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What's next in the Trump vs Lisa Cook saga, how to play furniture stocks
Y

What's next in the Trump vs Lisa Cook saga, how to play furniture stocks

Yahoo Finance

2 days ago

Summary

This episode of Market Domination discusses the stock market's performance, with stocks falling from record highs following the release of consumer inflation data. The Dow was down 3/10 of a percent, the Nasdaq down over 1%, and the S&P 500 down 7/10 of a percent, though all were still showing gains for the month. The episode also covers the legal battle between President Trump and Fed Governor Lisa Cook, focusing on the definition of "for cause" removal. Experts weigh in on the Fed's potential interest rate decisions in September, considering cooling labor data and persistent inflation. The discussion also touches on the resilience of the US economy, the impact of tariffs, and consumer behavior in a K-shaped economy. Finally, the episode highlights trending tickers like Alibaba, Dell, and Craft Heinz, and previews upcoming earnings reports from Dollar Tree, Figma, and Broadcom.

Notes

  • Stocks fell from record highs on Friday due to updated consumer inflation data showing prices firming above the Fed's target.
  • Markets were lower across the board an hour before the closing bell, with the Dow down 3/10%, Nasdaq down over 1%, and S&P 500 down 7/10%.
  • Despite the daily dip, markets were in the green for the month, with the S&P 500 marking its fourth consecutive month of gains.
  • The 10-year Treasury yield was ticking slightly higher, while the US dollar index was ticking lower.
  • Bitcoin and other cryptocurrencies were under pressure, with Bitcoin down more than 3%.
  • Under the hood, MAG7 stocks like Nvidia and Meta were experiencing pressure.
  • Consumer staples, healthcare, and energy sectors were in the green for the session, while technology and consumer discretionary sectors were under pressure.
  • A legal battle between President Trump and Fed Governor Lisa Cook is unfolding in Washington, concerning allegations of mortgage fraud and the definition of "for cause" for removal.
  • A federal judge presided over a preliminary hearing, with lawyers arguing the meaning of "for cause" and its applicability.
  • The outcome of this case could test presidential power and the Federal Reserve's independence.
  • Jim Bullard, former St. Louis Fed president, believes this case will likely go to the Supreme Court for a definition of "for cause."
  • Bullard emphasized the importance of the Fed maintaining an "arms-length" relationship from politics to avoid political volatility affecting financial markets.
  • Experts anticipate a 25 basis point rate cut by the Fed in September, but stressed that decisions are data-dependent.
  • The PCE inflation data and employment figures are crucial for determining the Fed's future policy path.
  • Shelter costs are identified as a primary driver of current inflation, though real-time housing data suggests slower growth.
  • US equity markets are considered expensive on a valuation basis, with earnings growth being the primary driver of stock prices.
  • AI is a significant factor in current earnings growth, particularly in the technology and communication services sectors.
  • Seasonality suggests September and October can be weaker months for equities, with a tendency for the VIX to spike.
  • The US economy showed resilience in August, with strong back-to-school shopping and consumer spending, despite a slowing growth rate.
  • Tariffs' impact on inflation has been less significant than expected due to businesses front-loading imports and a fear of alienating consumers.
  • A pause in tariffs with China is expected to keep prices more moderate.
  • Factors like tighter labor markets, increased deportations, and the aging population ("silver tsunami") could contribute to upward pressure on wages and inflation.
  • The consumer is becoming more cautious, showing pullbacks in discretionary spending like recreational services and dining out.
  • The US is ending a global tariff rule (de minimis exemption), meaning imports valued at $800 or less will be subject to duties, potentially increasing costs for consumers and leveling the playing field for US retailers.
  • Gap is experiencing sales success, particularly in its Banana Republic division, and is working to reestablish its brand in the premium lifestyle space.
  • Celebrity partnerships are seen as effective for brands in engaging consumers, with Gap's "Better in Denim" campaign with Kat's Eye being a prime example.
  • Gap's estimated net tariff impact is 100-110 basis points to its operating margin.
  • Tariff threats on furniture imports are creating uncertainty for companies like Wayfair, RH, and William Sonoma.
  • Wayfair's marketplace model offers flexibility in navigating tariffs due to its sellers setting prices and buyers having alternatives.
  • RH is increasing its US-produced upholstered furniture to 52% by year-end.
  • William Sonoma is being astute in capturing trends like the business-to-business market and the "dorm room trend."
  • Companies are using various strategies, including moving production, re-engineering products, and adjusting prices, to mitigate tariff impacts.
  • Upcoming earnings reports to watch include Dollar Tree, Figma, and Broadcom, with analysts bullish on Broadcom's AI business.

Quotes

  • "Stocks fell from record highs on Friday."
  • "Wall Street still digesting updated consumer inflation data showing prices firming higher above the Fed's target in July."
  • "All eyes are on Washington where the feud between President Trump and Fed Governor Lisa Cook heats up."
  • "Section 10 of the Federal Reserve Act stipulates that Fed governors will serve 14-year terms unless removed for cause by the president."
  • "What's at stake here is a test of presidential power as well as the central bank's independence."
  • "I think the the for cause, you know, uh clause uh has not been tested."
  • "It's not really Fed independence. It's arms length from politics."
  • "We think actually it still holds. And really what's driving inflation continues to be shelter."
  • "The US equity market is extremely expensive on a valuation basis."
  • "the US economy accelerated in August in particular."
  • "When you have a lot fewer workers, you know, that's going to mean that price is going to start rising somewhat."
  • "GAP is continuing to deliver strong and consistent results because we're executing really well against our playbook with consistency."
  • "The environment remains very uncertain and very dynamic."
  • "These companies are using all of the tools and levers at their disposal to try and navigate through the tariffs."
DuckDB in 100 Seconds
F

DuckDB in 100 Seconds

Fireship

18 days ago

Summary

DuckDB is an open-source, fast, embeddable SQL OLAP database designed to simplify analytics implementation for developers. Developed in the Netherlands and written in C++, it was first released in 2019. Its core philosophy is similar to SQLite, being easily embeddable, but it optimizes for columnar data storage instead of row-wise storage. This columnar approach significantly speeds up analytical workloads, particularly for tasks like data aggregation, filtering, and joining, which involve reading large amounts of data from a single column across many records. DuckDB achieves high performance through its vectorized query execution engine, processing data in parallel batches of rows. It is already being used by major companies and can be easily installed and used via the terminal, with the ability to directly query data from CSV or Parquet files and output it to various formats.

Notes

  • DuckDB is an open-source, fast, embeddable SQL OLAP database.
  • It was developed in the Netherlands, written in C++, and first released in 2019.
  • Its philosophy is similar to SQLite, emphasizing embeddability.
  • Unlike row-wise storage (ideal for transactional workloads), DuckDB stores data column-wise, which is crucial for analytics.
  • Columnar storage enables faster data aggregation, filtering, and joins, especially for time-series and IoT data.
  • DuckDB uses a vectorized query execution engine for high performance, processing data in parallel batches of rows.
  • It is already in use at companies like Meta, Google, and Airbnb.
  • Users can install and use DuckDB via the terminal.
  • It allows direct querying of data from CSV and Parquet files.
  • Data can be outputted to formats like JSON or HTML tables.
  • DuckDB excels at aggregations on time-series data using built-in aggregate functions and GROUP BY.
  • It is multi-threaded by default, making it suitable for analytical workloads.

Quotes

  • "Aduct DB, an open-source fast embeddible SQL OLAP database that simplifies the way developers implement analytics."
  • "And the TLDDR is that it's like SQL light, but for columnar data."
  • "Everybody knows that SQLite is the most deployed database in the world."
  • "And that's because it runs as a single binary with no dedicated database management server process necessary, allowing it to be embedded almost anywhere, like the billions of smartphones around the world."
  • "Duct DB is built on the same philosophy, but instead of storing data row-wise, it stores it column-wise."
  • "But why does that matter? Well, you see, storing rows together is great for transactional workloads like most apps out there, like an e-commerce website where you need to read and write entire records at the same time, but it's not so great for high volume time series data commonly found in analytics and IoT where you need to read and analyze all the data in one column across many records."
  • "And DUTDB achieves excellent performance with massive data sets thanks to its columnar vectorzed query execution engine where large batches of values are processed as vectors in one operation in parallel."
  • "And what's especially awesome is that if we have some existing data in a CSV or parquet file, we can access it directly in a SQL statement."
  • "That's cool and all, but the real power of this database is its ability to perform aggregations when working with time series data."
  • "But under the hood, we get excellent performance because unlike SQL light, which processes data rowby row, duct DB processes data in vectorized batches of rows and is multi-threaded by default, making it an excellent choice for analytical workloads."

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Transcripts • Summaries
What's next in the Trump vs Lisa Cook saga, how to play furniture stocks
What's next in the Trump vs Lisa Cook saga, how to play furniture stocks
Yahoo Finance
English (auto-generated)
1.47s
00:00 - 00:11 [Music] 00:09 - 00:13 Hello and welcome to Market Domination. 00:11 - 00:16 I'm Inspire live from our New York City 00:13 - 00:18 headquarters. Stocks fell from record 00:16 - 00:20 highs on Friday. Wall Street still 00:18 - 00:22 digesting updated consumer inflation 00:20 - 00:25 data showing prices firming higher above 00:22 - 00:26 the Fed's target in July. It's the end 00:25 - 00:29 of the trading week before a long 00:26 - 00:31 holiday weekend. Markets are closed on 00:29 - 00:33 Monday for Labor Day. Right now, there's 00:31 - 00:35 just an hour to go until the closing 00:33 - 00:38 bell and stocks are trading lower across 00:35 - 00:40 the board. We're watching the Dow down 00:38 - 00:43 3/10en of a percent, the Nasdaq down 00:40 - 00:46 more than 1% and the S&P 500 slipping 00:43 - 00:48 from its record high down 7/10en of a 00:46 - 00:50 percent. But still, if we take a look at 00:48 - 00:52 a month-to-day chart, we are seeing 00:50 - 00:54 green across the board for the month for 00:52 - 00:56 the Nasdaq, the S&P 500, and the Dow. 00:54 - 01:00 It's the fourth month in a row, by the 00:56 - 01:02 way, for the S&P 500 of gains. Taking a 01:00 - 01:04 look also at where we're at with the 01:02 - 01:07 10-year Treasury. We have se been seeing 01:04 - 01:10 that yield ticking slightly higher. The 01:07 - 01:12 US dollar index ticking lower today. And 01:10 - 01:15 then Bitcoin crypto has been under 01:12 - 01:17 pressure with Bitcoin down more than 3%. 01:15 - 01:20 Under the hood for equities, we are 01:17 - 01:22 seeing over on the NASDAQ 100 some 01:20 - 01:25 pressure on the MAG7 stocks. Nvidia down 01:22 - 01:27 more than 3% after its earnings this 01:25 - 01:30 week. Also, Meta down more than one and 01:27 - 01:33 a half%. We're watching Broadcom and 01:30 - 01:36 Tesla that's also lower. Over on the 01:33 - 01:38 sector action, we are watching consumer 01:36 - 01:40 staples, healthcare, energy, those 01:38 - 01:42 sectors are in the green for the session 01:40 - 01:44 and technology and consumer 01:42 - 01:47 discretionary industrials which have 01:44 - 01:49 been leading the rally this year. Those 01:47 - 01:51 are under pressure today. All eyes are 01:49 - 01:53 on Washington where the feud between 01:51 - 01:56 President Trump and Fed Governor Lisa 01:53 - 01:58 Cook heats up. A federal judge presided 01:56 - 02:00 over a preliminary hearing in the 01:58 - 02:02 matter. And on that, we'd like to 02:00 - 02:04 welcome in our Fed correspondent 02:02 - 02:07 Jennifer Shamberger with more. Jennifer 02:04 - 02:09 and as in a hearing lasting roughly two 02:07 - 02:12 hours, investors were left with no 02:09 - 02:14 ruling from US District Court Judge Gia 02:12 - 02:16 Cobb on whether President Trump's 02:14 - 02:19 allegations that Fed Governor Lisa Cook 02:16 - 02:21 committed mortgage fraud rise to the 02:19 - 02:23 level of for cause, something the 02:21 - 02:26 president could remove a Fed governor 02:23 - 02:28 over. Section 10 of the Federal Reserve 02:26 - 02:32 Act stipulates that Fed governors will 02:28 - 02:35 serve 14-year terms unless removed for 02:32 - 02:38 cause by the president. Now, both lawyer 02:35 - 02:40 lawyers from both sides argued what for 02:38 - 02:43 cause means and whether it applies in 02:40 - 02:45 this case as the judge pressed both 02:43 - 02:47 lawyers with questions. Lisa Cook's 02:45 - 02:50 lawyer Abby lol argued that the 02:47 - 02:52 president doesn't have four cause that 02:50 - 02:54 this is a policy disagreement. He 02:52 - 02:56 invoked examples of how the president 02:54 - 02:58 wants the central bank to lower interest 02:56 - 03:02 rates and when they haven't, he's gone 02:58 - 03:04 after firing Fed chair Jerome Pal. LOL 03:02 - 03:07 said that the conduct took place before 03:04 - 03:09 Cook was nominated and confirmed by the 03:07 - 03:13 Senate and that if she did something, it 03:09 - 03:15 did not rise to the level of for cause. 03:13 - 03:18 LOL argued that under the government's 03:15 - 03:20 reasoning, any move by Cook that Trump 03:18 - 03:23 did like could be a cause to h to be 03:20 - 03:25 fired. He gave the example of whether 03:23 - 03:28 Cook decided to attend meetings in a 03:25 - 03:30 pants suit versus a dress and that that 03:28 - 03:32 might not be enough respect for the 03:30 - 03:34 institution that that could be 03:32 - 03:36 considered cause for being fired. Now, 03:34 - 03:39 the government argued that defining 03:36 - 03:42 cause is the president's right as 03:39 - 03:44 Congress purposely did not define it in 03:42 - 03:46 the statute. If the president decides an 03:44 - 03:49 allegation of an infraction is an 03:46 - 03:51 acceptable reason to fire the fed 03:49 - 03:54 governor, then that's all what's 03:51 - 03:57 necessary. Justice Department attorney 03:54 - 04:00 Yakov Roth kept pointing out that Cook's 03:57 - 04:02 team has yet to deny the alleged 04:00 - 04:04 mortgage fraud. Now, no decision was 04:02 - 04:07 made on whether Cook can continue 04:04 - 04:09 serving as a Fed governor as as all of 04:07 - 04:11 this plays out. And the DOJ's Roth said 04:09 - 04:14 that the government would prefer that 04:11 - 04:16 Cook sit out of work while this is 04:14 - 04:19 sorted out. Of course, at stake here is 04:16 - 04:22 a test of presidential power as well as 04:19 - 04:25 the central bank's independence. Next, 04:22 - 04:27 Judge Cobb asked for a filing from 04:25 - 04:30 Cook's attorney lol by Tuesday. And both 04:27 - 04:32 sides also have the opportunity to file 04:30 - 04:35 additional arguments by Tuesday. A 04:32 - 04:38 decision expected sometime after Labor 04:35 - 04:40 Day. Depending on how the judge rules, 04:38 - 04:43 it'll be interesting to see whether 04:40 - 04:45 either side appeals. Many expect this 04:43 - 04:46 will be escalated to the Supreme Court. 04:45 - 04:48 Enz, 04:46 - 04:51 >> Jennifer, thank you. And for more on 04:48 - 04:53 this legal battle between feds Lisa Cook 04:51 - 04:55 and President Trump, let's go to Jim 04:53 - 04:58 Bullard, former St. Louis Fed president 04:55 - 05:00 and Purdue University Dr. Samuel R. 04:58 - 05:02 Allen, dean of the Mitch Daniels School 05:00 - 05:06 of Business. Jim, thanks so much for 05:02 - 05:08 joining us. What do you make of this the 05:06 - 05:11 Lisa Cook Donald Trump conflict and how 05:08 - 05:13 it's being handled right now? 05:11 - 05:15 >> Uh, well, it's very important. It's been 05:13 - 05:19 in the news and uh certainly is an 05:15 - 05:22 important uh thing to get resolved. I 05:19 - 05:26 think the the for cause, you know, uh 05:22 - 05:28 clause uh has not been tested. uh and 05:26 - 05:30 this will probably go to the Supreme 05:28 - 05:33 Court the way it's going and then they 05:30 - 05:35 will uh lay down a definition for us and 05:33 - 05:38 and we'll see where it comes out. But 05:35 - 05:41 the court has previously said that the 05:38 - 05:43 uh central bank is 05:41 - 05:45 uh maybe has special status uh the 05:43 - 05:47 Federal Reserve Act maybe has special 05:45 - 05:50 status going back to the first and 05:47 - 05:53 second bank of the United States. And so 05:50 - 05:55 I think markets are betting that the 05:53 - 05:57 Supreme Court will decide that this is 05:55 - 06:01 uh not enough for cost. You do have to 05:57 - 06:02 have due process somehow uh in this and 06:01 - 06:04 I guess that's what the lawyers are 06:02 - 06:05 arguing about here. 06:04 - 06:08 >> Jim, are you concerned about Fed 06:05 - 06:08 independence? 06:08 - 06:13 >> Yeah, I mean I I often say that it's not 06:11 - 06:17 really Fed independence. It's arms 06:13 - 06:18 length from politics. Um it's it's kind 06:17 - 06:20 of incorrect to say independence when 06:18 - 06:22 you have political appointees. Uh that 06:20 - 06:24 the seven people on the board are 06:22 - 06:26 political appointees. They have some 06:24 - 06:29 approval authority over the president. 06:26 - 06:31 So there there is politics involved but 06:29 - 06:34 it's meant to be neutralized a little 06:31 - 06:37 bit so that you don't get political 06:34 - 06:40 volatility feeding into financial market 06:37 - 06:44 volatility through the Federal Reserve. 06:40 - 06:46 and and uh if you can get that um uh you 06:44 - 06:48 know you probably get better uh levels 06:46 - 06:51 of interest rates otherwise investors 06:48 - 06:53 would have to put a risk premium into uh 06:51 - 06:56 into interest rates because of that 06:53 - 06:58 volatility. So I think it is wise to 06:56 - 06:59 have at arms length from politics uh so 06:58 - 07:02 that doesn't get wrapped up in the 06:59 - 07:05 day-to-day negotiations going on inside 07:02 - 07:08 the beltway. Um you you must have seen 07:05 - 07:10 the u PCE data that came out, the GDP 07:08 - 07:13 data this week that came out also. Uh we 07:10 - 07:15 have obviously been seeing a weak labor 07:13 - 07:18 market. So what should the Fed be doing 07:15 - 07:20 in September? 07:18 - 07:23 >> Uh I think the committee is going to 07:20 - 07:27 reduce uh by 25 basis points. I think 07:23 - 07:31 the market has a lot of probability on 07:27 - 07:34 that outcome. uh and I think they can 07:31 - 07:38 signal about what they want to do with 07:34 - 07:39 the October and and uh uh December uh 07:38 - 07:42 part of their schedule and then going 07:39 - 07:44 into next year uh they can lay out a 07:42 - 07:48 pathway that there's is their expected 07:44 - 07:50 pathway but um I think 25 is is likely 07:48 - 07:51 and and probably the right decision for 07:50 - 07:54 this point 07:51 - 07:56 >> and if there are more than 25 uh going 07:54 - 07:59 forward if this is the beginning of an 07:56 - 08:01 easing cycle again. Um, is there a 07:59 - 08:04 chance that you could see yields on the 08:01 - 08:06 long end going higher if it's too much 08:04 - 08:08 too soon? 08:06 - 08:10 >> Yeah, I think that would depend on the 08:08 - 08:13 data. I think this uh these jobs reports 08:10 - 08:16 coming in weaker. Uh we'll see what we 08:13 - 08:19 get here uh for August, but but uh 08:16 - 08:22 that's uh giving the committee some room 08:19 - 08:24 to maneuver a little bit down. uh even 08:22 - 08:27 though inflation's above target uh the 08:24 - 08:29 policy rate is farther above target uh 08:27 - 08:31 above neutral than they would have to be 08:29 - 08:36 to combat the uh inflation that they've 08:31 - 08:39 got. So I think um also the argument 08:36 - 08:41 that uh any inflation 08:39 - 08:43 uh that's in the data that seems to be 08:41 - 08:46 caused by tariffs would be a one-time 08:43 - 08:47 effect and not ongoing inflation. That's 08:46 - 08:50 why economists wouldn't call it 08:47 - 08:52 inflation and uh that argument seems to 08:50 - 08:55 be carrying the day with the committee. 08:52 - 08:57 So that gives them also some room uh to 08:55 - 08:58 maneuver both at the September meeting 08:57 - 09:01 and beyond 08:58 - 09:04 >> uh about that one-time effect um because 09:01 - 09:07 that is some commentary that is now um 09:04 - 09:10 uh among uh committee members and and 09:07 - 09:12 this idea that okay this is a one-time 09:10 - 09:15 bump and then after that you should see 09:12 - 09:18 inflation sort of easing. Um what if 09:15 - 09:20 what if it doesn't? I mean is there do 09:18 - 09:22 you see a world where the Fed could say 09:20 - 09:26 okay maybe it's not 2% maybe it's closer 09:22 - 09:28 to 3% the target. 09:26 - 09:30 >> Uh yeah I mean the committee just 09:28 - 09:32 reaffirmed the 2% target. So I don't 09:30 - 09:35 think that's uh changing. The question 09:32 - 09:37 is uh what are the right tactics to get 09:35 - 09:40 there given that you've also got the 09:37 - 09:42 employment side of the mandate. So um I 09:40 - 09:44 think they've got a pretty good plan 09:42 - 09:46 here. I think they can come down a 09:44 - 09:49 little bit uh and then watch the data 09:46 - 09:52 and I've said you know you could get as 09:49 - 09:54 much as 100 basis points of of policy 09:52 - 09:56 rate reduction over the next year but 09:54 - 09:58 how much of that that you'd want to 09:56 - 10:00 press you know be have be farther away 09:58 - 10:03 uh like a year away and how much of that 10:00 - 10:05 you want to bring forward uh into 2025 10:03 - 10:08 would be a decision that they they could 10:05 - 10:09 make uh depending on how the data come 10:08 - 10:10 in 10:09 - 10:12 >> and we know that you're on the short 10:10 - 10:15 list for Fed chair hats off to you for 10:12 - 10:19 if you that is a difficult job to have. 10:15 - 10:21 Um but um have you spoken to Secretary 10:19 - 10:24 uh Bessent or uh Treasur Secretary 10:21 - 10:26 Bessent or the Trump administration? 10:24 - 10:28 >> I have spoken with the Treasury 10:26 - 10:32 Secretary and I'm anticipating that 10:28 - 10:34 we'll line up uh uh interview uh very 10:32 - 10:38 shortly uh working with his office on 10:34 - 10:41 that. So we'll see. Uh, you know, I 10:38 - 10:43 think you got 11 candidates and a pretty 10:41 - 10:45 busy uh, Treasury Secretary, so it'll 10:43 - 10:47 probably take quite a while to get 10:45 - 10:48 through all the interviews, but um, I'm 10:47 - 10:51 looking forward to it. 10:48 - 10:53 >> All right, thank you, Jim. 10:51 - 10:56 And we're just getting started here on 10:53 - 10:58 Market Domination. Coming up, AI is 10:56 - 11:00 helping Alibaba share surge. We'll 10:58 - 11:02 explain what's behind the jump. Plus, a 11:00 - 11:04 slide in semiconductor stocks is 11:02 - 11:06 weighing down markets. We're letting you 11:04 - 11:08 know what's most important to watch. And 11:06 - 11:10 the stakes are getting higher when it 11:08 - 11:12 comes to Fed watching. We're talking to 11:10 - 11:14 an economist about the path forward for 11:12 - 11:17 the Fed. Those stories and much more 11:14 - 11:20 coming up. 11:17 - 11:22 [Music] 11:20 - 11:24 And with July's PCE inflation report and 11:22 - 11:26 employment, some investors are cautious 11:24 - 11:28 that the numbers could make or break the 11:26 - 11:31 Fed's path forward and determine whether 11:28 - 11:33 optimism persists into next month. Matt 11:31 - 11:36 Mskin, co-chief investment strategist at 11:33 - 11:38 Manual Life, John Hancock Investments 11:36 - 11:40 joins us now. Matt, welcome. Do you 11:38 - 11:43 think PCE inflation data defines whether 11:40 - 11:45 the Fed's easing narrative holds or 11:43 - 11:47 stalls? 11:45 - 11:49 >> We think actually it still holds. And 11:47 - 11:51 really what's driving inflation 11:49 - 11:54 continues to be shelter. And what is 11:51 - 11:56 shelter? That's housing. The housing 11:54 - 11:58 data real time is actually showing that 11:56 - 12:00 it's basically zero growth on a 11:58 - 12:03 year-over-year basis. National home 12:00 - 12:05 prices actually peaked in February and 12:03 - 12:07 are down four months in a row. According 12:05 - 12:10 to Key Schiller, national home prices 12:07 - 12:13 are up 1.9% year-over-year. Now, the 12:10 - 12:15 Bureau of Labor Statistics and um the 12:13 - 12:17 Bureau of Economic Analysis, who creates 12:15 - 12:19 this inflation data, they're saying 12:17 - 12:21 housing prices are up over 4% 12:19 - 12:23 year-over-year. So, lo and behold, they 12:21 - 12:26 have much hotter inflation data than 12:23 - 12:28 what the housing market would tell you. 12:26 - 12:29 And it just takes forever. The reason 12:28 - 12:32 why is because the way that we measure 12:29 - 12:34 inflation in this country somehow is we 12:32 - 12:35 call people up and we ask them if you 12:34 - 12:38 were to rent your house, how much would 12:35 - 12:40 you rent it for? People have no idea. 12:38 - 12:42 It's hard to catch that up in terms of 12:40 - 12:44 the data and that's why it's lagged in 12:42 - 12:46 our view. The Fed's got to focus on the 12:44 - 12:47 employment data and we think that's 12:46 - 12:48 going to cause them to cut here in 12:47 - 12:51 September. 12:48 - 12:53 >> And do you think that the what drives 12:51 - 12:56 this rally forward? I mean, we have seen 12:53 - 12:58 the markets at all-time highs today. We 12:56 - 13:00 saw a little bit of of a retreat, but 12:58 - 13:03 nonetheless, I mean, is it going to be 13:00 - 13:07 the September rate cuts? Is it AI? What 13:03 - 13:09 is going to keep this rally going? 13:07 - 13:12 >> Yeah. So, at the end of the day, the US 13:09 - 13:15 equity market is extremely expensive on 13:12 - 13:17 a valuation basis. We're at 22 forward 13:15 - 13:20 PE. Uh to put that in perspective, we 13:17 - 13:25 got that high in 2021 and then actually 13:20 - 13:27 in 20 in 2000, we got to 24 times PE. So 13:25 - 13:29 really we're near tapped out on multiple 13:27 - 13:33 expansion. The stock market really can't 13:29 - 13:35 get much more expensive this year or now 13:33 - 13:36 rel because in history it says it just 13:35 - 13:39 can't get much higher. But the 13:36 - 13:42 denominator of the PE ratio the E or 13:39 - 13:44 earnings can drive stock prices higher 13:42 - 13:46 and that's what you're seeing. The 13:44 - 13:49 second quarter was awesome in terms of 13:46 - 13:52 earnings results. Now to your point AI 13:49 - 13:54 was a big part of that. technology and 13:52 - 13:56 communication services sectors were the 13:54 - 13:58 strongest in terms of earnings growth. 13:56 - 14:00 They did the heavy lifting in terms of 13:58 - 14:03 the overall earnings growth, which 14:00 - 14:06 clocked in at nearly 12% year-over-year. 14:03 - 14:08 So, the S&P 500 is up about 11% year-to 14:06 - 14:10 date. Earnings are up about 11% year to 14:08 - 14:14 date. In the United States, it's got to 14:10 - 14:16 earn every single pocket of this uh 14:14 - 14:18 appreciation because the earnings have 14:16 - 14:20 to be the driver. And earnings have done 14:18 - 14:22 that. Now, as we go out another year, 14:20 - 14:24 it's going to be harder and harder to 14:22 - 14:25 meet that high goal. It's going to be 14:24 - 14:28 harder to do the same thing with these 14:25 - 14:31 comps all over again with AI. In our 14:28 - 14:33 view, we're more neutral on US large cap 14:31 - 14:35 because the valuations are rich. We do 14:33 - 14:37 like the tech side. We like the 14:35 - 14:38 communication services businesses 14:37 - 14:40 because the earnings are strong enough, 14:38 - 14:43 but in our view, it's a lower return 14:40 - 14:46 world out of US equities because of 14:43 - 14:48 valuations have come so far. And what do 14:46 - 14:49 you make about seasonality in September? 14:48 - 14:53 I mean, are you concerned going into 14:49 - 14:56 September and into October? Uh September 14:53 - 14:59 tends to be a weak month for equities. 14:56 - 15:02 Uh September and October, uh the VIX 14:59 - 15:04 tends to spike. So, how should investors 15:02 - 15:06 be thinking in the near term about 15:04 - 15:07 stocks? 15:06 - 15:09 >> Yeah. So, we go back to the macro 15:07 - 15:12 fundamentals and kind of the macro 15:09 - 15:14 trends, if you will. In August, the 15:12 - 15:16 economy in July and August really the US 15:14 - 15:18 economy accelerated in August in 15:16 - 15:20 particular. And really, I don't know, I 15:18 - 15:22 have two daughters. We're we just went 15:20 - 15:24 back to school. Literally, the LA, you 15:22 - 15:26 know, this week was back to school week. 15:24 - 15:30 Back to school shopping in the United 15:26 - 15:32 States was banner. It was off the chart. 15:30 - 15:33 It was awesome. Like, I mean, awesome 15:32 - 15:35 economically speaking, not so great for 15:33 - 15:37 households that are out there spending 15:35 - 15:39 all this money. But what you saw and 15:37 - 15:42 then you saw state tax rebate days or 15:39 - 15:44 you know kind of tax uh benefit days and 15:42 - 15:46 so this drove more consumer spending but 15:44 - 15:48 it's also a pullth through. So you're 15:46 - 15:49 getting this pull through in consumer 15:48 - 15:52 spending. I think that's going to weaken 15:49 - 15:55 up a bit into September October. You do 15:52 - 15:57 have the Fed cuts but in our view risk 15:55 - 15:58 is nearly priced for perfection here. 15:57 - 16:00 High yield spreads is this measure of 15:58 - 16:02 junk bonds versus treasuries. And the 16:00 - 16:04 wider it is the more value. The tighter 16:02 - 16:07 it is the less value. They're near the 16:04 - 16:08 tightest spreads in history and like I 16:07 - 16:10 said, equities are are heavily valued. 16:08 - 16:13 So what we're doing, we're looking at 16:10 - 16:15 high quality bonds yielding nearly 5%. 16:13 - 16:16 If the Fed cuts that gets price 16:15 - 16:18 appreciation on top of that, bonds are 16:16 - 16:20 having a really good year. I know it's 16:18 - 16:22 not as popular as other parts of the 16:20 - 16:24 market. Um but steady highquality 16:22 - 16:25 investments, we think are going to ride 16:24 - 16:26 out this volatility. Well, 16:25 - 16:29 >> and what about the dollar? We've seen 16:26 - 16:31 this downward trend in the dollar. um 16:29 - 16:33 has that helped to sort of lift assets, 16:31 - 16:34 but is there a point where it just gets 16:33 - 16:36 a little bit too weak or we should be 16:34 - 16:40 seeing some strengthening? 16:36 - 16:43 >> Yeah, the US dollar falling is a a great 16:40 - 16:45 riskon uh catalyst and really it just 16:43 - 16:47 increases liquidity. It's this 16:45 - 16:49 debasement trade that we hear about. So 16:47 - 16:51 the dollar going down, it's nearly 16:49 - 16:54 inversely correlated to everything. 16:51 - 16:56 Stocks like it, bonds like it, um and 16:54 - 16:59 international stocks in particular have 16:56 - 17:02 really benefited. So European stocks are 16:59 - 17:06 up nearly 25 to 30% this year. The euro 17:02 - 17:08 is up about 12 to 13% this year. So the 17:06 - 17:11 weaker dollar has really helped non- US 17:08 - 17:14 equities in our view. There's a So we're 17:11 - 17:16 just watching the 2016 to 17 parallel. A 17:14 - 17:19 lot of the weakness is already behind 17:16 - 17:20 us, but the dollar is on the map. It is 17:19 - 17:23 against the ropes. However you want to 17:20 - 17:25 put it, it is just it's really hard to 17:23 - 17:27 get a second like a couple days of a bid 17:25 - 17:29 of the dollar. every time it starts 17:27 - 17:31 getting a bid, there's all of a sudden 17:29 - 17:33 this geopolitical risk that's priced 17:31 - 17:35 back into and it gets knocked back down. 17:33 - 17:37 But until if the dollar does start to 17:35 - 17:40 rise, that's actually something we would 17:37 - 17:42 watch more broadly as a riskoff tell. It 17:40 - 17:44 hasn't happened yet. Um, but something 17:42 - 17:44 to keep an eye on for the the final 17:44 - 17:46 quarter here. 17:44 - 17:49 >> You know what's get been getting a bit 17:46 - 17:51 is gold and uh so and it's inversely 17:49 - 17:53 correlated. It tends to be inversely 17:51 - 17:55 correlated with the dollar. So what do 17:53 - 17:57 you make of it? I mean it is today it's 17:55 - 17:58 been up. Silver's been also up. We are 17:57 - 18:00 watching the metals that have been 17:58 - 18:01 rallying. 18:00 - 18:05 >> Yeah. So broadly speaking in the 18:01 - 18:07 commodity space we prefer gold and and 18:05 - 18:09 more precious metals out of any other 18:07 - 18:10 commodity and really it does have a 18:09 - 18:13 couple dimensions to it. One the 18:10 - 18:16 geopolitical hedge the weaker dollar 18:13 - 18:18 benefit the rate cuts. Uh all that 18:16 - 18:21 things could help the the gold or 18:18 - 18:23 precious metal complex. But oil's 18:21 - 18:25 trading weak. We've got industrial 18:23 - 18:26 metals, you know, kind of copper took a 18:25 - 18:28 took a hit. Overall, the broader 18:26 - 18:29 commodity complex hasn't really done 18:28 - 18:31 anything this year. But if you're 18:29 - 18:33 looking for an opportunity for something 18:31 - 18:36 different for the portfolio that can 18:33 - 18:39 hedge in a kind of re reinflation or 18:36 - 18:41 weaker dollar regime, gold can help. Um, 18:39 - 18:43 but it doesn't pay a dividend. It is a 18:41 - 18:44 rock at the end of the day. So, we 18:43 - 18:47 wouldn't take too much of it into the 18:44 - 18:49 portfolio given all those factors. 18:47 - 18:52 >> Great insight. Thanks, Matt. 18:49 - 18:52 >> Thank you. 18:53 - 18:56 [Applause] 18:54 - 18:58 And now time for some of today's 18:56 - 19:01 trending tickers. We're taking a look at 18:58 - 19:03 Alibaba chip stocks and craft hinds. 19:01 - 19:04 Starting with Alibaba, the company 19:03 - 19:07 reporting weaker than expected revenue 19:04 - 19:09 for the June quarter. However, shares 19:07 - 19:11 rising as its cloud intelligence group 19:09 - 19:13 saw accelerated growth driven by robust 19:11 - 19:16 AI demand. Revenue from cloud 19:13 - 19:18 intelligence growing 26% in the quarter. 19:16 - 19:20 That's growth helping offset the 19:18 - 19:22 company's drop in profit. Alibaba also 19:20 - 19:24 putting pressure on chip stocks as the 19:22 - 19:26 company reportedly developed a new chip 19:24 - 19:28 for China. That's according to the Wall 19:26 - 19:30 Street Journal. This comes as chip 19:28 - 19:32 designers look to fill the hole left 19:30 - 19:35 behind from Nvidia after the chip maker 19:32 - 19:37 faces regulatory barriers to selling its 19:35 - 19:39 products in China. Also adding the 19:37 - 19:42 adding to the pressure to the chip 19:39 - 19:44 stocks is server maker Dell. The 19:42 - 19:46 company, a customer of chipmakers, 19:44 - 19:48 providing thirdarter earnings outlook 19:46 - 19:50 that fell below Wall Street estimates. 19:48 - 19:53 According to Bloomberg estimates, Dell 19:50 - 19:56 accounts for over 2% of Nvidia's revenue 19:53 - 19:59 on an annualized basis. Lastly, Craft 19:56 - 20:01 Hind reportedly nears a deal to plan a 19:59 - 20:02 plan to break up the company. According 20:01 - 20:04 to the Wall Street Journal, a 20:02 - 20:07 transaction could be announced as soon 20:04 - 20:09 as early next week. The decision would 20:07 - 20:11 split the company into two separate 20:09 - 20:13 units, focusing on grocery and sauces, 20:11 - 20:16 respectively. The split would 20:13 - 20:19 effectively reverse the Craft and Hines 20:16 - 20:21 2015 merger. 20:19 - 20:23 Coming up, stocks are sliding amid 20:21 - 20:25 renewed inflation concerns. We discuss 20:23 - 20:28 the implications for the economy after 20:25 - 20:31 the break. Stay with us. 20:28 - 20:31 [Music] 20:33 - 20:37 Pressure builds for the Fed on multiple 20:35 - 20:39 fronts. The legal battle unfolding 20:37 - 20:41 between President Trump and Lisa Cook 20:39 - 20:42 casting a dark cloud over the Fed's 20:41 - 20:45 independence. Meanwhile, the central 20:42 - 20:47 bank's inflation gauge inches up again, 20:45 - 20:49 raising the questions on the Fed's rate 20:47 - 20:52 cut path. Here with more on the economic 20:49 - 20:53 stakes at play is Capital Markets 20:52 - 20:55 senior economist and managing director 20:53 - 20:58 Jennifer Lee. Jennifer, thanks so much 20:55 - 21:01 for joining us. Uh we've seen the 20:58 - 21:03 cooling labor data. Uh we looking at 21:01 - 21:06 persistent inflation or sticky 21:03 - 21:08 inflation. Um how does the Fed react 21:06 - 21:11 from here? Is a 25 basis point cut in 21:08 - 21:13 September a shoe in? 21:11 - 21:15 >> Um no, I would definitely say never a 21:13 - 21:17 shoe in. We're going to be completely 21:15 - 21:18 data dependent um and watch the data as 21:17 - 21:20 they come in. We still have a few more 21:18 - 21:21 weeks by the way uh before that meeting. 21:20 - 21:24 Uh also thank you very much for having 21:21 - 21:25 me on. This is a very difficult time I 21:24 - 21:27 think for any central bank around the 21:25 - 21:29 world especially the Federal Reserve um 21:27 - 21:31 when they're telling trying to balance 21:29 - 21:33 those their mandates and you know as Fed 21:31 - 21:35 chair Powell said uh in Jackson the 21:33 - 21:37 whole you know that he's uh he seems to 21:35 - 21:39 be less worried about inflation these 21:37 - 21:40 days and more concerned about jobs and 21:39 - 21:42 he's talked about the downside risk to 21:40 - 21:45 the jobs uh outlook. So I think it's 21:42 - 21:47 more these days uh more of the focus is 21:45 - 21:50 going to be on jobs um and a little bit 21:47 - 21:51 less so on inflation. I do want to say, 21:50 - 21:52 by the way, if I can just jump in on 21:51 - 21:54 myself here, it's sort of interesting. 21:52 - 21:56 You know, the University of Michigan 21:54 - 21:59 consumer sentiment index was revised 21:56 - 22:00 lower um um for the month of August, but 21:59 - 22:02 I noticed that their one year and five 22:00 - 22:03 year inflation expectations, even though 22:02 - 22:05 they ticked up on a month-to-month 22:03 - 22:07 basis, the actual levels were revised 22:05 - 22:09 lower as well. So, I thought that was 22:07 - 22:11 kind of interesting and a good takeaway. 22:09 - 22:13 >> So, what's where do you see the US 22:11 - 22:17 economy? I mean, do you think that it 22:13 - 22:19 looks resilient at this point? 22:17 - 22:20 That is the word that's been, you know, 22:19 - 22:23 popping around in my head all day is 22:20 - 22:25 especially when I saw the US um personal 22:23 - 22:26 income and spending data and the word 22:25 - 22:28 resilient, you know, crept back into my 22:26 - 22:30 head and uh and I think that's the only 22:28 - 22:32 way or or one of the ways to describe it 22:30 - 22:34 right now because even here we are in uh 22:32 - 22:36 you know heading into uh into the Labor 22:34 - 22:38 Day weekend and we're still seeing 22:36 - 22:40 growth, you know, albeit growth is 22:38 - 22:42 slowing, the expansion is slowing, but 22:40 - 22:45 we're still growing and uh that's an 22:42 - 22:47 incredible feat after all of the um you 22:45 - 22:49 know, ups and downs. of financial 22:47 - 22:50 markets and with all the tariff wars and 22:49 - 22:53 everything. Um the fact that we're still 22:50 - 22:55 growing, GDP was revised higher to 3.3% 22:53 - 22:58 in second quarter again and then the 22:55 - 22:59 handoff to um to the third quarter is 22:58 - 23:01 looking pretty good from what we saw 22:59 - 23:03 from durable goods orders and shipments 23:01 - 23:05 and of course the personal income and 23:03 - 23:07 spending data. So so far looking pretty 23:05 - 23:09 good as we enter the third quarter. So, 23:07 - 23:11 it's been a strong earning season as 23:09 - 23:14 well and we've heard from a lot of 23:11 - 23:18 companies um about tariffs and they've 23:14 - 23:20 been able to sort of work around a lot a 23:18 - 23:22 lot of companies working around tariffs 23:20 - 23:24 uh whether it be switching their 23:22 - 23:27 manufacturing from different places or 23:24 - 23:29 whether it be just reluctant to sort of 23:27 - 23:32 raise prices on consumers. But where do 23:29 - 23:34 you think that tariffs will eventually 23:32 - 23:37 uh how do you think that they will shake 23:34 - 23:41 out for uh for the economy especially as 23:37 - 23:43 we still have some uh a pending one 23:41 - 23:44 being with China 23:43 - 23:45 >> right so that's been like the 23:44 - 23:48 million-dollar question is that you know 23:45 - 23:50 where is the impact from tariffs why is 23:48 - 23:51 it not showing up yet on the inflation 23:50 - 23:53 data and you know I ask myself that on a 23:51 - 23:54 regular basis and you know we finally 23:53 - 23:56 saw a little bit of a tick up in the 23:54 - 23:57 July CPI figures whether or not we're 23:56 - 23:58 going to see that again in August you 23:57 - 24:00 know remains to be seen but that'll 23:58 - 24:01 Another interesting report to watch, you 24:00 - 24:04 know, but there are a number of reasons 24:01 - 24:06 I think why we haven't seen too much of 24:04 - 24:07 this showing up in the inflation data. 24:06 - 24:09 You know, number one, you of course we 24:07 - 24:11 knew all knew about the front loading. 24:09 - 24:13 Businesses were buying and importing 24:11 - 24:14 whatever they could in the first half. 24:13 - 24:17 So, they're meaning they're able to 24:14 - 24:18 bypass a lot of the tariffs. So, their 24:17 - 24:20 their prices that they that they paid 24:18 - 24:22 were not as high as they could have 24:20 - 24:24 been. Um there's also fear of course, 24:22 - 24:25 you know, that the consumer is going to 24:24 - 24:26 turn on them and you know, that's not 24:25 - 24:28 the last thing that they want as well. 24:26 - 24:30 So the the prices of their pay has not 24:28 - 24:32 been as high as they could have been and 24:30 - 24:33 especially now as you mentioned with 24:32 - 24:36 that 90-day pause with China. I think 24:33 - 24:38 we're at 180 day pause at this point. So 24:36 - 24:40 we're looking toward Novemberish, 24:38 - 24:41 November 10th, I believe. Uh we'll see 24:40 - 24:43 what happens with uh with with the trade 24:41 - 24:45 deal. Hopefully we will get a deal, but 24:43 - 24:46 in the meantime that pause alone is 24:45 - 24:48 going to keep prices I think somewhat 24:46 - 24:50 more moderate than they could have been 24:48 - 24:52 if you know if um if we did not have 24:50 - 24:55 that extension. And do you think that 24:52 - 24:57 eventually tariffs will be a one-off or 24:55 - 24:59 do you think that this is going to be 24:57 - 25:02 something that sort of lingers more when 24:59 - 25:04 it comes to prices? 25:02 - 25:07 >> Oh, another great question. Um, I think 25:04 - 25:09 it would be one of the factors why 25:07 - 25:10 inflation will still be steadily 25:09 - 25:12 creeping a little bit higher. I mean, 25:10 - 25:14 it's not just tariffs, you know, we're 25:12 - 25:15 looking at tighter labor markets. I 25:14 - 25:17 mean, not as tight as they could have 25:15 - 25:19 been, but you know, when we've got so 25:17 - 25:21 many people being deported now, and 25:19 - 25:23 you've got, for example, um in the 25:21 - 25:25 agriculture um sector, 50% of the 25:23 - 25:27 workers there are undocumented, 20% are 25:25 - 25:29 undocumented for the construction 25:27 - 25:30 sector, 10% for leisure and hospitality. 25:29 - 25:32 When you have a lot fewer workers, you 25:30 - 25:34 know, that's going to mean that price is 25:32 - 25:35 going to start rising somewhat. You 25:34 - 25:37 know, you've got so many people, 25:35 - 25:39 millions of people who are reaching that 25:37 - 25:41 magic age of 65 as of last year. It's 25:39 - 25:43 like 4.1 million Americans. They called 25:41 - 25:45 it uh the silver tsunami. So many people 25:43 - 25:46 are going to be exiting the labor force. 25:45 - 25:48 So you're going to start start continue 25:46 - 25:50 to see a tightish more labor market 25:48 - 25:53 which will keep um pressure on wages 25:50 - 25:55 which could also put some pressure on um 25:53 - 25:56 uh on inflation as well. So that's one 25:55 - 25:59 of the one of the reasons why 25:56 - 26:01 >> and one of the themes that uh we saw 25:59 - 26:04 also during the earnings season was uh 26:01 - 26:06 the how the consumer is reacting to 26:04 - 26:10 everything and you had retailers talking 26:06 - 26:12 about consumers that wanted value wanted 26:10 - 26:14 um um things that were less expensive 26:12 - 26:17 perhaps trading down in in some 26:14 - 26:20 situations. So do you think that we are 26:17 - 26:23 in this sort of K-shaped economy? You 26:20 - 26:25 have the higher income uh folks that are 26:23 - 26:27 sort of driving the consumption forward 26:25 - 26:31 and then you have the lower income that 26:27 - 26:34 is uh getting squeezed basically uh by 26:31 - 26:36 prices by higher prices. 26:34 - 26:38 >> I think that is a an excellent way to 26:36 - 26:39 describe it and that that is the case 26:38 - 26:42 now and I think it has been for for a 26:39 - 26:45 little bit now. Um but as long as again 26:42 - 26:47 we continue to see uh wage growth um and 26:45 - 26:50 of course we're seeing uh slower job 26:47 - 26:52 growth as well but wages are are still 26:50 - 26:55 rising. We had a point6% increase in um 26:52 - 26:56 in in July alone which was a nice bounce 26:55 - 26:58 back from what we saw in the previous 26:56 - 27:00 month. So as long as we continue to see 26:58 - 27:02 wages increasing you know um um still 27:00 - 27:04 city jobs we still have what 7 million 27:02 - 27:07 job openings out there that need to be 27:04 - 27:08 filled. um and that will benefit all of 27:07 - 27:11 all Americans as well, you know, for 27:08 - 27:13 whatever um um echelons of the of the 27:11 - 27:14 incomeru structure that you're on. And 27:13 - 27:17 that will be good news. But we're also 27:14 - 27:19 seeing some more caution kick in. Um 27:17 - 27:21 again, just going by this July um 27:19 - 27:23 personal spending report, we saw pretty 27:21 - 27:25 much across the board increase in 27:23 - 27:26 spending except two areas which I 27:25 - 27:28 thought were kind of interesting that we 27:26 - 27:30 saw a pullback in uh recreational 27:28 - 27:32 services and dining out and hotel 27:30 - 27:34 accommodations and things like that. two 27:32 - 27:36 areas of discretionary spending which 27:34 - 27:37 are starting to see some pullback and 27:36 - 27:39 that indicates that even though the 27:37 - 27:40 consumer is still spending, they are 27:39 - 27:41 certainly becoming a lot more cautious 27:40 - 27:43 these days. 27:41 - 27:46 >> Cautious indeed. Thank you so much, 27:43 - 27:48 Jennifer. 27:46 - 27:50 And the US is ending a global tariff 27:48 - 27:52 rule known as dimminimous exemption. 27:50 - 27:55 This means imports valued at $800 or 27:52 - 27:57 less will no longer be able to come into 27:55 - 28:00 the US duty-free. Yahoo Finance's Ali 27:57 - 28:02 Canal spoke with Sonia Leinsky, a 28:00 - 28:04 partner at Alex Partners about the 28:02 - 28:06 change. So for consumers, I mean 28:04 - 28:08 consumers who are used to buying really 28:06 - 28:10 cheap apparel and other goods, they're 28:08 - 28:12 going to see a significant increase in 28:10 - 28:15 the cost of that. For retailers in the 28:12 - 28:17 US, however, it's actually can be seen 28:15 - 28:19 as a bit of an advantage. A lot of them 28:17 - 28:21 who are sh are selling similar goods, 28:19 - 28:22 they're importing in bulk, so they're 28:21 - 28:24 paying the duty on everything coming 28:22 - 28:27 into the US and then shipping from 28:24 - 28:29 distribution centers. If a competitor is 28:27 - 28:31 shipping direct with no duty, then the 28:29 - 28:33 retailer in the US is at a disadvantage. 28:31 - 28:36 Now, it's going to level the playing 28:33 - 28:38 field a little bit, even Forever 21 28:36 - 28:40 mentioned when they went bankrupt back 28:38 - 28:42 in March that this was the the 28:40 - 28:44 dimminimus was a a significant 28:42 - 28:46 contribution to why they were losing 28:44 - 28:47 market share because they were competing 28:46 - 28:49 directly with Shien. 28:47 - 28:51 >> So, for those that are in that same kind 28:49 - 28:53 of comp competitive pool, they actually 28:51 - 28:55 have more of the the benefit is is 28:53 - 28:57 equalized. You mentioned Shien and 28:55 - 28:59 Chinese retailers like Timu Shien they 28:57 - 29:02 lost their dimminimous relief back in 28:59 - 29:05 May. So this is not China, this is your 29:02 - 29:06 Europe. But uh what's the fallout been 29:05 - 29:08 there and what lessons could US and 29:06 - 29:09 European retailers take from that 29:08 - 29:11 experience? 29:09 - 29:13 >> Yeah. Well, I think I think we're going 29:11 - 29:14 to have to see you know pricing is 29:13 - 29:16 generally we think is going to go up 29:14 - 29:18 across the board. Uh consumers have 29:16 - 29:20 already started to see some of those 29:18 - 29:22 price increases in stores even this 29:20 - 29:24 summer, but we really expect them to hit 29:22 - 29:26 in the fall. 29:24 - 29:29 coming up. Our executive editor Brian 29:26 - 29:32 Sazy sits down with the CEO of GAP to 29:29 - 29:39 discuss quarterly earnings. Stay tuned. 29:32 - 29:41 [Music] 29:39 - 29:43 Marking down its fullear margin guidance 29:41 - 29:45 amid tariff pressures. The guidance 29:43 - 29:47 update overshadowing continued sales 29:45 - 29:49 success at the GAP division. Yahoo 29:47 - 29:52 Finance's Brian Sazi caught up with Gap 29:49 - 29:54 CEO Richard Dixon to get the why behind 29:52 - 29:55 the numbers. 29:54 - 29:58 >> We have a good story to tell with 29:55 - 30:00 Banana. It is um an ongoing progressive 29:58 - 30:03 story. We, you know, we've been focusing 30:00 - 30:06 on reestablishing the brand in the 30:03 - 30:09 premium lifestyle space and our quarter 30:06 - 30:12 performance at 4% comp really shows and 30:09 - 30:14 reflects the significant progress that 30:12 - 30:17 we made against that ambition. Um we've 30:14 - 30:20 tightened our assortment. We redefined 30:17 - 30:22 our product aesthetic. Uh we've enhanced 30:20 - 30:24 our marketing campaigns. You could see 30:22 - 30:26 it out there with storytelling even on 30:24 - 30:29 our sites. Uh and we've improved our 30:26 - 30:32 service levels. So this quarter was 30:29 - 30:35 meaningful improvement progress uh that 30:32 - 30:37 we made also in harmonizing 30:35 - 30:40 the look and the feel of both men's and 30:37 - 30:42 the women's uh product lines. It's 30:40 - 30:45 created greater alignment in design and 30:42 - 30:48 merchandising. uh and it's unified 30:45 - 30:50 storytelling. It's showing up in all of 30:48 - 30:53 our uh platforms as we talk about the 30:50 - 30:55 brand. We've seen particular strength in 30:53 - 30:58 the women's business on the bottoms 30:55 - 31:00 business which is an important category 30:58 - 31:02 in relation to wardrobe building and 31:00 - 31:04 it's been central to our strategy. As 31:02 - 31:07 you know, men's has been performing 31:04 - 31:09 well. Uh and I'm really pleased now to 31:07 - 31:11 see the women's business start to catch 31:09 - 31:14 up. uh we've done a lot of work on what 31:11 - 31:15 we'll call brand codes. Uh that is a 31:14 - 31:18 really important part of keeping a brand 31:15 - 31:20 unified. So lots of work, lots of 31:18 - 31:23 progress and with each quarter we're 31:20 - 31:25 starting to see clear signs that the 31:23 - 31:28 brand is really coming together. I think 31:25 - 31:31 our Q2 performance really demonstrates 31:28 - 31:33 meaningful traction as our playbook gets 31:31 - 31:35 executed and the reinvigoration starts 31:33 - 31:37 to really take hold. I'm very pleased 31:35 - 31:39 with the progress. gap sales. Uh, as I 31:37 - 31:41 mentioned, uh, seventh straight quarter 31:39 - 31:43 of positive comparable sales. This is an 31:41 - 31:45 interesting moment in retail realtor. 31:43 - 31:47 There's a lot of unique partnerships 31:45 - 31:49 going on between celebrities and retail 31:47 - 31:52 brands. Are you surprised those 31:49 - 31:55 partnerships are are cutting through 31:52 - 31:56 what is a challenged consumer? I mean, 31:55 - 31:58 clothing has gotten more expensive, food 31:56 - 31:59 has gotten more expensive, but here 31:58 - 32:01 somebody is going out, they're paying 31:59 - 32:03 for a new pair of jeans because they see 32:01 - 32:06 a celebrity wearing it on TV. 32:03 - 32:09 Well, f first of all, good brands are 32:06 - 32:11 good storytellers. Um, and GAP is 32:09 - 32:14 continuing to deliver strong and 32:11 - 32:16 consistent results because we're 32:14 - 32:18 executing really well against our 32:16 - 32:20 playbook with consistency. Brian, you're 32:18 - 32:23 calling it out. This is this is the 32:20 - 32:26 seventh consecutive quarter of positive 32:23 - 32:30 comps for GAP. Uh, 4% this quarter is on 32:26 - 32:32 top of a 3% comp last year. It is 32:30 - 32:35 consistency with a brand that is now 32:32 - 32:39 setting new records and it's reinforcing 32:35 - 32:41 our confidence that this brand has great 32:39 - 32:44 growth trajectory. The playbook is 32:41 - 32:46 working. Our latest example is better in 32:44 - 32:48 denim. I mean this campaign which 32:46 - 32:51 launched last week starring cat's eye. 32:48 - 32:55 It has driven recordbreaking response 32:51 - 32:57 for the brand. early reads. Uh I would 32:55 - 33:00 tell you Better and Denim is striking a 32:57 - 33:02 range of being one of the most iconic 33:00 - 33:05 brand campaigns out there. People aren't 33:02 - 33:07 just watching, they're actively joining 33:05 - 33:10 in suggesting this is not a cultural 33:07 - 33:13 conversation, it is a cultural takeover. 33:10 - 33:16 Uh this has all the elements of GAP 33:13 - 33:18 global phenomenon. And this is where and 33:16 - 33:22 we've talked about it. Fashion meets 33:18 - 33:24 entertainment. Fashion tamement is 33:22 - 33:26 essentially what's driving a lot of 33:24 - 33:28 consumer connectivity and the brands 33:26 - 33:31 that get that story right are seeing it 33:28 - 33:32 resonate and GAP is certainly getting it 33:31 - 33:34 right. 33:32 - 33:36 >> Last time we talked for earnings before 33:34 - 33:40 can there was you put out a range for 33:36 - 33:42 tariff uh tariff impact rude 250 to 300 33:40 - 33:43 million tariff impact for this year. I 33:42 - 33:45 didn't see that on the earnings release. 33:43 - 33:47 Is that still the number people should 33:45 - 33:48 you should use? Because, you know, just 33:47 - 33:50 crunching the numbers on your operating 33:48 - 33:52 margin guidance, it looks to be a little 33:50 - 33:54 bit lower than it was before. 33:52 - 33:56 >> Yeah. Well, first of all, Brian, I just 33:54 - 33:57 want to give a big shout out to our 33:56 - 34:00 team. They they've been driving 33:57 - 34:02 incredible focus and discipline as we 34:00 - 34:04 continue to deliver on our commitments. 34:02 - 34:07 Um, we're now thinking about tariffs 34:04 - 34:09 more in terms of net impact. That's also 34:07 - 34:11 because of the progress that we've been 34:09 - 34:14 making with our mitigation efforts. So 34:11 - 34:16 with with that in mind, we estimate a 34:14 - 34:19 net tariff impact of approximately 100 34:16 - 34:23 to 110 basis points to our operating 34:19 - 34:27 margin. That's about 150 to 175 million 34:23 - 34:30 to fiscal 2025 operating income. This 34:27 - 34:32 has already been embedded in our 34:30 - 34:35 guidance. Uh and as we pursue mitigation 34:32 - 34:37 plans, we remain focused on sustaining 34:35 - 34:39 the momentum and the market share gains 34:37 - 34:41 that our reinvigoration playbook is 34:39 - 34:44 driving. And look, these are these are 34:41 - 34:46 circumstances we are all dealing with. 34:44 - 34:48 But what we need to make sure uh 34:46 - 34:51 particularly in our portfolio is that we 34:48 - 34:53 are not compromising the long-term 34:51 - 34:55 integrity of our strategy and our 34:53 - 34:58 customer value proposition remains 34:55 - 35:01 intact. Again, incredibly proud of the 34:58 - 35:03 team's focus and discipline. And as we 35:01 - 35:06 pursue uh you know moving forward into 35:03 - 35:08 2026 and so forth, we believe we'll be 35:06 - 35:10 able to mitigate uh all of the tariff 35:08 - 35:12 impacts moving forward. 35:10 - 35:14 [Music] 35:12 - 35:16 >> Furniture stocks under pressure as 35:14 - 35:19 President Trump threatens new tariffs on 35:16 - 35:21 furniture imports. We're navigating how 35:19 - 35:23 to play the sector with the Yahoo 35:21 - 35:25 Finance Playbook. Joining me now is 35:23 - 35:27 Michael Lasser, US Hardline and 35:25 - 35:29 Broadline and food retail analyst at 35:27 - 35:31 UBS. Michael, thanks so much for joining 35:29 - 35:34 us. Uh, President Trump is threatening 35:31 - 35:36 new tariff imports on furniture. Are 35:34 - 35:38 tariffs finally going to be the catalyst 35:36 - 35:40 that brings furniture manufacturing back 35:38 - 35:42 to the US? And what does this really 35:40 - 35:44 mean for companies in your coverage 35:42 - 35:46 universe? 35:44 - 35:50 >> So, what it means for the companies in 35:46 - 35:53 this universe, including Wayfair, RH, 35:50 - 35:55 William Sonoma, and others is that the 35:53 - 35:57 the environment remains very uncertain 35:55 - 36:00 and very dynamic. It's difficult to 35:57 - 36:03 plan, manage, and organize when there's 36:00 - 36:05 so much uncertainty out there and the 36:03 - 36:10 rules of the game constantly are 36:05 - 36:13 changing. So, uh whether or not there is 36:10 - 36:15 more, uh furniture manufacturing brought 36:13 - 36:17 back to the US remains to be seen. 36:15 - 36:19 Obviously, if there's a significant 36:17 - 36:22 tariff that's implemented, it will make 36:19 - 36:25 it more economically feasible to do more 36:22 - 36:27 of that manufacturing in the US. But for 36:25 - 36:28 now, it remains to be seen. 36:27 - 36:30 >> And let's talk about some of the names 36:28 - 36:34 that you cover in this space. You have a 36:30 - 36:36 buy rating on uh Wayfair and what makes 36:34 - 36:38 you so bullish on this stock. How much 36:36 - 36:41 pricing power does Wayfair have to pass 36:38 - 36:44 on cost and will the momentum hold if 36:41 - 36:46 the tariffs force price hikes? 36:44 - 36:49 >> So remember, Wayfair is a marketplace 36:46 - 36:51 model where it connects sellers of home 36:49 - 36:53 rellated products to buyers of home 36:51 - 36:56 rellated products. 36:53 - 36:58 the sellers of those goods are the ones 36:56 - 37:02 who really set the price with some uh 36:58 - 37:05 perspective from Wayfair. But if there 37:02 - 37:07 are a certain set of sellers on that 37:05 - 37:10 marketplace that are raising prices, 37:07 - 37:13 buyers can go seek out lowerc cost 37:10 - 37:16 alternatives on that marketplace. So in 37:13 - 37:18 our view, this is a model that has more 37:16 - 37:21 flexibility to navigate through the 37:18 - 37:24 tariffs than others who, you know, have 37:21 - 37:27 um you either a vertically integrated or 37:24 - 37:28 a designoriented model that may have 37:27 - 37:30 less pricing power 37:28 - 37:32 >> and it's a very competitive space when 37:30 - 37:34 you're shopping for furniture. Um let's 37:32 - 37:36 talk for a second about another name 37:34 - 37:38 that you cover also RH. You mentioned 37:36 - 37:40 that by the end of the year about 52% of 37:38 - 37:43 its upholstered furniture will be 37:40 - 37:45 produced here in the US. Does reshoring 37:43 - 37:48 that reshoring theme bode well for RH 37:45 - 37:48 given that trend? 37:48 - 37:50 I 37:48 - 37:53 >> I think there's going to be a balance 37:50 - 37:56 between uh what the home furnishings 37:53 - 37:58 retailers and manufacturers can produce 37:56 - 38:00 in the United States and in other 37:58 - 38:02 markets. These companies are very 38:00 - 38:05 sophisticated. They're very smart. 38:02 - 38:09 They're going to go to wherever it costs 38:05 - 38:11 the least to produce the goods. you 38:09 - 38:12 yourself said that this is a very 38:11 - 38:14 competitive industry and and that's 38:12 - 38:17 absolutely right. The consumers uh 38:14 - 38:19 smart, astute and willing to shop around 38:17 - 38:21 to get a good deal. So that that puts 38:19 - 38:25 the burden on these manufacturers as 38:21 - 38:27 well as retailers to ensure that they're 38:25 - 38:29 uh offering the highest quality goods at 38:27 - 38:31 the lowest prices. 38:29 - 38:33 >> And William Sonoma, that's another name 38:31 - 38:36 that you also cover. Um you have a 38:33 - 38:39 neutral on that stock. What's uh what's 38:36 - 38:40 the story with William Sonoma? 38:39 - 38:42 >> William Sonoma is doing a really good 38:40 - 38:45 job. They're they're doing a good job of 38:42 - 38:48 being early to trends. For example, 38:45 - 38:51 William Sonoma um started to serve the 38:48 - 38:54 businessto business market before a lot 38:51 - 38:57 of other retailers began to look at that 38:54 - 39:01 segment. Uh similarly, it has really 38:57 - 39:03 captured the dorm room trend. I don't 39:01 - 39:06 know if you're familiar with this, but 39:03 - 39:08 uh there is an emerging trend as co as 39:06 - 39:10 um college students move into their 39:08 - 39:13 dorms to really bling out their dorm and 39:10 - 39:15 William Sonoma through its Pottery Barn, 39:13 - 39:17 West Elm, and other divisions has 39:15 - 39:20 benefited greatly from that. So, it's 39:17 - 39:22 been um quite astute in how it's been 39:20 - 39:23 navigating through it. And the only 39:22 - 39:25 thing that really keeps us holding 39:23 - 39:26 holding back is it trades at a pretty 39:25 - 39:28 good multiple at this point. 39:26 - 39:29 >> How times have changed? When I went to 39:28 - 39:31 college, it was just you get the bed 39:29 - 39:34 that's there and the dresser that's 39:31 - 39:36 there and it looks like it's an old uh 39:34 - 39:38 piece of furniture. But anyways, look, 39:36 - 39:40 um a lot of companies have shifted 39:38 - 39:42 manufacturing out of China and we've 39:40 - 39:43 heard this over and over again, but 39:42 - 39:45 they've also shifted some of the 39:43 - 39:48 manufacturing to um not just North 39:45 - 39:50 America, but a lot of them to other 39:48 - 39:52 Asian countries. And there are tariffs 39:50 - 39:55 on other countries. So, I mean, are they 39:52 - 39:57 really able to dodge tariffs if they're 39:55 - 40:00 going from place to place, yet you still 39:57 - 40:02 have the US with tariffs on uh some of 40:00 - 40:03 these countries? 40:02 - 40:06 >> These companies are using all of the 40:03 - 40:07 tools and levers at their disposal to 40:06 - 40:10 try and navigate through the tariffs. 40:07 - 40:12 That includes moving doicile production, 40:10 - 40:15 changing uh and re-engineering the 40:12 - 40:19 products to make them lower cost, um and 40:15 - 40:21 when in doubt, using price as a tool to 40:19 - 40:23 try and offset the cost. Remember, these 40:21 - 40:26 companies have a fiduciary 40:23 - 40:28 responsibility to maximize the value for 40:26 - 40:30 shareholders and they're not in the 40:28 - 40:32 business of just assuming exogenous 40:30 - 40:34 costs. So, they're going to look to try 40:32 - 40:35 and navigate through it any way they 40:34 - 40:36 can. 40:35 - 40:40 >> Thank you, Michael. 40:36 - 40:42 >> Thank you. Have a good day. 40:40 - 40:45 >> And it's time now for your earnings 40:42 - 40:47 watch to what to watch. Coming up, some 40:45 - 40:49 big retail names, Dollar Tree, Figma, 40:47 - 40:51 and Broadcom. Dollar Tree is set to 40:49 - 40:53 report earnings before the bell on 40:51 - 40:56 Wednesday, September 3rd. Analysts 40:53 - 40:57 expect $4.47 billion dollar in revenue 40:56 - 41:00 for the second quarter and adjusted 40:57 - 41:02 earnings per share of 46 cents. The 41:00 - 41:04 retailer completed the sale of its 41:02 - 41:08 Family Dollar business in the quarter. 41:04 - 41:10 Analysts at Telsey Advisory citing the 41:08 - 41:11 sale as a reason to be bullish ahead of 41:10 - 41:13 the earnings. The firm upgrading the 41:11 - 41:15 stock, saying the retailer's expansion 41:13 - 41:18 of items at different price points and 41:15 - 41:20 updated store formats could drive sales 41:18 - 41:22 growth and profits. Bigma is set to 41:20 - 41:24 report quarterly results on Wednesday, 41:22 - 41:27 September 3rd, after the close, just 41:24 - 41:29 over a month after its Blockbuster IPO. 41:27 - 41:32 The company has signaled revenue likely 41:29 - 41:34 grew 40% in the period, but analysts see 41:32 - 41:38 Figma's growth rate shrinking next year, 41:34 - 41:39 slowing to around 20%. RBC Capital is 41:38 - 41:42 looking for insights into how the 41:39 - 41:44 company's AI product impacts results. 41:42 - 41:45 And Broadcom reports third quarter 41:44 - 41:48 results after the bell on Thursday, 41:45 - 41:50 September 4th. Shares are up more than 41:48 - 41:55 20% over the past 3 months. Analysts 41:50 - 41:57 expect 15.8 billion in revenue and 1 uh 41:55 - 42:00 67 in adjusted earnings per share. 41:57 - 42:03 Analysts see revenue from the company's 42:00 - 42:06 AI business rising to 19 billion in 2025 42:03 - 42:08 and jumping to $30 billion next year. 42:06 - 42:10 Broadcom announced a cloud partnership 42:08 - 42:12 with Nvidia this week. Analysts are 42:10 - 42:17 bullish on the stock with 48 buys, four 42:12 - 42:18 holds, and only one sell rating. 42:17 - 42:20 And while we're wrapping up today's 42:18 - 42:22 Market Domination, don't go anywhere. 42:20 - 42:23 We've got you covered with all the 42:22 - 42:28 action following the closing bell. Stay 42:23 - 42:28 tuned for Market Domination Overtime.

Summary

This episode of Market Domination discusses the stock market's performance, with stocks falling from record highs following the release of consumer inflation data. The Dow was down 3/10 of a percent, the Nasdaq down over 1%, and the S&P 500 down 7/10 of a percent, though all were still showing gains for the month. The episode also covers the legal battle between President Trump and Fed Governor Lisa Cook, focusing on the definition of "for cause" removal. Experts weigh in on the Fed's potential interest rate decisions in September, considering cooling labor data and persistent inflation. The discussion also touches on the resilience of the US economy, the impact of tariffs, and consumer behavior in a K-shaped economy. Finally, the episode highlights trending tickers like Alibaba, Dell, and Craft Heinz, and previews upcoming earnings reports from Dollar Tree, Figma, and Broadcom.

Notes

  • Stocks fell from record highs on Friday due to updated consumer inflation data show

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