on this jobs Friday and also big Tech Friday thank you thank you on the LA on the former friend let's recap jobs real quick the US adding 517 000 jobs in January unemployment rate falling to 3.4 percent wage growth though still under control Rising 0.3 month over month 4.4 percent year over year coming up we're gonna break down the top three things you need to know including some more big Tech earnings that's next foreign [Music] thank you [Music] foreign [Music] thank you foreign [Music] [Music] [Music] [Music] 9am on this jobs day here on the East Coast still 30 minutes away from the trading day let's get a check in on how Futures are trading here as I and my compatriots to sift through this morning's jobs data we have s p Futures that took a sharp turn for the worse after that much better than estimated jobs report NASDAQ 100 Futures as we have talked about so frequently big Tech reacts more to perceptions about changes in interest rates and what this report did today was perhaps reset those fed expectations that they are going to have to keep raising rates NASDAQ 100 Futures down two percent and then as we look at the treasury market here showing the prices of treasuries that means yields are spiking here this morning reflecting that perception about where interest rates are going the move on the two-year also quite dramatic it is on the shorter end of the curve meaning it is even more reactive to perceived changes in the future trajectory of interest rates so price down yields up there as well saws all right here are three things you need to know at right well right now the January jobs report blows past expectations with 517 000 workers added and hugely complicating the picture for the Federal Reserve is this a big shock or a just a noisy number we'll discuss and Apple earnings coming up sour missing expectations on the top and bottom lines we're going to break down the number for the iPhone maker shortly and Amazon earnings are thing three as they've been a bit cloudy as online store sales came up short of Wall Street estimates so what does that mean for the consumer we're going to dive into that and much more but first let's get into the first thing here this morning the first big thing that we have been keeping our eyes on here and it has been the jobs report as well here and Julie as we're continuing to really kind of parse through some of the numbers here I mean the growth that we had seen far far surpassing what the big expectation was coming into this yeah far and we were just looking at these charts here if we look at the three day as our Jared blickery was doing earlier that shows exactly what happened from the FED meaning the other day and then the trajectory until now so basically we have now come full circle since then if you look at the Futures as well not quite the same magnitude right but directionally going back in that direction so that's effectively what we're seeing here if we look at some of the heat maps and a look at the NASDAQ 100 here which is where we are the numbers on the bottom are mostly in the red and that's where we find a lot of the tech stocks this morning after that number and also after obviously a lot of numbers from the individual companies as well all right let's take through these thing thing number one you need to know today jobs jump coming in well above the 188 000 expected in unemployment rate uh falling to 3.4 percent guys let's uh try and dive into these numbers real blowout report here I really the analysis a moment ago from Joe braswellos and Lauren Goodwin they provide to us but a big report certainly pushing back I think on some of this uh hope or hopium in the market that we would might get that fed pivot and get it very soon this report suggests maybe that's not going to happen you know one of the other things that was mentioned by Joe when we had him on set here was that this is the lowest unemployment rate reading when taken out to the thousandth uh of the decimal point that we've seen in our lives here at least anybody that was here on this set so that is significant however it's also significant from the fact that fed share J Powell waking up seeing this number perhaps looks at it and says okay well looks like we can do a little bit more work on this and that's certainly rattling the markets as Julie was just breaking down at the touch screen a moment ago yeah and so you know we were just talking to Joe persuelas and Lauren Goodwin a little bit ago in their reaction to these numbers and Joe's message was really that well this is a big number it's not as big as it appears to be and I've seen some other commentary on Twitter and the like as well including from Economist Justin wolford's that if you look at the hourly earnings number yes it was up 4.4 percent year over year but if you look at the month-to-month change it was 0.3 percent bang in line with estimates and so that's really the number that the FED is keying in on if in fact it is trying to attack inflation maybe doesn't change the trajectory as much as the market seems to think it is today so I think maybe it's a little bit more nuanced than that big 517 is on the surface yeah a Leisure and Hospitality really sticking out creating more well about 128 000 jobs in the month that is a huge gain but maybe not surprising Brad we got some really good earnings results from these Airlines and all of the commentary that we heard on forward bookings into the spring was was pretty strong so clear at least that sector is not preparing for an economic downturn yeah the travel Leisure space has been talking about a golden age of travel since October at this point and for some of them signaling that man that was holding strong even since the summer of last year so where does that put us now as it relates to the employment situation here if you're going to continue to see Leisure and Hospitality try to rebound as best as possible and it is doing so largely has been outpacing because it's in the job gains at least largely because it's had the farthest way to come back then where does it get into some of the other elements of the economy in those consumer discretionary sectors that's one element that I would continue to watch out for here when you have companies that are they've got these large massive storefronts and Footprints and they're saying to themselves okay do we really need to hire more workers right now or can we just reinvent the retail experience and especially in some of those categories that aren't performing well why would they be compelled to open up more jobs and at the end of the day does that mean that for some of the employees that are there perhaps they'll get paid more but that doesn't mean that they're going to have the a lesser load in their workday as well I really like what Joe Braswell has said about why these Tech layoffs are not showing up in these jobs numbers the headlines of jobs hasn't been good not only from Tech but also increasingly manufacturing he said they're still getting higher they may not be getting higher at the same rate but the this pool of employees a lot of smaller companies have not had access to them at lower wages or had access to them at all so they maybe they're getting high right away if worse comes to worse in your coder and you get laid off you can always go work on a cruise ship you know they're looking forward your own business sure exactly I don't do cruise ships so I I find it hard to work uh but hey we're in a hotel you don't have to it doesn't have to be floating that's true that's true there's a lot of good hotels I take Spirit on your next Cruise what's that big Spirit oh no never guys second thing you need to know that's the last thing I need to do is be on a yellow boat anyway and the second thing that you need to know today Apple shares in Focus following a Miss on the top and bottom lines Tech Giant failed to meet expectations on iPhone and wearable sales joining us now to dive into the number we've got Jim souva City managing director and equity research specializing in Tech technology Jim you were on Apple's earnings call yesterday you got a chance to lob some questions into Tim Cook Brian and I gave our Vibes and our Vibe check after the call I want to know the vibe that you took away from what Jim or what excuse me Tim what Tim and Luca had to say hey it's great to see my friend Brian um and Brad and Julie all on the show today importantly the big takeaway is this foreign exchange has materially hurt apple and then the second negative was the China covet production closed down when you remove all that and take a step back and look at the big picture apple subscriber user base is still growing the number of active devices which are being used is now over 2 billion with a b and the number of iPhone users is over 1.2 million and so we're really looking at um this really important uh way of things being set up here uh when we look at again the active number of devices it's actually two million I said uh 2 billion but uh 2 million um I'm sorry it's 2 billion with a b and important to note that these are actively users that are using subscribers and servers and all that but the takeaways FX hurt and let me quantify you that eight percentage points of FX hurt in the December corner and five percent is pointing to the March quarter if you remove all that apple is still growing in reported terms and importantly their subscriber base is growing this is important this is why we're sticking with our buy rating and 175 Target prices are showing it correctly so Jim okay if FX was largely to blame here I just I think of Apple as typically managing all of this better and I don't just mean managing its currency hedging I mean managing you folks managing the analyst Community right I mean in terms of managing expectations is is that like what happened here on that front well importantly since covet hit Apple has stopped giving forward quantitative guidance they give him more color on the conference call you heard that uh Luca the CFO and Tim gave some color or some qualitative guidance is that a bad decision though is that a bad decision given what we're seeing today does Apple need to bring that back Julie in a world where we have unemployment challenges FX challenges supply chain challenges I don't think it is I don't think anybody has a crystal ball right now I think giving less guidance right now is fine where the visibility comes back then we should expect some more but for right now uh the qualitative guidance was just fine and then on the callbacks um it's important to note that people start to be able to ask some more pointed questions but simply put numbers are coming lower but it's mostly due to FX and the production issues look the problem is Apple can't supply enough demand is here and Supply is here that's a good problem to have when demand is way above Supply Jim uh you know hang with me here I'm gonna plug myself the most read story on Yahoo finance right now is one that I wrote this morning Apple stock it's nailed as Co Tim Cook Spooks investors with one phrase now if you click through that one phrase is a challenging economy uh cook and his CFO mentioned it seven uh seven times on that earnings call last night how concerned were you about their comment Terry on the the global economy and how would a recession impact this company this year so first of all that's a very well written article that's why I get those big checks Jim but I can tell you this the economics uncertainty look you look at the FED interest rates the other day you look at the employment data this morning and you're getting a lot of data points that are coming in that aren't all on the same page you have inflation you have clothing housing gasoline costs that are going higher natural gases are going higher you're going to get hit with the big freeze in the New York area this weekend and people are going to turn on their heaters a lot there's a lot of costs and dynamics that are changing it's a very fair and honest way to assess things and I think that's why people are reading it and so if you're an investor looking at Apple today trying to evaluate if this is the time to get in or if you should be waiting for another shoe to drop what do you say to that investor I I think you should buy the stock here and the reason why is the world is getting past some of the coveted closures the worst the the death the illnesses the how Society reacts the worst of it's getting the highest production is coming back on the supply chain bottlenecks are getting better and apple is continuing to innovate you know we expect them to launch an AR VR headset later this year we expect them to have a foldable phone next year I think that foldable phone will be great where you can on the top look at Yahoo finance and on the bottom be reading your emails I think that'll be a great phone to have they're working out some of the Kinks on it that will be for next year but the reason why that's important this year is people will start to look the head to say Hey where's the Innovation The Innovation is still coming there we think it's a great opportunity to buy the stock on this little bit of a pullback here the shoebox not been big but Apple's high quality Jim but why launch unproven products at a time where consumers are already pushing back and the discretionary spend is souring well when you think about unproven products first of all we're talking about late this year and come the worldwide developer conference in June they typically focus on software when you think about uh VR AR headset of taking a picture of your showroom of your kitchen of your dining room and Reinventing it by moving things around virtually there's a real business case application it's more than just gaming it's education doctors nurses uh different uh pilots and Fields that can be educated we think it's pretty exciting but right now what matters most is iPhone and the company subscriber base and they are growing I don't know I'm looking forward to looking at Yahoo Finance on the top of my folding phone you too and we work here I'm so excited City managing director Jim souba thanks so much for your perspective this morning really appreciate it thank you keep warm this weekend will do thanks Jim well the third thing to know this morning comes from another Tech Giant reporting earnings that is Amazon the company announced a mixed bag for its fourth quarter total revenue came in above expectations but missed when it came to online store sales is they were hit hard by a consumer slowdown we're going to dig into it more later as well but the cloud unit AWS saw slow and growth that was also a problem but I am intrigued by what is happening at the online stores as well because a lot of the analyst commentary I saw a lot of it was positive even though we saw that weakness in online store sales that came in below estimates most of the analysts commentary I saw said it held up pretty well there were a couple who said it didn't and so I'm like these people are all looking at the same numbers and yet the interpretation was quite different for in particular that 2.3 percent drop yeah I just think if you're trying to get a good read in on the consumer and trying to look across where products are being taken on by individuals and households you can look no further to Amazon's Miss on this online segment selling uh less than expected and the 64.53 billion dollars compared to that 65 so slight Miss there and then you want to draw a through line another one that's supporting data from Apple as well miss on product there and so consumers right now are being extremely value conscious about how they're spending their dollars and where they're spending them even if there are deals to be had on the deal Factory that is Amazon and the Prime Membership as well and since it's Friday I'll touch the third rail let's not lose focus on the fact that Amazon CEO Andy jassy was on this earnings call now he mentioned on the call yesterday just passed his one year mark that he he also know that he would like to likely try to hop on the earnings calls a little bit more I think Annie's starting to feel some pressure the stock has not done well under his leadership whether it whatever if that's just the covet on wine whatever it is the stock has not been doing well uh the capacity that in many respects he held bill during the pandemic it worked then but now they're having to unwind it they're having to lay off workers I think he's facing some increasing heat as he should I mean on the flip side of that the stock like the rest of the tech sector has rebounded this year it's up 34 so it's right in there it hasn't really liked competitors um and again when you go to a couple of other bright spots here when we talk about when I was mentioning that analysts are more positive on the retail sales Brian Nowak for example over Morgan Stanley mentioned a steep Improvement in retail profitability so even though the revenue might have missed maybe profits in that in that area are going a little better one other thing that stood out to me physical stores I.E Whole Foods came in above estimates up 5.7 percent of 4.96 billion dollars and that's a group that has not necessarily been working so well you know I'm excited about Whole Foods I just found out recently and they do a dollar oysters on Friday I had no idea this was oh yeah you've been touting this I thank them for doing this so you know obviously that's probably an operating margin hit Amazon but you know I'm okay with it so so we know what you're doing tonight that's what I'm doing seven dollar oysters at Whole Foods though that gives you a sense of the type of consumer that they're continuing to go after the consumer that says all right whole paycheck no problem well you can't get any because you have to be a Prime member I was kidding actually they're free Italy you got me so so here's the here's the big question before before we leave it I meet him alone would you no that well that that was going to be my second question the biggest question is do you pair them with champagne or vodka which way do you go it's a good question might be a Red Bull tonight all right thanks so much Julie Straight Ahead Starbucks after a tough quarter for China we'll dive into the results with Starbucks CEO Rachel Roger next thank you [Music] [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] [Music] [Music] foreign [Music] [Music] [Music] [Music] thank you [Music] [Music] Starbucks Shares are under pressure as investors lock in on a disappointing quarter for China sales that focus is overshadowing each overshadowing a good quarter for Starbucks U.S fueled by demand for holiday drinks and egg bites let's welcome back Starbucks CFO Rachel Roger Yahoo finance's Brook depalm is here as well good to see you both Rachel of course I'll start with you let's lock in on on China here have you started to see any sales Improvement here out of the country as more locations have opened up yes so we've seen Improvement in the month of January and I had shared that on the call so we're encouraged by the signs of improvement that we're seeing we still believe there'll be some headwinds in this quarter but we're expecting to see more Tailwinds in the back half of the year as full recovery starts to take place travel increases and people can get back you know more to normal day-to-day routines and so we're looking forward to that because it's going to help with our overall what we had provided was reaffirmation of our our guidance for a full year and China will be a big part of that Rachel within that guidance that reaffirmation do you see China sales growing again in the back half of the year yes we see China start to grow and contribute meaningfully in the back half of the year and that's going to be that supporting part of our reaffirmation of the guidance but it also gives us good confidence in the long-term growth targets that we've alluded to and here in the U.S same Source sales were better than expected but we're down after 2 p.m do you think that high inflation and recession fears have caught up to the U.S consumer you know I would say we don't see a challenge in our demand today and in fact what we're encouraged by is our reinvention plan is going to allow us to unlock even further demand so the we're working on being able to unlock the capacity in our busiest day parts and so we see the opportunity to continue to service even more demand in the periods where we're busiest and that's really the proposition that we're going after so I would say demand is just coming to us in different ways and here in the U.S how much did Starbucks raise menu prices from this time last year and do you expect to raise prices in the first half of this year once again the the increase that we're seeing in our ticket related to pricing is annualization from pricing moves we took last year our pricing was taken largely in line with our inflationary pressures so this year the ticket is benefiting from the annualization of that when we comp that in the back half of the year we'll start to see pricing return more towards historical levels and so we'll see a moderation of our ticket and an increase to our overall uh transactions so we've guided a comp range of seven to nine percent in the US business but you'll start to see more of a balance between ticket and transaction Rachel given the economic concerns here in the U.S do you uh have anything baked in terms of more promotions on the app or more promotions in general to get people back in the restaurants in the afternoon you know the reality of it is while we understand that our customers are dealing with a lot of uncertainty and economic challenges we aren't seeing an issue with our demand today and so we're not planning on discounting or moves of that nature we continue to grow our Rewards program and that creates value for our customers we increased in the quarter by about in the U.S business we grew by 15 to 30 million members that's up 4 million versus prior year and 1.7 million versus the prior quarter so that speaks to the value that it creates for the customer and also it's good for our business so we'll continue to lean on aspects of our business like that to be able to bring more customers in and to be able to provide them with the value that they're seeking and the Starbucks rewards update is getting a lot of Buzz among Main Street Wall Street how exactly will this boost margins for Starbucks but for the main consumer what does this mean about that cafe misto hack that they are grown to love yeah I mean I think the reality is you know we're trying to ensure that we're able to continue to grow the program while we create an efficiency we've taken pretty significant pricing moves over the past couple years in line with the inflationary pressures so it's important to make sure that our product Redemption aligns with that but we've also through the changes in the rewards program offered value for customers in different areas for an iced coffee for example now they can have a contribution or attribution in terms of earning Stars towards iced coffee so we've been able to take some benefits in the program to allow some members to be able to choose their Favorite Beverages and earn along those lines it will help support our margin proposition in the future as well as our Revenue growth so overall we see it as a good driver to our business but also still provides value to our customer within the various costs on your income statement Rachel do you see disinflation we don't today see a material impact from disinflation we did see to we did see a slight easing in terms of coffee costs and non-co non-coffee commodity costs such as Plastics but then we saw an increase in terms of our overall Logistics part of that is due to demand but it's also effective that there's still challenges across the supply chain so broadly we're still seeing inflation at an elevated level in FY 23 not as high as FY 22 but it is still elevated you've invested a lot into labor wage benefit wage and benefits you had the highest turnover a rather improved turnover rate since Q2 of 2022 where do you think labor for Starbucks stands right now you know we're in a good position today and we believe that's because we've invested ahead of the curve and we're continuing to make investments part of our reinvention plan right is to continue to roll out equipment that creates efficiency in the stores create a better experience for our partners as they're serving our customers we've leaned into increased training we've leaned into better wages and benefits the combination of that has helped us so that we've been able to bring turnover down and importantly improve retention it creates a more stable environment which is good for our partners but it's also good for our customers and Rachel on the call last night Howard teased some form of something new called Alchemy and I appreciate you probably can't say much about it but maybe you could just narrow it down is it is a new restaurant concept is it is it a drink is it a food is it something that Howard is just working on separately once he steps aside to CEO in a couple weeks well what I can say I can't share much about it but what I can say is it leads to Innovation which I think is an area we've always uh played well in at Starbucks we've always found ways to try to surprise and Delight our customers and this will prove to do something in that fashion and what it does is ultimately you think about today part of our proposition is you have to come into the stores because so much of what we make it's hard to make at home this is another way to lean into that area give customers a reason to come into our stores and importantly a reason to come back all right well if it's a drinker food I'm likely a buyer Starbucks CFO H over Jerry always nice to get some time with you and thank you of course to our very own Brooke De Palma thank you coming up Nordstrom gets attacked by a mean King more on this next [Music] thank you [Music] thank you [Music] foreign [Music] [Music] foreign [Music] we are less than a minute away from the opening bell on Wall Street and it looks like it is going to be a down one in the wake of the jobs report that we got this morning the NASDAQ showing a decline of two percent of the open of course adding insult to injury the big Tech earnings disappointing and they are trading down as well so all that combining to make the NASDAQ the worst performer of the three Majors if you look at the pre-market trade here s p Futures also pointed to losses as our Dow futures here this morning and guys it's very interesting what we're seeing here what we're hearing from investors because many of them don't seem to be reading the job support necessarily in as dramatic fashion as the market reaction would make you think yeah well no is that Susan Lucci I think well Star Jones up there for sure all right cool all right Rick and Heart Association very cool some prominent folks who are pulling for it oh awesome see look at that yeah but again non-farm payrolls up 517 000 Julie good um did you say 900 517 917. wow that'd be that'd be well you know I'm not surprised I'm checking my fitness tracker right now my heart rate is 140 beats per minute guys so you know I'm a little fired up today it's been it's been a morning it's been morning proud over to you we're fired up today is that working well the the markets are also uh fired up and in the wrong way here on the day here let me just get this over to the right part looks like somebody may have been looking at some other data here a moment ago but we saw there on the screen there and you've got it in the lower corner of your screen for our folks at home Dow Jones Industrial Average opening lower by a fraction of a percent by about three tenths of a percent there uh and over the past three days net lower here the NASDAQ Composite depending upon how we end today and that's going to be largely in Focus considering the week that we've had thus far here taking a look at the past four days we've been Higher by about five percent as of right now lower by two percent here and we've had some earnings that we've been bringing to your attention both yesterday after the close and this morning post some of the earnings calls as well that took place last night well the NASDAQ Composite Tech heavy average that's down and reflecting some of those declines by about two percent right now S P 500 you're seeing that down by about one percent I wouldn't be surprised if we had the worst performer in the s p 511 sectors being technology and here on the day I well it's not technology is not the worst performer it's down by about one and a half percent but then also you've got some move lower in consumer discretionary that's down by about 2.7 percent here and then communication services that also seeing a leg lower of about two percent this morning only three three sectors in positive territory right now sauce all right let's get back onto the big Tech earnings theme Qualcomm wasn't immune to the broader Tech slowdown its most recent quarter with sales dropping 12 percent operating profits were also Under Pressure uh really this quarterly weakness driven by uh pressure on the handset business that was of of course things we've seen in the likes of Apple last night as well iPhone sales under pressure as well but cities saying this is a difficult time in handsets and if you take uh the handset business and The Internet of Things business for Qualcomm that makes up about 77 of their first fiscal first quarter sales what they just reported yeah and that's something that investors are looking to more and more the company has really touted more and more is outside of the handset business what else is working initially the Qualcomm shares actually went up after they reported their results Automotive Sales were up 58 percent can you mention connected devices I believe up seven percent however if you're thinking about the the overall revenue of the company's 9.46 billion dollars Automotive Sales is 456 million dollars connected devices is 1.68 billion dollars in other words yes those areas are growing but they're still very small as a proportion of the total company as compared to the of in excess of 5.7 billion dollars for the q1 fiscal 2020 for the handsets yeah handsets yeah exactly and so um you know really thinking about how they continue to not just move more into the automotive landscape or at least kind of lessen the dependency on that handset business knowing how much Apple how much Samsung how much some of the other manufacturers have proven that they are ready to throw their weight around and perhaps a little bit have a little bit more vertical integration that's a that's a red flag for Qualcomm right now at least and so just a larger question of where you continue to have that demand generated in this near term as well given the shift that you've seen from some of those large historical purchases from the business too mover that we are watching this morning meme work makes jwn Dream Work was the title of our friend Simeon seagulls note on Nordstrom after activist investor Ryan Cohen reportedly garnered a sizable stake in the company intending to urge a shake-up in its Ford his set of sights on replacing former Bed Bath and Beyond CEO Mark Tritton in particular on the board of the company this according to multiple Resorts reports was first reported by the Journal but I know you've confirmed this news as well Mr sazi um you know I don't know what he thinks he's doing and it's a family controlled company and there have not been too many activists of attempts at Family controlled companies because the family controls the company so I'm not quite sure that you know they've said that they're willing to work with them yada yada I don't know how this is well yeah so uh Ryan Cohen has taken a position here a source uh tells me now Nordstrom is responding that they have in a statement to Yahoo finance they've not had any Mr Cohen hasn't sought any discussions with us in several years and you know this goes back to my think my long running thesis on on Ryan Cohen's unclear what he's trying to do with these companies because as he what did he did at Bed Bath and Beyond was essentially Squat and I don't know what his plan here is here with Nordstrom but if it's anything like what he did at Bed Bath Beyond it's probably no plan uh and it's just I will say this though uh Nordstrom shares down about 45 over the past five years down even more of course before this move uh by Cohen there are opportunities I think for Nordstrom either to let's say spin off their their Rack business from their full price stores and also improve operating margins now for all the great customer service that Nordstrom offers and the street love loves the brand for that it's camera it's come at a cost they've invested millions upons millions of dollars in developing the services they do have a buy online from store you name it but it depressed margins and there's a vibe that they could and should be doing better but again to your point Julie this is family controlled Ryan Cohen's track record here in terms of true activist investing uh Nelson peltsy is not is wildly which is wildly unproven and wildly unclear and I just I just don't see what he's going to get done here you know I think on Sunday I'm going to pray that God give me the confidence of Orion Cohen to go in and try to have all of these turnaround stories when really my only proven thing perhaps has been in the pet category this is a different type of Shopper that you're going after GameStop GameStop that story is getting worse you GameStop unproven you've got a potential Nordstrom play here unproven that he would be able to make a major wave in a very affluent consumer driven retail environment and experience as well he's been dead wrong about GameStop that's that fundamental story has gotten worse over the past six months he's still on that he's still on that board he was proven I think wrong on Bed Bath Beyond he essentially did nothing there and I think this has now just become personal for Ryan where he just wants to attack Mark Trenton he just does not like Mark Trenton and I can tell you mark Trent doesn't like him all right well let's also talk about shares of Ford here on the day forward shares have been driven downward following its latest Financial results as fourth quarter and full year 2022 operating results came in below its expectations the automaker also suffered a full year net loss of two billion dollars forward citing its lackluster performance in parts to execution issues in an environment with supply chain and production instability resulting in higher costs and lower than planned volumes it was a challenging environment for vehicle sales over the course of 2022 no doubt Ford also reclassified the way that they wanted investors and they wanted their financial results to be really proven out over time and breaking out and this was earlier last year actually this time last year that they had done so so now the larger question on some of the comps that you have now created where are they going to show that demand is coming back into the table and for all of the different Equity plays that they have across their vehicle lineup all they're doing is saying hey it's electric now so that Mustang that Maki which is done well it's electric or that hummer well no that's that's GM sorry for it but at the end of the day the F-150 excuse me the lightning trying to make sure that the cars that have been doing well for decades at this point can have the same type of fanfare on an electric basis Jim Farley CEO for no question has rejuvenated this company all these Electric Vehicle Products have been out under his watch he has done a good job but now he has to take things to a Next Level it's not necessarily just he can come out here with these amazing new electric vehicle models and excite Wall Street he has done that now I think him and his team and CFO John Lawler are trying to dig into every part of the business operationally and structurally of course this is a legacy automaker it's not like a test so that was built what a decade ago and they were able to start in doing new processes from day one I think for them they have to fix a lot of the structure of the business and in doing so they're hoping to take out a lot of costs but at the end of this week take a look at this two different stories we've heard between GM and Ford gmcfo Paul Jacobson came on with me early in the week said Brian we're cutting two billion dollars in cost this year you have a Ford now only trying to find cost savings that they might execute upon two totally different stories exiting this week flip of the stories what's the story yeah because it was the opposite before right in terms of Liberty yeah all right coming up the search for disinflation SAS is going to break down his take on that keyword buzzword next foreign [Music] thank you [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] [Music] Jay Powell surprised investors on Wednesday during his press conference noting that disinflationary process has begun investors took that to mean fewer rate hikes real soon and potentially higher stock prices that sent saws in search of disinflation and corporate earnings calls the script has flipped a little bit today the narratives changed a little bit today that's me looking for disinflation but what we're hearing from companies has not changed like even jobs report aside companies are still talking a lot about prices they are and look we just talked to Starbucks CEO of Rachel rogeri moments ago and we asked her if uh if we are seeing if she's seeing disinflation her items should no still seeing high levels inflation But ultimately I think at first it is important to break down what in the world disinflation is because it is not it is not deflation so here's disinflation uh just decoded it's used to describe the slowing pace of inflationary pressures look at another way it is a decrease in the percentage change in inflation it is not deflation so very important thing to just point out there and consider as you starting to hear these disinflation discussions pop up now where we might be seeing some disinflation here I went through a couple of earnings calls from this week going to start with Brinker seal Kevin hochman on his EPS Coley came on here on our Network yesterday talks about the turnaround at that brand saying that commodity inflation for the quarter increased meaningfully year over year and will continue to be a headwind although at a diminishing rate as we move through the rest of the fiscal year to me that smells like disinflation next up Otis CEO Judy marks they reported earnings this week I talked to her on the phone they said she said we see Commodities have already become Tailwinds in China we saw that last year they've turned now in the Americas but they haven't turned yet in Europe I would also call that some disinflation and the McCormick CFO Mike Smith on his earnings call McCormick of course the maker of some amazing spice that you probably rub all over your fishes and meats the impact of cost inflation will be weighted toward the first half of 2023 with Peak inflation in the first quarter so maybe some disinflation at the likes of McCormick and some of its competitors might take is this and it's something to keep in mind as we talk about this more not every company is seeing disinflation so be careful dot dot dot Bulls like I just mentioned Starbucks CFO Rachel or Jerry is still warning investors that inflation remains high and in some light items for them they're just not seeing costs come down disinflation after they had to do a period for some of these retail companies of discounting or price normalization again we could all use a price break at this point it's been a whole about two years of rampant inflation double digit increases get us uh get us some disinflation I mean to your point though about people being careful I mean some of the consumer products companies for example Colgate Palmolive said prices are still going up so you definitely have to pick and choose on that so true coming up a soft Landing may be priced in but that doesn't make it likely Yahoo finance is Jared blickery gonna break down today's morning brief that's next [Music] thank you [Music] foreign [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] [Music] [Music] so investors seemingly took a glass half full approach to this week's fed decision and press conference from fetcher J Powell despite more rate hikes on the table the general response was relief that disinflation was the word of the day but our hopes of a soft Landing premature writing in today's morning brief Yahoo finance's Jared blickery says this soft Landing has the holy grail for the pal fed an economy in which inflation comes back to Target and doesn't tip into recession Jared joins us now to talk about Goldilocks Jared I hate to disappoint everybody I don't think it's coming even Powell doesn't think it's coming if you paid attention to what he was saying Wednesday he was banging the table once again saying that he's going to raise rates it's going to be higher for longer and he doesn't believe that a soft Landing is a base case what he said was some analysts believe that's a possibility he thinks it's a possibility but that doesn't mean that majority opinion rules here now NASDAQ is down one percent I'm going to show you the three day here I thought it was important to look as a potential reference point because given the strength of the payroll's number some people would say well a good news report is actually a bad news report for the market so we did see this initial sell-off but we are right back up to the starting point there so I I didn't tweet this morning but I did say to a few people here if we close green on the day that's going to be very bullish for stocks because you look at the longer term Trend here we have just broken out to the upside we have a series of higher lows and higher highs so could be bullish for stocks now I want to get back to the jobs report because a few interesting Trends here I was noticing that construction jobs on a year-on-year basis were actually going up and it's at this stage before a potential recession that you would expect that to be going negative instead it's going positive and it's already positive to begin with so when we see the job losses we see them initially in startups in high growth we've been reading those headlines manufacturing construction whole sell trade and then we start seeing it bleed into the other sectors like retail Financial Services professional service and then late stage later on in the recession we finally see decreased spending habits hit the Leisure and Hospitality sector those people are laid off same thing in information which includes Us in the media as well as software Mining and lodging kind of its own thing education and health government and utilities now government I should also say saw a big increase in payrolls and that was because of the effect of University workers who had gone in strike coming back into the market so between that education and that's our part of the University thing and also construction that's where we're seeing a lot of these outsized gains I think it's been really important to see if that changes now in terms of construction there are so many commercial real estate projects going on right now they are making up for the lack of construction in residential retail or residential construction and that overhang that is expected to change in about the middle of the year so we could see these construction numbers increase over the next few months or at least stay the same and then roll over anyway none of this takes away uh in this jobs report the potential for a soft Landing in my opinion um I I think a soft Landing is even less likely than it was on Wednesday very interesting and as you mentioned that is not what the market is currently passing in so we'll see who ends up being right chair blickery with the morning brief thank you so much appreciate it so is this a soft Landing trade is the market right or has a January jobs report changed the landscape in some way BlackRock says it sees the market and Central Bank disconnect resolving and favoring higher rates joining us now to break that down is Wei Lee BlackRock Global Chief investment strategist Willie thank you so much for being here um so given what we just heard Jared talking about given where the markets are given when we heard from the fed and the job support this morning there's a lot buzzing in our heads obviously what do you think is the likelihood of that soft Landing scenario at this point well if we look at market pricing so far this year it's not even pricing in soft Landing is pricing in takeoff right it's probably inflation to come down is pricing growth to avoid a recession altogether it's also pricing in central bank's cutting rate starting meet this year so that is really markets priced for Perfection and in the near term Beyond fomo and chasing momentum it's hard to see a fundamental reason for stocks to keep pushing higher you talked about a very strong labor markets indeed I mean like we always thought that labor market is very very tight but even this number is higher than our expectation maybe there are some seasonality Factor at play here but the bottom line is that the effect of the over tightening by the fat have yet to be felt by the labor market and that means service inflation is likely going to be persistent core service inflation acts shelter is likely going to be persistent because of the wage component and that means actually interest rates yes they will Peak and they will pause but they won't be able to start cutting rates this year which is also why we're currently underway development market equities we prefer emerging market equities because of global Dynamics with China reopening in fixed income we want to stay in a high grade credit for their income potential and we also like front end of the Government Bond Market because of the income potential okay so that starts to get into what my question was because for a lot of investors out there their New Year's resolution was just simply in 2023 not have the same type of losses that they may have had in 2022 and so now for them what is a disinflationary environment portfolio Playbook that they can enact and strategize well if you believe that we're in an environment of disinflationary disinflation inflation falling down very very quick quickly not only to four percent three percent but all the way to Target then it's a outright risk on type of Playbook which is essentially What markets have demonstrated so far this year but because of our view that it's easier for inflation to get to four percent just from good service rotation along but to go from four percent to three percent and Below all the way to Target then we're talking about the sticky components of inflation related to wage which is hard to actually see that transparent which is why we wouldn't kind of trace this uh this this this momentum at this juncture I would say though to your point about you know everyone starting the new year wanting to avoid the sort of performance that we saw last year there is a lot of cash being deployed in to participate in this rally because of formal fear of missing out and I think that explains part of the momentum that we're seeing and just in addition to short squeeze that we have seen some signs of as well and alongside these jobs numbers uh today we have earning season still going on Tech of course wrapping up what have been some of your biggest takeaways well we're actually seeing signs of margin pressure coming through right so we're seeing sales growth outstreaming earnings growth which is the the result of margin coming under pressure expectations have already been lowered and yet beats is below historical average so we're actually seeing what we would expect from earnings but that's not being listened to by markets you know like even the the misses are being rewarded with positive return on the day of the earnings release which means that the attention is focused elsewhere it's focused on inflation it's focused on central banks not so much on the fundamentals but at some point as technical factors wash out focus will shift back to fundamentals are the fundamentals bad for Corporate America at this juncture is not going to be as good as What markets are pricing for we are expecting a mild recession we're expecting a mild earnings contraction around a minus six percent for S P 500 versus currently markets pricing in high single digits for earnings growth so when not expecting a very very bad outcome for fundamentals but currently market pricing is very good and that's where the disconnect is some execs have tried to Pivot the attention towards their international business and primarily looking at some of the potential rebound or the growth in India and China particularly which kind of mirrors what we had heard from the IMF but is that enough in that kind of global picture to buoy them or offset some of the declines or near-term headwinds that they might see in the U.S and emea well if you look at how oil price has performed it's falling a bit but it would have fallen a lot more if China restarts didn't pick up momentum as we saw so far this year so this theme that you talked about in terms of pivoting towards in the international market is also how we see our Equity allocation currently playing out as well we see U.S Equity markets being kind of priced for Perfection at its juncture International equities look more interesting Emerging Markets equities look more interesting especially given the context of a weaker dollar after last year as well and also the fact that yes we see recession but it's a mild recession so we can move on and move through it always great to get your insights Whaley BlackRock Global Chief investment strategist uh have a great weekend stay warm well I do thank you all right today's unusually strong jobs report dashing hopes of a dovish fed this even after less hawkish fed remarks and major earnings all within the span of a few short days let's get a broader look on where the economy is headed I'm Marty Walsh U.S labor secretary joins us now Mr secretary always nice to get some time with you your top takeaway off of this report you know it was a good strong report uh certainly uh far better than expectations and when you look at the unemployment numbers and there's a rate uh three points four percent unemployment rate the the lowest since May of 1969 uh the black unemployment rate 5.4 percent the second lowest are ever recorded uh since the 70s that when we started recording those numbers uh we've seen strong gain in business development business and and in hospitality and Leisure and certainly in health care so you know it's a good strong report it shows that you know 12.1 million draws of an end for the economy since president or or created since President Biden has has taken office so you know it's something it's good momentum it is good momentum Marty excuse me secretary Walsh it's Julia and what do you expect that momentum to continue what do you think happens from here going into 2023 how are you sort of thinking about the year and preparing for what we're going to see in the job market well you know I think you know certainly this number jumped off the page when we saw it and it was a big number I think that you know you think we saw labor participation rate tick up a bit there's still many openings in the United States for jobs so I think that our job our Focus my focus will be working making sure that we get that participation rate up even higher at getting more people into jobs whether it's training or apprenticeship or Workforce Development so there is real opportunity here you know we talked about a little bit I've talked about it for the last last year on this call on this phone on this interview I should say uh you know I think that that some of the policies that we laid out there uh you know the chips Bill the infrastructure Bill the IRA those are going to create more jobs as well I mean some of those jobs might be replaced from other areas that are slowing down but but I think there's real opportunity here moving forward we've talked about those jobs that are going to be created and kind of classifying them as good paying jobs that would allow people to earn a living and for the environment that people have had to navigate through over the past year and change it has been one and where prices are higher for everything from the Necessities to all the way through the services that they choose to pay for as well and so when you think about that Target of what a good paying job is you know how does that change within the administration perhaps even quarter over quarter at this point so that people do have the opportunity to kind of maintain the ability to save and earn a living as well yeah well I think first and foremost you know we've seen wages grow 4.4 percent year over year inflation's roughly 64.6.4 percent so I don't think it's just about closing the gap between wages and inflation it's about creating a pathway for families to be able to get into the middle class buy a home buy a car put keep keep food on the table and be able to have a little bit Money in the Bank savings so I think that that's when I think of that that's what I look at it's not just simply closing the Gap and you know two weeks ago I was in uh Switzerland in Austria and I was looking at the apprenticeship programs there and and not just looking at the programs laying out but really about the opportunity for middle class and you know I think that we just have to continue collectively to work together I think Congress made a determination over the last two years to make major investments in infrastructure and other things I think what we're doing to do now is capitalize on those Investments so it's again it's not just about closing the gap between inflation and and real wages and year-over earnings it's about making sure people have long-term sustainability into a job that they can they can be proud of and allow them that opportunity as President Biden said build an economy from the bottom up in the middle out Mr secretary when you travel around around the country are you just surprised that you know so many folks on in the markets are talking about a recession I mean do you see any signs of recession in the places you travel to no you know I I kind of you know I said a long time ago I'm not I think this economy and what would what we're experiencing right now is very different it's hard to it's hard to put into words and I think economists are trying to figure out what to how to put this into words and you know I think that we just have to keep signs on making sure our construction markets are strong making sure that you know when you have conversation around the tech sector laying people off you want to see if that's a short term or is that a long-term problem and again just monitoring those and responding and in 2021 when the president took over you know he laid out a plan to get people back to work in 2022 the beginning of the year he laid out a plan on inflation because that was a big issue on gas Rising gas prices and we're working we stated those plans and I think that Folks at the White House and and working with the private sector have done a really good job of trying to identify a challenge and addressing those challenges I'm glad you mentioned some of the layoffs within the tech sector labor secretary because when we think about the reason that's been given by some tech company is it's because they're moving towards solutions that are more artificially intelligent and to increase productivity from their perspective but I wonder from your perspective whether or not artificial intelligence if AI is a threat to some of the employment situation goals more long-term how much obviously everyone's it's it's somewhat of a concern in employment goals obviously I can't say it's not but I think long term I'm not sure you know I've heard a lot of different reasons why several different reasons why the tech sector is making layoffs uh you know I think that it's kind of a a watch and see approach As you move forward here to see see what happens I think in those Tech sectors you still need people you still need people invested in those areas and I'm not sure how much artificial intelligence maybe in the long run there'll be a lot more artificial intelligence I think in the short run you're still talking about you need a Workforce but again you know I think I'm always at the mindset let's not panic about about modernization let's let's try and work with it and see how we can move forward with it um and finally Mr secretary um there's starting to be a little bit of turnover in this White House Brian deese for example just confirmed he's going to be stepping down there are some reports I I can't imagine you're going to comment on this but I got to ask you about it anyway there are some reports that you've been approached to head up the NHL players Association are you getting antsy there at all what are your thoughts on on this year and whether you're going to be sticking around well I can tell you I'm not going to make any any personal news today uh and you know I think that I think that when I think about the job I have and other folks in the White House they have uh you know people have been working really hard for the last two years uh for the Amer on behalf of the American people at the direction of President Biden uh and you know and this this job that I'm in today certainly is something I I would never have imagined in in my life never mind 2019 and early 2020 and when the president uh called me and asked me to be his labor secretary you know I left a job that I love being here at Boston to serve not just the president but the American people so I enjoy I love my job I like my job and we'll see what happens in the future all right we always enjoy talking to you on uh the jobs day U.S labor secretary Mari Walsh good to see you stay warm out there we'll talk to you soon thank you all right it's been a good week for Spotify investors it shares closing are more than 20 gain falling much better than expected earnings our chart of the day helps explain this game as you can see spotify's monthly active users grew 20 to 489 Million last year that marks an acceleration for the 18 18th up percent growth rate seen in 2021. we'll be right back with another look into today's jobs report that's next thank you [Music] [Music] foreign [Music] [Music] [Music] [Music] foreign [Music] foreign [Music] foreign [Music] [Music] not just the job support today we also got other economic data in the past few moments the Services Industries are still growing and growing in a pretty big way in fact we saw the institute for Supply Management Services index it's non-manufacturing index up by the most since mid-2020 so it was up six points to 55.2 50 and a half is what economists have been estimating here so we keep talking about it through the prism of the jobs report this morning Services jobs versus manufacturing jobs right what's happening on these two sides the economy renew manufacturing was slowing down Services was holding up pretty well we've also been talking about Services inflation versus Goods inflation but like all of this price is paid the price is paid component of this slowed down a little bit from December to January but not by much to 67.8 from 68.1 look another strongish data point here and the market is off its lows I love what Wei Lee from BlackRock said there is still this fear of missing out and missing out on this rally so despite data that would suggest maybe that fed pivot is later off in the year you still see money coming to this Market or you just see investors holding their positions that they've bought up over the past few weeks I think it's a very good point by Whitley and to your point Julie fetcher Jay Powell had kind of been a precursor to some of that or at least commented on what we knew to be very true because of the data that was already showing up and saying that they expect inflation to continue moving up for a while but then to come down assuming that leases continue to be lower he talked about Supply chains being fixed demand shifting back to Services shortages on the supply chain being abated as well so all of that kind of coming back and in through this reading as well this morning yeah and I should mention we also got the s p Global PMI which is sort of a similar number but it's still showing contraction they cut the the composition of these two different measures is different so that's part of the reason why you get that anything else no more Julie please stop it I think I think that's it maybe anybody want to report earnings right now saws is ready for you coming up the markets may be down today but carvana is still climbing higher and Asbury is going to dive into that story up another one percent today really kick it into gear [Music] foreign [Music] [Music] [Music] [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] thank you [Music] [Music] foreign [Music] welcome back to Yahoo finance live on this Jaws report of Friday I'm Brian salzi here with Julie Hyman and Brad Smith Market slammed as investors digest turbocharged jobs numbers with a whopping 517 000 increase in jobs for January Brad let's get over to you right now we're seeing sucks off the lows of the session off this strong print but still stocks are still down yeah let me show you what a slam Market looks like here on the day Dow Jones Industrial Average right now lower by about four tens of a percent so just off of our session lows there but still uh down on the day the NASDAQ Composite you're seeing that lower by about one percent here S P 500 that's lower by about three quarters of a percent here and so just to put this in context in the move that we've seen over the course of this week still net higher there I'll put this on a line chart for you for the folks that don't like candlesticks out there but anyway net higher over the past four days by about 3.3 percent we'll see exactly where we end and perhaps can hold on to I would hope at this level can hold on to these gains for the week that we for the week that we have seen but also taking a look at some of the other major areas that investors might be keeping their eye on today and I want to go on over to the NASDAQ Composite because that will give us a look at some of those Mega cap tech stocks that have reported over the course of this week where you had Amazon and apple as well as alphabet or Google reporting last night all of those companies in Focus right now Amazon and Google lower Amazon you've got uh deep red there down by about 5.4 percent Apple holding on to gains actually right now which is an interesting move considering the move lower that we saw on the reaction to earnings yesterday evening it had actually moved lower by about five percent at one point and then started to pair some of those losses after the leadership team started to speak about the international opportunities namely India and some of the conversions that they've seen they're an iPhone as well as in China as well in the opportunity there so that's up right now by about two and a half percent and then just lastly here alphabet you're seeing that lower by about 2.8 percent Google alphabet Alpha Google whatever guys carvana that's also in Focus Shares are in Focus after an epic week amid a major short squeeze Yahoo finances and Nez foray yeah you know she's on the case she's been tracking this one shares right now are up by about two and a half percent and that is help us break this one down yeah this has been a really interesting stock to watch over the last week before but first let's back up for a second to talk about what Short Selling is and what a short squeeze is so short selling is when investors for a fee will sell borrowed shares with the help of a broker and they agree to replace those shares by a later date that means that they're covering their positions now short sellers are betting that that's those shares will go down in price and that spread to the downside would be their profit a short squeeze is when a stock Rises and shorts cover their positions buying back shares at those higher prices literally getting squeezed out of their positions and that's what creates that upward movement in the stock price now we saw this happening with carvana where carvana's price moves and this is a quote from our friends at S3 Partners carvana's price move has made it one of the most squeezable stocks in the U.S with the short interest of 67 percent of the float the float is the number of shares that are available for trading and short Interest really gives you a sense of how investors feel about a stock that they believe that the stock will go down in price now carvana's all-time high remember was at 370 dollars back in August of 2021 last year the stock was down 98 percent this year year to date the stock is up about 200 percent because you are watching short squeeze on that on that stock and you see it on the screen right now other notable names that have also had short squeezes in the past of course AMC gme you know the drill there so what are the other squeezable stocks that uh maybe could be I mean carvana you know is not alone we have seen this happen with some other companies some of them you just mentioned right exactly and usually these are companies that are facing challenges and so investors are betting that share prices will go down Lucid is another one lucid's a short interest is 25 of the float and we saw that stock really squeeze laps Friday on that headline that was a speculation of a buyout so these headlines are the catalysts and then they will create this these massive short squeezes and in fact I had a analyst from cfra research saying this is why it's so dangerous right now to be in electric vehicle stocks because they got decimated last year investors are betting that the share price are going to go down and this creates a short squeeze when you see a headline and the share prices go up peloton's another squeezable stock Open Door coinbase Wayfair some of these companies watch out squeezable stock I like that one that's right thanks so much appreciate it all right before we had to break Goldman Sachs analyst Eric Sheridan staying bullish on Meta Even in the face of the stocks post earnings surge on Thursday Sheridan rates the stock a buy and sees 10 more upside says the analyst while debates will likely persist around product Transitions and Industry platform headwinds in the quarters and years ahead we remain focused on meta's large-scale audience across their family of apps against which the company can continue to align evolving consumption habits within short form video messaging Commerce augmented reality and social connections lots to consider there by rating by Sheridan coming up Coles is announcing a leadership shake-up Julie is back with that plus a look at other top headlines next [Music] foreign [Music] foreign [Music] foreign [Music] foreign [Music] thank you [Music] here's a look at some of the other headlines that we are following right now and we start with retail giant Coles announcing interim CEO Tom Kingsbury will remain as permanent leader of the struggling chain Kingsbury took the top job in December after former CEO Michelle Gast left Ford Levi Strauss Kingsbury was a nominee of activist hedge funds McCallum advisors and Ancora Holdings with whom the chain agreed to other terms as it tries to reverse the decline in retail sales as it comes under activist pressure turning out to 3M the eighth largest shareholder in the group is calling for better performance or a better chief executive this according to multiple reports a German asset manager invested in the company raising fears about the conglomerates recent earnings Revenue expectations and Outlook and accuses leadership of being overly optimistic in its assessments 3M recently announced layoffs despite job losses bankruptcy for some of its units and other challenges and Twitter is trying to woo back advertisers during one of the biggest sports events in the country the microblogging site offering advertisers a three-day ad package with up to 250 000 worth of free ad space that's according to the Wall Street Journal the offer is described as a fire sale and we'll see ads run ahead of NFL highlight Clips Twitter's been trying to turn around in Exodus of advertisers spooked over concerns about new owner Elon musk's approach to moderation among other things the platform has traditionally generated significant revenue from the Super Bowl as advertisers hope to amplify their game Day ad content coming up Amazon's Cloud sector took a hit in the fourth quarter where it didn't really take a hit it just wasn't as amazing as it has been as of late we're going to discuss that with an analyst from cow index [Music] foreign [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] taking a hit after the e-commerce shrines reported mixed quarterly results but it's the company's Cloud division getting some Buzz as Amazon web services growth it decelerated while also falling shy of analysts expectations to dig in this further we have John Blackledge who is the common managing director and Senior equity research analyst here John great to have you here with us on the Day post earnings for Amazon just want to get kind of a broad brush stroke of your take from Amazon yeah I mean if if we look at 4q and 1q guide um we'll maybe start there so 4q revenue and up up income beat led by accelerating uh third-party uh retail Revenue growth um while AWS growth slightly missed uh the 4q op income of 5.4 billion x one-time items uh was above the zero to four billion guide range then for 1q so that was good so for one Q Revenue guide range bracketed consensus estimates despite the macro headwinds and further Top Lane D cell at AWS and then the op income guide of 0 to 4 billion also bracketed Street estimates uh led by efficiency gains at retail Biz offset by AWS softness so we tweaked estimates we took the price Target up to 150 from 140 mainten outperform you know Amazon shares uh were up 31 year-to-date going into last night I think they're tracking down five six percent right now and I think as you guys were mentioning before I got on um I think it was the Slate AWS us miss and the guide was a little bit softer um and that offset um actually better you know better retail revenue and margins John um is Amazon's leadership position in Cloud at risk at all I don't think so uh they are number one um on an incremental basis in terms of their incremental Revenue um it's probably um you know I think this year we have incremental revenue of nine or ten billion um and that's probably as much or more than Azure and Google Cloud combined uh so um you know I think I think what they said last night was like like a lot of companies like we're seeing on the advertising side too uh is the macro is having an impact companies are trying to uh find savings wherever they can um and that includes uh you know kind of in public cloud and and I think um you know we we had alphabet report also as well last night and Google Cloud's growth was really strong um but it it missed what we had it was and it was a deceleration so I think everyone's feeling it it's just like AWS is the biggest they they're working off the largest base uh and um they're not immune to kind of macro uh various macro headwinds Johnny disappointed that Amazon doesn't appear moving quick enough with cutting expensive sure they just had the recent riff or laying people off but they don't seem to be in the high gear of trying to get their margins up yeah I I think it's a great great question and and I think everyone was looking for the margin last year and we didn't get it we didn't get it for a lot of reasons um you had a higher labor cost with the head count ads last year we and I'll get to the cut the cuts um for this year uh energy inflation supply chain inflation uh doubling the Fulfillment Network the last two years all these various Investments as we get into this year um you know some of those uh headwinds are going to be Tailwinds um we obviously had the head count uh cut uh 18 000 heads uh cut um so I think we'll start to see that as we go through the year uh and then the energy and supply chain inflation um that's going to be at their back and I actually think you saw that kind of show up a little bit in the fourth quarter of their shipping costs uh were up about four percent uh so so that was a pretty big decel uh and obviously um we'll see what they do on the capital investment side we think it's going to be down this year we have uh capex down mid teen so but but I understand the question because I I think meta came out and they they said hey are our op-backs and our cat-backs are going to here and here and it was lower than their prior guide whereas Amazon um and actually alphabet didn't give that oh quantify you know kind of the cost savings but um you know when when I talked to them after the call last night they're like hey we're making surgical Cuts here uh we're doing head count Cuts we're streamlining as much as we can and I I think it'll show up as we get through the year but as we you know kind of said like that that 1q guide was um the op income guide was um solid but um after the the the fourth quarter op income number I think investors were also a little bit disappointed um John to just to go back to Cloud for once again not just at Amazon but but overall when do you think the CL like how long do you think this sort of dip in spending on the part of clients is going to last yeah it's a great question uh who's we struggled a little bit uh modeling it out last night for uh both the Amazon and alphabet but we basically think um it's going to we have the D cell in 1q I'll just take AWS for example um a further detail and 2q which I kind of feel like they didn't say that because they don't really guide Amazon but um that's what that's why I thought the messaging was and then kind of stabilizing and then maybe take it tick up maybe towards the end of the year but it will obviously be dependent on the macro um if the macro gets worse then you know it'll probably be you know probably be lower um but but I would say and we didn't get this number last night but they do put it in their filings they said the backlog audit at AWS is strong and and so you know we'll wait to see that number um but but yeah it's a little it's a little bit TBD to be honest with you hey John just quickly is there anything that could trigger uh super cycle type of upgrade for that cloud services division and I use that super cycle kind of analogy just to kind of pair back to what we may be used to even with an apple on the product side uh I mean I they're always introducing new products and services and I think it's I think governing the growth trajectory this year is the macro and then not to not to get away from your question but you know the the AWS for example um they uh basically their product cycle is it's kind of like a virtuous cycle you know they lead with their infrastructure services and then customers tend to need things and then that helps their Pro that helps them with product ideas and and leads to this virtuous cycle and so they're always innovating as is as is um you know gcp at alphabet and in Azure um but more so I think it's more more at least for this year probably more macro oriented um as it relates to um going back to the numbers and trajectory for the businesses John Blackledge Cowan managing director and Senior equity research Alex good to see you have a good weekend thank you coming up we'll get more reaction on those January jobs numbers on the other side of the break foreign [Music] [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] [Music] foreign [Music] foreign [Music] [Music] let's look between the lines of today's shockingly strong jobs report a whopping 517 000 rise in jobs for January doesn't necessarily mean strong gains across every single group some vulnerable workers finding the recovery uneven here with more Bill Rogers director of The Institute for economic quality at our Equity at the St Louis fed Bill always nice to get some timing through here where are you seeing the most unevenness because today at least from the vantage point of investors in the markets this was a good job support but your research may suggest maybe that's not the case yes good morning and thanks for having me and I think it's still okay to say uh Happy New Year haven't seen you since last year uh yeah you know it's uh what we're seeing in the data is number one as you said I'm and I'm very happy uh that we're continuing to see uh robust uh job creation because there is a long-standing relationship that it that uh as the economy improves you uh you end up seeing improved opportunity for black individuals for people with a disability uh for young people particularly those who are out of school but and they don't have a college degree and in our research at The Institute has shown uh early into the into the summer into the fall that many of these groups their employment population ratios that is the share of their populations that had a job uh have begun to have begun to fall oh we've extended that work and have found that uh that uh into November and December and probably this month we get the get the new data at the micro at the individual level we'll end up seeing that uh you know there hasn't been a vast Improvement but uh but the Slowdown has thus far been averted so the bottom line here is that for those loanable groups who typically have lower participation rates people with disability uh young minorities who are out of school uh Latinos at uh young Latinos that uh that there was an erosion into the third quarter or into the fourth quarter but that seems to have been abated in today's numbers will uh will help to continue uh averting a Slowdown amongst these more vulnerable vulnerable groups over the past two years we've seen a wave of pledges by every kind of Corporation and across sectors whether that be in the banking sector or whether that be in the athleisure and apparel sector about how we can start to narrow this Gap in in terms of the equity and and really kind of make sure that there are people who are not left behind given the fact that there had been so much disparity between um and within the racial wealth Gap there had been so much disparity for years uh and also almost baked it in so with that have you seen anything that's been successful within that regard thus far and those pledges and commitments well that's a great question and one of the things that we're actively trying to think about in terms of where do you start the counter of of of looking and starting to see if uh we're getting improvements and so um but so what we're doing before we're really diving into that area what I've been doing and my staff have been doing is really developing what we're calling cases for Equity uh just to help people understand such for example from a business case that we have estimated for St Louis or St Louis economy that that would be an additional six billion dollars in disposable income uh to the to the community if we were to pursue Equity economic equity in terms of in this case moving black incomes more towards those of wide income uh White incomes we've also seen like in Memphis um that that would be again another several billion dollars of additional uh disposable income that would come into the come into the economy and the punch line here or the point here is that uh you know as you saw you talking about these various businesses we're helping to provide a rationale or offering a rationale that if you uh help to act affirmly then that could be your own employment hiring and promotion approaches but it also could be being that good corporate partner in the community that uh that that there's a win-win here that uh will improve uh Equity but also well Prosperity will be uh broadly spread and experienced hey Bill it's Julie here um this seems like a compelling argument it's not an entirely new argument even if we have some new numbers around it right so what's what's the hold up is it just that we still have institutionalized racism that is that entrenched that is holding back are there more sort of specific things that you can pinpoint what's what is not working in this direction yeah yeah that's a great question and great to see you and you know one of the challenges is that as you said uh you know you have have uh these these these institutional structures that have existed for generations and it's uh very very hard to unwind them uh uh and so that's why I'm spending a lot of time traveling my eighth District I'll be in the delta Mississippi Delta uh next week talking to uh leaders there and sharing these these cases for Equity uh another case that we that have developed is borrowing some of the on the building on the Contin that work that Dr King did I was reading one of his recent speeches or his interviews where he was uh uh at the Southern Seminary and talking with students there and he and he he actually said like you said he he was building that economic case uh and he was perplexed at that time I was like why is it that uh that certain businesses really don't want to pursue Equity even though it would help to improve their bottom line and so you know my limit my role that I focus on is just really providing education providing those those narratives to people in their various communities to to that they can then use them in a cocktail party they could then use them in their workplace to to help themselves create change so Bill bringing this conversation full circle back to the news of the day as well within the employment data that we've been continuing to track of course there is the invaded unemployment rate for black Americans and that in comparison to the broader kind of average among the labor force participants but then you also think about the wave of layoffs that have also taken place and how that has disproportionately uh impacted some of the more kind of the the more marginalized groups within the workforce as well how can we ensure that there isn't a larger ranging implication or impact to ethnic groups that are underrepresented or had been underrepresented coming into this hiring wave that had taken place especially across some of the tech companies that said that they over hired yeah I mean that's a great question and I think some of the evidence that's been compiled is uh is is that what importance is transparency right is that uh people have have a clear understanding of what the what the rules of the game are um and I think also we've we've seen this the the important role of Institutions and I think in this report particularly there's another example of how institutions matter that uh that we saw that right Leisure and Hospitality that was one of the leading Industries where sectors that had had this had this job creation well at the beginning of January over 20 states were required to uh have required that their minimum wages be raised so what you may have gotten going on here is people were being attracted to uh pulled into the into the Leisure Hospitality particularly because you know wages again because of the institutional framework of of the government of the minimum wage that that those legislative pieces uh led to higher wages and then that went above what is called people's reservation wage that indifference between working and not working and they were drawn in uh now you know I have to caution that this is one data point uh doesn't make a trend so we'll be following this over the next few months and we'll check in with you as you do that bill it's always good to catch up with you Bill Rogers director of The Institute for economic equity at the Federal Reserve Bank of St Louis thank you and have a great weekend you too thanks coming up we'll do a deep dive into the state of hospitality with the CEO of Lightspeed that's next thank you [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] let's get back to the jobs report now and in particular one of the areas where we saw pretty big growth that we've seen consistently in the jobs report that is in Hospitality restaurants as well let's talk more about some of the challenges within that industry as they hire a lot of people but they probably like to hire more JP Chauvet is joining us now light speed CEO Lightspeed a vendor for many of those restaurants and you guys just came out with your state of hospitality report and it you said after inflation the largest issues are hiring new staff and staff retention so it being jobs day JP I want to start you there talk me through what restaurants are currently seeing on that front and whether anything is changing yes good morning Julie thanks for having me um nothing has changed from from the last time we spoke in this industry what you see is that restaurants and retailers also are having a really hard time hiring people and and here you're faced with the reality of you know the return from covid where the businesses are more complex than they've been they need to serve online and serve now of course everybody back in the restaurant and so that means a lot of needs for more people which which they're having a hard time finding and so that's why companies like Lightspeed what we do is we help them Implement technology to do more with less and so what we did see within this data from the employment situation was Food Services drinking places they added 99 000 jobs that really made up the brunt of that Leisure and Hospitality uptick there and of course this has been the recovery story that's needed to happen is it happening quickly enough from your perspective and and what further kind of uh incentives perhaps need to be put out there for employees to start making their way back into this sector particularly JP yeah I I think I think really what happened is during covet everybody realized that there's a life outside of hospitality and you know they were let go and now they're really having a hard time bringing people back I know that it looks good I mean we we've hired quite a few but there's still a long way to go and and and really the you know the majority of our customers we have we have about you know 167 000 customers the majority of our customers around the world are still lacking staff everywhere in the kitchen in front of house and so it's really been very difficult for them and so here what we're seeing is they they know that they need to automate mundane tasks they need to they need to have fewer servers or fewer waiters uh you know do more and serve more tables and so they they're they're turning towards technology right now to try and and kind of compensate to this lack of people but but there's still a long wait a long way to go of course that's where your sales pitch comes in right that you guys sell some of that technology for your clients is part of the argument that they won't need to hire as many people if indeed they're using your technology I mean this is sort of part of what is a big debate right now whether we're talking about the kind of Technology you sell whether we're talking about AI which is a Hot Topic right now there's this debate over whether it's replacement or augmentation how do you talk to your clients about that I think it's really doing more with less and I think so I'll give you an example a customer a large customer of ours in Europe they went with new technology for table side so with people with iPads serving at the table and they told us that they increased productivity per waiter by 30 just by implementing a you know a tableside POS so I think there's a there's a real Runway here and there's an opportunity for the industry to really reinvent itself and to to use technology to just provide I think two things a better experience for your customers and also at the same time just augment productivity and and so 30 just by implementing you know a table device uh platform instead of having your old you know point of sale on the counter so I think there's a lot of a lot of room we're hearing also that you know all of the new payments Technologies you know with QR codes and tap a table and all of these are also just uh just there to augment productivity so I think the the big thing we hearing from all of our customers is we need technology to do more because we can't hire and the cost of Labor is actually going through the roof so the only way they can they can bridge the gap to profitability is by adopting technology let me just pick up on the last thing you said the cost of Labor is going through the roof we've had so much debate today over and we've been listening to company conference calls about whether wages or costs of any kind are going up at the same rate within Hospitality are wages going up is the increase in wages slowing down well it for for sure that the wages are not going up um at the same rate as the cost of the goods so I think you know and I think Julie when we were together in New York we had a restaurant tour say do I need to put a burger at 30 bucks to be able to strike a profit so I think really what you're seeing is the cost of goods has gone up quite drastically the cost to serve has gone up but this doesn't translate in the consumer accepting you know the the the the the increase in the good or in the cell sale price of the good so I think that there's a real challenge there and I think the only way out is to really have fewer employees or fewer waiters or fewer staff that can automate as much as possible and I think here when you look at what happened with covid you you really had you really have what what we call Omni Channel or multi-channel you have all these delivery networks that you have to manage and and so there's and there's a lot of silos there's a lot of room to just do more in terms of how do I adopt technology how do I you know synchronize all these channels and and drive a simpler business and I I don't think the wages uh going up or I don't think they'll they'll be able to cover for all of that if they don't adopt technology and Technology hasn't evolved for you know arguably 100 years inside of restaurants sure and for a technology prioritized business like your own that I imagine has some very favorable margins that come along with that have you had to reevaluate your own cost structure right now well we are like like everybody else in this industry our cost to serve has gone up because you know we have a very large staff of support people even cost of infrastructure or Amazon or so we are facing exactly the same challenges as everybody on the planet which is our cost to service gone up and how do we continue to serve customers in a profitable way and and so I think for us we're we're looking at different ways to to try and adapt to that world and and one of them of course is scale and so we're trying to scale as quickly as possible uh so that we can uh we can lower the cost to serve JP Chauvet who is the light speed CEO joining us here today JP that's all we have time for here today we'd love to check back in in the future appreciate the conversation thank you very much thanks for having me coming up everyone we'll do a quick recap of the January jobs numbers and we'll take a quick look at Apple before we depart you for the 11 A.M hour [Music] foreign [Music] foreign [Music] thank you [Music] thank you [Music] foreign [Music] foreign we started the 9 A.M hour three things we're going to end the show with three things as well first up we recap the January jobs report and as we know big number here 517 000 jobs added to the US economy in January unemployment falling to 3.4 percent stocks are not doing what they were doing earlier out of the gate we had a big Decline and now we're mixed things aren't that bad after all everything's okay you guys well it looks like it's okay with apple I think Apple this little this reversal we're seeing here Brad maybe they're going back to what we caught on the uh after the call last night after that earnings call where Tim Cook mentioned a little bit of a budding turnaround in China maybe people are reviewing this uh conference call performance by Tim Cook and saying you know what we like what he said on China we'll be uh we're getting here and buy that stock yeah when we caught this earlier on in the hour here and continuing to look like that move was actually heading on to some of the gains that we've seen earlier it was up by about two percent earlier now up by nearly three and a half percent so for Apple services and greater China was really two of the bright spots in the earnings report perhaps as you mentioned a moment ago investors given a little bit more outside weight to that yeah and also Jim Silva from City telling us that FX the currency effects were a big problem for Apple so that doesn't really imply that there's a fundamental issue with demand necessary thoroughly at Apple if it's sort of currency conversion maybe maybe that at least with suva's View and finally thing number three at least on my radar remember we've been talking about this this AI phase right now Harkens back to the slap a blockchain on the name of something and it goes into the moon there's a company called nerdy that I'd never heard of before nerdy apparently said it would debut two new AI powered products and integrate chat GPT into its existing product suite and look what happened to the stock it's up by 14. sounds promising right now it's about a 300 million dollar coming so it's a little company say something about AI BuzzFeed similar we saw that move the AI slap on everybody wants that AI magic right yeah all right coming up in the next hour secretary blanken's trip to Beijing is canceled or at least postponed after the detection of what has been called a Chinese surveillance balloon over the United States Rochelle acufo is going to discuss with an analyst a very fascinating story that does it for us have a great weekend everybody [Music] thank you thank you [Music] foreign [Music] [Music] [Music] thank you [Music] foreign [Music] welcome to Yahoo finance live it's 11 A.M on the East Coast 8 A.M on the west I'm Rochelle acoufo and here's a look of what I'm watching this morning the January jobs report blows past expectations with 517 000 workers added and hugely complicating the picture for the Federal Reserve now is this a big shot or just a noisy number we'll discuss and tensions between the US and China ramp up and its official Secretary of State Anthony blinken will not be going to Beijing for now we'll tell you why and look at the ties between the world's two biggest economies and Tesla defines January's various headwinds to report strong sales in China is this all down to those price Cuts though we look at how Elon musk's industry leader is managing to Buck the trend but first let's take a look at the major indices as we see now a mixed picture despite all three starting in negative territory buoyed a little bit as they start to digest some of those job numbers trying to sort out some of the noise and similar seasonality and some of the changes that the BLS made but still we see the Dow they're the only one in the green they're up about 40 points the s p down about two tenths of a point two tenths of a percent and the NASDAQ there down 27 points as well now of course let's take a look at the treasury market because any indication that the FED might have to do a bit more work with that from jobs number but we did see more going into yields today you see the five-year there up almost five percent on the day the 10 year up four percent and the 30 up two and a half percent on the day foreign well the US economy added 517 000 jobs in January blowing past estimates of 188 000 but not all may be what it appears as mentioned by RSM Chief Economist Joe Bruce Ellis on Yahoo finance earlier this morning take a listen let's all take a step back and breathe January has lots of seasonal noise attached to it this report however strong exaggerates the true underlying pace of hiring in the economy so taking it with a grain of salt there so here to dissect this further is Yahoo finance's own Innes foreign there are a couple of factors to take a look at when it comes to this January report one of them is population adjustment when it comes to the household survey this is one of two surveys that is considered in the jobs report and the household survey data for January 2023 reflects updated population estimates so there's that there's also the issue of seasonal hiring and this is a quirk in the labor employment survey now retailers tend to hire seasonal workers in the fall than they let them go in January but last year last season there were less seasonal hires so perhaps fewer workers laid off so that would boost those January numbers as well and then you have to take into consideration a seasonal adjustment so one year ago you had kovitz omnicron variant that reduced payrolls but it wasn't an issue this past January so that helped January's employment total after seasonal adjustments also want to point out the University of California workers that went on strike you had last year and that lowered employment in December that's been resolved so that would increase in the employment in the public sector by about 36 000 jobs according to economists and certainly an eye-popping number there but good to have that that context there that makes January's numbers a little bit skewed here but a big thank you there to our very own Innes foray well as January adds an eye-popping number of jobs to the US economy the rate of employment came in below expectations as average hourly wages cooled down to 4.4 percent in January so what does this mean for markets as investors navigate the slew of economic data and earnings we're here to discuss it is Jeff klingelhoffer Thornburg investment management co-head of Investments good to see you Jeff so as we break some of this down obviously you have this bumper number some nuances in there as well what are investors making of this picture as we saw the markets tank initially but at least starting to come back a little now yeah look I think this is a monster of a jobs report and really I think this is the Goldilocks scenario for both equity and fixed income right coming into the year we've seen fixed income yields decline we've seen equities move notably higher and all of this is on the strength of the consumer and I think what we saw from this morning's jobs number is just confirmation the consumer continues to be strong and ultimately where we're heading is a period of sustained higher inflation coming from a very strong labor market and sustained higher wages this is great for markets so then what about for Powell because we know he he tried to give a lesson well he it ended up being a more dovish tone at least from the Market's perspective does this jobs report at least take some of the pressure off him saying look clearly there's still some work to be done I don't think it takes the pressure off of him but look in my perspective chair Powell has been incredibly transparent with markets they're going to continue to hike they're going to find a terminal fed funds rate of slightly above five percent and then they're going to pause for a prolonged period the Market's been discounting this for the entirety of the Year thus far and really through the much of the last year the Market's expecting that they get to terminal feds fund and are forced to cut very quickly thereafter and I think again what this jobs number this morning points to is confirmation that ultimately the economy is at least as of now on a very very strong track again pointing to sustained higher inflation pointing to sustained higher rates and really to me an opportunity within fixed income markets so let's talk about some of these opportunities what are some of the best ways investors can put their money to work right now yeah look I think as I've been listening to the show this morning we hear the the looking forward there remains a significant amount of uncertainty but that's really where fixed income shines yields are notably higher today that the consumer at least as of now remains on strong footing for us it's Focus focusing on both yield generation primarily within the securitized market focusing on the higher quality portion of the consumer side and balance that out with longer duration treasuries right the ability to reinsert ballast within a portfolio and you highlight in your notes the the income component of fixed income what are you honing in on there sure for for US Today's Marketplace is the old world of fixed income is back the ability to have not only some capital appreciation which we've seen here to date but really it's the ability to generate a very interesting uh level of yield today to find six percent in a broad fixed income portfolio is relatively easy and six percent offsets a lot of the inflationary pressures for your average investor but importantly for managers that focus on the defensive component of fixed income like we do here at Thornburg right you have a rates backdrop where if we do head into a much deeper recession ultimately the FED will be forced to cut rates and you can reinsert ballast into the portfolio so the ability to generate an interesting income and offset with really the preservation of capital side of fixed income today is tremendously tremendously interesting and one of the ways you look at keeping your sort of your asset allocation a bit more balanced is also keeping an eye on what's been happening with gold under some pressure today but still positive for the year so far how do you see that progressing sure I mean as I look at at really coming out of uh uh the the press conference this week I was perplexed at the market reaction right the only way that I can square a move higher in equities and a a move lower in yields is the Goldilocks scenario that at least as of this morning it seems like we're getting where labor remains very strong yet a potentially inflation comes down now it's not my base case but into that the potential the FED Cuts but the reason why I like gold here is is looking forward the FED would be cutting in that scenario looking back with very high inflation right stimulating the economy at perhaps the exact wrong time so to us and and within our asset allocation portfolios gold can serve is a pretty interesting place it's a hedge on on future inflation if monetary accommodation does continue and Jeff depending on your time Horizon say if you in the one year perhaps one year mark versus some of these longer time Horizons really planning for what happens on the other side when the FED does eventually pivot or perhaps decrease interest rates what's the play there sure for us it goes back to again yield generation but also a focus on defense while across the cycle the world of high yield looks pretty interesting we worry about the potential future volatility right last year was entirely explained by the movement in risk-free rates But ultimately spreads were relatively contained and that continues into this year and so we're at this point a little hesitant to move into the world of high yield very selectively more defensively oriented companies companies like healthcare that continue to have pricing Power Insurance Etc but but really what we want to focus in on is not just our base case one of at least a Slowdown in growth or perhaps even a mild recession but importantly as fixed income investors we also need to focus on the left tail a much deeper recession So within the world of high yield and income generation always keeping an eye towards defense and building robust portfolios to perform throughout the cycle and certainly a lot of unexpected moves could be ahead but we'll be keeping an eye on what happens with the economy and of course how investors react Jeff Klink investment management co-head of investment thank you so much for joining me all right well shares of four driven downward following its latest Financial results as fourth quarter and four year 22 operating results came in below expectations to see the stock there off about five and a half percent now forward citing its lackluster performance in part to execution issues in an environment with supply chain and product production instability resulting in higher cost and lower than planned volume now the automaker also suffered a full year net loss of two billion dollars as CEO Jim Farley says the company is going to correct this with quote improved execution and performance now Ford is expanding its cost-cutting efforts now looking to eliminate considerably considerably more than the three billion dollars in annualized expenses previously targeted by mid decade all right coming up the bite Administration is reportedly postponing Secretary of State Anthony blinken's trip to Beijing but why well the reason might be out of this world stay tuned [Music] [Music] thank you [Music] foreign [Music] thank you [Music] [Music] foreign [Music] [Music] is it a plane or is it a Chinese surveillance balloon well according to the North American Aerospace Defense command United States government has detected and tracking a high altitude surveillance balloon that was seen flying over Billings Montana on Thursday my spokesperson for the Pentagon says they have been keeping an eye on the balloon for several days and say that it's traveling at an altitude well above commercial air traffic and does not present a military or physical threat to people on the ground now President Joe Biden was briefed on the balloon and took a military advice to not take it down due to the risk to the Safety and Security of people on the ground from possible debris Now Chinese authorities have confirmed it was a civilian Airship intended for scientific research all right well this comes of course as Secretary of State Anthony blink and was set to meet Sheed president Xi Jinping in Beijing in the coming days but now the Biden Administration has decided to postpone blinken's upcoming trip to Beijing following the news of that balloon now any future conversation between the two would make blinken the first U.S Secretary to sit down with the Chinese leader in nearly six years and the first of President Joe Biden's cabinet secretaries to visit China or for more on this we welcome in zombyu and Zoe Liu Council on Foreign Relations fellow for international political economy as well as the author of sovereign funds how the Communist Party of China's finances its Global Ambitions good to have you on Zoe so obviously you have this complication here with this trip being postponed what should we read into this will you try and sort of characterize it as to really this sort of disjointed relationship that the Biden Administration has had with Beijing yeah thank you very much Russia for having me everything be postponed trip to be honest I'm not necessarily surprised that to be honest part of this is because on the one hand neither China nor the United States have officially confirmed that the secretary Valencia is going to go through China even uh his trip is supposed to supposedly to have start to start tomorrow right now on the other hand obviously the complication of the balloon situation did not help at all but on top of this remember what has been having happening in the background there are a couple of things that I I'd like to highlight on the First on one hand that there is the schedule house Speaker visited to Taiwan and there is also a series of U.S export controls against uh Chinese entities and in particular highlighting Huawei and then finally uh as of yesterday the United States announced that weekend um addition of four additional base access in the Philippines though a lot of this really did not surprise me and I did go back to your point this has a lot of strength uh to the bilateral relationship so I mean when you have a backdrop like that and you and you have this visit that was supposed to take place what really is at stake here and what does this visit actually mean for the U.S China relationship is it is it a resetting or the expectations too high for that oh that's a great question Rochelle and I think reset is actually uh the word that many uh foreign policy communities both here in America and in China would be actually be really looking forward to and if anything you remember when the President Biden came into office back in 2021 the Chinese officials were really looking forward to a reset uh in the valid relations but unfortunately so far we haven't seen this and um a lot before even before um a secretary Clinton Secretary for Lincoln post a point is trip a a lot of the public opinions and the commentators or state-run media commenting um the perspective of his visit was the expectations was very very low because of all these things happening in the background and so we're likely not going to see some of the more complex issues with this first visit when it does take place but what is supposed to be on the agenda for this visit so supposedly you know I would say the the bottom line is the both the size they have very different expectations in other words that the expectation Gap is relatively wide so on the on the on the one hand uh the United States would expect that there would be would on the one hand meet high level new generations for Chinese leaders and they would also want to reaffirm the agreement during the buy then she meeting alongside the G20 Summit last year and it probably also would want to touch upon the issue of Russia's war against Ukraine how to end the war the rule of China and then probably we would also want to ask China to end the series of the sanction measures imposed on U.S entities and U.S individuals after a house Speaker Nancy qualities to visit to Taiwan last year and in other words a lot of these are meant to put a bottom line to prevent a crisis between U.S China in the relationship between United States and China however what the Chinese government and Chinese officials are really looking forward to is to on the one hand making sure that well you know crisis management putting on bottom line is not enough we are really looking forward to have exactly as what you are saying reach that in the relationship and more specifically the one probably your the United States to acknowledge or respect whether China considers as its core interest especially with regard to Taiwan and other sensitive issues such as xinjiang and when you speak of core issues and you mentioned Taiwan obviously the biggest semiconductor chip producer in the world but then you have you know the bright Administration tightening its rules of certain U.S Technologies to China starting to have talk of some limited investments in China as well and then so so what does that mean that I mean I'm assuming we're not going to have that conversation at this sort of meeting if we want to see any sort of progress but how does that Dynamic do you think play out so that's a very interesting question you ask in Russia and you know you are absolutely right you know semiconductor is really in the you write it to the core of the the conversation right now here however I would say you know for for us you know the United the United States interested in Taiwan is not necessarily to protect the Taiwan on its own I've been arguing this for a long time that you know we we our interest in Taiwan is not uh Taiwan per sea or Taiwan 70 or whatever our interest in Taiwan is really from our own interest you know supply chain and American business interest and to what extent the semiconductor supply chain actually it fit into United States national security interest and from that perspective actually China seized it very similar as well but on top of that in addition to semiconductor or let me step back regardless whether Taiwan has or has not a semiconductor China's perception or China's interest in Taiwan has always been or you know how the Chinese Communist Party Chinese policy makers consider Taiwan as part of China and that is something that Chinese leaders would not negotiate and as you mentioned they're coming from do two very sort of interests there when it comes to Taiwan but as we mentioned things like geopolitical tensions one of the reasons that we're starting to see some of these companies some U.S companies diversifying their supply chains away from China but there are obviously other factors at play as well break some of those down for us so oh that's a great question Rochelle again so in terms of I would say you know the core of your question really is about you know the factors out of play that might have accelerated or decoupling right so on the One Hand In addition to all these geopolitics and all that I would also say that actually from business interest perspective pure Market Dynamic perspective decoupling or or for that matter supply chain relocation already happened after before U.S China uh trade War and the pure reason for that from marketing perspective is really because labor costs in China has increased land cost in other words what made China attractive as a global manufacturing center is no longer there and then on top of that there has also been a lot of major policy swings from uh president xi's discussion of a common Prosperity the Crackdown of the tax sector a lot of these uncertainties made it it seems that China is no longer welcoming International business despite that the Chinese government and the national the ndrc the national uh the ndrc a state Council consistently say actually we are still interested in International Investment so policy makers wins adds to business business uncertainty and business don't like that and then finally covet really seals the deal in terms of you know major supply chain disruptions so a lot of play here a complex relationship we'll have to see what happens if secretary blinken does eventually make it to Beijing a big thank you there for your insights and Zoe new the Council on Foreign Relations fellow for international political economy thank you so much all right coming up Tesla defines January's various headwinds to report strong sales in China is this all down to those price Cuts though well disgust me [Music] foreign [Music] foreign [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] [Music] foreign look at Tesla and it seems price Cuts in China are paying off preliminary data from the China passenger car Association reveal the company's china-made vehicle sales surged in January up 18 from December meaning that Tesla sold 66 051 china-made electric vehicles last month now this of course comes amid a troubling backdrop in the world's second biggest economy Tesla's Shanghai plant cut output by a third in November in a bid to cope with Rising inventory now Reuters report this week suggested the EV leader is now planning to step up output at that facility over the next two months and to put that in perspective Tesla was the second biggest selling car maker in the nation last month after byd it shipped over 150 000 cars during that period now of course competition in the space has been accelerating quickly and China continues to be viewed as a key Battleground sales of new energy Vehicles which include battery-powered cars and hybrids are expected to grow in the nation in the months to come and to keep up with demand the company is importantly considering building an electronic electric vehicle plant in Mexico City according to comments from a presidential spokesperson the facility would serve as an export hub for the group The Factory is expected to cost anywhere between 800 million and one billion dollars Tesla shares on the rise today as you can see they're up almost five percent well a shareholder class action trial against Elon Musk and certain Tesla board members enters its final stage today Tesla shareholders are suing over musk's 2018 tweet saying he secured funding to take Tesla private Yahoo finance is Alexis Keenan is following the story and joins us now for more on this obviously a lot of people wondering what was going to happen with this what seemed like an off-the-cuff tweet but so much went into it so much and potentially so many consequences for this tweet and the one that followed so the nine-member jury that's hearing this case in California it's a federal shareholder class action against musk as well as Tesla as well as certain members current and former members of Tesla's board they could get the case as soon as today to start deliberating because in just minutes from now closing arguments are slated to begin now these shareholders they say that they lost billions of dollars in trades because they relied on that tweet from musk in 2018 in August that said he had funding secured to take Tesla private at 400 twenty dollars per share and that they relied on a second tweet that later that same day affirming that investor support was confirmed now over this three-week trial the jury has heard evidence from the shareholders from musk himself from Tesla's board members also economic experts as well as Tesla's former CFO for musk's part he testified that his tweets were quote truthful he said they came after talks with Saudi Arabia's public investment fund that gave a verbal commitment through its representatives and musk said that that commitment to fund this take private deal was quote unequivocal he also said that even without Saudi funding that he could have sold his shares in SpaceX to fund this kind of a deal and so he said he didn't necessarily need it also this jury here they're tasked specifically with deciding if musk believed that that funding secured tweet and the subsequent one if he believed that to be true at the time of the Tweet that's what they're going to have to decide they're also going to have to figure out if that information was material and that's the type of information that a reasonable shareholder would rely on in making decisions to buy or sell the stock also going to have to decide if the market volatility that followed those tweets if that is actually uh was caused if it was caused by musk's tweets there so a lot for this jury to take to deliberate they will likely get the case today after closing arguments and so I suppose we could get a decision even as soon as today Rochelle I mean this will be a fascinating one to watch I mean but how much money though do these Tesla shareholders claim that they lost based on musk's tweets so in this complaint the shareholders do not allege a specific dollar amount however they're talking about money losses during a 10-day period that was from the day of the tweet on August 7th 2018 up until the 17th now the market cap swing for Tesla during that time frame was approximately 12.6 billion dollars but then you had shareholder experts economic experts testify one in particular who was willing to put a dollar figure range for the regular shareholders who bought and sold and this is completely excluding all types of options contracts that existed during that time that expert testified that those losses were between 4 billion and 11 billion dollars coming to 22 about and 66 dollars per share Rochelle I mean this is a tough one trying to figure out that intention and then looking at that timeline of what happened with the stock price afterwards great stuff Alexis Keen in there thank you so much all right coming up matters yet of efficiency plan caught the attention of investors yesterday so is the idea simply doing more with less and is it achievable we'll discuss next [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] foreign [Music] [Music] foreign [Music] might be grappling with some overhead costs the tech giant out with some interesting stats about just how much it takes to run one of the world's largest social networks especially during earnings now Yahoo finance's Ali garfinkle with more on how it's set to affect their bottom line the year of efficiency Zuckerberg said yeah and meta told the most convincing cost cutting story this week Rochelle among all the big Tech tickers they actually did the best in a lot of ways and though a closer look at some of these cost cutting strategies I think is worth doing because it becomes clear that they're trying to eke out profits just about wherever they can one of those areas is Data Centers now if you have to explain to your parents what a data center is imagine a building with lots of infernet Internet infrastructure servers that kind of thing so which is that sort of thing is essential for Tech Giants but they also can get expensive right real estate servers and in meta's case what they're saying is that they're set to save at least 3 billion on these data centers some cases it could be as much as 4 billion in the call they said and I quote we expect Capital expenditures to be in the range of 30 billion to 33 billion lowered from our prior estimate of 34 billion to 37 billion the reduced Outlook updates are reflected plans for lower data center construction spent in 2023 as we shift to a new data center architecture that is more cost efficient and can support both Ai and non-ai workloads so they're thinking about AI at a moment that's really clear however it's important to say that this plan while it seems like it makes sense is a little vague a lot of analysts I talked to said as much what they've understood is this meta's plan is to build out spaces over time instead of building buying buildings all at once now that seems like it makes sense however over time it might end up costing more money it's a it's a borrowing from Peter to pay Paul's situation so then what does that efficiency mean for a company like meta you know I think it's complicated Rachelle because they also are losing a lot of money on reality Labs let's remember despite the numbers that everybody's really excited about they still are losing billions and they are projecting to continue losing those billions now the reality Labs pay off the metaverse payoff Mark Zuckerberg is saying is in 2023. so it's going to be an interesting task to try to sell efficiency while also being convincing people that these losses are worth it and worth it over time all right thank you so much a lot of stuff to unpack there but we're seeing at least the stock price doing some rewards today Ali garfinkel thank you so much all right well turning now to jobs we're seeing a whopping 517 000 rise in January which of course was a sharp contrast to the recent headlines of major Tech layoffs now outplacement Specialists Challenger grade Christmas seeing cards also in retail and real estate now here with more is Andrew Challenger senior vice president and head of sales and media at Challenger gray and Christmas good to see you here so a lot of us are trying to digest this we know that these Tech job Cuts really have been getting the bulk of the attention put that into some context for us because I believe January's Tech job Cuts 158 higher than December's yeah I mean we are seeing really large announcements from tech companies that they're going to be cutting jobs but I think at this point it still feels more like a correction for a lot of over hiring maybe some hiring Mania that these large tech companies got into over the last two years as opposed to a tech bubble bursting right this idea of a real crash in the labor market in the face of a strong number like this is a little hard to digest and keeping in mind obviously that even with a lot of people cutting tech jobs they are still hiring so what sort of movement have we also seen as they go from the cuts to some of these other companies that are still hiring for tape jobs yeah overall the economy just added an enormous number of jobs in January and so while we are seeing cuts and we're starting to see them spread just past the tech sector we're starting to see them in other Industries as well and we'll probably continue to see that the labor market in general is starting to cool down as the labor market as the overall economy cools down but we're not hitting some uh Cliff where we're having a huge mass number of layoffs that's outweighing how many jobs are still being added to the economy it does seem to be this sort of slow trickle here and you do know retailers and real estate as the the second and third where you're seeing some of these losses what kinds of losses are we seeing there yeah we've started to see uh job Cuts as well and some of those areas where uh consumers are starting to spend less money so in areas that are really affected by real uh by interest rate increases like in real estate people are spending Less on homes uh Automotive we're also seeing some Cuts uh and those are some areas where people are just starting to slow down their spending as things start to cool and people get a better sense of what the economy is going to look like as we move away from this kind of super inflationary period and what about on the flip side where are some of these jobs going which of the sectors are really benefiting right now and scooping up and scooping up some of these workers yeah well we saw the largest gains in employment over the last month in healthcare and in food and accommodation so restaurants and Retail uh those areas of the economy that are still servicing American consumers spending domestically are booming uh we started we also saw quite a few jobs added to kind of the corporate business sector a professional and business administration jobs lots of those temp worker jobs as well increased over the last month and even in terms of location California understandable being that where a lot of these Tech sector jobs are but also Washington and New York as well in terms of states that are also seeing the biggest layoffs how do you see that playing out is is there a reason why it's not more distributed especially when you look at some of these other industries that are under pressure yeah it's a good point I think the reason we're seeing it concentrated on the west coast right now is because of how concentrated the layoffs so far have been in the tech sector uh which are over over represented on the west coast of the country uh we are starting to see those announcements spread into other Industries and with that over the next few months and quarters we'd expect to see layoffs start to spread across the country and a little bit more of an even fashion and what about some of the more resilient the some of the more resilient sectors at the moment who where are you seeing really the least amount of cuts were you seeing some real at least some sort of normalcy and consistency yeah there still is an enormous shorter shortage of workers in the retail and uh they call Leisure and Hospitality so restaurants uh travel people are still spending lots of money on uh consumer goods and durables uh and that's a that's an area there is massive labor shortages there's still 11 million job openings in the country a number we never saw prior to the covet period it's a it's a really high number and we continue to expect to see a lot of hiring happen in those areas but over the rest of the year we'd expect them to cool slightly down from this really high level where they're at and adding to that pressure of course concerns about recession how deep it'll be whether or not the FED can stick The Landing how does that perhaps shape the hiring picture as well as you were already seeing a lot of companies trying to tighten their belts yeah I mean I think you're seeing hiring managers now take a step back and say we've been in this rapid hiring period for two years a lot of companies have grown their payrolls uh significantly and I think they're getting more cautious about bringing a bunch of people on in the face of some economic head ones so I'd expect to continue to see uh the the say six month trajectory we've been on which is the labor market slowly cooling uh this month feels like a little bit of an anomaly I would not expect to start to see the labor market really Spike up in the other direction uh we're going to continue to see some cooling as as the FED continues to cool down the overall economy all right a big thank you for joining me this morning Challenger gray and Christmas SVP and head of sales and media Andrew Challenger thank you for joining me all right coming up there's a lot more to the jobs report than that Blockbuster headline number we take a closer look at the construction sector next [Music] [Music] foreign [Music] [Music] thank you foreign [Music] [Music] foreign [Music] foreign [Music] [Music] foreign [Music] the construction labor market saw strong gains in January the US added 25 000 construction jobs last month and while employment in the construction industry grew by an average of 22 000 per month in 2022 our next guest says there is a shortage of quote critical condition here to discuss is Daniel codsi Royal Palm companies CEO good to have you on the show Daniel so for a lot of people they might not understand on the grounds what this is actually doing in terms of some of these Investments that we're seeing in the space and what we're seeing with the jobs here how are you seeing hiring for construction right now so look uh you know we're going through unprecedented times right now uh and in unemployment as you know we were discussing uh whether it's the service industry the hospitality industry but big impact in construction currently we have 360 000 uh unfilled jobs in construction and so that's pretty significant it's about a 19 increase in just just since last year it's it's triple the amount of openings that we had since 2014 and so that's that's a a significant amount of of openings um couple that with the fact that we've had major increases in in construction uh material a steel concrete I mean all material costs have have risen significantly somewhere you know where overall cost between labor and material have gone up over 30 percent and about a 12 to 16 month period uh and then you know on top of that we've had interest rate hikes um you know last year so you could you know combine construction costs interest rate hikes and lastly even Insurance costs have gone up so it's a big impact on the construction industry and for a lot of people pulling back on expenses right now they're not trying to invest in real estate even though a lot of analysts say that is still the smart move so let's break some of that down in terms of Labor we know that Latin America plays a big part in that immigration in the US plays a big part in construction's job how much has that impacted your business uh look so we have a jobs program so just to give you a little background I'm a high-rise developer build large mixed-use developments here in downtown Miami uh it's part of Miami World Center mining World Center is a uh a major uh master plan project in Miami it encompasses 10 blocks five blocks of retail we have a major transportation the brightline high rail station that connects all of Florida so this is really the the center core of Miami uh so in our jobs program um what we did is we we uh you know originally we started where we started taking people for unskilled workers from neighborhoods around our downtown area gave them skills out of 15 000 workers about 20 percent of them were unskilled we pay them double the minimum wage so we could bring them in we can give them skills a lot of these people were able to expand from an immigration standpoint we did have a lot of immigrants that have come into the program where you took immigrants out put them into the program gave them skills even women have enter the program women today consist of about 10 percent of the construction industry so the combination of that um you know I've actually met some of these folks where uh you know you hear the story where they they were down and out they came in got the skills moved up to a journeyman some people even supervisors really changed their life and you know gave people that American Dream and so then for people wondering just how serious is this construction worker shortage what are some of the consequences how bad is the situation I know you said it was critical so look it is critical um it has it has delayed schedules um it's it's just harder to get construction workers to the jobs our subcontractors are constantly complaining some subcontractors can't even bid on jobs because they just can't get Workers uh you used to have you know six eight subcontracts for instance a plumbing contractor you'd have about six six uh bids on a project you can sometimes get one or two because there were some cases you couldn't even find a plumber because they couldn't find Labor uh so it's it's pretty impactful and so uh people trying to build today is very difficult it doesn't pack schedules I think there will be some relief uh the capital markets have pulled back out of construction out of development so we're not going to feel the relief in the near future but uh probably in the next 12 months or so as construction slows down that might that might uh you know help help the situation some and we know that of course Florida was one of the the main states when we look at some of the southeast where there was this migration during covid people you know they wanted perhaps some looser restrictions the good weather the the income tax breaks as well of course but then when you have that demand coupled with this shortage in construction workers what does that do and are you still seeing as much Demand right now the man has the man has slowed down slightly but but there is still demand I mean High tax states as you mentioned the high tax states and we used to not see people from places like California for instance uh move to Florida so you have seen a major migration of of high tax states to low tax states such as Florida uh you know Florida is probably going to be one of the few states that we're not going to see a major slowdown we still have major inventory issues uh we don't have enough inventory to house all these people coming into the State of Florida so construction is still you know as probably the rest of the country starts to slow down Florida is probably not going to slow down as much because of the migration into the state um and so we're going to have to we're going to have to work through that now so in some cases when that happens you'll see uh workers from other states come to states where there is jobs if the job market starts to soften so that could be an advantage for places like Florida or even Texas you know again the southern states that are seeing uh the upward migration I mean certainly people will go where the work is and as you mentioned there Florida at least not anytime soon slowing down great stuff there Daniel codzi Royal Palm Company CEO thank you for joining me this morning all right coming up we'll get the latest Market action after that Blockbuster jobs number stay with us [Music] [Music] foreign [Music] foreign [Music] foreign [Music] foreign [Music] [Music] foreign well as we close in on the new now and let's check in with Yahoo finance's Jared blickery over there at the interactives Jared what do you have for us we have a surprising turnaround just want to show you what's happening in the indices uh Dow is up uh 13 basis points S P 500 in the NASDAQ slightly down but they had climbed into the green and uh let's just go through some charts here these are going to be a little bit longer term than the intraday here's the vix and I just want to point this out because we are coming off a low a major low only yesterday and we're also seeing bond market volatility here we go here's the B of A Move index Bond volatility coming down too but never that's from yesterday's close and that might change today because we have a lot of volatility and bonds today five year t-note yield up 17 basis points that green green candle here haven't seen a big move like that in a long time the tenure also on the move up 13 basis points in the 30-year up nine finally on the short end of the curve the 13-week t-bill yield that is flat important because that's really that really tracks what the FED is doing also the U.S dollar Index strongly up and in these scenarios a lot of times we see Tech faltering not necessarily the case today Tech is number two xlk on our sector list and that's just behind energy financials also in the green but I want to show you what's going on in the NASDAQ 100 we had those huge Tech earnings after the Bell that we've been talking about not going to go through all of the details there Apple up four percent that's accounting for a big chunk of that xlk gain and then Amazon down about four and a half percent Tesla up four and a half percent and meta up two now alphabet also reported earnings yesterday metadata was two days ago alphabet down about two-thirds of a point percent but it's in the communication Services Group with meta not Tech so a little bit of uh sector technicality and wonkiness right there now meme stocks we can see those of our leaders group that's in the Forefront that's up one percent followed by gambling that's bets retail uh excuse me Regional Banks momentum retail and biotech all of of those in the green and we take a look at some of the meme stocks I just noticed that carvana well that was up a little bit more it's up only five percent now had been up quite a bit uh we'll be tracking some of that throughout the day ape shares those are the preferred shares those are up eight percent all in all I'm a little bit surprised to see as much green as we're having right now given the reaction in the bond market let me just close with some of the disruption stocks I saw those some of those jumping earlier it's mainly on the back of Tesla because you take a look at the rest of the smaller ones here most of those trading to the downside and that's what I would expect with some of those yields just popping up like that Roblox Zoom Square all down one to two percent so on that note gonna excuse me toss it back to you Rochelle all right I mean it's a fascinating way to end the week it's been a big week of both with earnings and with the FED of course Jared blickery thank you so much well as we wind down what was a huge week for earnings the season rolls on of course next week with another slew of big names reporting numbers as well as you can see there on Monday we'll get a beat on Tyson there so we'll understand what the consumer is feeling especially as we're seeing what we're seeing with food inflation remember we've been following what's been happening with egg prices but also taking a look at what's been happening with food inflation overall checking in with the gamer Activision you also have Spirit Airlines as well and then Pinterest of course following what we saw with ad spend a lot of people wondering what that means for Pinterest as well as they struggle to monetize on Tuesday we'll be getting another beat here from the energy sector here with BP reporting more consumer spending outlooks here when it comes to food as once we look at Chipotle Hertz also reporting as well as Royal Caribbean groups seeing what we'll see with the Leisure spending as well as some consumers going to tighten their purse strings and we're seeing credit card debt going into historical Highs at the moment so seeing what happens with some of this discretionary spending on Wednesday we'll be checking in with some more food companies we've got Wendy's and of course Yum brands but also taking a look at CVS see what's happening with the health space there and of course Disney the big one that's going to be reporting earnings on Wednesday that definitely one to watch as well as we've been seeing what's been happening with some of these streaming leaders Disney with a lot of hands in different pots including of course it's Parks business but also Disney plus as well so keeping an eye on what's happening there and in the payment space you have a firm and Robinhood as well be checking in with them as well and of course Thursday Friday are still a pack day there as well before we go though let's give you that final check on markets a mixed picture there we see the Dow they're the only one in positive territory at the moment and that is thanks to Apple leading the charge Amazon of course as Jared was mentioning they're dragging down the doubt but at least still in positive territory up there about 43 points the s p relatively flat though down about a third of a percent and the NASDAQ the tech heavy NASDAQ down also a third of a percent well that will do it for now I'm Rochella Cooper I will be back Monday at 11 Eastern we'll see you then have a great weekend [Music] foreign [Music] foreign [Music] [Music] [Music] foreign [Music] [Music] [Music]

Channel: Yahoo Finance

Views: 63,315

Keywords: Yahoo Finance, Personal Finance, Money, Investing, Business, Savings, Investment, Stocks, Bonds, FX, Currencies, NYSE, Equities, News, Politics, Market, Markets, Yahoo FInance Premium, Stock market, bitcoin, bonds, market, recession, inflation

Id: 3PMaTKcFY40

Length: 216min 52sec (13012 seconds)

Published: Fri Feb 03 2023