On today’s episode of Market Domination Overtime, Hosts Josh Lipton and Julie Hyman discuss the day’s market performance and the aggressive rise in meme stock activity.
The Dow Jones Industrial Average (^DJI) broke its eight-day win streak. The S&P 500 (^GSPC) closed just below its flatline, while the Nasdaq Composite (^IXIC) ended 0.29% higher.
Meme stocks popped after “Roaring Kitty,” best known for the 2021 GameStop (GME) short squeeze, made a return on social media. Yahoo Finance’s Josh Schafer joins the show to discuss the implications of this rally and Head Moderator of r/WallStreetBets Noor Al gives insights into the renewed interest in meme stocks.
We’re joined by Jared to get up to speed on the action from today’s session sponsored by Tasty trade.
So let’s see where the major averages ended up here.
Kind of the lows of the session but still not seeing big declines today.
A lot of what we talked about today, people sort of waiting for the inflation data to come later in the week as we know most of the action and excitement today came from the meme stock trade which I’m sure Jared’s going to talk more about the game stop just consistently.
The top training ticker of the day after Keith Gak, a war kit.
He tweeted a cryptic drawing earlier in the day of him sort of sitting forward or someone sitting forward and a bunch of videos of the rest of the day.
Well, I’d like to think there’s more to come and we’ll have to see what happens here.
But it was a bit of excitement that admittedly I wasn’t expecting when I woke up this morning.
I just want to point out that on a day when most of the sectors were in the red, only tech managed to make it to about half a percent.
We saw a lot of fringy behavior, investment behavior in the markets.
So let me show you what I mean by that with our leaders.
First of all, crypto Bitcoin up about 4%.
Then you have Chinese stocks which are absolutely battered.
Then we have unprofitable tech that’s arc.
Then we have retail, then solar also hit hard this year, cannabis really hit hard this year.
And so you find all these pockets of strength which are really on the fringe of the market and not in the core.
And when I say that you can look at techs, here’s software, even tech was up half a percent, but it’s a mixed board.
There is software here is semi conductors, a little bit more green than red.
And then when you get to unprofitable tech, that’s when you see the most greens.
So a little bit of a head scratcher there, we’ll have to see if anything comes of this in the days and weeks to come.
Uh Let me just show you the NASDAQ 100 here.
Uh This is uh this shows a mixed board with respect to the mega caps.
So a lot of these names haven’t seen too much uh activity from in a long time.
And then some of them we have uh beyond, beyond uh meat.
For instance, we were writing about a couple of weeks ago.
Now with the takeaway of the trading day, Yahoo finance is very own.
Of course, we are talking about the meme that was posted last night, right by roaring kitty.
And that’s of igniting this meme rally that we saw today.
I think one of the broader takeaways I had from this was that if you guys remember we were talking about meme stocks, I think it was last week or two weeks ago and how games were starting to bubble up.
It was like we looked up one day and it was like, wait game stops up 30% in three or four days.
And it wasn’t today, which was pure, kind of classic meme stock mania.
But I did find it sort of interesting, think like, ok, we haven’t, it hasn’t necessarily come out of completely nowhere.
There’s been random interest in this stock for a little bit now over the past month and really kind of broader in the markets.
As I know you guys have been talking about through the hour or two, like, we’ve seen people speculating in different areas even you just think about sort of the crypto chatter that we’ve had over the last couple of months.
And obviously you can’t really explain why Bitcoin is going up, but it just has, has, right.
It’s your number go up meme Julie.
And so I think we’ve really sort of had this sentiment maybe bubbling and this maybe set us off.
But to me that was one thing that I was sort of thinking about today.
It just like, ok, we’ve kind of been inching toward this.
And it is also important to note that from a broad sense.
A lot of market strategists say sentiment has not nearly gotten as frothy as it has in 2021.
We’ve talked about that a lot over the last couple of months.
We’re not near 2021 from a frost sentiment standpoint, but this is perhaps her first sign that maybe we’re getting closer.
Josh, that really the meme stock trade, it never went away.
It just found different names, different vessels.
And it just, this brings us back because it is roaring kitty and is sort of that Wall Street bets crowd.
I mean, we’ve been talking about meme stocks on and off since 2021.
Like maybe people have labeled Carvana as it in the past.
Right.
And now, I mean, they’re having a fundamental turnaround there that you can maybe argue the company is actually doing well, but it’s still, there’s a short squeeze aspect to stocks like that.
I mean, even Reddit when it went public two months ago, the one of the first, the first short report to come out on it.
So an analyst was already calling it a meme stock, right?
They were saying this has me Mike characteristics to it.
It’s trading disattach from fundamentals, the stock is way too high.
And so that phrase is, I mean, I don’t know, we use that phrase a lot now.
So it does feel like we’re always still talking about it, but it hasn’t been gamestop in a MC.
So I guess that’s kind of the they come up in a minute.
I love the idea though, like, like the image in my mind of like the sleeper cells of like all of the like uh Reddit traders or Wall Street bet traders and then they were awakened like the code word was, was like, how quickly it all happened or not surprised because that’s just kind of how surprised but not shocked.
I don’t, you know what I mean?
You know, this is kind of how this thing works as we talked about earlier.
I mean, you know, I do wonder what’s gonna happen from here.
Are we actually gonna get more direct communication from roaring kitty or is it, you know, because that his, his bag was always, as we pointed out earlier in the show him on camera giving the fundamental case for gamestop.
This is much more cryptic and sort of he’s posted, you and I were talking earlier, you know, he’s been posting all these like movie meme mash ups today to try to communicate something to people.
So I don’t know if we’ll actually hear from him directly.
That would be fun.
or is there, are they looking at something like everyone just immediately jumps to gamestop?
But there hasn’t been a lot of online discourse that I there’s like a little bit of discourse, but like, remember in 2021 we got to like, what are other stocks that are shorted heavily?
Right?
And that was sort of where like the speculative bubble went next.
And I guess when you look at the action today, maybe you did see some of that.
A lot of the shorted stocks that Jared was highlighting were up.
But like, is that sort of where the discourse goes next?
Is what is Lauren Kitty even talking about?
I think it’s something I’m still wondering come out.
Does he come out and make the fa fundamental case for another stock entirely?
That would be fun.
Maybe I want to see him back the fundamentals of Tupperware.
All right, let’s brought it back out because markets were mixed at the close of the dow snapping eight straight days of gains.
But we did, we do a big economic data on deck with the consumer price index out on Wednesday for more on what to expect.
We’ve got Gus O, chief economist of PNC Financial Services Group.
GUS, it’s good to see you.
So we’ve been talking all about this anticipation for the inflation data.
I know that you have been doing a lot of work on this and also work on kind of how the inflation data relates to the job market, how the FED is viewing that.
So we’re expecting to see a 0.4% increase in the overall CP I from March to April and then a 0.3% increase in the core CP I excluding food and energy.
Uh That means we would see year over year core inflation slow from 3.8% in March to 3.7% in April.
Uh That’s good news from the Fed’s perspective, but the fed does want to see inflation move even lower.
Uh And so I think we see the Fed on hold in the near term until they get more definitive proof that inflation is really slowing.
And, and Gus how confident that we get back to the fed’s target in the next 6, 12 months and, and what needs to happen gus for us to do that?
Uh I think we need two things for that to happen.
The first is, is that we need to see slower growth in housing costs.
So when we look at measured rents, those are falling pretty quickly.
But we haven’t seen that show up in the shelter component of CP I yet.
And then I think we need to see a bit weaker wage growth.
Wages are growing around 4% year over year.
I think to get to 2% inflation, we need to see something closer to 3.5% wage growth.
Uh I do think with a bit softer job growth with perhaps a bit of an increase in the unemployment rate, we will see slower wage growth and given slower wage growth, given slower growth and shelter costs.
I think we’ll be back to that 2% objective by this time next year.
So what does that say about the fed’s ability to cut before this time next year?
Uh The fed doesn’t need to see that inflation is at 2% to cut uh, year over year.
What they need to see is that inflation is moving toward 2%.
Even if the fed were to cut 123 times monetary policy would still be contractionary.
It would still be weighing on the economy just not as much as it is now.
So I think that if we do see the inflation numbers start to look a little bit better, we see that inflation is, is indeed slowing.
Then I think the fed feels comfortable cutting.
I would say sometime, let’s say at the September and then again at the December meetings, 25 basis points each time.
So maybe September Gus.
I’m just curious whether you think, does it get tougher for the fed to get cut though as you get closer and closer to the election?
Gus, um, you know, I think the fed will take into account the election, but I think if inflation is slowing, I don’t think the fed wants to wait too long.
Uh I think they’re concerned about uh waiting too long to cut rates that could increase the drag from monetary policy.
So I think as long as we see better inflation numbers, the fed will be OK, cutting in September and then they can cut again in December after the election.
Um And you, since you mentioned the election, we have to ask, you know, how you think that’s gonna play into their decision making.
Um I, you know, I don’t see that as a big factor.
I don’t think the fed is going to be cutting rates aggressively heading into the election.
I think that would look bad.
Uh I also don’t think the fed is going to see any need to raise rates heading into the election.
I do think that we’ll see slowing inflation and that will allow for cuts.
So I think if the fed cuts once this year before the election, I don’t view that as a big deal.
That’s not their attempt to influence the election.
That’s just their attempt to stay on top of things.
And I don’t expect that that’s going to deter them one way or the other.
Gus uh switching gears a bit.
You know, we, we do have some big retailers reporting this week.
Uh how healthy and resilient the consumer looks, Gus because we do hear this talk of uh you know, consumer uh frugality, consumers trading down.
What are you hearing and seeing Gus?
Um So we do accept uh expect to see a bit softer growth in, in retail sales in April.
We had a very, very good March.
Uh So I think, you know, we see retail sales up about 0.4% if you take out autos, maybe up 0.2%.
Some of that is higher gasoline prices.
But I think consumer fundamentals are still very, very good, good job growth, good wage growth, slowing inflation, uh rising household wealth with higher stock prices and home values.
The big drag is coming from higher interest rates.
But overall, I think consumers are in solid shape and they will continue to increase their spending throughout 2024 and into 2025.
Coming up, meme stock buzz took center stage in today’s trade.
I’m gonna speak to the head moderator of Wall Street bets on the other side, more market domination overtime is coming up.
Let’s get you up to speed on today’s session or recap it at least sponsored by tasty trade.
We had a mixed day here today as folks await the inflation data come later in the week as we’ve mentioned its wholesale prices tomorrow and then pro and then consumer prices are coming on Wednesday morning.
The dow down about 1/5 of 1%.
The S and P little changed the NASDAQ down about a third of 1% industrials, financials and consumer staples leading the declines tech and real estate getting a little bit of a boost today.
Meme stock buzz taking center stage in today’s trade as gamestop shares soar the move higher coming after Warren Kitty, the person behind the meme stock frenzy during the pandemic posted online for the first time since 2021.
Joining us now is nor al head moderator of Wall Street bets nor it is great to have you back on the show.
So, so let’s start there, NORA it was the story of the day today.
Uh, I just immediately knew as soon as I saw that tweet that retail trading is back and that we’re gonna see more volatility than ever these next couple days.
So, no, that’s interesting because we’ve been sort of debating here, like, was this just a sort of one off excitement and then it’s gonna fade?
I mean, I think we’ve actually seen the build up for today’s activity over the past two weeks and even just three days ago when we were talking about DFE liking a tweet for the first time in three years.
So there’s precedents and there’s been a lot of build up to this moment to today.
Are you saying, or you think the activity continues in gamestop or, or no, it’s gonna shift to other names.
I think gamestop is definitely going to be the stronghold.
Um That’s what we’ve seen in previous explosions of retail excitement.
Uh But that’s definitely gonna spill out into other stocks.
We saw a MC today up almost 80% even more than Gamestop really?
So I think you’ll see both.
You’ll see Gamestop explode and you’ll see the others explode in sync with it.
Nora, I’m really curious as someone who does what you do um in terms of, and, and that’s your sort of side thing here that you moderate Wall Street bets.
I saw the uh DF BS Tweet yesterday and I just knew, wow, tomorrow is gonna be an intense day.
I took the day off and I’ve honestly just been looking at Reddit all day uh hanging out in this court and making sure that, you know, the the millions of people that are visiting our subreddit, our community are uh having a good time, having a good experience.
Are there people who have sort of been on the sidelines for a while who now saw this and came flooding back to the platform and back to the markets.
So page views are up, uniques are up, we’re seeing more people tossing money at the market.
We’re seeing people post their, we call them yo os and their gains.
Uh People taking profits, people throwing all those profits back into the market.
Uh Every stock you can name.
Uh We’ve been seeing elevated levels of activity on them today.
So I think this is just the beginning though.
Do you know the, and we’ve been talking to different guests about this today too?
So I wanna get your take, do you look at what’s going on GME today and it’s some broader tell to you about some serious trend or theme in the market?
It’s telling you something about risk, appetite ramping or do you see it?
Um, I think definitely people are having a ton of fun but it comes down to really just people seeing more opportunity in the market.
You know, we’ve been sitting on quite a bull run for these past couple of months.
Uh, spy is at all time highs people want to take some money off the table, realize those gains and toss them back into riskier plays.
I think that’s what we’re seeing, nor can you tell us.
And Josh sort of asked this, but if you can expand a little bit, like, is there buzz around other stocks as well?
Yeah, absolutely.
I mean, uh we’re just coming off fresh off the A I hype cycle.
Um Now we’re going right back into the meme stocks.
So I think you’re gonna see all meme stocks move together.
Um And really, I think this just shifts a broader um shift towards, you know, narrative economics, you know, can companies tell their story in a compelling way and really engage with their shareholder user base?
Um So we’ll, we’ll both a trend from investor appetite for those kinds of companies and hopefully a shift in companies and how they manage their investor relations.
I mean, the irony of this though is that gamestop is not doing that nor like at all, they don’t talk to anybody.
If they do have conference calls, they don’t ask questions.
There’s not a lot of transparency around what they do.
I think you can look at companies that over communicate and companies that under communicate.
People believe that gamestop has a plan and is executing on that plan.
We’re seeing them swing from tremendous losses in previous years to actually a net profit last year.
Although it was small, we’re seeing their underlying business kind of uh grow and, and, and trend closer towards green.
And I think in the absence of their Q and A and answering those hard questions, people are coming up with their own narratives.
And so narrative economics doesn’t necessarily mean the company has to create the narrative, but that narrative is being created and that’s why it’s so important to stay close to the source, close to social media for these stocks.
Yeah, I love that narrative economics.
Uh quickly, Nora I’m curious, given you saying that are you a believer in the gamestop story?
Thank you so much time now for to watch Tuesday May 14th, the president by his quadrupling tariffs on Chinese electric vehicles as early as tomorrow to tariff on Chinese S is going to rise to 102.5% and 27.5%.
According to a report from Bloomberg Biden will also sharply increase levies for other key industries.
Sometime this week.
Moving over to the economy, we will get some key economic data this week starting with producer prices coming out tomorrow morning, economists forecast PP I will take up slightly while core PP I hold steady.
This reading will come ahead of April’s CP I reading or consumer price index on Wednesday.
And after the PP I print, we’re getting another round of fed commentary.
This time from F Jerome Powell and fed Governor Lisa Cook Wall Street will look for clues to see how the latest data affects monetary policy and finally more earnings coming out tomorrow.
We’ve got Home Depot Alibaba and on holding reporting among others, Home Depot announcing first quarter results before the bell.
And analysts expect the company same store sales to drop by 2%.
Coming up.
The gaming industry hitting a rough patch amid the economic uncertainty, elevated inflation take a deep dive in today’s investor playbook.
On the other side, the gaming industry hitting a rough patch amid economic uncertainty, elevated inflation concerns of a slump in the video game industry is settled in after roadblocks cut its annual bookings outlook.
Meanwhile investors waiting on results from video game companies, take two Interactive and Ubisoft this week.
Joining us now for the Yahoo Finance Playbook, Wedbush Securities Managing Director, Michael Pachter.
Let’s start big picture Michael um video game industry right now.
How healthy and strong and resilient does it look Michael?
It, it’s probably as healthy as it’s ever been.
Um, I think that we had a lot of games that were canceled and a lot of games that I think the publishers have decided just aren’t worth chasing.
And, uh, uh, what, what, what that really means is that tastes have shifted away from buying the $70 game and in favor of playing the free to play game, uh, overall revenues are growing nicely.
I mean, growing definitely.
So all was, oh, I think Michael, we’re having a little bit of issue with the connection there with Michael Pachter, Michael.
What I was just gonna say then as you talk about the sort of steady revenues from these companies is they’re not trading like they’re doing well.
Uh, because I think that the publishers have recognized over the last couple of years that they can’t just throw anything out there that they have to provide really premium content in order to charge a premium price.
And they’ve spent way too many of their resources expanding the brands.
So having that holistic approach to, to FIFA, which is no longer called FIFA or to Call of Duty, you know, having a couple of uh free to play games to augment the premium game.
And so what that means is that the smaller games kind of get left by the wayside and the gaps being filled, you know, by smaller publishers, consumers still want that stuff.
It just doesn’t pay off.
So think about it, like the movie industry, we get more Marvel’s Avengers and far fewer romantic comedies.
That’s what the publishers are starting to reconcile right now that they need to offer big Blockbusters and 360 you know, experiences where you’re always playing mobile or, or free to play PC in addition to console Michael and just to follow up on Julie’s point, are you look at ee A and take two both?
Well, in the red so far this year are those names you want to buy here, Michael?
Um even if the rockstar guys were to delay it, it’ll be late 2025 early 26 and that is a many billions revenue enhancement.
Um And I think the thing I like about it this time around is that Grand Theft Auto Online, which is the free piece of that game has been built.
Knowing GT A six is so they’ll incorporate GT A six into GT A online.
I think you get a boost to the free to play game in front of the release of GT A six.
So I like take two a lot.
And uh unlike E A take two, bought Zynga, they are well along in, you know, kind of diversifying their, their, their game uh offering into mobile, uh they have a big hit called Match Factory that nobody talks about.
I’m, I’m about $300 into it already.
It’s a great game my wife is and I’m also curious about Ubisoft, which reports, I think Wednesday it is after the close of trading.
Um This one doesn’t have the sort of franchise like a Grand Theft Auto uh behind it, but it’s one of the bigger studios here and you guys like that one as well, right?
We do and, and for a different reason, I mean that you’re right that their biggest selling game is maybe 1215 million units compared to Call of Duty at 35 and Grand Theft Auto at over 100.
So, you know, it’s a much smaller developer.
Um What we like about it is that they, they’ve kind of their lack of performance the last five years suggests that they’re positioned to really perform well in the next couple of years, they’ve got a lot of content backed up and about to launch.
So I think you’re going to get a big spike in revenue and profitability.
And then the other thing is in that Activision, Microsoft merger, the UK Regulators kind of stuck their nose in the middle of all of it, forced Activision to sell the, the global streaming rights to its content to somebody else.
And Ubisoft stepped in and astutely bought up those assets for not very much money.
I think they’re going to get big checks from Microsoft growing every year for the next several years, Michael.
I also gotta get your take on uh another story today, Gamestop, uh you know, roaring kitty posts on X the stock surges.
What, what did you make of it?
Yeah, I I listened to your uh guest immediately prior.
Uh There’s no fundamental basis for this and you know the story that Ryan Cohen has a super secret plan and if he tells us what it is, he’ll have to kill us.
That made sense in the fall of 2020.
And throughout 2021 and two, when he hired all those Amazon executives, they’re all gone.
Nobody works there with a, with ac level title except Brian Cohen and I’m not even sure he’s there.
Um, I think that, you know, the inmates are in control of the asylum.
Uh, the, your former guests are prior guest said that they’re showing solid revenue growth.
And as revenues decline, the only thing they can do to keep up is close stores.
I’d say they have about five more years because of their cash position and then they’re a zero.
That’ll do it for today’s market domination over time.
Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell.
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