Ether ETF approved, Live Nation antitrust suit: Morning Brief
After an eventful week compounded by Nvidia’s (NVDA) fiscal first-quarter earnings, the major market averages (^DJI, ^IXIC, ^GSPC) are hoping to end the week on a high note and claw back some gains ahead of the Memorial Day Weekend.
Morning Brief Hosts Seana Smith and Brad Smith walk investors through the top stories moving stocks in Friday’s trading day, kicking off the session with Truist Co-Chief Investment Officer and Chief Market Strategist Keith Lerner who compares the market sway of Nvidia’s latest earnings to that of inflation data or the Federal Reserve’s monetary policy.
The Securities and Exchange Commission (SEC) approved ether ETF offerings on Thursday, leading Bloomberg Intelligence ETF Research Analyst James Seyffart to believe ethereum-exposed (ETH-USD) products will have similar success to the spot bitcoin ETFs (BTC-USD) rolled out at the start of 2024, just not on the same scale.
Other top trending stories include the latest in the Department of Justice’s (DOJ) antitrust suit against concert promoter and ticket seller Live Nation (LYV) and Charter Communications’ (CHTR) content distribution deal with Paramount Global (PARA).
This post was written by Luke Carberry Mogan.
Video Transcript
9 a.m. here in New York City.
I’m John Smith alongside Brad Smith and this is Yahoo Finance is like to show the morning brief was that features are moving to the upside here this morning recovering some of the losses on the worst session that we saw more than a year for the day that the do on these to drop about 2.5% for the week.
And we’re looking at two mag seven members this morning in video and Tesla video poised to hit a fresh record high and this comes as Reuters reports, Nvidia’s oversupply of its A I chips prompted the company to cut prices in China.
Meanwhile, Tesla reportedly slashing production at its Shanghai plan for its model.
Why vehicle we dive into those stories this hour?
Let’s get right to it with the three things that you know on this Friday morning, your road map of the trading day as we’ve got Yahoo Finances, Jennifer Schomberg and Anne for standing by with more stock futures moving higher this morning as the dow looks to recover from its worst session since March 2023.
1 year ago.
Stocks have been feeling the pressure.
This week after the fed minutes reignited concerns over the path of interest rates and with progress stalling on inflation, Goldman Sachs is pushing back on the timing for a potential rate cut from July to September.
The SEC approved a rule change late Thursday that paves the way for a spot of the ETF approval.
The next step, regulators will need to give fund managers approval before they can launch ETF products.
So the timing of that remains unclear and we’re on full Elon Musk watch this morning.
The giant Tesla reportedly slashing production at its Shanghai plan for its model.
Why vehicle this coming amid concerns of wing demand in the electric vehicle market and must pushes back on a report of discussions over selling existing shares of Space X at an undisclosed price that could value the company at $200 billion.
Well, good morning everyone and a happy pre holiday weekend to you.
We’re taking a look at some pre market moves ahead of this long holiday weekend, Thursday choppy session for stocks, Boeing, dragging the Dow to its worst session since March of 2023.
The NVIDIA bump also be called being called into question.
As strong economic data reinforces the good news is bad news narrative here.
So focusing in on some of the future’s activity here this morning, you are seeing just a little bit of a move higher for the dow futures by about 2/10 of a percent.
And then additionally, attempting a little bit of a rebound from yesterday S and P 500 the NASDAQ 100 also in positive territory right now, this is going to be really interesting to watch because like you said yesterday, a lot of that movement to the downside, the worst day that we’ve seen for the Dow in over a year that was attributable to that massive decline that we saw in Boeing yesterday falling just around 7%.
I believe.
So.
Again, a close, it’s important to keep a close eye on that name.
When we talk about some of that movement, they falling just about 7.5% yesterday.
Today, you can see this morning up just about 6/10 of a percent ahead of the open.
But we will see whether or not we will see a bounce back in some of those uh dow components here today.
And then also another big story that’s going on in the market.
It’s going to be critical here in today’s session is the movement that we’re seeing a lot of these larger cab names, especially what we’re seeing play out in the tech sector because like you can see on your screen, there was certainly a lot of red across the board yesterday, NVIDIA, actually the only mag seven name to close out the day with gains and you’re looking at a pop of just about 9%.
So NVIDIA wasn’t enough for the broader market, but it was enough for investors to still find reason to buy that name on the heels of earnings.
You gotta imagine a lot of the talk around the grill this weekend is gonna be around NVIDIA, the stock split and the absolutely massive run that we’ve seen over the course of this year for if you need a fast fact to toss out there to folks and try to impress some of your friends and family.
Just remember up over 100% year to date for NVIDIA.
All right.
Well, the raids debate surges on and the higher for longer narrative isn’t going away just yet.
Atlanta Fed President Rafael Bostick noting that progress on inflation is still slow even if it has resumed falling.
Now, Goldman Sachs economist also weighing in on race, Jared B licky has the details on that.
Jared.
That’s right.
Roth Bostic is the latest of a plethora of Fed speakers this week to come out saying that the fed may have to keep rates higher for longer.
That doesn’t sound like anything new, but there are some new details here because the FED is in danger of being on the wrong side of inflation once again with uh everybody remembers the transitory episode from a few years ago as far as interest rates.
Bostic is suggesting the Federal Reserve may need to delay cutting rates uh potentially keeping the current rate which is five and a quarter to 5.5% longer than expected because the US has not passed that critical point at which inflation we can say is in the rearview mirror.
And yesterday, it was only yesterday that we got the composite PMI S. Those are purchasing purchasing manager manager index surveys.
Those came out at the highest level since April of 2022.
That’s important for a number of reasons.
This is a small report that doesn’t usually move the market, but it suggests according to S and P, what’s what’s interesting?
And this is a quote from S and P. What’s interesting is that the main inflationary impetus is now coming from manufacturing rather than services.
So getting back to Botek, another thing that he said was interest that I thought was interesting was the FED is going to conduct a new framework review of its inflation target in 2025.
That’s next year.
Currently, that target is 2% but the FED has been making the case very slowly that maybe just maybe that needs to rise guys.
All right, Jared.
Thanks so much.
Well, again, taking a look at the major averages here, you have futures moving to the upside.
It’s looking to regain some of that momentum that it lost yesterday.
The dow coming off its worst day of the year now, the move lower yesterday coming despite the fact that NVIDIA once again posting another record breaking earnings report, it was not enough though to keep that market rally intact.
So here to break it all down and where we could see maybe pockets of strength going forward.
We want to bring in Keith Lerner.
He’s truest, co chief investment officer and Chief Market Strategist Keith.
It’s great to see you.
So talk to me about how you’re looking at some of the losses that we saw yesterday and whether or not the narrative surrounding NVIDIA and some of that excitement has faded just a bit when we talk about the broader market action.
Yeah.
Well, first, uh Shawna and Brad always great to be with you, especially out of this long weekend.
I hope you guys get some downtime as well.
Um So, you know, our view is this, first of all, we, we, we did upgrade um equities in late April um when we were down about 5% because we thought the risk reward had improved.
Now, we moved up 7% expectations into that NVIDIA print was really high and it almost seemed like the anticipation of this report felt like AC P I Employment Day.
And if you know, you have been doing this for a long time that on those days, regardless of the number, the market often acts differently than you would expect.
And I think that’s the case yesterday, but I also think what’s kind of happening now is that we’re moving past earnings season, one of the most steady things in our work has been forward earning estimates.
Have been moving higher.
But now that you move past earnings season, the market hasn’t now start focusing again on what is the fed gonna do and inflation and each economic data.
So that just makes for a more volatile market.
Our underlying message is we still think the primary trend is higher.
I think their term, the market will be searching for a catalyst, which likely means that we’re in more of a choppy period after that 7% rip up.
But again, we think the primary trend is still one that is positive.
Who do you think is that next catalyst that could emerge?
Keith?
Well, I I think, um you know, first of all, I’m gonna go through the summer months.
So it’s, I mean, even just kind of going through back and forth um is, is actually, I think fine, I think the catalyst for the market um is, is probably to start seeing more disinflationary pressures which as as Sharon just mentioned, we got almost the, the opposite of that yesterday.
So for the market to actually move high in a meaningful way, we likely need rates to actually break below this 430 level in the 10 year Treasury and the market get more comfortable.
But that, that there’s more this inflationary pressures that will allow the fed later this year to at least cut, you know, once or or twice.
I don’t think it matters if it’s June or September.
I think the main most important thing for the market is that it’s more likely that they cut if the message really starts to change, that they have to raise rates, which is not our base case.
I think that would be the biggest concern for the overall overall market.
Keith, are you seeing any signs of exuberance in the market at this point?
When you take a look at valuations and where we are today?
Well, so I think there, there’s some signs in the last week or so.
I mean, we saw some signs as far as the meme stocks, we saw some strategists on the street really just lift their targets, you know, pretty meaningfully in a short period of time.
If you look at the options market, there’s almost no demand for, for downside protection.
Um So I think that’s more of a, a shorter term.
I don’t think it’s, you know, exuberance.
I just think that it’s one of those things where you, where when you have those type of things happen, it’s not unusual to have a little bit of, of a, of a gut check or gut check in the overall market.
And that’s what I think we’re, we’re having and I also think, listen, when we get back from Memorial Day, you get into June, you’re gonna seeing the presidential election.
Um And I think people are gonna start focusing on that.
That’s gonna add another dynamic as far as just this kind of more of a two way trade even within that uptrend that we still think is intact when there are those pockets of volatility heath, where are some of the top dip buying opportunities emerging from your purview?
Well, I, you know, I actually still think um that, that, that tech and communications is still leadership.
In fact, uh yesterday, one thing we look at is relative price, momentum and relative trends um of each sector to the overall market.
And what we did yesterday at the NVIDIA print, which makes sense is we broke out to an all time high after consolidating.
So what that tells us is tech remains leadership.
We’ve been overweight that reaffirms our overweight.
The other thing that we look at is the earnings momentum for the overall sector is still much stronger than the overall market.
When that happens, historically, tech remains leadership.
And I will say, you know, if you look into the, the, the surface, you know, while the S and P broke out to new highs and we’re still positive below the surface, we didn’t see the follow through from mid caps or small caps or some of these interest rate sensitive areas.
So we would really be fo focused more on that large cap space and, and really still like tech and communications as two of our favorite sectors, you know, uh Keith, as we look out to next week, we’re also gonna get one more big earnings report here coming in the form of sales force.
Now, NVIDIA has also been called, they’ve already been dubbed the, the de facto A I play by Goldman, but is, is sales force almost brewing as maybe AAA de facto junior as it relates to some of the software services side of this business and the, and the elements that can immediately kind of be tangibly touched within workplaces.
Yeah, I, I think, I think that’s, that’s fair.
I mean, I think, I think the sales force, you think about it oracle, what you wanna see is, is the A I benefit accruing beyond, you know, one big company, right?
And, and I think that from from market perspective, you, you do want to see it, it boiling out to be a be beyond that.
And if you had something that was really weak there, then again, I think on a short period, tech is the biggest sector that could weigh on things.
But overall, I still think if you kind of zoom out a bit, you know, our perspective on artificial intelligence.
Um and also the earning trends, I think as far as you know, the spend on that is we’re still pretty early cycle even if the economy slows down, even if there’s all these uncertainty, I think companies will have to continue to invest in A I and tech otherwise they’re gonna be left behind.
So I think there is a tail and bigger picture.
But as you mentioned, I think in a week next week as we winding down earnings, that will be an important report.
Yeah, even as I’m sitting here previewing sales forces earnings and calling them de facto junior for a, I imagine, uh, the meta platforms and Microsoft or somewhere saying hold my beer.
We’ve got a lot that we’re doing in this area too.
Keith Lerner.
Great to see you.
Thanks so much for taking the time.
Great to be with you.
Take care.
Absolutely.
The sec approving a rule change paving the way for spot Ethereum ETF approval.
The next step, fund managers need approval from the agency before they can launch ETF products.
Now, the timeline on that it’s still unclear.
So for more on this, we’ve got the person to bring us some clarity on this.
Yahoo finance reporter Jennifer Schonberger here with us.
Hey Jennifer, good morning, Brad.
That’s right.
The SEC giving a green light to the New York Stock Exchange and the NASDAQ to begin listing exchange traded funds that hold either but it has yet to give approval to money managers that want to issue these new funds.
The move marks the first step towards allowing these ETF to trade.
The SEC would need to offer approval though, for the money managers filings for those actual funds to begin trading, though the regulator has not given any indication of when that could happen.
The cohort seeking approval for these Ether ETF s include some of Wall Street’s biggest names from Black Rock Fidelity and Franklin Templeton to a number of firms better known in the crypto world including gray scale and bit wise.
This decision coming roughly four months after the SEC approved Spot Bitcoin ETF for the first time after years of denying approval, Sec chair, Gary Ginzler, speaking at a conference here in Washington early on Thursday morning ahead of the order said that the SEC is very deeply committed to following the law and how courts interpret the law that the SEC had picked up formally on what the previous SEC chair uh Clayton was doing in this field around exchange traded products.
But after he says two dozen orders from the commission, the ruling from the DC Circuit Court of Appeals took a different view and the SEC has now taken that into consideration and pivoted.
Hence why we’re seeing the groundwork here laid for an E spot ETF.
Of course, the race is on in terms of speculating for when we could see approval for those actual money managers, we will be keeping an eye on that.
E has been pretty volatile on the back of this down.
About I think 4% last day check still.
It was trading around 3700 guys, Jennifer, thanks so much for teeing up this next conversation.
For more on the Ether ETF news we bring in James Seaford who is the Bloomberg Intelligence ETF research analyst.
Great to have you here with us and Thanks for hopping on this morning.
I mean, how significant is this for Ethereum?
And how many of the other, perhaps alt coins out there could be watching this and saying we, we, we got a shot maybe.
Yeah.
Thanks for having me, Brad.
Um, I, I don’t think the other ones have that much of a shot in the near term.
Um, look, the Bitcoin ETF got approved because we have a regulated, a federally regulated CME Bitcoin futures market.
And basically the SEC said we’re not going to approve anything unless we have a market that we can surveil.
Um, and that we can make sure there’s no fraud and manipulation going on.
So that was basically what the DC Circuit court that she was just talking about allowed for the Bitcoin ETF to get approval.
Ethereum is the only other digital app that has a federally regulated futures market that trades with enough size and enough frequency that theoretically the SEC could look for some sort of fraud and manipulation that doesn’t really exist anywhere else that said things are moving very fast.
The political winds have shifted.
I mean, over just about a week ago, we didn’t think this was going to happen, but everything really changed.
On Monday, there was a complete 180 as far as we’re concerned from DC.
And the SEC on this topic, we think that they were likely going to deny these things until sometime late last week.
James.
What do you think one, what changed?
And two, what do you think demand is going to look like then for these potential, uh, spot, uh E three ETF s?
Yeah, I mean, what changed is political wind shifted?
I mean, if you just look at what happened in DC, there’s been, it’s almost kind of insane to look at what’s happened over the last couple of weeks, right?
You had Trump saying he was pro crypto.
You had the SAB 121 votes in Congress, which we don’t need to get the weeds there.
But that’s also a pro crypto um legislation.
And the Senate had a bunch of Democrats including the majority leader, Chuck Schumer side with the cryptos uh vote and you had same, similar things happened with fit 21 which is another crypto Bill.
Nancy Pelos.
He sided with that 71 different Democrats.
This was seemed to be a partisan decision, right?
It seemed to be Democrats versus Republicans.
Republicans were more pro some dems were still pro crypto.
But for the most part that all shifted the minute that Trump basically said he was pro crypto.
And I think that there’s been a lot of things changing in DC over the last few weeks.
Um As far as the ban goes, um, if you look at Ethereum compared to Bitcoin, just the asset the market cap of Ethereum is around 30% of Bitcoin.
So if you take that into account you just translate that to ETF and you look at other ETF S around the world.
So the US is not the first one to have an Ethereum and Bitcoin ETF.
S. Um The demand is going to be a lot less than what we saw for Bitcoin.
So we’ve seen about $13 billion of flows to the Bitcoin ETF since they launched on a net basis.
Um So if you take in that 30% I think there’s going to be even less than that 30 30% of interest.
One, these things are not going to allow to stake, which is like a native yield that you would get in Ethereum.
There’s a lot more utility you lose by just sticking Ethereum into an ETF and not allowing to use it.
So the demand will probably in our view be a little bit less than that 30% ratio.
So it depends who you talk to, but it will still be likely billions of dollars that we’re expecting to go in here.
So it should be a monster success if and when we get, well, not if when we get those final approvals from, from the SEC for the issuers to actually launch these things.
What is the timeline look like on that?
We know there, I mean, anyone who tells you they know is lying or they’re at the sec at this point as far as I’m concerned.
Um There’s a huge gap, right?
So this can take as long as five months.
There’s examples of this taking five months before this gets through.
Um I think the Bitcoin ETF is probably the more apt analogy and that took about three months, a lot of the language and concerns and issues that had to be ironed out between the sec on these risk disclosures.
What these, these offering documents need to disclose to the people investing in them.
A lot of it’s been ironed out with the, the futures.
ETF and the ETF so the Bitcoin ETF took 90 days, I think it will probably be less than 90 days.
I think it could be weeks, but it also could be months.
So like we don’t really know, my gut tells me if they went and basically truly did a 180 like we think late last week, that means they took three days to get these 19 before approvals after usually taking 240 days of work before they actually get this stuff done, they can accelerate this.
So I’m thinking it will be measured in weeks, pro multiple weeks, most likely at the very least, but it could be months.
There’s no way to know.
So now with cryptocurrencies and, and specifically the Majors Bitcoin and Ethereum having their ETF asset class moment does the utilization value proposition or, or use case matter anymore?
Um I think it does because it’s still what matters is what’s actually happening in the ecosystem of these assets, right.
It’s the ETF S are nice.
They’re great for people who want financial exposure, particularly if they’re looking to do things in like a tax advantage account, like an IRA or they have money in a brokerage platform and they want to make sure they get exposure.
What this is going to provide is financial exposure to the asset, investment exposure.
If you want other, if there’s other reasons why you would want access to these things, which there are, there’s plenty of people doing things with Ethereum in the decentralized finance on these different decentralized platforms.
Um Same with Bitcoin, there’s sovereign store of wealth, you can kind of do what you want with it.
You can take your own custody of your own asset, which you can’t really do with much else, those things all still exist.
But what this provides is it takes those assets from the defi world and puts them on the traditional financial rails in a very unique way.
So there’s this thing going on right now with a lot of these asset managers, it’s going both direct, right?
They, they’re taking these digital native assets and putting them in these wrappers of the traditional financial world.
But there’s also examples of them taking traditional financial assets, things like money market funds and wrapping them and tokenizing them and putting them on the decentralized finance world.
So a lot of these asset managers, these banks are probably going to play a lot at this intersection between these two things.
Um And it’s going to be fascinating to watch over the coming years.
Really great context and insight James severed.
Who is the Bloomberg Intelligence ETF research analyst James.
Thanks so much for taking the time.
Thanks for having me.
Certainly, we’re just getting started here on the morning brief coming up, Tesla reportedly slashing production of its model.
Why in Shanghai?
That is according to Reuters, what does this mean for the company’s waning share in China and Live Nation is the latest target for the justice department, the US suing to break up Live Nation and Ticketmaster over alleged antitrust violations.
We discuss the impact on the company all that much more coming up, Tesla dialing back in China, the EV maker reportedly slashing production of its model Y in Shanghai.
This comes amid concerns of winning demand in the electric vehicle market.
Let’s put one big number on this 20%.
Potentially.
Here is what’s the production cut from model Y at G of Shanghai could look like between March and June of 2024.
And it seems like according to a few reports out there, this is also being cross referenced up against some of the information or data from the China Association of Auto Automobile Manufacturers, Brad.
I think this all just boils down to that weaning demand that we’ve been talking about time and time again.
So Tesla trying to right size the business there are at least better match what demand looks like when it comes to supply as a result, they’re cutting just about 20% of that production output.
Again, that’s according to the latest numbers that have been crunched here by Reuters.
But what more specifically this points to one obviously, this is happening in the midst of this price war that’s been playing out, not only in China but also what we’ve been seeing across the world and then to just Tesla is up again, is facing an uphill battle.
When it comes specifically to the China market, you talk about the increasing popularity and the increasing market share that you have byd.
You have a number of those domestic players that are continually putting more pressure on Tesla, making it tougher to compete within that region with, with within that country.
And then also just the geopolitical tension between the US and China clearly could be a potential challenge, not only for Tesla, but a number of us, larger us automakers here over the coming quarters over the coming years.
So again, with all that in context here, you see Tesla making some adjustments to their production numbers, at least in China.
But we’ll see what the material impact is going to be on their sales in the quarters to come.
I mean, you’re spot on and it’s hard to compete when you’ve got one of your biggest competitors in that region that’s receiving subsidies from the nation as well.
And so for China and the subsidies that they’ve been able to pass through to Byd for Tesla, regardless of the relationship that they’ve tried to strengthen within that, not just among regulators and among some of the broader officials and figureheads there, but also among the consumer, the consumer mindset also shifting too and it’s gonna come on a price point basis as well here, especially if you are recognizing more of those cost savings on set as a consumer in buying a Byd versus a Tesla, then you’re naturally going to gravitate towards one of those other options.
And oh yeah, the broader industry is facing that slowdown in waiting demand as you were mentioning too here.
So let’s stay in the car landscape sticking to stress in the ev space as I uh so coincidentally ended on there, Lucid announcing a restructuring plan to optimize the company’s operating expenses.
The company is looking to trim its workforce by approximately 400 employees shares right now are up by about 1.1%.
But you, you hate to see pops that are really for this company, especially if you look at the broader term here.
Yeah, past two days.
But if we tossed up a year to date chart for Lucid, it would be a much different picture here and even over the past 52 weeks, slippage year to date down 35% in here and it comes as the time where they’re also in the broader kind of ev demand landscape.
They’re on the ultra luxury side of that too here.
And so trying to woo some of the big money out there to buy into that luxury experience could be even tougher.
Oh, yeah.
And you’ve got more competition from the likes of Mercedes and some of the E offerings that they’re putting out there as well as still Tesla too.
Yeah, exactly.
And this is just another by product or another effect here of the slowdown that we have seen in the adoption of the growth rate for s and as a result, a number of these companies facing these tough decisions.
And it’s also important to point out that Lucid is far from alone within having to announce layoffs here over the last couple of quarters.
Even when you take into account what has happened in the last couple of months, you have Tesla announcing layoffs that it would cut about 10% of its workforce.
Also, Vivian having multiple layoffs this year.
So again, Lucid the latest to join that.
And why is it happening?
It’s happening because of that uptake rate that you have been talking about the fact that consumers are feeling pressure, many consumers aren’t out there making those bigger ticket purchases right now because rates are high and likely to stay high for longer here.
When you take a look at the recent commentary that we’re getting out from fed officials here this week.
So all that taken into context.
It’s leading to weakening demand here in the US for a lot of these EV vehicles.
And as a result, these ev manufacturers having to make adjustments to their business and unfortunately having to lay off hundreds of workers as a result here in an effort to cut costs.
But when it comes to this restructuring effort out it saying that it’s going to incur charges of about 21 to 25 million from this restructuring plan.
The bulk of this is going to be recognized here in the current quarter.
All right, let’s take a look at into a shifting gears just a bit.
The company missing Wall Street expectations for its fourth quarter profit forecast also though raising its full year revenue outlook, although not enough for the street and you’re looking at losses of just about 6% digging into this report just a bit.
A couple of key things I wanted to highlight here, Brad when it comes to the CEO of its credit Karma business, they will be retiring at the end of the year.
So an executive change, that’s something that, that analysts are making note of here this morning.
And then also when it comes to turbotax, they higher price, TurboTax clients that did help boost sales during the tax season.
But the company did see a decline in the lower end customers.
Barclay is calling it out in their quick reaction to this print and that competition for these lower paying and free customers raises some questions that could concern investors here down the line.
So I think that’s one of the reasons in addition to that guidance falling just a bit shorter, not at least not enough to excite the street.
One of the reasons why we’re seeing that stock under pressure here this morning.
I mean, it’s a $35 billion market addressable market that they were talking about on the earnings call last night.
And for TurboTax, I mean, they have been a household name for decades when it comes to filing your taxes.
But coming back to your point here, it really does boil down to where some of those core users even over the years are saying, wait a minute, I can get this done for free, either by the government in some cases or just finding other cheaper services here.
Why not lean into that?
So that’s one of the potential hits that we could see in this near term, at least in the investor sentiment.
And the credit karma piece is interesting, especially at a time where so many consumers as we’re looking across household balance sheets and continue to talk, especially on wealth, small pitch about the amount of people who are tapping or swiping their credit cards and how credit card debt is at high levels right now.
All time, high levels that we’ve been tracking up against the number of people that are trying to figure out.
Ok, how do I make sure that my credit is in good standing on the other side of this economic cycle.
If we do see a recession and the consumer sentiment surveys and the data that continues to come out showcases exactly where, uh, more consumers are trying to prepare for that.
If we do see a recession soon, something we’re already in anyway.
You know where we’re already in, we’re in the opening bell.
You know why?
Because that guy with the cowboy hat, hit the button at the NASDAQ there, you’re taking a look at, I mean, that is, we would consider that a cowboy hat, right?
It’s up for debate.
Cowboy look like a fedora.
It’s cowboy adjacent, cowboy fedora, adjacent cowboy chic, something like that.
Anyway, you’ve got some bell ringers at the NASDAQ Memorial Day, uh, foundation.
I think it was, uh, excellent group of folks over there.
And then additionally, you saw the opening bell at the Nyse.
Well, here’s the market’s activity out of the gate this morning.
We’re seeing green across the screen.
Woof, man.
That’s good.
All right.
Dow Jones industrial average.
That’s up by about 1/10 of a percent.
S and P 500 up 3/10 of a percent.
And the NASDAQ finding out the hat trick we’re up by about 3/10 of a percent.
There.
You see a bit of a rebound from yesterday.
Sell off a lot of that.
You had the Dow suffering its worst day that we had seen in just over a year.
A lot of that was because of that drop that we saw in Boeing, which shares closing off just about 7.5% here at the Open Boeing is opening just slightly to the upside here.
So again, a couple of key names to keep in mind throughout today’s trading day, but Jared Bl has a closer look at what is moving here at the open and standing by with that, Jared.
That’s right, Sean.
I’m looking at the Wi Fi Interactive.
We have S and P 500 all five days here.
You can see a slight decline for the week.
If you take a look at the dow, it’s more pronounced down 2% and the NASDAQ actually up two thirds of a percent.
So a mixed board for the week, I did want to focus for a minute on yesterday’s candle.
Now, if you look at candlesticks, that’s just a way of charting the day’s price action.
But that big red candle right there, that could have some ominous implications.
There is a lot of focus on Twitter about it.
Some people calling it a bearish engulfing, is it that uh candle?
Uh that’s a technical matter.
But suffice to say that we’ve seen these before.
Sometimes these candles do precipitate a decline.
And so that’s what people are looking at.
Also want to show the Vix which is perking up here.
Uh, the VX I think, opened yesterday at a, at the low of the year, I’m gonna show you a year to date.
There we go low of the year and then it climbed throughout the day.
Sometimes that kick off a rally in, uh, in the vics that lasts a few days.
So we’ll have to see, uh, if that confirms the equities weakness that we saw yesterday.
And also I do want to hit on Eli Lilly real quickly because we got some news out of the Wall Street Journal.
Uh Let me just get to that, Eli Lilly is going to spend 5.3 billion to make more Monro and Zip bound.
And this is to boost their manual factoring capacity for its hot selling anti obesity drug Z bound and its diabetes drug Monja.
This is Aws J.
This is a Wall Street Journal scoop.
So we will be following that and you’re looking at the sector action here, you can see everything in the green for the week and let’s see if we can get an Eli Lilly quote.
Uh Here’s our Rx screen and well, look at that.
It is exactly flat.
So there you go guys.
All right, Jared.
Thanks so much.
Not too much movement here on the news that was just broken here by the Wall Street Journal.
But Brad, why, why this is significant and why we’re talking about this is just this unprecedented demand that we’ve seen for these weight loss drugs for these diabetes drugs.
And these companies, Eli Lilly, when we take a look at Novo Nordis doing everything it can to keep up with that demand, trying to expand their manufacturing capacity.
So again, this news here from Eli Lilly, the fact that they are expanding the manufacturing of that key ingredient for their weight loss and diabetes shots.
And that key ingredient uh is transit.
The fact that they are doing that is something that investors have wanted to see.
Something that investors have asked executives about in most recent earnings calls just in terms of their ability to boost production and boost it in a very timely manner.
So again, you would think news like this would likely at least please analysts and please investors just in terms of the fact that it’s going to help them get more of that medication out the door quickly.
Yeah, only two things that add to that one big number $100 billion is what Goldman Sachs is anticipating.
This business could be or this broader industry could be in the addressable market by 2030 you look even further out and then we might even have more about the efficacy in other elements of life.
And this brings me to my second point where you’re seeing some of the additional health benefits, kidney functioning more properly, a positive effects on cognition.
So all of these things, in addition to the weight management, marketability of some of the drugs here.
That’s where we might have between now and 2030.
By the time we get to that 100 billion dollar addressable market, even more data to show the effectiveness.
And uh I think by then, we could be looking at a whole different type of picture in terms of the number of companies, whether existing or newer that are playing within this space right now.
And this news just released by Eli Lilly.
Eli Lilly saying that it’s increasing manufacturing investment to 9 billion at its newest Indiana site.
It’s boosting api production for trait like we were just talking about and also pipeline medicine.
So again, just a name to keep in mind during today’s trading day, we’ve got much more of your market action ahead.
Stay tuned.
You’re watching morning breath, well, stocks opening higher for the day as follows.
Yesterday’s sell off with the dow looking to rebound following its worst day that we’ve seen since in over a year, but still though heading for a weekly loss.
And when you take a look at the NASDAQ here today, up just about 4/10 of a percent, the NASDAQ in the greens.
So checking in on NVIDIA, one of the big drivers of that tech movement here over the last several months, several quarters is just around the flat line today.
But we do want to point out that NVIDIA closed the day yesterday up just about 9%.
It was actually one of the only or the only mag seven name to close out yesterday in the Greens.
Let’s talk about what this means for the broader macro picture for that.
We want to bring in Mike Nell.
He is U BS Asset Management, senior portfolio manager, Mike, it’s great to have you here at the desk.
So talk to us just about how you’re looking at this movement, this excitement that we’ve been seeing in NVIDIA surrounding these chip names and what that signals for the broader market.
Well, NVIDIA obviously is the leader in A I processing.
They have a technology called the GP U graphics processing unit, which they’ve evolved into an A I processing unit over time and they’ve specialized uh instructions and capabilities in those chips that have made them the leader in the space.
They also have a, a software interface calcuta that allows people to easily program the chips uh for these A I applications and other uh applications that are what, what they call heavily parallel liable.
And so uh it’s a, it’s a great uh story that NVIDIA has their, their revenue growth has been stupendous.
Their profit growth has been even better.
And um uh but there’s a lot of competition coming when, when you have a market that’s as, that’s as profitable as this, it sort of draws a bull’s eye for all the competition.
And so there’s a number of other companies that are coming after them, including a MD.
Uh And uh uh we’ve also been owning stocks that uh support the chips but things like memory chips, uh you need lots of memory bandwidth to make these chips work.
And uh so that’s been another theme that’s been working pretty well.
We, we hear warm and always talk about moats.
How deep or entrenched is the moat that NVIDIA has even in the face of that competition that you’re mentioning on the A I front.
It depends who you ask.
If you ask NVIDIA, they think it’s a, you know, solid boat that cannot be penetrated.
Uh And, and it is very solid, I think.
But if you ask Intel and A MD, there are ways to get around the coa interface.
Uh There are third party and open uh interfaces that are being developed uh that uh they’re supporting and uh they’re doing everything they can to help the, the customers migrate their software from CU A to these open platforms.
Uh That’ll take time in the in the meantime, NVIDIA is gonna have quite a run, I think.
So you can talk about quite a run.
Are we just still in the early innings of this excitement surrounding A I?
And then when we talk about real life applic application, how much of this hype and excitement has to do with what is happening currently versus what could happen in the next several years.
I think a lot of it is already based on what could happen.
You hear people talk not so much about applications for A I but what they call use cases and the use case is more of a theoretical application.
It’s not one that there’s proven demand for today, but there are things that are likely to develop over time.
So a lot of this is speculative.
Everybody’s got a fear of being left behind.
So it’s everything from companies.
Uh even governments are buying these chips so that they can uh have an A I capability within their country.
And uh a lot of it’s on speculation, but it doesn’t seem to be at this point quite as exaggerated as the internet bubble.
I started as an analyst back in 1998.
So I lived through that and uh that, that was different.
Uh evaluations were really, really, really stretched during that period, not so much this time, I think.
And so there was a massive fallout of uh a multitude of companies who were trying to latch on to the.com Fervor.
Well, we see the same here within the A I landscape, I think.
So.
Uh you know, there’s funny stories about, you know, just companies that announced that they had an internet capability back in 1999 in Chicago stock to go up tremendously.
I think you’ll probably see some examples of that with A I uh that probably with hindsight won’t make so much sense.
Uh But uh everybody’s kind of getting in there uh the the best areas I think to focus on for investment are what people call like the picks and shovels area.
So that would be the semiconductor companies like NVIDIA and others.
Uh But also the uh the applications that are real today.
So things like uh social media uh ad targeting or search those are areas where A I is already proven itself.
Mike Nell U BS Asset Management, Senior portfolio manager.
Mike, Thanks so much for joining us in studio.
Thank you.
Coming up, everyone.
The DOJ has filed an antitrust lawsuit against concert ticket provider Live Nation.
We’ll have the details on the other side.
Good news.
If you’re a Spectrum cable TV customer.
Yesterday, Spectrum’s parent company Charter Communications announced a new Multiyear distribution agreement for Paramount’s full portfolio of linear cable networks, CBS owned and operated broadcast stations and direct to consumer streaming services.
For more.
We bring in our own Ali Canal.
Hey Ali, what do we know?
Hey, Red Yes, Paramount successfully avoiding a blackout of its channels on charter which if you remember that’s what happened with Disney last September.
So a big win there especially as these charter negotiations were viewed as a potential overhang for the company clouding some of those m and A prospects as Paramount seeks a buy out with Sky Dance media and possibly Apollo Global and Sony.
Now there were still some unknown surrounding this deal, including what charter paid, but we do know that charter will continue to carry all of Paramount’s networks including Showtime CBS and Paramount Plus.
And the subscribers to charter’s largest tier, along with its Spanish language tier will receive the ad supported versions of Paramount Plus and Bet plus at no additional cost.
Now, Moff and Nathan and had a good point here that this agreement is a big deal since Paramount’s TV media division is largely driven by the linear networks.
That’s a big driver of EBITA, a big driver of revenue.
So having those channels on charter is important.
There have been some expectations coming into these negotiations that some of Paramount’s longer tail networks could get dropped.
So again, a win but have to see what the carriage rates ended up being and how the payments were ultimately allocated to determine the long term financial impact.
Here.
There might also be some cannibalization on the subscriber front, but we should see some movement on a bigger strategic action or a possible deal.
Now that this has been determined, you’re seeing Paramount shares up about 1% shortly after the opening bell.
All right, thanks so much for bringing that down for us.
Turning to another story that we’re following here at Yahoo Finance.
The US government has filed a sweeping lawsuit against a live nation, the parent company of Ticketmaster.
Now the doj along with 30 state and district attorneys general alleged live Nation has an unlawful dominance over the industry.
The company controls about 70% of the ticketing for live events.
Now Live Nation responded to the suit saying, quote, the defining feature of a monopolist is monopoly, profits derived from monopoly pricing.
Live live Nation in no way fits the profile for more.
We wanna bring in Jason Bazinet, he’s the city’s managing director covering Live Nation’s Stock.
And Jason, when we talk about this suit that we have from the DOJ against Live Nation.
How strong do you think this antitrust lawsuit is?
I don’t think it’s particularly strong.
Um, I guess I would, I would make two points.
The first is there is sort of a bigger picture, almost ideological thing that’s going on here that has nothing to do with the companies.
And that is for, um, most of the thirties, 19 forties, fifties, sixties, um, antitrust law is really governed by a mindset that was underpinned by what, what lawyers would call structuralism, which is big firms are bad.
Why?
Because they’re big and what happened in the eighties nineties, you know, until today really has really been the price theory of competition which says that unless a firm causes consumer prices to rise, it’s not really anti competitive.
And this administration is trying to go back to structuralism, that’s what’s underpinning a lot of the antitrust actions that they’re pursuing.
Um And so that, that, that’s difficult, I think for the judges to understand because they now have 40 plus years of case law that says this is really all about price and that’s why you see Live Nation in their response focusing on price.
If they are forced to break up with this, really have any material impact on prices paid.
Let me just, uh, I don’t think so.
Um, let me just start with just some basics.
I’m just going to say a hypothetical ticket, let’s say that, um, costs $100.
Um, Live Nation, um, makes about $1 for promoting that show.
Um, the artist would get $99.
And then when you, when you check out, when you actually buy the ticket, you’re gonna see all of these fees and those are typically about, for $100 ticket would be about $30.
And what most of that money goes to is the, the rental fee for the venue.
And then Ticketmaster on the ticketing side is going to get about 20% of that $30 or $6.
So at the end of the day, you check out, you’re gonna pay as a consumer, 100 and $40 Live Nation’s total revenue is a dollar for promoting the concert and about $6 for ticketing the concert.
So they’re gonna get $7.
Um, so no matter what you do to live Nation, I’m not sure that you’re going to see a demonstrable change in the price consumers pay to go to a concert.
Jason does this suit though.
How much of an overhang do you expect this to be on the stock or do you think it’s gonna at least add a little bit of volatility to the stock price, at least here in the short term?
I think the volatility has already happened.
Um We’ve gone through the math of what a breakup would imply and it suggests something in the high eighties.
And so what you saw is the market was very confident that the doj was going to file this lawsuit.
And so it’s been putting pressure on Live Nation’s share price.
Um And now, uh I, I think at least based on the conversations we’ve had with clients, um What it’s going to go back to the fundamentals.
This is going to be stuck in the court for years and years and years.
If the stock price does well at Live Nation, it’s because the fundamentals are good.
If the stock does poorly, it’s really more because the fundamentals are bad.
But I think the market is baked in as we sit here today, very high probability that the suit is successful.
Jason thanks so much for hopping on with us here today.
Jason Bazinet City managing director, talking all things Live Nation Ticketmaster.
We’re gonna be tracking this DJ DOJ suit and everything to come around it.
Jason, appreciate it.
You bet.
Thanks.
We’ve got all your markets action ahead.
Everyone.
Stay tuned.
You’re watching Morning Brief, Burger King is reportedly launching a new $5 meal.
Then they’re not the only ones, a slew of fast food chains like mcdonald’s and Wendy’s launching value offerings of their own.
After seeing consumers pull back on spending this week, we spoke to salad and Go Ceo Charlie Morrison on the sustainability of these offerings.
Take a listen.
Chains are taking lots and lots of price when they feel like they can.
And then when the consumer starts to push back, we go right back into the cycle of value orientation.
What doesn’t seem to be working is the idea of sustaining an everyday low price and a price that consumers can afford.
And so as we’re watching, even more of these value offerings emerge, it typically does come at a time where many of the consumers are trying to look for value hacks.
And so these value menu deals where even if you look back towards the great recession or the GFC, a lot of the promotions were centered around for mcdonald’s and the Golden Arches.
It was, hey, here’s the $1 menu and, and you start to see some of these things sunset over time as they then kind of move and mirror with the economic cycle and try to promote other higher value menu items that they can perhaps take a little bit more price on.
Yeah, but this just comes as consumers are under pressure, a lot of these companies are trying doing, trying to do everything they can to boost their profits, especially on the heels of what we’ve seen from an, a number of their competitors.
When you take a look at what mcdonald’s is doing.
When you take a look at what Wendy’s is doing.
Burger King, it seems like at least feeling the need to jump in on this value trend that we have seen and offer that to customers in order to try and boost their foot traffic.
And we take a look at exactly the pressure that these food companies have been under mcdonald’s and their most recent report here, missing profit estimates for the first time in two years, this past quarter.
And they said that they are seeing consumers starting to pull back.
So there really is this emphasis on value that has been one of the themes that we’ve been tracking really throughout the season and it’s beyond a number of these fast food chains.
Even when you talk about some of the commentary that we’ve gotten out from Walmart from target, even from some of these off price discount retailers, people are looking for value, they’re looking for cheaper options right now as they are being a little bit more discerning about what they’re spending on and how they are spending.
So you would think a deal like this would at least boost foot traffic.
I think the question is, what kind of pressure could this ultimately maybe put on margins here, at least in the short term depending on how long these deals are available for and in that margin equation too, if you’re saying hello to value, you might be saying goodbye in the near term to menu innovation to the extent that companies talk about that and the amount of money that they put into spending on new creative products that they’re able to list on the menu even more of the foot traffic.
Now it’s ok. Let’s stick to what works.
See how we can re bundle it or repackage it in the same great burger or sandwich that you’ve tried before, whether it be spicy chicken or whether it be a triple quarter pounder whopper, whatever you’re naming it here, it could just be variation in what they’re calling the burgers or calling the different menu items at this juncture and how it’s being marketed and in the franchisee mindset, they’re going to be looking for even more of that directive to come down from some of these companies, whether it be mcdonald’s, whether it be restaurant brands and how they’re working with their franchisees to make sure more of the marketing elements are continuing to engage with more customers who are looking for those deals will keep right here on Yahoo Finance.
Coming up the latest reading on consumer sentiment that’s out in just a few minutes.
We will break down the numbers and exactly what this report could signal for the fed plus A I disrupting the energy landscape.
We will be speaking with the CEO of a same Allman backed nuclear energy company that’s coming up on catalyst next.
