On today’s Market Domination, hosts Julie Hyman and Alexandra Canal analyze equity market movements, the top trending tickers, and the biggest players in the retail sector.
The show opens with a discussion of Federal Reserve Chair Jerome Powell’s dovish commentary on interest rates in his speech at Jackson Hole on Friday, which signaled a potential rate cut to come in September. Oxford Economics chief US economist Ryan Sweet joins to break down Powell’s comments and explain its potential implications for markets going forward.
The focus then shifts to a variety of trending tickers, providing updates and stock reaction coverage for companies including Apple (AAPL), Cava (CAVA), GE Vernova (GEV), Topgolf Callaway Brands (MODG), and Roku (ROKU).
Finally, the retail sector takes center stage, as recent earnings reports have painted a mixed picture of consumer behavior. Amid this uncertainty, R5 Capital Founder and CEO Scott Mushkin joins to discuss the top three retail names that remain “advantaged” despite a weaker consumer environment.
And today live from our New York City headquarters.
We are giving you the ultimate investing playbooks to help tune out the noise and make the right moves for your money.
And here’s your headline blitz getting you up to speed one hour before the closing bell on Wall Street, the time has come for policy to adjust.
But, you know, there’s not a lot of positive, there’s not a lot of big surprises either way in here and it does tell us that we better be watching the data that comes down the pipe in the next couple of weeks.
Of course, he was mute on sort of the size of the first cut and, you know, 25 versus 50 which I know the financial markets are very, you know, focused on.
But in some sense, that’s not the right question for this period.
We are not going back guys, we are finally through sort of the opening act here and now we’re getting into the home stretch about 75 days until the election and it is a dead heat.
I mean, it is.
I just, I looked at the betting markets today, uh, 49.2% for Trump, 49.2% for Harris.
I mean, like, just as tight as you could be, we got one hour to go until the market close.
Let’s take a look at the major averages here and we do have a rally even though JP delivered a message pretty much what the market expected, but with a sort of clarity here that indeed the pivot has arrived and cuts are coming.
So we’re seeing a stocks gain here a little bit of a range in today session, a little bit bouncing around right now.
The dow is a 354 point about 9, 10 of 1% and people be 8, 10 of 1%.
The NAS that up a little better than one and the equal weight index also hitting an intraday record, I believe today.
That’s a narrative where we’ve been talking about quite frequently there.
But I want you to hit the 10 year Treasury because that’s hovering near the lows of the year.
If you look at a year to date there right around 3.8%.
Of course, like we’ve been talking about there is this expectation that the fed was going to cut rates in Fed Chair Powell all but confirm that.
Now the question becomes at what pace are we going to see those rate cuts?
And just how much of a rate cut we will see in, in September and then across the sector wise too.
I mean, pretty much everything was in the green, I believe consumer staples was that in the green now too?
And change change?
But yeah, I mean, real estate really leading, leading the gains here.
Obviously, that helps with the rate cuts that we’re seeing.
We have positive new home sales data today as well.
So a positive outlook on the market, it seems from an investor perspective, shareholders, investors, they got what they wanted to that.
Yeah, and the sort of soft landing narrative appears to be in place here.
There’s another group that I want to highlight here that we’re seeing a lot of action and that is in the banks, the S and P financials look like they could close at a record today and you see all green among the big banks here.
And we have also got regional banks that are higher.
I think that’s right here.
Regional banks also surging today on this outlook from the fed that they can sort of have this soft landing where we’re gonna have rates come down, but the economy will remain relatively healthy and then home builders as well.
It’s like when you have a million tabs on your, um, on your web account anyway, you get the point.
Um, I do wanna circle back around to one other, uh, asset class that we are watching and that is currencies because we’ve got some interesting moves here in the dollar which has been falling.
This is the euro versus the dollar, the euro going up, the dollar going down.
Um, and that’s something that a lot of strategists have also been paying some attention to here.
And even Bitcoin is in the green today too, Bitcoin in the not much of the oil in the green, gold in the green.
It’s and everything rally, it’s back.
Let’s bring in young finances, Josh Shafer for more on how Wall Street is reacting to fed.
Yeah, I mean, you just called in everything rally and I think you’re seeing that sentiment across Wall Street economists with how they’re reading what Chair Powell had to say it was pretty clear read through here.
He said that the time has come for policy to adjust, noting that there’s ample room for the fed to respond.
And that’s essentially what economists are saying.
They’re saying that the chair Powell opened up the door for fed rate cuts.
So sort of the interesting thing that people are stuck on here is the 25 versus 50 basis point cut debate for September Renaissance macro’s Neil Dutta highlighting that Powell did not use the word gradual.
Remember some other fed officials earlier this week had referenced gradual cutting by him not using that word gradual to Dutta.
That means he’s sort of providing optionality to do potentially larger moves.
And then the key question among economists, Goldman Sachs highlighted this several other firms.
Also highlighting this is basically the August jobs report we went from waiting for today.
But a lot of people are like, yeah, September 6th is probably when you’re gonna learn more about what the feds gonna do.
And now we’re fully just let’s see what happens on September 6th is that jobs report weaker than expected.
I just looked right now, we’re looking at 100 55,000 job ads and for the unemployment rate to come down to 4.2% we’re two weeks out that might move.
But expectations are for us to get a look of the labor market that will be a little bit better than what we got in July.
And if that happens, economists don’t feel like the fed will go by 50 in September.
Yeah, I think the ample room to run here when it comes to mitigating risk.
That was language that really struck out to me because basically he leaves the door fully open for a 50 basis point cut.
There, not just a 25 basis point cut.
I mean, markets are pricing in around 100 basis points of rate cuts through the end of the year and he didn’t necessarily push back on that.
And I think that’s a narrative that we’re going to see, not only in September, but throughout multiple of those, just to put a fine point on that for a minute.
When we talk about 100 basis points of, of cuts, a full percentage point cut, there are only three meetings.
I just want to emphasize that because even if it’s not in September, the market is expecting that there will be that labor market deterioration at some point that will then trigger the interesting part of that to me too, Julia.
So the market is expecting some level of labor market deterioration, right?
But is it actually going like when we see some level of labor market deterioration, I think is perhaps a broader question?
Things like in video earnings are going to decide that right.
But if we’re sitting at a record high and we get another weak labor report, we know how that went last time for the stock market and maybe it doesn’t go well again, even if it means you’re getting these cuts Yeah, I don’t know if it means you’re getting, I don’t know, I guess we’ll see, we’ll talk to our guests about that too.
We also see the lagged impact right on monetary policy as well.
So even if we do see a 50 basis point cut, that could still mean a bumpy road potentially through the end of the year.
And I feel like markets are expecting things to be good through the end of the year.
The annual Jackson Hole economic symposium has Wall Street Abuzz fed chair Powell signaling.
The central bank is about to start a rate cutting cycle.
Powell also vocalizing the ample room, the Federal Reserve has to respond to potential economic risks.
There is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market.
The current level of our policy rate gives us ample room to respond to any risks we may face including the risk of unwelcome further weakening in labor market conditions.
For a closer look at the state of the economy and the risks we have Oxford Economics Chief US economist Ryan Sweet Ryan.
You are forecasting a 25 basis point cut in September, but we still have an August Jobs report before that.
And I’m curious in your view, if we see that come in below expectations, is that going to set off a panic button among FO MC members that maybe were thinking in their heads, they wanted a 25 basis point cut that we could potentially see 50.
I don’t know if we will send off a panic button, but it would clearly support the fed going a little bit more aggressively, uh, in September.
I mean, the fed is arguably maybe a little bit behind the curve and to get caught up if we do, in fact, have a weak August employment number, uh they may opt to go with 20 or 50 basis points.
And I think that it was really the message from Powell’s comments today is that, you know, he didn’t tie the feds hands or front, run the rest of the FO MC.
They want optionality and the fact that, you know, they’re going to remain very data dependent.
So we can kind of put the inflation numbers in the back seat and everything is about the jobs numbers, Ryan, it’s Josh here and you mentioned putting those inflation numbers in the back seat.
But I’m curious like we have P CE coming out next week, right?
How are we supposed to be thinking about those releases moving forward?
Yes, there, it seems like the fed has cer certainly shifted here and more concerned about the labor market.
But how much do those inflation releases still matter.
And do we still need to see something like core P ce coming down?
Now, the FED clearly wants to see inflation continue to accelerate.
So I don’t think, you know, uh the Fed’s going to ignore the inflation aspect of their dual mandate.
It’s just got a smaller weight in their reaction function because, you know, as, as pal alluded to today, they were feeling a little bit more confident and comfortable with where inflation is headed.
It’s not gonna be a smooth, you know, uh easy ride.
There’s gonna be bumps along the road uh with the inflation numbers.
But overall looking at the job market, looking at nominal wage growth, slowing uh all indications point towards inflation getting back to the Fed’s 2% target.
I mean, if you already look at the, the PC deflator, which that’s the fed’s preferred measure, it’s within spitting distance of their target.
And I think that’s why they’re shifting more of their attention towards the labor market side.
The full employment part of their mandate is because if this, you know, soft landing is going to occur, they got to make sure that some of the fish that we’ve seen in the labor market don’t turn into anything worse.
Well, and Ryan, how motivated is the Fed to attack that aggressively?
I thought it was interesting today, some commentary from Krishna Guha, the vice chair over at evercore.
I si and he said, he said, Powell nailed his colors to the mast on the soft landing.
In other words, Powell’s legacy is effectively perhaps this at this point.
And so if there is any deterioration, do you think that the fed will be pretty aggressive when it comes to addressing that?
Yeah, I think history tells you that, you know, when the economy suffers a growth scare, you know, the fed doesn’t hesitate, they’ll aggressively cut interest rates.
I think one thing to keep in mind is that, you know, this easing cycle is more akin to a normalization of interest rates.
You know, the fed funds rate is not an equilibrium.
You need get it back down to roughly where it should be in the long run in past cycles of the la at least over the last few.
I mean, those have been panic moments that’s been break the glass with a financial crisis in 0809.
A pandemic and the fed aggressively cut interest rates down to zero as quickly as they could.
Uh, this time around the feds, you know, I know he didn’t use the word gradual, but it’s not gonna be, you know, what we saw during the pandemic or financial crisis.
You know, the fed is gonna be more measured in their, their pace of normalization because really what the fed is trying to do is get interest rates back down to where they should be in the long run.
Ryan.
I’m, I’m curious what you think interest rate cuts do at this point.
Right.
If we’re talking about a 25 bits cut in September, a 25 bits cut in November, it, it’s, it’s not that aggressive, right.
We are talking about gradual, to some extent.
How much does that help the areas of the economy that are struggling?
Does that really ease policy enough to, to help keep growth going at this point?
Well, I, I mean, first thing I, I think the economy is in, in a pretty good spot.
I mean, you know, GDP growth, you know, for the rest of this year for next is looking like it’s gonna come in around 2% which is the economy’s short run potential.
Essentially think of that as our speed limit, you know, 2% is roughly where we should be growing.
Uh There are parts of the economy as you alluded to that are are struggling, one’s housing.
Uh One is vehicles for example, and they’re very interest rate sensitive.
So, you know, just even a little bit of uh a decline in interest rates will help those segments of the economy.
Say, for example, housing every little wiggle and mortgage rates that we see.
We see this rush into uh home buying, you know, existing homes, new homes.
Uh it’s not a cure all.
I mean, these uh parts of the economy are still gonna struggle because interest rates are still elevated.
I mean, the FED still has its foot firmly on the brake.
Uh, but I do think it will help the part of the consumer that I’m most concerned about, which is low and mid income households.
So as the fed bri brings down, you know, the fed funds rate, you know, credit card interest rates are gonna come down and that will provide some, you know, almost immediate relief to those households that are, are struggling under the weight of still, you know, elevated prices, uh a softening job market and uh weak or nominal wage growth.
They are edging higher with less than an hour before the close.
The tech giant reportedly looking at September 10th as the date for its biggest product launch of the year.
That’s according to reporting from Bloomberg Apple, of course, set to unveil its new iphone watches and air pods.
And if the timeline matches previous launches, those devices would then go on sale on September 20th.
Separately, Apple getting a vote of confidence from billionaire hedge fund manager Dan Loeb.
He says there is upside for the stock, especially if it can harness A I for its IOS operating system.
We talked about this actually yesterday as part of a note from loop capital Ananda Broa talked about how the A I cycle because of the large install base of iphones could be the sort of next unlocking of growth for Apple.
Yeah, that, that makes perfect sense to me.
And we talk about the A I cycle, we talk about the upgrade cycle for the iphones obviously very critical for Apple.
Now, if we get that September 20th release, that’s going to feed into the company’s current quarter, fiscal fourth quarter results, they do expect sales to grow about 5% year over year.
Of course, that’s slightly below what we’ll see from the holiday season.
That’s the quarter after this current one.
And that’s predicted that revenue will climb 7% a year over year.
I do it like a year before I, I should just wait, you know, like it, I have a 15 that I just got, but I’ll, it’ll, it’ll have the A I capabilities, I think when they roll them out, it’s like the one, it’s the one that is 15 and then above towards else.
So I lucked into it this time around.
Um, but it’s not expected that the hardware itself is gonna see a huge revamp this time around.
It sounds like according to Bloomberg’s reporting that the watch, um, and the airpods maybe will have a little more of an upgrade.
So we’ll have to see what they say.
Yeah, I mean, wearables, they are a really important part of Apple’s business and you know, services have really done well for Apple, especially as we’ve seen the hardware sort of be a little sluggish recently.
But obviously, whenever we have these upgrades, you usually see an uptick there.
And just quickly mentioning um Dan Loeb, who um in a letter to shareholders obtained by Yahoo Finance talks about his investment in Apple.
And Loeb of third point says, if Apple can execute on this opportunity, meaning the ja I opportunity, the monetization form factors will follow and have the potential to increase Apple’s earnings meaningfully.
And he said this is going to be a relief because the last few years have been stagnant in terms of those numbers.
So yes, we’re just getting started here on market domination.
Coming up.
Best day ever stock season, its biggest one day jump after the company raised it for your guidance.
We’re going to take a closer look at the restaurant chain bucking broader industry trends and starting at 4 p.m. Eastern.
We’ve got live coverage from Jackson Hole Wyoming, our Jennifer Shaber will be speaking with several folks on the ground there including Atlanta fed president, the Atlanta fed president and Jared Bernstein White House Council of Economic Advisors chairman, sticking around lower nation is coming your way after the break.
Markets looking to cap off the week on an upbeat note.
Thanks to Fed chair, Jay Powell who said this morning, the time has come to cut interest rates.
Our next guest sees a soft landing on the horizon.
That’s partly because of technology joining us now, Kim Forest Boca Capital Partners, founder and chief investment Officer.
Thanks for being here.
So, um let’s talk first of all about the FED chair’s comments this morning, the market obviously happy about it, not just stocks but kind of across the board.
We’re seeing a rally here.
What do you think was so welcomed by investors here?
Because what he said, kind of confirmed what, what people were expecting.
Sure.
Well, we’ve seen the jobs market kind of degrade and let’s just take the, the recent correction off the table.
I think a lot of people have understood that there’s some weird math that goes on there and um that the, the statistical adjustments need to be adjusted.
So that wasn’t the big surprise.
But you can, if you watch the jobs numbers and jolts and, and especially unemployment, they’ve been going in the wrong direction.
And I think Powell is incredibly um clear on what his objectives are.
And first, it’s a dual mandate of job, uh you know, uh full employment and stable prices.
And he, as he has been saying, you know, inflation was a big hazard and they had to address that first.
Now that that feels like it’s coming under, you know, a little bit of a relief going in the right direction for um, a number of months.
Now, jobs are going in the wrong direction and to that he’s going to have to lower rates.
We all anticipated it and he said it, he said what we were all thinking.
So he gets big kudos for being Mr Obvious Mr Obvious saying what we were all thinking.
But now it’s a debate of whether or not we’re going to see a 25 basis point cut or a 50 basis point cut.
Is there an argument to be made that a 25 basis point cut would actually be more preferable for markets?
Because a 50 basis point cut might signal panic that the economy is slowing faster than anticipated.
I think you’re right.
But guess what, we’re gonna have to look at the jobs numbers and then the inflation numbers and all the other kind of health checks that we will get as statistics on the economy between now and the time the fed meets.
The thing that I’ve taken great comfort in maybe over even Janet Yellen is Powell has been very explicit that they are data driven.
And it certainly seems that way even in his speech where he walked us through the history of inflation, how they thought it was transitory.
He was kind of funny in that math joke kind of way saying we were all in that ship, you know, anyhow, he said, here’s why we had to recant that and say, oh, this is a problem and we’re gonna raise rates.
So again, he went back to the data, he is data driven and I think investors need to be too.
Uh So Kim, let’s get to the technology side of the equation in your view because if we’re gonna have a soft landing, um what role does technology play in that?
So I think it plays a huge role and I think the Fed gets some credit, but I think the way businesses are structured by and large, not just in the US, but around the world really deserve a good looking at and some credit for a soft landing.
Here’s what I see back in the like 2010 to 2019 time frame, a lot of economists and investors were looking for the next recession that never came.
So I kept asking myself, where is that recession?
Whenever the tariffs from C on China were put in place, you would expect that to push us into recession when you know, we have a loss of demand in a lot of areas because a lot of um equipment and products come from China.
Companies actually know what’s in their buildings and warehouses because of uh cr or I’m sorry, er P systems that were put in place in the year 2000.
But then in 2010 companies started adopting customer relationship management software like sales force, but it has allowed them to understand what their pipeline looks like and even smaller companies are looking at their pipeline and making adjustments.
And I think that is gonna deliver us a soft landing or as soft of a landing as we can manage because businesses tend to not over hire anymore because they see demand and they don’t necessarily get rid of people or, you know, just keep on building hoping that things are gonna turn around because they see the demand for their products and services almost real time.
And to your point tech has really been a sector that is lifted this market rally.
But we have seen this broadening out and I’m curious to get your perspective since we’re getting closer and closer to that, that rate that we’ve been operating in this ultra high restrictive rate environment.
How should investors be positioning themselves for a low rate environment?
Sure.
Well, a couple of sectors that really have missed out.
Well, not even sectors but just areas of the market or small caps, you know, everybody’s been complaining and I’m one of them that the magnificent seven was the only thing that was driving the indexes.
And we know why we’re not gonna go into the math problem of that about market weighted market cap weighted indexes.
Um But I really think that smaller companies are gonna get some credibility because do you really wanna buy into Amazon?
That’s saying, hey, things are kind of slowing and we’re gonna just keep on investing in, you know, the, the new products that we’re gonna roll out through Aws come hell or high water.
So you’re gonna look for other areas.
And I think the smaller names are one area that you should look at and then the obvious things for lower rate environments are um things that people borrow for.
So housing Home improvement, um and you know, we saw Home Depot suffering and Lowe’s Suffering, maybe they’ll come back.
So there’s lots of areas that where people borrow, where they might pick up, borrowing to once again spend on their housing and perhaps autos as well.
Now for some of the days trending tickers have shares shares.
They surging, hitting an all time high after upbeat second quarter results, the restaurant chain also lifting its full year guidance C Ceo Breman telling yah who finances Morning brief earlier today on the driver behind this move, we raised our guidance significantly and it’s a reflection of the strength we continue to see in the business.
So it implies low double digit comps for the remainder of the year and for a dollar or two more often at parity, you can get a bowl of fresh Mediterranean food at Kabba versus a traditional fast food freezer to fryer meal and we’re seeing people trade over and trade up to us.
All right, I mean, K shares, the, the, the stock move here was truly a standing up about 20%.
This is the biggest jump ever the most since June 2023.
It comes after the strong earnings, more than doubled on top of that, we have increased menu innovation like that grilled steak offering, which did help the sales and really the brand awareness overall.
And this seems to be the narrative on Wall Street right now.
Just the uniqueness of K as a potential value proposition across various income levels, various geographies, it just went public last year.
And I remember at the time, there was a lot of comparisons to a Chipotle whether or not Kabba could be the next Chipotle.
And we are seeing other similar types of plays like a sweet green, for example, rising on the heels of this move.
I mean, you have to think that some of the move today is a short squeeze, there’s about 14% short interest on this stock.
Um But nonetheless, some of it is obviously driven by fundamental optimism as well.
You said this is the biggest move um since its IP O or since June of last year, that’s when it had its IP O.
And the IP O was then at 22 bucks a share.
So obviously, you’ve gotten a good return on your investment.
If you’ve bought into this thing, I was looking at some of the analyst coverage today, lots of steak puns, by the way, um Chris O call over at Stel, in particular, calling out the expansion into new stores.
And not only that they are aggressively opening new stores but that they are improving moving unit performance as they’re opening new stores.
In other words, those new stores are becoming more and more profitable as they sort of learn um from, from experience, uh increasing experience, even with the increased increasing cost of goods sold, increasing steak is more expensive for them to buy.
For example, they are still um getting good margins on these stores.
The efficiency narrative is one that I think is very important.
When you talk about a Cava Chipotle or any of these fast casual chains, you need to be able to deliver, you know, your product to customers in a way that makes sense.
You need to make sure that your labor force is, you know, paid well, but also, you know, kind of getting their job done in a quick manner and you wonder how like A I plays in all that too, especially when it comes to some of these names.
Those shares are sliding following a turbine blade failure in an offshore wind farm near England is the latest incident involving the company’s, there was a blade collapse last month near Nantucket as well.
In fact, that’s sort of shredded, the ended up shredding the blades and they washed up on the beaches in Nantucket resulted in some closures there.
Um It’s unclear what exactly is gonna end up being material as a result of this.
I mean, the wind industry has already been struggling a little bit.
So is it gonna result in a pullback in orders that is unclear at this point?
I mean, the shares are down about 2% not a huge decline, but it’s not a good look at the very least, no, in the court of public opinion, this is not a great thing and there’s also a few things at play here.
You know, you mentioned this is a struggling industry, you have high interest rates, you have supply chain concerns that have stalled and really impact projects there.
Analyst said this is going to come down to whether or not these failures are installation issues or if it’s an actual blade issue.
And the company itself said it’s investigating the incident.
But beyond that, it just seems like there’s just a few external factors here that uh G for Nova is going to really have to deal with.
And then like we were saying, when you have such high profile events, like there’s washing on the shores of Nantucket in the middle of some, none of this is is great, although the shares are up like 40%.
So they have been been doing pretty well before this latest set back.
We’ll have to continue to watch where shares move.
Coming up though, we’ll discuss what Wall Street made a Vice President Harris says DNC speech.
That’s next.
I know there are people of various political views watching tonight.
And I want you to know, I promise to be a president for all Americans.
You can always trust me to put country above party and self to hold sacred.
America’s fundamental principles from the rule of law to free and fair elections to the peaceful transfer of power.
Vice President Kamala Harris there touting a future of unity.
At last night’s DNC accepting the Democratic nomination for president.
The VPs whirlwind campaign has been characterized by memes, momentum and record fundraising.
Though a lack of policy specifics have left some wondering how if at all, a Harris administration would differ from Biden’s for more.
We’re joined by Jeanette Lowe Stur, managing director of policy research that it’s good to see you.
Indeed, we still are left wondering for some aspects of Harris is economic policy besides what we know about Biden’s.
So, so when you’re doing sort of the policy analysis, are you just basically looking to Biden’s playbook?
Yeah, absolutely.
I mean, I think that there in a lot of ways Harris has to abide to some extent to the um Biden agenda because she is part of the administration and she does want to separate herself a little bit from Biden.
But at the same time, she is going to support a lot of the policies that are in place and some of the proposals that Biden um endorsed, that she is endorsing as well.
So she doesn’t want to rush to put out any of these policy proposals.
But she’s also finding that the campaign said that they don’t feel like they need to put out too many details either because at the same time, they feel like voters don’t need that.
Um They’re more concerned just about what the image is that she’s presenting.
But I think what we’re trying to think about is there’s not a lot of differences between Biden and Harris and that’s what we’re using to move forward even when she did outline some of her economic policy proposals.
Last Friday, you still saw that they were quite in line with what Biden has proposed.
Perhaps he was just a bit more progressive, you know, things like he was proposed a $10,000 credit to help homeowners by a do or do a down payment on a house.
She moved that up to 25,000.
She wants to increase the child tax credit from the levels that he put.
So she’s a bit more progressive on some of these policies.
But in general, we are seeing her kind of follow the same path that we have with the Biden administration.
So it does still give us a reasonable path forward for what her administration might look like.
Reasonable path forward.
But Janette, I have seen a phrase being thrown around that she’s been leaning into quote strategic ambiguity in regards to our policy.
My question though is how long can that last?
And how much more pressure does that put on that first debate between Harris and Trump?
Right.
So I think that is very important that they are specifically saying that this is something that they want to do.
They somewhat argue that voters don’t need all of that detail to make a decision.
They’re more looking for what the broad strokes are.
But at the same time, they’re also trying to protect the campaign from attacks from Trump and the Republicans as well.
But we do have a debate up on September 10th.
That will be a really good opportunity for the moderators to ask questions specifically about Harris’s policies as well as Trump’s policies and to get more detail there.
And we do expect her to put out some additional proposals, some additional details as we move ahead into this final stretch of the campaign.
But I think that one of the other things that is very important for this election is it’s also gonna matter what happens with Congress who’s in control of the House and who is in control of the Senate because we anticipate that it’s very likely that if Harris does win the presidency, there’s still going to be divided government with a Republican Senate, even if there’s a Democratic House and that is going to limit her ability to do a number of proposals that she may want to do.
Does that though also uh sort of lower the stakes on what she does promise?
Right.
And I think that some of the things that, you know, if you looked at what Biden was trying to do, he came in during the middle of COVID.
So we were in kind of a recovery uh situation.
She is kind of of the view that the economy is doing relatively well.
So now, but you can’t really propose um $2 trillion of spending at this point, especially if you’re looking at the current US fiscal situation and what those constraints are as well.
Um The US is spending a whole lot on interest costs just because interest rates are high.
The fed will be cutting next month, but that’s only going to take a little bit of that paying off.
And so Congress and the president, whoever it might be, are looking forward into 2025 to a fiscal situation that is going to be a, a, you know, much tougher to do tax uh credit.
I mean, tax cut extensions.
You have both a president former President Trump and a potential President Harris both want to extend at least middle class tax cuts they will have to pay for that.
So there’s going to be restrictions there.
So how much spending and how many tax cuts or tax proposals you’re going to be able to offer is going to be limited by the makeup of Congress?
What kind of fiscal situation we’re looking like and other situations might be involved.
So what do we need to do with defense spending?
What do we need to do with other geopolitical concerns?
So I think there is also a realization that there may be some restraints on whatever policy she may want to enact as well.
You you mentioned those tax hikes, she does plan to raise the corporate tax rate to 28 percent.
What can that mean for the profits of these corporations and the trickle down effect that could have on wages?
Right.
And so this is something, you know, that Biden has also proposed and again, kind of following along with the same proposals of the Biden administration, he’s also proposed raising the corporate rate back up.
You know, I think overall it might be more likely that we might see a rate go up to about 25%.
So it could definitely hurt some of these companies who had seen quite a good um boost to their bottom lines from the Trump tax cuts going from a 35% rate.
Down to a 21% rate.
One of the things I think that would offer at this though is that if we do have a tax deal, we are increasing the corporate rate.
We also most likely would see, um, a continuation of full expensing for the R and D tax credit that is currently expired.
So that would help some of these companies with a lot of R and D costs offset any of the impact of a higher corporate rate.
Um And so that’s something else that we will be looking forward to.
So this is going to be a little bit of a give and take situation once we actually get into the tax debate next year, Janette Lowe, thank you so much.
There’s gonna be a lot to look forward to ahead of November.
Thank you.
Now let’s get to some calls of the day Guggenheim upgrading, broke to buy from neutral the note, citing investor enthusiasm towards the company’s broadening a sales and this is from analyst Michael Morris.
He reiterated is upgraded his by rating I should say and then establish a 12 month price target of $75 a share that represents about 20% upside based on current levels here.
Now, like we said, this auditing out of advertising is a catalyst for his by rating.
He also views rou as a unique top line acceleration story in 2025 especially as we see those at dollars flow from linear television to connected TV, like Roku and some of those other streamers out there.
He did.
However, cite some concerns saying that leadership has been slow to take advantage of ro significant position in the connected TV marketplace.
Now you also have increased competition which could pressure financial performance.
But overall, the growth narrative seems seems to be intact here, at least for analyst Michael Morris and that will help the company over the long term.
Yeah, I mean, the stock is down a lot year to date as well, something like 25%.
So this uh even even with today’s gains.
So also a valuation call, as we’ve seen the stock pull back.
Uh Let’s also talk about Raymond James which is downgrading top golf g Calloway brands from out perform to under perform to a two step downgrade here.
The stock is down only about 1% but the note does highlight the recent deterioration in same venue sales at top golf.
Basically, he says it was a bad idea for Callaway to buy top golf.
I mean, what I mean, like effectively, that’s what it boils down to here if you do a tl uh too long to read right on, on this note, um He talks about that uh the company’s rival, a cush net, which is still a pure play golf gear company has vastly outperformed this company because they didn’t go out and buy a venue.
Now, this is a um an acquisition that initially looked good because top golf was performing really well.
But as we have seen this sort of post pandemic revenge activity and travel bump fade a little bit.
And he argues, he argues that, you know, um, you, it’s hard to be a regular at something that costs that much.
And to your point about how they thought they were getting a good deal.
I mean, they purchased it in March 2021 evaluation of 2.6 billion and you know, pre COVID top golf was potentially eyeing an IP O.
They have tried to themselves with new loyalty programs, new games, fitting rooms, upgrades, et cetera.
But that, of course ups the cost, it’s about 100 and $55 to reserve one bay for two hours and that’s before food and drink and the food and drink.
It’s expensive there.
Yeah, he also points out that the company has talked about now spinning off top golf, but he says we fear that it might be too late.
So we’ll keep watching to see what it w and a miss there, I had to get at least one golf done in there.
Stocks tied to the housing market including Red Fz and Compass are jumping today.
That’s on the back of that chair JP comments in Jackson Hole and positive housing data over the last couple of days, new home sales coming in much better than expected and existing home sales increasing on a monthly basis for the first time in five months.
As a result, the XL RE is one of today’s best performing and home builders are eyeing a record close.
Joining us now is Logan might lead analyst at Housing Wire Logan.
Thank you so much for being here.
Like we were just saying, new home sales clearly outpacing existing home sales at this point.
Can you explain why we’re seeing this economy?
And is there anything to decipher there about the type of buyer we have that’s currently in this market.
Home sales market is a much smaller marketplace, but they have the advantage of paying down rates where the existing home sales market has never had a sub 6% marketplace to deal with.
So the new home sales have been able to grow from the bottom of 2022 where the existing home sales have been kind of hover around the 4 million levels since then.
So whenever rates fall, especially when they go under 7% the builders tend to be able to move their products they sell homes like a commodity where the existing home sales just doesn’t have that ability.
And that’s what we’ve seen.
The difference where this marketplace has the advantage of lower rates than the existing home sales market still hasn’t had a marketplace under 6% yet.
And so are we gonna then continue to see this pattern until rates do hit 6%?
You know, I think the builders will always have a rate advantage here until mortgage rates get well below 6% for the existing home sales market.
Affordability is basically shot still.
So the last time we could actually compare this housing market to was the early 19 eighties.
It was actually uh the affordability index was worse back then for the existing home sales market, but rates fell 2.5% plus and kept on going lower.
Then home sales for the existing home sales market actually grew.
Uh uh back then the new home sales market, as long as rates are kind of here, we still have that advantage.
But if mortgage rates fell 2% and actually stayed lower below 6% the existing home sales market could get some traction.
And we’ve already seen some of the kind of the positive expectations going out in the future now that the Federal Reserve will probably be in a rate cut cycle.
And I think that’s really important when we think about mortgage spreads, right?
The spreads have been historically bad for some time if they just go back to normal, we’re a sub 5.5% mortgage market today.
And what is the other catalyst for the rebound that we could see in the housing market?
I mean, we talk a lot about interest rates.
Is it all tied to mortgage rates or are there other things at play here?
You know, we’re, we’re sitting at the third calendar year, the lowest home sales ever.
So you have such a low bar to move from.
But really, it is rates like the history of nominal home prices falling.
This is not a lot since 1942.
Uh but rates going down, especially coming off of a very bad affordability.
We have so many buyers waiting for that rate to come down to the level where they feel comfortable and can qualify that you could maybe get a little bit of a rush of demand when that happens.
But to me, I’ve not seen the existing home sales market actually be able to grow sales as long as mortgage rates are above 6%.
The builders, on the other hand, they’ve been able to do it because they could play in that field, but the existing home sales market hasn’t yet.
So with consumers so keen for a deal which retailers are best positioned to benefit will discuss in our investor playbook.
Some retail giants getting a lift from price conscious consumers target reversing its sales slump as Wal Mart post a 4.3% rise in same store sales.
While other names like B J’s feel the pressure from pricing efforts to keep costs low for consumers.
So how do you play deal seeking consumers?
We’re looking at how to navigate the big picture with the Yahoo Finance playbook, our five capital founder and Ceo Scott joining us now to discuss Scott.
It’s great to see you here.
Um So we have obviously been talking about this theme for a while now, the so called more choiceful consumer, more cost conscious consumer.
Um but it doesn’t feel like all of the sort of discount retailers are benefiting equally.
So what is sort of helping the ones who are winning to win?
You know, it’s, it’s a funny consumer right now.
Um you know, r five capitals, both research consulting business.
We actually are a bigger consulting business than we are research business.
So we, we deal with a lot of retailers.
Um And what I’d say is that, you know, we started seeing signs of this in kind of the early spring where there was definitely pullback going on, especially and now this has become kind of common think at the lower end, lower middle end with the cumulative impacts of inflation.
Uh We saw a lot of weakening up there.
Um So that’s definitely something that’s playing out overall.
But if you look at specific companies and it just becomes like, OK, what is a specific company doing?
One of our top picks for the last 2 to 3 years, 2.5 years has been Walmart.
Um And what we put out, uh, earlier this week is that, hey, it’s them not like the consumer.
OK.
Uh because their core consumers actually, according to our data really struggling, but Walmart’s doing a lot of things to improve their business.
They’re attracting new consumers in uh their, their stores are much better executed.
Uh They Walmart Plus, which is their membership program and they’re doing a lot of things behind the scenes to improving their logistics and distribution and improving their labor model.
Labor is a is continuing to be an issue, the productivity of labor.
So there’s a lot going right at Walmart.
And the good thing about Walmart is, you know, we’re early endings there still, even though the stocks worked.
Uh So we, we, you know, really key on, I think retailers that are doing uh self help.
Uh And you, you mentioned bjse even though the stock came down.
Um That’s one of our favorite names actually.
Uh We liked a lot of what we saw uh in their second quarter even though the, the stock came down.
So going back to Walmart there, I mean, I think of Walmart and how much it has diversified its business, right, as it looks to compete with the Amazons of the world.
So, if you’re just, you know, a normal retailer, I guess you should say, or do you just have 11 thing that you’re focused on?
Are you going to fall behind and, and to that point, you know, we’ve seen Walmart partner with other companies as well.
Do you need to create partnerships in order to kind of cut through that consumer?
Yeah, I mean, that’s, that’s an excellent question.
And so right now, as, as we look at the marketplace, there are three companies that are becoming extraordinarily dominant, uh even more so than they have been Walmart, Costco and Amazon and their, their business models, particularly Costco is a little bit different.
Um but particularly Amazon and Walmart, their business models are be, are extraordinarily advantaged and they’re becoming more advantaged.
And so both companies are somewhat operating the, the same playbook, they’re putting a lot of money into their distribution, their, their warehousing their logistics and uh uh automating them.
And so with that model, their business, the more they volumes they drive over those types of facilities, the better they, they do.
And so you’re really gonna see, I think both companies, it’s already starting to use price as a way to drive market share.
Um And so competing against these guys is very difficult and as market share grows, the flywheel that gets going is that advertising business grows and that’s very, very profitable for both companies.
And so, you know, when you look at those 22 firms, it’s really hard not to see them gaining more and more share.
When you come to Walmart, one advantage they do have over Amazon is that fresh foods business drives a lot of traffic to their stores.
Uh, they’ve done a much better job, especially in produce, But across brash that drives a lot of traffic to Walmart and that is a big advantage for them.
Amazon has its own, but it is a big advantage for Walmart with those 4200 stores selling a lot of produce meats.
And I guess, well, whole foods doesn’t do it to the same, nearly to the same extent.
Right.
Um, but kind of, to Ali’s point, how important is the, the bundling, right.
You know, Walmart just announcing this Burger King partnership.
I don’t, I definitely don’t use all the stuff that they have as part of that.
Uh, or at some point, do you think they’re going to cut back on some of that?
Because maybe there’s not enough upside and it’s, it makes it more expensive for them.
So, so I think the more the better a little bit here.
Like, yeah, I’m not a Burger King guy, but that doesn’t matter like there are gonna be plenty of people at Walmart.
Plus that, that will mean something to.
So I think it’s, we anticipate they’re gonna continue to add to the benefits of Walmart.
Plus as they can fund that through their advertising business, which I mentioned before.
So Walmart Plus, you know, we use all, all the stuff, you know, that we cover.
Um, you know, particularly again on the fresh food side, if you’re not necessarily near a whole foods which Amazon uh, Amazon has.
But I, I do think a as you look at the consumer, like how many subscriptions will they actually have retail subscriptions?
One thing that target didn’t talk too, too much about was the, the, the, the circle 360 which is their membership.
Uh You know, they say they’re happy with it, but it hasn’t really taken off like Walmart Plus and certainly Amazon Prime.
So I do think, you know, if you look at a consumer, you can pretty much do almost anything you want if you have a Costco membership, if you have a Walmart Plus membership and you have Amazon Prime.
And I, I think it’s again growing advantages for those three companies, Scott.
While we’re wrapping up today’s market domination.
Don’t go anywhere.
We’ve got you covered with all the action following the closing bell.