On today’s episode of Market Domination Overtime, Hosts Julie Hyman and Josh Lipton break down the market close and some of the biggest stories dominating the trading week.
The Dow Jones Industrial Average (^DJI) closed Friday over 0.9% lower — shedding more than 370 points — with the Nasdaq Composite (^IXIC) and S&P 500’s (^GSPC) also posting losses of over 0.8% and 0.7%, respectively, on Friday. PNC Asset Management Group CIO Amanda Agati explains, “I think it’s a little bit of an awakening in the broader part of the market here as we sort of hit the halfway point of the year and set the stage for the second half. So I think it’s been a very interesting couple of weeks.” She argues a rotation is beginning as the markets broaden outside of Big Tech, adding, “the handoff between large to small and mid and certainly growth versus value has been sloppy. This relay race has not been a clean handoff, but I think it’s what sets the stage for the second half. It’s going to be choppy out there.”
More reports of Democrats urging President Biden to drop out of the race have surfaced, and Yahoo Finance Senior Columnist Rick Newman joins to discuss how Biden’s chances of winning the election are dwindling. American Action Forum president and former CBO Director Douglas Holtz-Eakin explains how Trump’s policies differ from the traditional Republican policies of the modern era. He says that the former president’s mix of policies is not “recognizable as traditional Republican policy, but I don’t think it’s an entirely new brand yet. There are these elements that exist, they reflect something that I think is real and new, and that is a far more inward-facing Republican Party.” Holtz-Eakin points to more isolationist foreign policy and less commitment to using the military to defend freedom globally as different policies from the traditional Republican agenda.
There’s the closing bell on Wall Street and now it is market domination over time.
We’re joined by Jared to get up to speed on the action from today’s session.
Let’s start with where the major averages ended the day down in a word.
Still though the Dow did gain on the week we should mention was the only of the three major averages to have an up week up about seven tens of 1%.
The S and P 500 down on the day, seven tens of 1% having its worst week since April as we pointed out earlier.
And the NASDAQ also losing today and losing on the week.
It was actually the big loser of the week not seeing any relief as we pointed out in places like small caps today.
That group was down as well and they wanted to get a final check on one of the big stories, really the big stock story of the day.
And that is crowd strike falling some 11% after a worldwide outage that sort of was linked to its cyber security software, although it was not a hack was not a cyber security incident, but the shares finishing lower by 11%.
You know, folks we’ve been talking with today including Trevor Wal over J MP said this isn’t necessarily going to cost them market share on a large level.
But certainly investors stay a little bit concerned here.
Microsoft through the whose window systems this outage seem to spread down about three quarters of 1%.
Jared, tell us what’s going on in the sector level and beyond today, you bet.
First, I want to take a real close and short look at crowd strike.
I’m just going to paint uh some uh some simple moving average lines on here.
If you use candlesticks, it was a precise hit and then it was bought.
So that was a gift for short term investors.
Some of them might be gone already on the close, but some might be holding.
Now for sector action, we have health care that was in the number one spot that’s up half a percent followed by utilities but was mainly action to the downside here.
We got tech that was worse off down 1.5% followed by energy financials also down about 1%.
But let’s take a quick look at the weekly totals here.
Energy was in the lead followed by real estate.
And so we did see this resurgence in value and a little bit of the cyclicals, we got industrials up half a percent right there.
But really, it was a week when tech was sold, that was the only under performing by the way too.
And you can also see this when we take a look at our leaders, Bitcoin and regional banks were the big leaders that’s for the week and then for the day, guess what?
It’s also banks that would be Kre those are the regional banks and also crypto uh that would be G BT C. Uh The worst off today was by far the socks and that is the chip index.
Once again, here’s what happened today in semis and here’s what happened this week, pretty bleak picture.
Although it does contrast with software just a bit, you do see a little bit less red in there and a little bit of green even.
And then if you take a look at the Arc Innovation Fund components, you can actually see a lot of green, so unprofitable tech, small cap tech, uh that did uh have its moment in the sun and we’ll see if it continues.
We did see uh all of this uh resurgence in an interest in other parts of the market and something we’re gonna explore in about 30 minutes with you, Josh, looking forward to it.
Thank you, Jared for more on the markets joining us now is Amanda Agatti PNC Asset Management Group, Chief Investment Officer, Amanda.
It’s good to see you.
So, um you know, we were talking to a another market strategist earlier in the show, Amanda and we were asking him to make sense these, these markets.
And he said, you know, he, he really just sees kind of summer doldrums kicking in here.
That was his, his explanation.
There was nothing in the data he argued uh to suggest the top is in uh your reaction.
I’m not sure I would chalk this up to doldrums by any means.
I think it’s uh a little bit of an awakening in uh the broader part of the market here as we sort of hit the halfway point of the year and set the stage for the second half.
So I think it’s been a very interesting couple of weeks.
We’re starting to see ever so slightly um a rotation in some of the sectors and industries that you called out just before we started chatting, you’re starting to see a little bit of broadening.
It’s very early days.
And let me just say the handoff between large to small and mid and certainly growth versus value has been sloppy.
This relay race has not been a clean handoff, but I think it’s what sets the stage for the second half, it’s going to be choppy out there, Amanda.
Um what started as a rotation just turned into broad selling really by the end of the week here.
And so, um what do you think is gonna get markets back in rally mode?
If indeed you think that a broad, a broader rally is what awaits us?
I really think the only thing that matters right now is earning season and the results of, of earnings reports that are yet to come.
It’s still very early.
Uh Some of the reports that have come in have been modestly better than expectations.
I think that has fueled some of this rotation, but we’re kind of settling in here at the of the day on Friday, maybe hunkering down a bit for some news that might come over the weekend, but next week is a very big week for earnings reports and earnings results.
And I think that could very well be the catalyst to get this market rally going again, Amanda, what, what is your expectation for corporate profit growth?
Not just this earnings season, but for the year.
Well, we’re still looking at about 11% earnings growth.
That’s a consensus number, by the way for all of this year.
Um If you back out the top five or seven names, that growth rate falls to about seven or a little bit more than 7%.
So I do think that there are some negative revisions yet to come in the second half of this year.
And it’s really important to see where earnings growth kind of ultimately lands considering we’re still sitting at price to perfection valuation level.
So I do think there’s some room for it to come down.
But really the key is what happens with financials, health care and industrials in the second half.
Those are the ones that are going to keep the lights on on this earnings growth trajectory.
And are those the areas that you would be buying right now?
Well, I’m not sure that I’d be backing up the truck and buying them necessarily just yet.
There’s certainly a valuation opportunity.
But I think from a revisions perspective, we haven’t seen that inflection point yet.
And that’s why I’m saying, I think the key in the second half is really to start to see some signs of life in those particular areas.
We can’t just assume that tech is going to lead the charge here and communication services is just going to continue to lead the charge at these valuation levels.
The earnings chops are strong.
There’s no question, but there’s just not a lot of headroom to keep this market rally going without some broader based participation.
And man, I’m curious how many, how many questions are you getting from clients about the election?
And what, what are you telling them?
An infinite number of questions besides the deficit and debt levels.
It’s the second most popular topic for sure.
Uh in terms of our investor base and you know, despite what may or may not happen over the weekend, I think it could catalyze some short term noise for the market.
But really what the ma the market really cares the most about in terms of election outcomes is the makeup of control.
Is there going to be a change of control?
Is there going to be a sweep of one particular party?
The best performing market environments tend to be where there’s divided control.
And it’s really because the market believes they can’t do too much damage in one extreme or the other.
So a time where there’s kind of a volatile backdrop, maybe Washington might not be quite so volatile.
Coming up, pressure mounting for President Biden to bow out of the 2024 election.
Amanda was just referring to perhaps we’ll discuss what that could go, what could come next when market domination over time returns, the pressure is ramping up on President Biden to end his re election campaign.
And in his latest column, our own, Rick Newman highlights that Biden is risking becoming irrelevant and Rick joins us now irrelevant.
Rick, that is almost the way the political world is treating Joe Biden at this point.
Um I follow the betting odds.
Uh The average betting odds at real clear politics.
Um, they’re saying 60% odds.
Um, Joe, uh, sorry, Donald Trump ends up being the next president.
So Kamala Harris, the betting markets are saying three times as likely as Biden to become president at this point.
Um, he has been enduring some epic disses.
Um, the big one this week was the uh president of the Teamsters Union Teamsters endorsed Biden in 2020.
Uh And Biden has done a lot for uh unions, I mean, actual legislation and policies.
He showed up and praised Donald Trump, the president of the Teamsters Union uh during the uh this week’s convention.
He said that doesn’t mean I’m endorsing Trump but he, he is sort of saying to the rank and file, yeah, you can find if you’ve vote for Trump, that is a real burn for Biden.
And of course, at the moment, he’s isolating with COVID as there seems to be like a parade of Democrats.
Just more and more people saying, dude, you need to, you need to withdraw.
I want to go back to the odds markets for a minute because they are a measure of sentiment at any given point in time.
I don’t, I don’t like the prediction markets in terms of their predictive power but polls aren’t great either.
So if you look at what’s happening now, um Trump is up, but more important than Trump is up, Biden is down.
So that is, that is how, uh, investors to a large extent are reading the state of the election at this point.
And that does affect, I mean, we’ve been talking this week about the Trump trade.
It’s here now, right?
Um And the reason that the Trump trade is here is because uh investors think uh the odds are growing, not only that Trump will win, but that he will win with a Republican sweep, which means he will be able to pass partisan Republican legislation or double barrel.
This last 11.
I mean, update on the Rick Newman probability that Biden does withdraw where you, where you’re at right now and two, if they did, I’m interested, Rick, let’s say Biden does withdraw.
Who do you think poses the biggest competitive challenge to Trump?
II, I think the, the, the mere, the fact that there’s so much discussion about Biden withdrawing, I think is becoming a fatal liability to him.
Um And he has brought it on himself.
Unfortunately, uh he has demonstrated as Nancy Pelosi framed it.
It is a condition because he has continued to flub, I mean, it’s almost as if every interview he does.
I mean, he gets the details of his own policy wrong on rent control.
He forgot the name of the defense secretary and called him the black man that was Lloyd Austin.
Um And uh so he is kind of advancing his own narrative of fragility is what he’s doing that if there’s a replacement, I mean, Kamala Harris is the odds on heir apparent without a doubt.
And it would take somebody within the Democratic Party who really wanted to create chaos by challenging her because uh the party, I mean, still does have some unity.
There are still people running the party.
I mean, Biden is obviously there but Sh Chuck Schumer, Nancy Pelosi, I think is a huge force behind the scene scenes, probably Barack Obama also to some extent, um they, if Biden withdraws, I mean, they want this to be as seamless as possible.
So whatever inter ning warfare we have do that doesn’t last very long and doesn’t interfere with trying to beat Trump.
I mean, if you’re fighting among yourselves, you’re not, you’re not taking on the other guy.
And that’s the most important thing for the Democrats.
So I think they will try to make it happen.
The question is, is there, is there some rebel who says no, I’m gonna challenge Kamala Trump.
I, we have been gaming this in our planning sessions here and uh it’s hard to figure out who that person might be.
I don’t, I don’t think it would be Gavin Newsom.
I don’t think it would be one of the uh, Rust Belt governors.
You know, there, there’s Dean Phillips, I guess who could say I want it.
But um so I think then it’s Kamala Harris and then we, she gets a fresh start and then we find out what kind of campaigner she is.
I, I have no idea if she was not great in 2020 who her VP is and her, who her VP.
But you know that that’s interesting for a, for a couple of days and then nobody really cares who the VP is.
Have a good, appreciate it and be sure to check out Yahoo Finance its newest podcast, Capital Gains.
It’s debuting today on Yahoo Finance or anywhere you get your podcast and it features our own meantime, on the Republican side of the race, former President Donald Trump, of course, accepting the Republican nomination last night.
Not only promising to cut taxes but also lower inflation.
We have an inflation crisis that is making life unaffordable, ravaging the incomes of working and low income families and crushing just simply crushing our people.
Like never before.
I will end the devastating inflation crisis immediately bring down interest rates and lower the cost of energy.
We will drill baby drill.
Joining us now, Douglas Holtz and American action, former president and former congressional budget office director, Doug Iii, I don’t know where we gotta unpack some of the stuff that, that former president Trump was just saying they’re cutting interest rates to slow inflation.
I don’t know.
That sounds a little Turkish to me but, but, but tell me what you’re what you, you made of uh what former president Trump had to say.
Well, I, I think if you look at the Trump Vance uh economic policy platform, you see some things that are very traditional Republican policy, uh low taxes, low regulation, our reliance of small businesses, things that you’ve heard a lot from the Republican Party about over the many, many years.
Uh You see some other things that are uh fairly radical departures, uh support for uh Lena K style competition policy.
Uh Something you did, we didn’t expect to see certainly a continued evolution of the, the restraint on international trade.
Uh His 10% tariff proposal being most dramatic form of that.
So those, those things are very different and you know, the promises of the outcomes.
We’re, we’re going to uh lower inflation and uh, cut interest rates.
Well, certainly if inflation goes back to 2% target, I, you know, we, we all know the feds gonna uh normalize interest rates that, that’s to be expected.
I think that ball is more in the feds camp than it is in the, the Trump administration’s camp.
If they are elected.
The question is, will they actually be supportive of what the feds up to?
Um The White administration is running $2 trillion deficits at full employment.
That’s nobody’s help for trying to, to get uh inflation down and help the fed.
But the Trump track record on the budget and in his first term is not very good.
And uh he’s talking about cutting the corporate rate and not touching Social Security Medicare and how does it add up?
I think that’s the big wild card from the inflation front.
We know what the monetary policy is gonna be.
We haven’t a clue what the fiscal position is gonna be and the, and the fiscal position is a really important part of the policy mix on both inflation and the long term growth.
You know, Doug, you touch on an issue that I think is just so interesting, which is how, how the Republican Party is changing.
Doug, you know, when I was growing up the Republican Party, it was Reagan and Kemp, you know, it was my dad with his copies of National Review around the House.
Right.
That, that was a Republican party now, as you touch on, you know, Senator Vance or, or Holly or Ruby, I mean, you hear it’s economic nationalism, it’s domestic manufacturing, you know, forget free trade.
It’s, you know, China is an adversary.
Is there a way to sort of bridge these economic views doug traditional, conservative and populist conservative?
I think there’s a lot of it that, that really isn’t that new.
So, you know, uh go back literally over 20 years and uh George W Bush imposed tariffs on steel products to protect the domestic steel industry.
So that, that’s not new and, and by the way, it doesn’t seem to work very well.
So, uh but, but we, we see more use of, of tariffs on the strategic uh trade side.
China being uh one where I think pretty much everyone has bought into the notion that we’re, we’re gonna use that as a strategic tool against, against China.
What’s really different is a 10% across the board tariff proposal.
We haven’t seen that.
Is that something Republicans broadly are prepared to embrace?
I think the jury is still out.
Um You know, it seems to me that you need legislation to do that.
I know there’s some people think you might not uh would that go through the House and the Senate?
I think that’s a really big question because that’s a $3 trillion tax increase over the next 10 years.
Well, and I think Doug, that, that Josh touches on something interesting here, which is, um, are the Republican, is the Republican party agenda, particularly on economics, but really across the board, recognizable recognizably Republican at this point, or is it just Trumpism?
Does it need to be called something?
I mean, you know, it seems to be sort of redefined here and what are the implications of that?
Yeah.
Well, I’m not the communications director so that I think you got the point for trying to brand this.
Um, as I said, I don’t think it’s recognizable as traditional Republican policy, but I don’t think it’s, it’s an entirely new brand yet.
Uh there are these elements that exist, uh they reflect something that I think is real and new and that is a far more inward facing Republican party.
Uh one that is not uh far more isolationist and foreign policy views.
Uh one that is far less uh committed to defending freedom around the globe and, and using the, the, the power of the American economy and military to do that, that that’s really different and that’s really important.
Um A lot of the economic policy changes I think are more evolutionary than radical changes.
And, and the question is whether they will survive the next 48 years or not.
Um, you know, the reality is if you look at the deficits and the debts, you can’t do nothing there so far, there’s no commitment to doing something, but circumstances are going to force the hand of whoever’s governing as much as their policy platform is gonna drive it.
So we’ll see how they react to the circumstances when, when you say circum cir circumstances will, will force it doug.
Um, what are those, those circumstances?
You’re, you’re, you’re mentioning there, uh, you know, January 1 2025 the debt ceiling comes back and suppose Republicans control the house, the Senate and the White House.
Um, will they casually easily pass an increase in the debt ceiling or suspension?
Um, something that all the rating agencies are gonna be watching carefully because the last time we tried to do this, it was a major political football and there was a downgrade based strictly on the inability of us politics to manage its finances.
What do we do with the 2025 revision to whatever we get out of the 2017, uh, task cut sunsets.
Those are three big important circumstances that are going to happen in the first year.
How will they handle that?
Something’s going to have to be done in each instance?
What will it be?
Doug literally nobody’s talking about this except for you, you know, not literally no one.
I, I’m just, I’m sort of it’s sort of interesting how little people are talking about it, how little voters seem to care.
I mean, we were just talking with, um, a, a strategist earlier who said she’s getting a lot of questions from clients about deficits.
I heard that I was excited but I, I, I’m sure that you are but it’s not something that’s really been talked.
First of all, these are, these are very difficult policy issues.
I mean, the centerpiece are social security and Medicare, which are, you know, 36 out of $71 trillion of uh uh non-interest spending over the next 10 years.
So that, that’s the bulk of the money, those two programs, they’re complicated, they’re important, they’re very, very big and they’re growing faster than any anything else.
So if you want to deal with the US budget outlook, you have to deal with social security and Medicare and both people running for president have said they’re not gonna touch them.
So uh the reason no one’s talking about it is the people at the top have sent the message, we’re not doing anything about it.
But if the markets wake up and the rate and the rating agencies wake up and say, look, you can’t even raise the debt ceiling, you can’t fund the government.
What are you gonna do about these really big problems?
That’s gonna change that, that, that conversation.
They’re gonna have to come up with real uh efforts to, to bring in the, the bring the spending growth down and, and make things add up.
Big Jack earning is coming in throughout the week and all eyes will be on Tesla.
The ev makers announcing second quarter results at the close on Tuesday.
Investors are going to listen for any updates on the company’s delayed robo taxi event also on Tuesday, Google parent alphabet report second quarter earnings after the bell and taking a look at the economy, personal consumption expenditures that PC, the preferred inflation G that’s coming out on Friday, economists forecast both overall P CE and core PC will take up slightly.
The new June print will be another key piece of economic data as traders look forward towards September for a potential rate cut and finally getting some more corporate earnings next week including these of Horizon and Coca Cola among others, Coca Cola reporting on Tuesday and expecting the C of the post slower organic revenue growth for the second quarter that will do it for today’s market domination over time.
Be sure to come back Monday at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell, but don’t go anywhere on the other side of the break, it’s asking for a trend.
I got you covered for the next half hour.
The latest and greatest market moving stories soon.