Stock market today: US stocks tumble after Meta’s reality check, soft GDP print | April 25, 2024
I’m Brad Smith alongside Shauna Smith
this is Yahoo finance’s Flagship show
the morning brief stock feature sharply
in the red this morning the 10year at
the highest level 10e yield at the
highest level that we’ve seen in 5
months this coming after the US economy
grew at its slower Pace than expected in
the first quarter the latest GDP printed
a Reviving talks of the fed’s ray cut
timing and exactly what that could
potentially look like when when will
they do it plus Tech also moving lower
meta disappointing on earnings and
dragging the NASDAQ lower with it the
next of The Magnificent 7 to report
Microsoft and alphabet both after the
Bell today so let’s get to it with the
three things that you need to know your
road map for today’s trading session
Yahoo finances andz foray Jared blicky
and pro super Manan have more meta’s big
spending plans shocking investors shares
of the social media Giant Sinking
following a softer Q2 sales Outlook CEO
Mark Zuckerberg urged investors to be
patient after meta revealed it will
spend more a aggressively on investments
in artificial intelligence meta is set
to wipe out $200 billion in market cap
at the open and the tech sector is under
pressure this morning the NASDAQ 100
down more than 1% with about half of
that decline coming from meta Tech
investors hoping to see a turnaround for
the sector with results from Microsoft
and alphabet after the markets closed
today outside of tech we have results
from two Airlines this morning Southwest
shares falling sharply after the company
posted a wider than expected loss and
warned that that Boeing’s airplane
delays will hurt growth in 2025 the
company now expects to receive only 2737
Max planes from Boeing this year much
less than the 46 they previously thought
but shares of American Airlines are
moving in the opposite direction the
company expects Q2 profit to come in
better than expected ahead of a busy
travel season
[Music]
well good morning everyone today’s top
story Futures are sinking after a
downbeat GDP report the 10year treasury
yield at its highest level in 5 months
let’s take a look at some of the wider
Market action that this is triggering
ahead of the opening cross as well here
as we’ve got a look at the Dow futures
and we’re getting over to some of the
yields here that we’re tracking this S&P
500 futures we’ll stay we’ll stay on the
futures for right now S&P 500 futures
right now you’re seeing that move lower
by 1.2% and the NASDAQ futures also down
by about 1 and a half% yeah we saw this
real move lower right after the GDP
print was released again 1.6% growth in
the first quarter well below what the
street was expecting and Brad you just
mentioned yields very quickly and taking
a look a closer look at some of the
movement that we’re seeing there at
least for futures when you take a look
at the pricing action obviously a huge
selloff there a lot of that tied to what
we learned about prices within this
print obviously higher prices clearly a
worrisome sign here for the market for
the economy and we’re seeing that
reaction in treasury yields we’re seeing
a spike in yield a drop in prices here
so something to keep an eye on and then
outside of that GDP print that’s not the
only thing driving Marcus this morning
we’re also seeing some action here when
it comes to Tech and that move to the
downside here that we’re seeing in the
broader markets a lot of that has to do
with that move lower that we’re seeing
in meta here this morning and take a
look at the extended action and look at
that a drop of 15% here ahead of the
open so we’re seeing that huge move to
the downside and of course the question
is what exactly this means for alphabet
and for Microsoft which are both set to
report here tonight after the Bell
absolutely all right well driving the
market action in the NASDAQ today that
disappointment from meta Shares are off
just about 15% here in the pre-market
action after the tech Giants big
spending plan spooked investors well
meta will likely wipe out $200 billion
dollar of its Market capap at the
opening bell for a deeper dive into the
company’s results we want to bring in
Brad Erikson RBC Capital Market Market
internet analyst Brad it’s great to have
you here so when you take a look at the
reaction that we’re seeing in shares
shares off just about 15% here in the
pre-market does that make sense to you
given the report that we read last
night uh yeah probably an overreaction
to be upfront about it but nice to see
you guys thanks for having me by the way
um I I think from a revenue standpoint
things are generally fine um they they
beat sside consensus actually for q1 um
and guided slightly ahead for Q Q2 I
think the investor side by side was
probably closer to an inline inline
report the issue was obviously cost
right they raised the operating expense
guidance modestly and then the capex was
the big one they they they raised that
12% 8% ahead of the street um to us
that’s maybe a bit more of an
appropriate magnitude so coming off of
the year of efficiency of course it was
celebrated given the stock price
reaction that we had seen out of the
gate in the first quarter of this year
now you get these results Brad what is
this year for the company the the year
of spending the year of
capex totally fair question you know as
we were talking to the CFO last night on
the Callback that I think it’s still
obviously maybe not the year of
efficiency is the quite right way to say
it but they’re still very very focused
on controlling headcount costs they kind
of called out that none of this increase
is really owed to to anything from that
perspective so I would say from that
perspective perspective year of
efficiency is still very much in play
this is capital
expenditure uh issue where they’re
having to spend a ton of money to build
uh infrastructure and obviously acquire
gpus to run their AI research and uh and
product development in the future BR
what do you see that ultimately the
impact that it’s going to have the Gen
AI Investments here what is that going
to do to engagement here in the longer
run what do you see it doing the impact
it’s going to have on revenue for years
to come yeah for sure we we think it’s a
kind of the next leg of you know
outperformance type growth relative to
the ad Market in general um it does a
few things right one is is that it it
helps them develop we call these
probabilistic models it basically means
that they’re figuring out what ads are
driving which conversions and then
they’re optimizing and and making those
uh campaigns perform better and better
um two you mentioned it uh it recommends
content right everyone knows about kind
of the Tik Tock uh killer algorithm has
worked on that a ton with Reals in the
last year and that’s going to continue
to get a lot better and cause people to
to spend more time on it and then third
is we call it kind of it’s in it has the
potential to increase users utility of
meta and specifically it’s things like
using a virtual assistant as kind of a a
research tool and a discovery tool on
the internet and also think about
businesses connecting with their
customers and new ways not just customer
service but just maintaining a much more
open line of communication with their
customers that’s adding actual utility
that’s Revenue growth for these guys so
there’s a lot of ways it contributes in
the future how accurate will those
engagements with an AI type of engine or
interface need to be in order for
businesses to feel comfortable
relinquishing that because they’ve
talked about how successful conversions
have been to drive purchase decisions
and now we’re talking about conversions
with relation to making sure that you’re
not losing out on the digital body
language or missing out on that and uh
ultimately Dam in or hindering a
customer relationship yep totally yeah I
think if you talk to most you know
companies or a lot of companies
Executives who have begun certainly the
ones that have a customer service or
support component of their business I
think a lot of them will tell you
they’re still very much a human
component they want to deliver the right
experience that’s on brand exactly what
their kind of mission as a company or
product is I don’t think any of that
changes I think where with that said I
think meta’s capability on this front
can fill in and and drive a lot of
efficiency there there are still going
to be a lot of sort of like trivial
black and white things that customers
are going to really appreciate a more
direct line to the company for even W
without missing out on a lot of the
value that I just mentioned digital body
language was the term you used I like
that I may steal that that I think
that’s still really important of course
right when we talk about what exactly
this could mean for some of the other
larger players within the group we’re
seeing a reaction in shares of alphabet
here this morning amongst a long list of
companies obviously that are taking a
hit following the results here from meta
does this signal anything just in terms
of a reality check maybe that we could
be getting from alphabet from Microsoft
after the Bell here this afternoon yeah
yeah just to be clear I won’t I won’t
comment on Microsoft because I don’t
cover the stock but for the other ones
certainly the the advertising names I
mean there’s two read throughs right one
is just on the digital ads Market um I
would say the fact that that meta met
expectations but didn’t exceed um
probably a a little bit of an could be a
little bit of a net negative there um
just that we know meta is outperforming
the digital ad Market um with Google
there’s data out there so investors kind
of know have a sense of what the results
are but I think for for everyone else
given that meta is outperforming um it
it could lean a little bit negative on
that front and then on the capital
expenditure side right that hits at the
cloud business and and the
infrastructure build um it’s it’s a
positive from that perspective all these
companies are are spending more the
issue of course is Google is both a
spender on that category as well as as a
uh as a beneficiary and so it kind of
works both ways so it kind of is a mixed
effect for Google from that perspective
Brad just lastly while we have you I
mean we’re looking at about a $75
pullback on shares of meta this morning
a lot of investors as they’re charting
their strategy for not just today’s
trading activity but looking out into
the Horizon trying to figure out if this
is a dip that they should buy in on what
within this report tells them that there
is something that they can kind of hang
their hat on if they choose to do so
yeah I think uh you know Mark on the
call talked about how they’ve been
through some pretty messy transitions
historically three in particular uh
mobile uh when they shifted uh to
stories as a new service and then most
recently when they shifted to expanded
into reals uh short form video and
they’ve always done it really
successfully but it’s always started out
with a period of investment and pretty
volatile downward reactions in the stock
and I think this one’s no different so
the question you got to ask is as you
think about are you know do you want to
buy the stock on this pullback or not do
you believe that AI is going to be this
transformational driver for this company
if you think that they can do a lot of
the things I was talking about earlier
buy the stock if you don’t I guess not
we we’re we’d be buying it Brad Erikson
RBC Capital markets internet analyst
Brad always a pleasure to grab some time
with you thanks so much thanks a lot
certainly IBM shares plunging this
morning nearing their worst single day
percent drop since 2021 the company
missed q1 Revenue expectations and
posted weak Consulting sales
disappointing investors the Miss is
overshadowing Big Blue’s plans to
acquire infrastructure Cloud company
Hashi Corp you’re taking a look at
shares down right now by about 10% and
it’s kind of like a bang bang thing here
sure it’s on the revenue side and a miss
there but in the bang bang play of
course that we talk about in baseball
all the time there’s also this other
activity that’s happening simultaneously
and that is the acquisition and
typically you would see an acquisition a
company making the acquisition shares
move lower investors trying to price in
exactly what the accretive nature of
that deal would look like and then at
the same time how much they’re shelling
out for hashy Corp a company that just
went public at the late end of I think
the last month in 2021 bang bang sums it
up right there IBM’s results the news of
the deal and the stock reaction all
summed up in just two words but let’s
talk a little bit more about why IBM is
acquir baring Hashi courp because Brian
sawser executive editor was on the phone
with IBM CFO Jim Kavanagh earlier here
today and he was talking about why this
is a tremendous in kavan’s words it’s a
tremendous strategic fit here to the new
IBM of a hybrid cloud and AI company so
talking about where exactly he sees the
direction of IBM here going forward they
have confirmed that this is the largest
deal that they have made since the deal
for red hat which was several years ago
at this point so again the extended
reaction here in or the pre-market
reaction in this stock here ahead of the
opening BT when it comes to IBM the fact
that shares are off 10% a lot of that
tied to how much maybe they are paying
for this deal not exactly huge surprise
a lot of times you do see that company
that is acquiring another one under a
bit of pressure here on the heels of
that news but he also went on to say
that he thinks it’s a major
transformational shift for IBM that’s
complimentary and that drives the next
leg of scale of red hat in IBM as a
hybrid Cloud platform so again talking
about what exactly this is going to
ultimately do here for IBM for the
business for the bottom line in years to
come as they do shift and focus more on
AI and that hybrid Cloud strategy going
forward at least Kavanagh making the
point that he views it and the executive
team obviously views it as a smart move
a strategic move for IBM at this
juncture two words that this is about
and there’s actually a hyphen in between
them open source and that’s what it
comes back to at the end of the day here
IBM leaning more into their open source
strategy they talked about that on the
earnings call after the earnings were
released saying that they’re going to be
leveraging the open open source
combination of AI models whether they’re
ibms or own models or open source models
such as llama from meta Mixr from MRA as
well which sounds like a rapper name I
don’t know but anyway all they can do
here is think about deploying these AI
models across multiple environments and
open source is really what Hashi Corp
also helps out with on the open source
project side with the community of users
that they have they talked about that in
their S1 when they won public as well so
kind of a collaboration of the open
source efforts there yeah not also a lot
of the focus here at least when it comes
to the results was ultimately on the
fact that we saw unchanged sales here
for at least the Consulting side of the
business overall Revenue had increased
just about 1% 14.5 billion from a year
ago free cash flow was 1.9 billion that
was actually an improvement from the
levels that we saw a year ago there but
again we’re seeing some downward
pressure on the stock a lot of that
likely tied to this deal absolutely well
let’s go from the cloud to the skies
even further I guess A Tale of Two
Airline results this morning Southwest
shares plunging after saying now expects
to get 20737 Max 8 planes from Boeing in
2024 that’s down from the previous 46
that they anticipated the airline also
saying that they expect Revenue to grow
in the high single digits for 2024 that
is lower than the previous expectations
of double digit growth you’re taking a
look at shares right now they were down
pre-market here by about 8% ahead of the
trade and we’re continuing to watch that
very closely I think going forward here
and it comes back to actually something
that we spoke with Delta CEO at Bastion
about and they had a profitable quarter
Delta did and he predicted made this
statement when I spoke with him about
this most recent earnings period and
what he anticipated from the rest of the
airline industry let’s play that real
quick well that’s uh that’s the reason
we were able to generate the uh the
profit in the first quarter we expect
we’ll be the only if you believe the
analyst the only Airline that’s
profitable only major airline is
profitable in the first quarter so hash
was right um and at the end of the day I
think it really comes back to a few
things number one it’s the corporate
travel where corporate travel and the
margins that that continues to provide
Delta versus some of the other
competitors out there where that is
ultimately benefiting them and then
additionally it is the aircraft uh
capacity as well and how that’s
impacting capacity versus where they
were expecting to take delivery for some
of the other major airlines we’ve heard
from yeah and Bob Jordan in this
earnings releas saying that he cited
significant challenges this year and
next on those reduced deliveries here
from Boeing we talked about the impact
that is having on United we talked about
the impact that it’s having on a number
of the larger Airlines here obviously
like you were just talking about so
clearly this is the latest Southwest
citing that as a huge issue and
something that’s going to restrict
Revenue here at least for the immediate
future right let’s take a look at
another airline here that’s also moving
but this time in the opposite direction
American Airline shares on the move to
the upside climbing after the company
said that it expects current quarter
profit to be better than expected you’re
looking at a gain of just about 2% and
Brad even going back to what you were
just saying a minute ago when it comes
to the rebound in corporate travel and
business travel American Airlines
calling that out as a real bullish
assign here for the quarter also the
expectations of a strong demand in the
upcomer summer travel season very
similar to what we heard from United
very similar to what we heard from Ed
Bastion in your conversation uh there in
terms of what some of the other large
domestic airlines are expecting here in
terms of demand coming up over the next
several months I also highlighted uh
some of that robust travel not only here
domes Ally but also what they’re seeing
in terms of interest for international
routes this summer so I think this all
points back to what we have been talking
about what exactly the prices are going
to potentially look like here this
summer and when you’ve got demand couple
that with the fact that many of these
airlines are restricted in terms of
their flight routes they’re not able to
add the number of flights or add the
number of planes in the skies that they
initially had planned could lead to
higher prices eventually yeah you know I
only highlighted one thing within this
American Airlines earnings report
usually I mean my entire thing is like
just look at that the whole front page
highlighted but anyway the only thing
that I highlighted for this one is
really coming down to the forecast and
what they’re forecasting here going
forward something that you heard across
the airline space here even as you think
about what United is saying and it
really comes back to what you were
mentioning a moment ago the demand for
this current quarter expected to remain
high expected to remain elevated and
then additionally here talking about
where their operation they’re expecting
the best operational results in Revenue
uh for that quarter and so we’ll see EX
exactly how they’re able to deliver upon
that at a time where they’re going to be
navigating some of the broader kind of
aircraft and Fleet that they do have I
think the fleet is something to pay
attention to as we go on throughout the
rest of this year this means more
maintenance if they’re unable to take
more aircraft you’ve got more
circulation of those you might even have
to see some leasing also enter into the
expense uh expense mix equation as well
all right well we have so much to get to
here just this is just a taste of what
is up ahead for the next hour we’ve got
more on the earnings front coming up on
the morning brief first just how much
are people willing to pay for burritos
well more than you might think Chipotle
Shing off higher prices in its first
quarter and delivering a huge earnings
beat we are going to speak with the
company’s CFO Jack Hartung later this
hour and coming up the theme of the day
is AI shares of service now sliding
despite a beat in the first quarter the
company tting new AI Tools in its report
service now CFO GM masuno is going to
join us in just a bit plus shares of
Microsoft fact rubric will begin
charting on the New York Stock Exchange
today our executive editor Brian sa is
going to speak with their CEO on the
closing bell show Market domination you
won’t want to miss that came right here
on the morning brief
[Music]
[Music]
[Music]
[Music]
[Music]
p
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
this morning’s GDP report showed the US
economy growing by
1.6% that’s well weaker than the 2 and 1
half% that was expected but with
consumer spending remaining strong what
does that mean for inflationary
pressures and potential rate Cuts
joining us now to discuss former Federal
Reserve former Reserve board econ
Economist Claudia Claudia great to have
you here on the program with us you know
maybe I’m just flabbergasted trying to
figure out what this print means for the
fed and how it changes the tenor of
their conversation at the next meeting
if at
all the going to look at data big
picture right so one number particularly
thinking about oh it was a surprise on
what the markets thought that is not you
know enough to really move their
thinking and in particular and you
mentioned this consumer spending looks
really good under the hood business
fixed investment so set aside those
inventories the investment business
making are really good considering
interest rates are a lot higher and so
that’s what we think of is kind of the
underlying Pace the where do we think
GDP is is headed today we got hit by
Imports had a bigger drag that’s a very
noisy series inventories were a little
in the play these are not things that
should change our view on the economy
it’s been strong it continues the
underlying Pace continues to be strong
that’s not bad for the FED right we had
a strong Pace last year inflation came
down frankly the FED thinks it can lean
on a strong economy a little bit get it
some time to get comfortable with
inflation Claudia when you take a look
at this number when you take a look at
the fact that maybe PC is going to
surprise here to the upside if we do see
any sort of elevated uh print here
tomorrow before the Bell from pce what
does that signal just in terms of what
the FED is then likely to do how far out
could we potentially be pushing that
First Rate
cut everyone said and absolutely the FED
Jay Powell when he’s been out talking
towards the end of last year you know
there had been some real progress last
year but it was going to be a bumpy ride
well we got our bumpy ride in the first
quarter
and the progress really slowed there has
been progress it’s just been really slow
the target index for them the personal
consumption expenditure index has looked
a little better but still it’s slow they
want to build confidence confidence
takes time so we are pushing out I think
where the FED probably will start their
cutting and yet we are set up for them
to cut this year and probably more than
once but you know what they’re going to
be driven by the data and there’s a lot
of data we don’t have yet yeah Claudia
that’s a good point and I want to bring
up the move that we’re seeing the action
that we’re seeing in the yield market
today because that bump higher and
yields obviously tied to that pricing a
data that we’re getting in this GDP
print but you say that it is likely that
the FED is still going to cut before the
end of the year what do you think then
is going to what does the FED need to
see in order to be confident to make
that first cut and when we talk about
the Improvement I would guess that
you’re expecting then to see on the
inflation front where do you see
inflation then trending between now and
year
end there is a very clear path given
what we know now there is a clear path
for inflation to slow and in all
likelihood we’re going to see a pickup
in that disinflation maybe not as much
as last year but we’re going to get
moving the fed’s Target price index is
within a percentage point less than a
percentage point of the 2% Target and
they have told us over and over again
and it is good practice they will not
wait until 2 % to cut so we got to see
more progress to 2% things can’t stall
out and goodness they cannot inflation
pick up again the fed’s going to be
driven by what it sees happening in the
world and yet we know things like the
shelter prices the owner’s equivalent
rent we got more data on the rent people
are like the contracts they’re signing
now have really come down so it’s in
train we we see it but we have gotten
surprised and there could be other
surprises down the road so I understand
why mark markets are having a hard time
getting a read on the data and yet we
should remember that the FED doesn’t
wake up look at One release and go wow
we have to totally change our thinking
where do you think the the data
especially on that housing front needs
to continue to Trend towards in order
for the FED to feel confident with its
cut decision when they do make that the
FED is looking for things back to normal
which doesn’t mean it has to look
exactly like before the pandemic say in
terms of inflation but if you at the
pieces of the quote unquote excess
inflation so like what pieces of
spending are running above the inflation
before the pandemic the leader is the
shelter particularly the owner’s
equivalent rent we have every reason to
believe we’re pointed in the right
direction of that slowing do we know how
much or how fast no I mean it’s coming
much slower than what we had expected
the other piece I mean there are some
other pieces of services and some of
it’s pretty eclectic and Echoes of covid
I me in the Consumer Price Index motor
vehicle insurance is another big excess
that isn’t as much in the pce but it
just shows we’ve got we have far fewer
enemies in the fight on inflation than
we Claudia we really appreciate your
Insight especially on a day like today
thanks so much for hopping on early with
us here in Yahoo finance Claudia Assam
Assam Consulting
founder thank you well we are just
minutes away from the opening bell on
Wall Street we’re going to take a look
at some of the biggest movers that we
are seeing here in pre-market action
again a huge sell off that’s going on
across the board when it comes to the
major averages that’s tied to that
weaker than expected GDP GDP print also
within that print we saw a spike here in
pricing so exactly what that means for
equities we’re going to break it all
down when we come back
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
10 seconds away from the opening cross
here this morning yes it is Friday’s Eve
Thursday and let’s get this quick check
of the market sponsored by tasty trade
as of right now you’re seeing the
opening cross play out at the NYSC and
the NASDAQ at the same time that we’re
tracking us major averages poised to
begin the day down here so let’s see
exactly where things open up as of right
now it’s looking like the Dow opens
lower by and I’m squinting to see what
that number is 1.4% here is the initial
read that we get at the opening cross
the S&P 500 that down by about 1.3% and
the NASDAQ on your screen there
calibrating right now that was down
pre-market the future is pointing lower
and indeed as we get that first official
trade here down 2% right now to start
the day yeah bad when you take a look at
the losses here a lot of that really
accelerating obviously we saw Tech Under
Pressure early in the pre-market that
was on the heels of meta’s a
disappointing report that we got after
the Bell last night and we saw those
losses start to accelerate here we saw
deceleration to the downside as after we
got that GDP print that showed growth
was much weaker than the tree had
anticipated also the fact that pricing
surging here in the first quarter at
least relative to expectations and also
relative to what we saw in the prior
quarter so we saw the spike in yields
but let’s take a look at a lot of the
action that we’re seeing on an intraday
basis when it comes to those larger Tech
names because we are seeing a tremendous
amount of selling action you don’t have
to look any further than the losses that
we’re seeing in meta here at the open
off nearly
15% and that is dragging a lot of those
larger cap Tech names with it we’re
getting Google we are getting Microsoft
after the Bell here today you’re looking
at 4% a loss here for alphabet at the
open you’re looking at a nearly 4% loss
here for Microsoft and that’s not all
you’ve got a name like Amazon also under
a tremendous amount of pressure so we’re
seeing the street take a look at meta’s
results so far and asking themselves
whether or not this is almost a reality
check to some of the other Tech names
that we are going to be hearing from
Over the coming days and exactly what
that could ultimately do to that
Market’s momentum here whether or not
it’s going to put maybe some pressure on
the larger uh Market space here going
forward absolutely well let’s talk about
that larger market space here too Yahoo
finance reporter Jared blicky taking a
look at what’s trending on Yahoo
finance’s trending ticker page Jared
tell us you got some green for us man
you know I might have a little green I
was checking Altria uh before the market
but unfortunately uh they their report
is being called uninspiring by City And
maybe we can get that quote behind me
but here’s city which r stock and
neutral we do not expect much change to
consensus EPS estimates and there it’s
up 1% that is some green we do not
expect much uh change to consensus EPS
estimates and with no Catalyst coming
out of the print we expect the shares to
be flat after this uninspiring report
now here’s Jeff with a buy saying it is
hard to get excited about much in these
numbers today and now if we can move on
to Caterpillar I’m afraid we got some
red there that’s going to be be down
about 6 to 8% as it was there you go
about 67 % as it was in the premarket
and this is joining meta uh in just kind
of leading the market down Industrials
caterpillar is the biggest company in
that group and they’re concerns that
they’re showing weakness outside of
America North America also they forecast
second quarter sales to be lower than a
year earlier and finally I got to hit
Southwest Airlines this is another uh
negative print here it looks like that’s
down almost 10% um that would be the
worst in about a couple months here I
think you have to go back to march to
see something but they reported an
adjusted loss per share for the first
quarter of 36 Cents that was wider than
consensus City rates it with a neutral
but they had concerns as well so lots of
I would say more more earnings
disappointments than good news here
before uh before the I guess five minute
Mark in the open all right Terry thanks
so much for breaking that down for us
again lots of R across the screen today
we got to talk a little bit more about
that GDP print coming in much weaker
than expected
1.6% making the feds Pat of rate cuts a
bit more murky potentially here now this
report set a major indices down and
we’re also seeing a spike in yields a
lot of that being attributed to the rise
that we saw in prices within this GDP
print so here to break it all down what
exactly this means for the market we’ve
got Ryan Dietrich Carson group’s a chief
Market strategist here with us Ryan it’s
great to see you so we’re looking at
weaker underlying growth when you take a
look at this GDP print we’re also
looking at higher prices so what exactly
does this signal maybe to the possib
that we could see more downward pressure
on the broader markets here at least in
the short term yeah let’s start with the
markets and thanks for having me back
good morning everyone you know let’s not
forget we were just up 30% the past year
on a total return basis for the S&P 500
up 27% 100 trading days off that late
October low when you look at some Jared
thank you Jared he actually shared one
of my charts in your morning uh the
daily briefing email that went out when
you have a big start to a year in
election year you tend to have some
indigestion right now your average
election year from now until about
Memorial Day maybe even a little bit
early June tends to be a little weak so
after that rally we think this is kind
of normal now to get to the GDP I love
the conversations to have with Claudia
because again yes the headline looks
weak 1.6% at that we were about to have
seven in a row above 2% we missed that
obviously unless it gets revised higher
we’ll have to wait and see on that but
if you take out inventories and exports
actually GDP was 2.8% if you take out
government spending which is a little
bit weaker is 3.1% what’s that tell us
well final demand is still really strong
so we can get into the inflation part of
it next but overall we’re not too overly
concerned the econom is just slowing
down because it sure doesn’t look that
way when you kind of break it down a
little bit more so if we do get a
revision and I guess that’s what the
markets are trying to figure out should
we be banking on a revision or should we
just be taking this as it is on Headline
and then moving forward with thinking
about whether or not the FED because in
a in a bad news is good news then that
would say hey this bad GDP print should
actually see the markets moving higher
because of the prospect for a potential
cut here that’s not what we’re seeing
though no you’re you’re right Brad I
think we just move forward right I mean
we we can slice and dice is all we want
we know the Market’s a forward-looking
mechanism I mean again why are Futures
down well we know right caterpillar Jed
just talked about obviously meta and
then if you peel back the onion a little
bit you’ve got higher prices now that’s
monthly pce tomorrow I’m sorry quarterly
quarterly pce tomorrow we do get the
monthly PC maybe it’s giving us a clue
maybe it’s not I mean similar what
Claudia said before I came on we’re
optimistic we’re trending the right way
right we’ve got low unit um labor costs
we’ve got higher productivity wages are
strong but also coming back so yes
inflation is not perfect it is a bumpy
ride we’re still optimistic though guys
that we could have you know potentially
two maybe even three Cuts still this
year I know we need better inflation
data but who knows it might it might
start tomorrow so let’s not get too
overly um you know too overly worried
here after this one data print three
Cuts not many on the street are still
saying that at this point but ran why
why we have you let’s talk about
earnings because we’ve got meta really
moving the markets here this morning
we’re seeing this selloff here in Tech
when you take a look at meta’s results
does this signal any worrisome signs
here for what could what we could see
for the rest of big Tech this earning
season yeah they’re one of the first big
ones and obviously it’s not so good I
guess Tesla but they’re not really Tech
are they I guess but I mean I mean you
think about it I mean what they say well
things were strong they made money
Revenue was strong it’s all because
they’re going to continue to spend and
they shocked the street how much you’re
spending so you know that’s that’s a
little oneoff we we’ll see I mean it’s
hard to just say one company matters for
everybody obviously and in big picture
and I know caterpillar is lower right
but this year we came into this year
more neutral Tech after the rally it had
we you know that’s that’s a that’s
pricey what’s pricey in the market well
the big cap Tech we’re pricey so we’re
more neutral as areas we think
Industrials and financials we added some
industrial financials in the models we
run for our Carson Partners a few weeks
ago and again I know caterpillars weak
what they had to say but there’s still
some uh some positives out there in our
opinion on the global economic front
that that suggests the cyclicals will
probably do a little bit better I’m not
saying money flows out of tech into
cyclicals maybe a little bit we you
think those those areas going to hold up
better the rest of this year I’m sure
Tesla would take issue with you calling
them not a a tech company and well
they’re in consumer discretionary I me
that they’re in consumer discretionary
don’t don’t yell at me Elon you’re right
you’re right yeah I know it’s it’s Elon
that would say well hold up we’re
computer on Wheels and we’ve got junk in
the front Point all right thanks so much
Ryan Dietrich who is the Carson group
Chief Market strategist thanks so much
for taking the time here on day thank
you absolutely Ford pairing back its
gains after its commercial Ford Pro
business saw Revenue jump 36% from a
year ago offsetting the 1 billion loss
that it saw from its EV unit Yahoo
finances Pro super Manan joins us now
with the details here Pro you have just
been clamoring waiting to talk about
this with us you’ve been on set for like
three blocks at this juncture tell us
about Ford mentally preparing myself
Brian Sai is here also this is a big
All-Star crew here but yeah strong
earnings that’s the kind of big picture
EV still the drag you know Revenue up 3%
nearly $43 billion that really surprised
the street but Ford Pro like you said
really the star here 18 billion Revenue
three billion in ebit basically they’re
overcompensating for that loss in in in
in EVs and and for actually their
Outlook they they boosted some of their
Outlook metrics but they only said that
their profit Outlook would be the high
end of its range of 10 to 12 billion
part of that is the eeve business that
Jim Farley called it drag on the call
last night but then also a slower than
expected roll out of the F-150 the brand
new F-150 was sort of collecting on lots
of dealer Lots couldn’t they couldn’t
ship it for various reasons so fing
that’s coming out but that’s going to
affect their profitability for this year
how long ises that expect is it just
till the end of the year and when you
talk about that slow revamp because Jim
fry did call that out on the ARs call
the the slower ramp I should say with
for the allnew Ford F-150 when is that
going to have a more material impact
here on Revenue in the future they said
they’re already shipping to dealers
they’re seeing High uptake from
customers so it’ll be they they’ll catch
up but not as much as they thought they
would before the year started so it’s
going to be a little bit of a drag maybe
they’ll maybe they’ll up it maybe
they’ll see strong results in the up it
then after Q2 but we’ll see all right PR
thanks so much for breaking that down
for us again for shairs on the move here
following results well Microsoft back
rubric is gearing up to make its public
debut on the New York Stock Exchange you
just saw us a few saw them a few moments
ago ringing the opening bell for the
trading Daye today now the data
management software company pricing it
shares at $32 a share that was above the
initial expected range under the ticker
rbrk here to break it all down what
investors need to know ahead of the
latest big Tech IPO Yahoo finances
executive editor Bri sazy s what should
we expect well this is a very simple one
to explain they sell cyber security that
protects Big Data what else do you guys
need no really I we got a jamack show
need to know this is another one of
those AI plays that of course it’s a
different company uh Reddit which came
public got a great reception a couple
weeks ago this is a tough day for rubric
to come to Market also a tough company
to understand full disclosure I read
this perspectiv numerous times I do
think I know what they do now which is
good but I think that is the bigger
Point here with rubric and a lot of
plays that will come to Market like this
probably later this year they have a lot
of I think work to do with Wall Street
to get people to understand what they do
why it’s important the size of the
market and then ultimately how they will
make money rubric points out in its
perspectives they’ve never made money
since their Inception in 2014 they lost
a couple hundred million dollars for the
12 months ended uh January 31st uh 2024
so a lot to prove inside of a growing
Market of course as we uh explode into
the AI a decade
uh there’s going to be a big importance
of protecting this new technology and
cyber security companies like a rubric
like a cloud flare uh those are the
companies that should ultimately uh
capitalize but really a big part of the
story is in fact the co-founder and CEO
uh bip El Cena uh who I’ll be talking
later today down at the New York Stock
Exchange with um he has just a
phenomenal story longtime venture
capitalist uh really points out in his
perspecti this that he came from poverty
in India uh and he came over here and
just made it happen he founded rubric
out of coffee shops next to the offices
of Google and YouTube in 2014 so he’s
got a great success success story uh a
lot of investors I talked to in the
leadup to this one in particular that is
an early investor uh in rubric uh you’re
backing someone like this and the team
that he has been able to build since
2014 so yes tough business to understand
not a tough story to understand in the
CEO who’s just really truly made it
happen and congrats to him yeah
absolutely he says maximal thinking is
how he lifted himself out of poverty
built a life in America and created
rubric with his co-founders real deal
Real Deal all right looking forward to
that conversation Brian thanks so much
for joining us Brian’s going to stick
around actually because we’ve got much
more after this break plus let’s do a
market uh check here quick check of the
markets as we’re taking a look at the
Dow the S&P 500 and the Nasdaq all down
across the board the NASDAQ the biggest
decliner on a percentage basis by about
2% right now we’ll be right back
[Music]
[Music]
[Music]
[Music]
[Music]
a
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
tootle posting strong results for the
first quarter the burrito chains at same
store sales jumping 7% from a year ago
foot traffic climbing over 5% we’re
looking at gains in the stock of just
around 4 and a half% the quarter also
getting positive feedback from the
street Oppenheimer Piper Sandler Barkley
just some of the analysts here raising
their price Targets on the stock on the
heals of these results we want to bring
in Jack Hartung Chipotle’s CFO joining
us now alongside Yahoo finance’s
executive editor Brian sizy great to
speak with both of you jack let’s talk
about this once again very strong
quarter here for Chipotle I’m curious
what do you tribute the strength to and
what what are your results do you think
really tell us about the state of the
consumer right now yeah I mean first of
all our Core Business is really strong
right now and I have to hand it to our
field teams our restaurant managers our
crews they’ve done a Fant fantastic job
of making sure our restaurants are fully
staffed they’ve hired and trained
terrific employees our turnover is at
historic low and they’re executing our
teams are executing throughput at the
highest levels we’ve seen in a very very
very long time and when we execute great
throughput our customers love the idea
they can come into Chipotle um they’ll
be served fast they can customize their
meal um it’s very very affordable and
it’s the kind of food that they really
want to eat but it all comes down to
execution I think in terms of the
customer when we look at our customer
base um our customers are very healthy
when we look at our income uh cohorts
from low medium and high they’re
spending at the same level they’re
increasing their purchase their visits
and their their purchase uh you know uh
habits when they come to Chipotle at the
same level for the low income as they do
at the high I know there’s other
patterns out there uh but so far I think
chip because Chipotle is Affordable I
think our customers are still able tojoy
the meal that they love at poing Jack
it’s Brian here good good to see you so
look the the Market’s tanking today I
it’s a bad day for the markets really
because GDP is is slowing down it
suggests the economy might be entering
some type of soft patch are you
concerned that the pace of growth that
you saw in the first quarter and looks
like it continued into April that that
slows in coming quarters yeah you know
we’re going to watch the health of our
consumer very very closely so far so
good there’s not much we can do if
there’s going to be a macro event
meaning consumer confidence and consumer
spending declines one thing Brian that
though we’ve seen in the past when
consumers are under pressure If we’re
executing at a high level customers tend
to keep Chipotle in their budget longer
and than they will keep other dining
experien and and other um you know
things that they want to do um they will
keep the Chipotle in their budget for a
longer period of time we like the
underlying trends that we saw in the
first quarter they’ve continued into
April so far um and we’re just going to
keep motoring and you know our our view
is if we keep executing at a high level
customers will keep visiting uh Jack
regarding the the California wage
increases now 20 $20 an hour took price
increases that came at a time where the
economy was was doing good you know but
like we’re talking about here the
economy might be slowing down I how big
a pickle it would a Chipotle be in but
also the restaurant industry at large so
you have now these have these high
structural wages in the key Market of
California and the economy is slowing
down and then maybe you can’t push
through more price increases yeah you
know from a macro standpoint in
California this is going to put another
layer of inflation on top of inflation
that’s been really there for the last
two or three years we know that
generally consumer are getting inflation
warry and so we’re going to watch that
very very closely U one advantage we
have Brian is that our prices in
California have frankly lagged the rest
of the country considering California is
a high cost of doing business but our
prices in California before this last
action was similar to what the average
price throughout the country would be so
we have a value and pricing Advantage
going into this uh we did have to take a
six to 7% uh you know increase of so far
we’ve not seen any resistance but there
could be this kind of macro across the
state
impact in consumer confidence and
consumer spending it is another layer of
inflation on top of inflation that
people are you know frankly they’re
they’re they’re ready to move on from it
you know Jack uh earlier when we were
talking about Chipotle’s earnings before
you came on sea had mentioned clearly
people are just willing to pay whatever
for these burritos and it felt a little
bit like a personal attack because uh
it’s me uh I keep buying into this
experience and I think a lot of
consumers are also looking for what that
next big menu Innovation that drives
demand is going to be from Chipotle what
is that what’s on the
docket yeah so we’re still in this
Cadence and we like this Cadence of
having one to to uh limited time
offerings during the year uh we’re still
running Chicken al pastor right now our
customers love Chicken al pastor and so
as soon as we announced that we were
bringing it back customers came in right
away was a great response uh that will
sunset uh probably sometime in the third
quarter we haven’t announced what we’re
going to do in the fourth quarter uh but
we’re going to come up with something to
keep our customers excited about what
our chefs are cooking in the kitchen
Jack when it comes to AI new automation
implementation of those plans how was
that going and how do you see that
ultimately impacting Chipotle’s bottom
line here in the next couple of quarters
yeah it’s early days we’re starting to
experiment with Gathering customer data
C Gathering what are the visit habits
what are the buying habits when they do
visit um and using AI to help us
understand when customers habits are
changing is there some action we can
take like if if somebody is starting to
visit less or if they’re starting to
spend less when they come um if that
happens what can we do in terms of
making an offer that is relevant to that
customer we’re very very early days uh I
think we’re you know we’re very excited
about where AI can go but we’re going to
take this a step at a time we’re not
going to get ahead of our ahead of
ourselves on this one Jack what’s the
water cooler Talk inside of Chipotle
headquarters when you see a journal
story a couple days days ago saying that
your Ro results are being driven by by
muscle building powerlifters I mean I’m
not a powerlifter I’m in the gym all the
time I usually do go to poly after I
work out I mean I’m I’m okay with it I
already pumped iron and burned a th
calories that’s awesome I think you
should have two burritos today uh so so
listen usual order Jack actually is my
usual
order we we we love that listen I I
don’t know that we use the same language
that was used in that article but we
love the idea that people who are fit
people who are athletic and people that
really uh seriously take care their body
Chipotle is their go-to place they can
they know they can get the right amount
of protein the right amount of car they
can get exactly the diet we get contact
all the time by you know not just
amateur athletes but professional
athletes and you know college division
one um athlet that they love Chipotle
because it fits in with their workout
routine and we think we think that’s
fantastic yeah I’m trying my best Jack
just to keep up with Sai but anyway just
lastly while we have you here we’re
thinking about next week and the Trove
of employment situation data that’s
going to be coming out uh and the
workplace is really being redefined I’m
wondering how’s chippy doing is
especially knowing the type of
productivity that you expect to see from
Investments like that yeah so chippy is
still in our lab and we’ve got some
challenges with chippy uh frankly we’ve
got a couple other innovations that we
think are likely to uh move into our
restaurant sooner uh than chippy one is
the avocado uh and that would cut core
and peel avocados that’s a very timec
consuming uh task that our uh restaurant
teams do uh we make our guac guacamole
fresh every single morning our teams
right now are making guacamole in our
3400 restaurants so that’s a task that
we do think that we can uh make make
easier and more pleasant for our teams
and the other one is uh hyphen which is
an automated uh digital make line um
about 37 38% of our business is on that
uh that digital make line and this will
automate at least the making of the
bowls it won’t roll the burritos that’s
another thing that business really tends
to come in concentrated periods as well
and so that would also relieve kind of a
choke point in a restaurant those are
two things that we expect will go into
at least one restaurant this year we’ll
see how it works in a real restaurants
doing great in the lab so far for the
next step would be to get it in the
restaurant and have our crews really
interact with it when they’re serving
customers all right we’re getting the
group order fired up jackart decline
push-up here there we go I’m ready to go
let’s go Jack har who is the Chipotle
CFO alongside yaho finances executive
vedor Brian sazy thanks so much thank
you guys coming up everyone this
morning’s GDP report continues to show
signs of an economic boom somewhat here
what could it mean for inflation of
course you’ve got to back out a few
things in order to still see that boom
we’ll speak with an expert on the other
side
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
a
[Music]
[Music]
[Music]
[Music]
now
[Music]
[Music]
[Music]
let’s take a look at this LOF that’s
happening right now on Wall Street we
are 30 minutes into the trading day and
you’re looking at the dowal dropping 650
55 points right now you’ve got the S&B
also amount under a tremendous amount of
pressure off just about 1 and a half%
taking a look at the intraday chart you
can see we are right around the lows of
the session the NASDAQ also under
tremendous amount of pressure here this
morning off just about 2% a couple of
things that are going on one that GDP
Prim putting some pressure on the
broader market and that’s on the heels
of meta’s weaker than expected earnings
results after the Bell last night that’s
a big reason why the NASDAQ is the worst
performer of the three major averages
but let’s talk about what’s going on
with that GDP print and I want to take a
look at what we are seeing the action
that we are seeing in yields and you
could see yields spiking higher up seven
basis points getting closer to that 5%
level the reason why we were seeing
yield spike is because of what was in
that GDP report not so much about that
headline number which was 1.6% yes that
was slower growth than what the street
was expecting but when you look inside
that report and take a look at core pce
and what exactly that looked like there
for the first quarter that was running
much higher than what the street had
been anticipating there rain 9 some of
those fears surrounding inflation the
fact that the FED is far from getting to
that 2% Target that they have been
talking about now for quite some time so
worries here about higher prices that is
sending yield higher we’re seeing yield
Spike to the highest level that we have
seen in several months all right from
Cars to Machinery caterpillar shares
moving to the downside this morning
after seeing sales in both of its
construction and resource units fall
from a year ago the company which is
largely seen as an economic Bell weather
also forecasting lower sales in the
second quarter yaho finances and Sr
joins us now with the details on that n
s yeah Sean on caterpillar’s Management
on the earnings call just now said that
it foresees a weak economy continuing in
Europe and a softening economy in Asia
Pacific not including China the maker of
heavy machinery posted lighter than
expected Revenue but his profit came in
stronger than expected now keep in mind
that the company has beaten earnings in
all but one quarter in the past three
years but sales were impacted by lower
volumes cater pillar was able to offset
that through pricing the results sales
of 15.8 billion flat compared to last
year and short of analy expectations and
uh earnings of 5 $5.60 versus estimates
for
$513 guidance for the second quarter
came in light caterpillar expects sales
this quarter to fall from the same
period last year and looking at the
caterpillar segment energy and
transportation that was an important
segment that saw gains seeing Tailwinds
from infrastructure are spending a think
of uh energy like gas uh generators
power plants as well now taking a look
at the stock the stock had been trading
near record highs coming into the print
year-to dat the shares were up more than
20% so some of this may also be some
profit taking guys all right Yahoo
finances Zone andess fre andess thanks
so much for breaking caterpillar down
for us here this morning we’ve got some
more Media Earnings to digest today as
well adding 3 million paid subscribers
on peacock in the first quarter it’s
boosted by its partnership with the NFL
to exclusively stream One play off game
now the company did however report a
wider loss in Broadband customers than
expected shares reacting down by about
6% as of right now and as I’ve been
continuing to look through this report
just to put some number on the total
customer relationships for connectivity
and platforms that decreased by about
166,000 customer relationships to 52
million and then addition ly going on
further talking about that video Revenue
that video Revenue decreased due to a
decline in the number of video customers
offset by an overall increase in the
average rates and then they say a
positive impact of foreign currency but
other Revenue decreased primarily due to
lower residential Wireline voice Revenue
as well that they mentioned yeah exactly
I think you can setm this up as being a
mixed quarter here for Comcast yes
there’s a lot to take issue with in this
report but Revenue though you have to
remember was stronger than expected and
looking under the hood at some of those
uh more worrisome Parts within this uh
report here they did lose 55,000
residential Broadband subscribers 10,000
business broadband subscribers there for
a total of 65,000 so some of that
weakness really showing here within the
reaction to this report you can see
shares under pressure today off just
about 5 and a half% and I think the
question here going forward is obviously
when you take a look at these numbers
core cutting that momentum picking up
steam it’s on full display within this
report exactly what the company is going
to be able to do to offset some of that
pressure there yes we did see peacock
out a substantial number of subscribers
whether or not though that is enough to
offset the losses that they’re seeing
one a very uh lucrative parts of their
business there historically I think
that’s a big question for investors for
analysts here going forward yeah a lot
of marketing dollars have to go into
getting subscribers on that that
impacted the margins adjusted eah margin
decreased to
56.7% yeah and that’s something it’s not
only Comcast but obviously industry head
wins here across the board all right
coming up at the top of the hour more
Fallout from meta’s latest earnings
results and later we will we will be
speaking with the CEO of Astra zenica he
will join us for the latest on their
earnings report and of course at 11: a.m
we’ll be hosting wealth with me hey
redin CEO Glenn kelman’s going to be
joining me to tell us why home costs in
the US are higher than ever we’ll be
right back
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
now
[Music]
[Music]
[Music]
welcome back to Yahoo finance I’m shaa
Smith alongside of Brad Smith 30 minutes
into the trading day let’s get to our
biggest stories of the day first got to
talk about that selloff that’s happening
right now and taking a look at the
pressure that we’re seeing on the
broader Market this comes on the heels
of that softer than expected GDP print
that we got and also faster inflation
here in the first quarter the Dow now
off nearly 700 points and you can see
the S&P falling back below the critical
5,000 level and the NASDAQ taking a
massive hit as well with about half of
that drag coming from meta platform
shares of the tech Giants sinking after
it disappointed investors with the
second quarter revenue forecast below
expectations plus announced plans to
spend billions more than investors
expected driven by artificial
intelligence Investments and investors
now looking to Microsoft an alphabet to
hopefully set things back on track
although you can see pressured there
across the board with for those two
stocks both Tech Giants reporting after
the Bell here today and the eye is going
to be on whether or not we’re seeing any
proof of the massive bets that both
companies have made on AI we want to get
some breaking news on the housing front
we’ve got pending home sales those Rose
3.4% in the most recent month here the
estimate was for a growth of 4/10 of a
percent so better than expected there we
take a look at some of the trends that
we’re seeing on a Regional basis here
Brad you’ve got Northeast that was up
2.7% Midwest though actually fell 4.3%
on a month over month basis in the South
we saw a rise of 7% and in the west it
was up 6.8% so again the Midwest being
the outlier here within this report with
that drop that we’re seeing on a
month-over-month basis yeah this report
just screaming big Northeast Corridor
Amtrak energy here with those signings
rising in the Northeast one of the huge
things though to also think about is
what they’re saying and this is from
good friend of the show n Chief
Economist Lawrence Union who’s saying
meaningful gains will only occur with
declining mortgage rates and Rising
inventory here uh however this pending
home sales index at 78.2 they mentioned
as well marks the best performance in a
year Still Remains fairly narrow range
over the past 12 months without a
measurable breakout here as well and
soor to keep an eye on this because this
is often viewed as a leading indicator
of existing home sales so again maybe if
we get a strong print like this at least
stronger than expected I should say of a
rise of 3.4% this could potentially
indicate maybe some strength or maybe a
rise that we could ultimately see here
in existing home sales in that next
Sprint yeah expecting to see median home
prices increase by 1.8% in 2024 to a
record of
396,000 now seeing up to $40 billion in
capital expenditures in 2024 this is
coming off of y’s meta’s year of
efficiency where the tech giant honed in
on cutting costs but now the game has
changed as every tech company races to
be a leader in AI meta CEO Mark
Zuckerberg seemed to be seeking patience
from investors on the earnings call
Wednesday night this is what he had to
say we’ve historically seen a lot of
volatility in our stock during this
phase of our product Playbook uh where
we’re investing in scaling a new product
but aren’t yet monetizing it I think
kind of smart investors see that the
product is scaling and that there’s a
clear monetizable opportunity there um
even before the revenue
materializes an analyst at hard Greaves
land down said about Mena spending that
it can’t afford to take its eye off of
the Core Business which is advertising
so how could this AI bet impact the
company longterm joining us now we’ve
got Roger mnam who is the elevation
Partners co-founder here Roger thanks so
much for taking the time here with us
this morning you hear what Mark said on
the call last night what was your
reaction well I’m sure Mark is right but
I think investors who are selling the
stock today are more right meta as a
stock has just had a fantastic past 12
months and it did so in the face of
rising regulatory action in Europe and
legal cases the United States that
jeopardized the core of its advertising
business and I think all that’s going on
today today is that after a big run
investors are pausing taking a look at
this thing taking some gains and asking
some very basic questions like how real
is generative Ai and how real is mixed
uh media glasses is that a real business
or is that just something that you know
CEOs fall in love with when stock prices
are
rising Roger we spoke to a an analyst of
meta last hour Brad Ericson of RBC I
want to play a quick sound bite of what
he had to say he was talking about metas
capex spending exactly what the plans
look like how that fits into what he
still sees as a year of efficiency I
want to play that quick sound bite and
then get your reaction on the other side
I think it’s still obviously maybe not
the year of efficiency is the quite
right way to say it but they’re still
very very focused on controlling
headcount costs they kind of called out
that none of this increase is really
owed to to anything from that
perspective so I would say from that
perspective perspective year efficiency
is still very much in play so he’s
saying year of efficiency is still very
much in play I’m curious so and you’re
saying it’s hard to grasp some of these
AI plans are exactly what it’s going to
mean ultimately for the business but
from an investor perspective is it in a
sense making meta relative again given
that under performance that we had seen
previously before they started
announcing some of these AI initiatives
if you believe that generative AI is
real then these Investments May well
work the challenge that we have here is
that this is a class example of a
product category where the demos are
mindbending but the reality is something
far less than that and I think that we
have seen consistently in use case after
use case that the actual performance in
the field has real issues and the
industry itself is trying to pretend
like it’s not a problem that the amount
of electrical power it requires is
greater than the largest states in the
country that it needs more water than a
small country that the architecture
itself appears to be deeply flawed that
as you increase the data geometrically
the performance of the product only
increases in a linear fashion and that’s
the exact opposite of what technology is
supposed to do it is entirely possible
that we’re going to look back in five
years at generate Ai and realize that
the whole thing was a mistake and the
big tech companies have all made a giant
bet on this and the bet they’re making I
think literally could Cascade into
effectively a bare market for the big
tech companies because they’re so
overcommitted to this that in Google’s
case they’ve allowed generative AI to
really undermine the quality of its
search product which is the core of
Google’s business and I think at
Microsoft I have no doubt they can sell
tens of billions of dollars worth of
generative AI but I have great doubt
that their customers will get any value
from it and you know again I’m not
saying here that gener AI is not going
to work I’m simply saying that
essentially 100% of of the market is
betting that it is the next big thing
and that feels a lot like a Mania to me
and the odds of disappointment are very
very high I mean you’re talking about
hundreds of billion dollars uh of market
cap being wiped out potentially
trillions of dollars of market cap being
wiped out if it does not come to
fruition so for a company like meta like
we’ve been discussing what are the key
pillars of generative AI that they need
to get right in order to solidify their
own positioning as they’re kind of
making these Investments and looking
across the entire kind of pillars that
Mark Zuckerberg has put out there before
the applications the models and then one
area that they don’t participate on the
chip side well to be clear I’m not sure
there’s anything it can do if you look
at this from an architectural point of
view the inefficiency of generative AI
is greater than any technology product
that has ever come before it I mean I
had always thought that crypto was the
most inefficient technology product ever
invented but generative AI is much much
worse than that and again if you’re just
looking at it without listening to what
the promoters say and just look at how
it actually works it’s not impressive at
all the product was designed to fool
people right to pass a touring test and
in order to do that they optimized it to
make it persuasive so the product itself
can’t distinguish between fact and
fiction and you apply that in an
Enterprise setting that’s actually not
useful if you apply it to search it’s
not useful no one wants to fact check
their search results and so my only
point to you here is not that gender of
AI is going to fail but rather that 100%
of the people expect it to be the
biggest thing ever and therefore the
chances of disappointment are
unbelievably High and the chances of a
catastrophe are high enough that we
should be paying
attention Roger let’s talk about Tik Tok
here and ultimately what that means for
meta because we got the news earlier
this week obviously lawmakers of Biden
Administration essentially Banning Tik
Tok unless is sold here to another
company outside of China here when it
comes to that Tik Tock band you’ve
brought it up as a massive issue here
for meta in the past Tik Tok being a
competitor to meta in the past How
likely one do you think this band is
going to be the fact that it’s actually
not going to sell bite dance is not
going to divest Tik Tok here in the US
and the two ultimately what that would
then mean for meta so getting rid of Tik
Tok if it were to happen would be the
greatest thing that could possibly
happen to meta because it would give New
Life to Instagram but you know I just
can’t tell exactly how this is going
going to go down the bill itself is
ridiculous the problem if you’re worried
about National Security in American data
the things you have to ban in order are
you need to
ban the use of of uh excuse me data
Brokers data Brokers selling to foreign
countries is obviously a huge issue and
right now there no rules against it
there are there’s talk of rules against
it but right now it’s still a big deal
and anyone China any country can buy
tens of thousands of data points on
American citizens for next to nothing
you can also take that data and then use
Facebook and Google and other products
to Target Americans and you know as long
as those two things are true Tik tok’s a
relatively small problem yet Tik Tok is
a competitive issue for Instagram that
is taking away all young people and so
if this ban does go through that will be
a tremendous gift to uh to meta without
doing a darn thing to improve our
national security Roger mamy I wish we
had more time we’ll have to hopefully
have you back soon here on Yahoo finance
Roger elevation Partners a co-founder
thanks so much for taking the time to
join us here today pleasure take care
let’s get to a trending ticker here on
Yahoo finance shares of Merc on the move
to the upside up just about 2% the
company posted strong sales results for
the quarter driven by demand for one of
its key Cancer drugs K truda Yahoo
finances Angeli kamani joining us now
with that story an that’s right CH yeah
K truda of course the name that is
assigned to Merc and the drug that it is
known for Blockbuster coming in with 6.9
billion in sales up 20% previously and
up 4% versus consensus meanwhile total
revenue came in at about about 15.8
billion for the quarter really good 3%
above consensus there for the company as
well as their gardisil vaccine that’s
also one of the profit drivers for the
quarter 2.2 billion up
14% compared to the previous year so
that’s all that was in line with
expectations but all a good story for MC
this
quarter all right an thanks so much for
that right stick with us here because we
also have our eyes on another Pharma
giant that we are watching here this
morning and that’s Astra zenica taking a
look at that stock that’s on the moves
on the heels of its q1 results you see
gains just about % the company beat the
Street’s estimates for a deeper dive on
those results we want to bring in Pascal
sorio a CEO of Astro Zen and our very on
Angelie Kimani leading the charge on
that interview on take it away thank you
shaa Pascal so good to see you again and
thanks for joining us a really good
quarter for you guys and really playing
out the sort of focus of the company on
core areas and getting the profits to
follow that what can you tell us about
how this is playing out and what that
means for the Outlook for
2024 yeah thanks Angel it’s great to see
you again uh we had a tremendous first
quarter uh overall our Revenue grow by
19% um but the most exciting part of it
is every portfolio of products grew
oncology 26% cardiovascular grew
respiratory Immunology grew rare disease
grew by
16% every geography grew 19% in the US
and Europe the most remarkable was the
grow in the Emerging Market outside of
China 40% growth it really shows that we
are bringing our medicines to lots and
lots of patients around the world um and
our company is really doing very very
well uh across the geographies and
across the portfolio absolutely adcs in
particular helping to drive profit for
the quarter so that’s a really good
Buzzy area to be in I’m glad you
mentioned China because I know that
there’s a lot going on broader picture
if we look at us China ties we of course
know uh the biosure ACT is in Congress
right now and you have had ties with
China I know you have operations
independent as well as Partnerships as
well as a Target $1 billion fund what
can you tell us about how if this act
passes and is signed into law what kind
of pressure that can put on the
company well I mean China is certainly a
very important country from the point of
view of having to serve 1.4 billion
people but also more importantly
recently from the point of view of the
Innovation that is happening in China
especially new technologies Cell Therapy
t- cell engagers and many others um so
we are very much uh engaged in China and
we have been for many many years having
said that of course we have considered
all this geopolitical tensions and we
have established a very resilient supply
chain uh we have manufacturing sites in
China for China and some other countries
and the emerging markets in particular
and of course we have Supply that is
dedicated to what you might call the
Western World the US and uh and Europe
for instance we are right now in the
process of building a s manufacturing
site in Maryland so we really have a
very resilient uh supply chain that has
shown that uh it can sustain a crisis
and the covid was a good example of this
absolutely moving on to one of your
drugs Fara I know that that has been of
course a focus for the US as well
engaged in negotiations with Medicare
you’ve already said in the past that
you’re pretty good with where they’re
coming in from what can you tell us
about the response that you’re getting
for the initial back and forth uh you
know for the negotiations and how much
of a Delta currently exists between
where you’re looking to land and where
the government is coming from well it’s
a great question the uh first of all I
should say FASA is a very important
medicine for the treatment of diabetes
but also kid disease uh heart disease
and it has really made a tremendous
difference to patients around the world
um and also the class the so-called
sglt2 class has made a huge difference
in the United States FASA will lose pent
protection early
2026 so those uh pricing discussions
come on the back end of the life cycle
of of Fara in the United States I cannot
really specifically comment on the
discussions and negotiations that are on
ongoing um but suddenly we will make
sure that uh we retain the ability to
serve patients uh leverage those
discussions to make sure that the
product is more affordable and more
patients can benefit from this very
important medicine speaking of
affordability for patients you are in
the ADC space I know there’s a lot of
energy around this uh anti antibody uh
drug conjugates for cancer and that
seems to be an area also where it leads
to the conversation about newer
Technologies and the expense that
patients have to take on as a result
what can you tell us about how you’re
thinking about moving forward in this
space and the different therapies that
are coming to Market and how it’s going
to affect the wallets of
patients yeah so actually uh for your
viewers a very quick explanation of what
an antibody drug conjugate is it’s
essentially combining an antibody with a
toxin and they very different type of
toxins and the antibody will Target the
cancer cells and deliver the toxin into
the cancer cell um and it’s essentially
uh aiming at replacing traditional
chemotherapy and it’s much more targeted
of course so you deliver High efficacy
and better tolerability another typee of
such products is so-call Radio conjugate
where you attach a um radio isotop to an
antibody and essentially you can
complement or replace radiotherapy and
Target much smaller t tors in the body
that radiotherapy could not
traditionally Target or or reach so
those are really transformative agents
and we intend to combine those with our
antibody imuno imuno imuno oncology
products especially our by specifics and
we think we can transform the care of
many many cancers and of course the cost
of those new agents is is higher and
suddenly we are around the world looking
at solutions to make sure that U
patients actually can afford them uh in
the United States Medicare covers those
injectable products so it’s a little bit
easier but suddenly patients still have
co-ace to to cover absolutely we’ll have
to leave it there for this quarter thank
you so much Pascal Soo astroica CEO
thank you very much back to you shaa all
right an thanks so much now let’s take a
look at the markets here we’re just
about an hour into the trading day
you’re still looking at losses across
the board although the NASDAQ well off
its lows of the session you actually
have the Dow as the worst performer now
of the three major averages off just
around 640 points the S&P off about 1.2%
and you’re looking at the NASDAQ under
pressure off about
1.4% coming up we are speaking with the
strategist who’s going to give us the
three Catalyst that he sees for the
markets this year we also get a take on
that GDP print that we got out before
the Bell this morning that is the Big
Driver in today’s market action we’ll be
right back
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
we are 60 minutes into the trading day
let’s take a look at some of the selling
action that’s taking place right now
this Market check sponsored by tasty
trade you can see we’ve got the dial off
648 points and you can see we are just
off the lows of the session here so a
bit of a bounce if you want to call that
higher at least for the Dow although it
is the worst performer of the three
major averages here this morning you’re
taking a look at the N at the S&P 500
also sliding here off 1.2% but now back
above that critical 5,000 level and
you’ve also got the NASDAQ under
tremendous amount of pressure right now
off about 1.4% some of that selling that
we’re seeing taking place in Tech TI to
meta results that we got after the Bell
last night but when you take a look at
that broader Market sentiment right now
you also got to check in on the spike
that we’re seeing in yields today you
got the 2-year right around 5% you got
the 10-year up seven basis points at 472
so getting closer and closer to that 5%
level a lot of that is because of the
what we got out from that GDP print here
this morning inside that print showing
that inflationary pressur is remaining
sticky that of course is a concern here
for the market so we’re seeing that
reaction play out in the bond market
also in the equities markets today well
stock selling off on worries of that
slower growth and and sticky inflation
the S&P 500 briefly falling below 5,000
now just above that level the weaker GDP
print coming on the heels of meta
lackluster earnings report which has
also put some pressure on Tech you’ve
got the NASDAQ now falling just about
1.4% on the day over the last five days
off just about 7/ t0 of a percent we
want to bring in binging chat Deutsche
Banks achieve equity and Global
strategist Binky it’s great to see you
here so let’s talk first about that GDP
print because that is a big driver here
of the markets today lots of questions
about what exactly this could signal
we’re seeing the reaction in yields play
out how are you looking at today’s print
so what I would argue is that there’s
actually you know very little to take
away from uh the GDP print and I think
it has uh uh you know very few
implications basically going forward and
if anything I’d argue it’s positive so
what do I mean uh if you take GDP print
and you start thinking about you know
the components the largest component of
course is personal consumption
expenditure uh
pce uh and and that’s you know close to
70% basically of GDP that came in at 2
and a half% growth believe it or not
that happens to be the 10-year Trend so
that’s why I say there’s not a whole lot
to take away from the largest component
if you think about you know the second
very important component especially
basically you know at a cyclical turning
point which is what we think we are at
that’s really investment spending that’s
telling you about you know corporate
confidence how corporates think about
the future and and capex really you know
has come in uh basically better than
most people expected you know the
housing part actually looks also like
it’s recovering so we have consumption
at its 10year Trend we have growing at
its 10-year Trend We have basically
investment picking up so you know
slightly better than expected uh but in
line with the view that we are turning
up so why do we get this bad print it’s
you know coming from basically primarily
the two largest noisiest components of
GDP which are basically inventories and
the trade balance because we measure
them as contributions to growth so you
know if you take a quick look at what
the trade balance did the GDP took off
four four and a half percent from the
headline number I think people forget
that GDP is a very volatile number the
qu is about 1 and a qu% and if you’re
talking about Trend growth of 2 2 and a
half% that’s a rather large proportion
of noise um so not taking away too much
uh I think uh growth you know is really
about consumption and investment
responding basically to the outlook for
consumption and those two major
components look absolutely fine so bingy
is this a bit of an overreaction then
when you take a look at the fact that we
are seeing a bit of a sell off here in
the markets and we are seeing yield
Spike I I I would say it’s in keeping
with uh the Market’s Behavior which was
impacted hugely by 2022 but I would
remind that we are in 2024 now uh but
the market is still you know very much
if we have good growth or strong growth
that means higher inflation I would
disagree I would say you know yes of
course growth matters for inflation but
the growth that we’ve had has not
mattered for inflation uh I if you think
about you know inflation relative
basically to growth which I would
measure as basically by uh unemployment
I mean we we’ve been study for about two
years give or take decimal points here
and there so it’s it’s not really coming
from uh you know uh the main driver in
the so-called Philips scar which
actually works rather well in explaining
inflation historically we would argue or
or the other Big Driver of inflation
which is the US dollar which is you know
as as as high as as as it is basically
at the top of its bands it is all really
coming from outside um and and and it’s
really about US inflation and because us
growth’s been stronger than the rest of
the world there’s a tendency to believe
that basically you know that inflation
is coming from uh the very strong us
growth um what you know I would point
out is that uh this pretty strong
consensus and read and view you know
sort of across basically Economist the
market the ECB that European inflation
you know is is is behaving well it’s
well on its way down to the Target of 2%
uh and and and you know the Market’s
priced in and the ecbs told us they
might have got rates in June uh it’s
important to keep in mind that uh Europe
uses a price index called hicp it’s the
harmonized index for Consumer prices
well you know the hicp also exists for
the United States and if you look at the
hicp for the US it actually you know got
down to 2% before it did in Europe and
it’s been sitting at 2% since June July
of last year so we’re in nine months of
2% inflation the US indices you know uh
uh the CPI and the pce of course running
higher and I would argue that the main
culprit there is uh you know owner’s
equivalent rent which is an imputed
price nobody pays it uh and and that’s
what’s keeping uh US inflation measured
by our you know indices that we focus on
U whereas if you looked at US inflation
in European terms you know you would
come to the opposite conclusion that uh
I mean European hicp core inflation is
actually catching down to US inflation
so bigy let’s talk about then what is
ahead given all that given some of the
trends that we have been seeing I want
to bring up a chart that we’ve been
following very closely here at Yahoo
finance it was initially included in
Yahoo finance’s chartbook a few months
ago but it’s still relevant today and
it’s comparing where the GDP prints or
projections have been relative to
consensus and we have seen this catch-up
Trend play out here over the last
several months is this something that
you expect to continue here for the
coming quarters or coming months uh you
know we we got a poor print today so I
expect that uh nobody’s going to be in a
hurry to raise their growth numbers I
think underlying GDP growth in the US is
you know about two and a half percent uh
and I think that simply because if you
look at the largest component and this
is something that I mentioned earlier if
you look at the largest component which
is uh uh personal consumption
expenditure you know and as I pointed
out it’s about 70% of US GDP uh you know
it’s growing steadily in a trend Channel
at 25% annual rate it was doing that for
the 5 years before the pandemic we had
of course the pandemic blip down we had
a recovery back into exactly the same
channel and and if you started you know
by looking at the data and you the
largest component I mean there’s
actually nothing to see there it’s doing
what it’s been doing and that’s why I
call it a 10year trend of Two and a Half
perc so I would argue U you know
relative to the chart that you put up
which was this you know sort of six
quarter roll forward of imminent
slowdown around the corner uh you know
there had been basically an improvement
U but you can still see the gentle sort
of you know down move so I would argue
you know the macro consensus has sort of
remained cautious to pessimistic and
sort of you
know and and I expect with today’s print
it will remain so but I would argue that
provides an opportunity because underly
growth does look stronger as I mentioned
all right Binky Chata always great to
get your Insight we look forward to
having you back here soon Binky Chata
Deutsche bank’s a chief equity and
Global strategist thanks so much thank
you coming up service now is out with
their latest earnings print how is the
software companies push into AI working
here benefiting here the bottom line
we’re going to talk all about that when
we come back
[Music]
[Music]
[Music]
[Music]
[Music]
a
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
Ving software company service now out
with its latest earnings report the
company has been integrating generative
AI technology into its software adding
to some excitement surrounding that
investor story but customers though
might be being a bit cautious as
companies look to continue to cut costs
here amid this uncertain macroeconomic
environment so here to discuss the
latest results we want to bring in
service now CFO G M tuno Gina it’s great
to see you again thanks so much for
taking the time to join us this morning
thanks sha it’s great to be here again
nice to see you as well so let’s talk
about this most recent report because
when you take a look at the top and
bottom line numbers you beat the
Street’s expectations on both yet it
looks like investors are focusing on the
guidance that you issued there the
overall Guidance just falling just short
of the Street’s expectations talk to us
just about some of the trends that
you’re seeing within your business and
whether or not you’re seeing a pullback
here on company spending yeah we’re
really excited we off to a strong start
with an outstanding q1 performance as
you said we beat the both the top line
and the bottom line and in fact raised
our full year guidance which uh at a at
a rate that’s higher than we usually do
so early in the year and so subscription
revenues of
24.5% operating margins at 30% free cash
margins at
47% um so we’re really excited that
we’re out of the gate really strong in
q1 um we saw sign ific large deal
acceleration as well so from a demand
perspective really strong um our deals
greater than 5 million up 100% deals
greater than 10 million up 300% so again
really strong start to the year and
raising that Topline guide for the full
year by more than our beat in q1 um so
again really proud of what the team has
executed against so far G I’m curious
what your message is to investors here
on a day when there’s a lot to celebrate
we ran through a number of the beats a
number of the positive trends that
you’re seeing within your business I
know you’re not focused on individual
moves like the one that we are seeing
today but I’m curious what your message
is to the street on a day like today
when your stock is still off
6% yeah the message is strong execution
you know we’re seeing Global expansion
in our most important geographies um
Japan which is an investment area for us
landed its largest deal ever in the
quarter we have incredible customers
such as Ulta Beauty um the governments
of Italy and Australia Suzuki um ana
systems um from an industry perspective
Tech media and telom grew more than 100%
year-over-year education grew 50% and so
I’m really trying to focus our investors
on the execution and The Innovation that
continues to come out of service now
Gina give us a better idea of some of
that demand that you’re seeing for the
higher price tier that you launched the
platform that includes generative AI
what do those numbers look like and what
do you expect growth to continue to look
like in the coming
quarters yeah you know every CEO and CFO
that I’m talking to is leaning into what
gen can do for their business you know
IDC is talking about 11 trillion impact
from gen over the next three years and
businesses spending half a trillion uh
in US Dollars on AI by 2027 and so we’ve
been innovating on the platform with our
gen SKS and in fact we just launched two
quarters ago and our gen SKS are the
fastest growing product launch that
we’ve seen in our history um and so it’s
been in seven of the top 10 deals this
year included gen um we have customers
like Microsoft nardis Hitachi energy
really leaning into our geni offerings
and it’s just continuing to innovate on
the platform and giving our customers
more capabilities as they look to
strengthen their AI strategies over the
coming year Gina m wish we had more time
we look forward hopefully to continuing
this conversation at a future date
Regina M tuno CFO of service now thanks
thanks coming up more on this morning’s
GDP Report with the former chair of the
Council of economic advisors Jason
Ferman he will join us right after the
break stay tuned
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
now
[Music]
[Music]
stocks are in the red this morning after
the latest GDP print showed a sharp
slowdown in economic growth and also
pointed to persistent inflation dashing
investor hopes that rate Cuts could be
coming anytime soon inflation worries
also sending the yields on the 10year
treasury above 4.7% the highest level
that we had seen since the start of the
year for more on this we want to bring
in Jason Ferman the former chair of the
Council of economic advisers under
President Obama Jason it’s great to have
you here on Yahoo finance thanks so much
for taking the time to join us let’s
talk about that print that we got out
this morning because I think when a lot
of people are taking a look at that GDP
report they’re taking a look at that
headline number asking themselves a
little bit worried about the fact that
maybe we are looking at an economy
that’s considerably weaker than we
initially thought is that the right take
or if you look underneath the surface is
there reason though to believe that this
print actually isn’t as bad as that
headline number suggests yeah I think
there was very little to be worried
about in terms of real GDP and real
growth in this print there was a lot to
be worried about um in terms of
inflation um on the first most of that
Miss was volatile stuff um you had um
inventory subtracting almost half a
point from growth you had net exports
subtracting even more from growth those
are not factors I would expect to
persist going forward if you look at
something more like core real GDP growth
consumption and fixed investment that
was up 3.1% annual rate in the first
quarter that’s really quite healthy real
GD P growth Jason let’s talk about maybe
the worrisome side of this when it comes
to inflation the pricing pressure sticky
inflation prices that we are seeing what
do you think the signals just in terms
of how much more work the fed maybe
still needs to do before we can even
talk about lowering rates yeah the big
surprise here was that at an annual rate
in the first quarter core pce inflation
which is basically what the FED is
looking at was a 3.7% annual rate as
recently as two months ago that was
expected to be 2.1 forecasters thought
mission accomplished instead we now have
a red flashing warning sign the FED will
not be able to be reassured enough about
inflation to cut rates anytime this year
maybe in December probably not the only
thing that’s going to get us Fed rate
Cuts anytime soon is a much more rapid
deterioration in the job market than I
expect to get or hope to get but that’s
the contingency under which the FED Cuts
rates before December so Jason what do
you think looking out beond beond
December into 2025 what that rup picture
potentially looks like then for the FED
look I think we’re in a world where the
neutral interest rate is almost
certainly higher than what we thought a
couple years ago but we have no clue no
idea how much higher it is um my guess
is the Fed is probably absent a
recession not able to lower rates much
below four and a half that there aren’t
that many Cuts there absent to recession
but you know look over a long enough
time Horizon and eventually recession uh
accumulative probability of recession
becomes near certainty um so at some
point they’re going to respond but I do
think that’s not going to be because
they’re reassured about a soft Landing
that’s going to be because they’re
worried about a recession and right now
there’s nothing in today’s data um to
increase your recession worries very
much if at all and Jason when you take a
look at a number like we got today or
taking a look at the recent Trend that
we’ve seen in inflation the fact that we
haven’t seen Improvement we’ve actually
been trending to the upside there has
been a bit more talk in recent weeks
about maybe the FED could actually end
up hiking one more time is it at all in
play is that at all under consideration
for you um I hope it is for the FED um
it should be um right now Financial
conditions have tightened all on their
own so we’ve had the equivalent
basically of one Fed rate hike over the
last month maybe one and a half after
today’s data so the market does that on
its own I think if we in is you know
persisting into the second quarter at a
rate above 3% absolutely they should be
very seriously considering more hikes
Jason Ferman always great to talk to you
we hope to have you back here on Yahoo
finance again soon former chair of the
Council of economic advisers under
President Obama thanks so much thanks
for having me checking the movement in
the bond market today we’ve been talking
about it all morning treasury yields are
on the rise you’re taking a look at the
five the 10 and the 30-year yields on
your screen right there the 10 year y
yield right around 4.71% a move to the
upside of just around six basis points
on that move coming and hitting at the
highest level that we have seen in just
about five months after that GDP print
showed that first quarter showing that
weaker growth and also sticky inflation
clearly a worrisome sign here for
investors let’s talk about that reaction
with Alia ESP spinosi as saxo Bank head
of fixed income strategy AIA it’s great
to have you here so first just your
reaction to the to the jump that we’re
seeing in Yi
today well shaa it’s pretty simple the
bond market is sending the same message
that has been sending in the past couple
of weeks which is if inflation is not uh
going to drop sustainably towards the
Federal Reserve Target of 2% in
inflation there is no way that we are
going to see a bond bull rally you see
sha when we look at bonds inflation is
their main dri if inflation remains
sticky or there is the risk that it
might remain bound because of several
factors including escalation of tensions
in the Middle East that’s bearish for
bonds so when we look at the 10 years at
4.7% right now what is telling us is
that investors are expecting real growth
to remain at Trend around 2% and
inflation to remain sticky well above
the 2% Federal Reserve inflation Target
I do you think we could see the 10year
yield hit 5% do you think it’s going to
continue to Trend to that upside given
what you were just
saying absolutely 5% is now a very high
probability there is also a very high
probability that yields continue to rise
towards
5.25% however to see a break above of
that level we need to have a second wave
of inflation we need the Federal Reserve
to talk about hikes again and right now
that’s a little bit of a taale scenario
Alia when it comes to investment
opportunity or what investors should do
at this juncture right now when it comes
to the bond market what are you advising
a clients to look
at well sha I think that this is the
moment to remain cautious to try to
limit credit risk and duration risk so
we really like the front part of the yel
curve There is almost no uh way to lose
money in the two years teners you see if
we assume a holding period of one year
and yields rise from 5% to 11% you will
be still in the green yelds need to rise
well above 11% to lose money on that
position it’s very different when we
look at the longer part of the in curve
especially the long longer part of the
yield curve which is very dependent on
bets on interest rate Cuts so is a very
much more directional kind of bet Alia
how closely are you tracking the
geopolitical risk developments because
at least when you take a look at the
reaction that we see play out across the
equity market across the bond market it
almost seems like that worry is on the
back burner for now how big of a
challenge or risk do you see the the
rise in geopolitical escalation here
presenting potentially here for the bond
market I think it’s huge shaa because uh
what that we have learned since tensions
escalated in the Middle East is that
commodity prices remain very sensitive
to what happens uh in terms of
geopolitical equilibriums we saw oil
resuming its rise we saw Metals prices
going up and that is a bullish for
inflation and it might cement a second
wave of inflation which is a bearish for
bonds and that’s why our message is to
remain cautious to if you look at bond
market remain in the front part of the
ill curve up to five years but maybe the
10 years can still offer some value in
case of a edge against of a market crash
because it offers a good risk reward
ratio issue but beyond that tenor it’s
important to remain cautious all right
Al spinosi we appreciate your Insight
today sexo Bank as head of fixed income
strategy thanks so much for joining us
here Alia thank you very much do a quick
final check of the markets at least for
right now we’re taking a look at the
markets Under Pressure here across the
board 90 minutes into the trading day
you’ve got the Dow off nearly 700 points
the NASDAQ now back off nearly 2% you’ve
also got the S&P back below that 5 ,000
level coming up next our brand new show
wealth dedicated to all of your personal
finance needs Brad Smith has you for the
next hour where he will be digging into
whether the latest GDP print what it
means for you and what you should do
about when it comes to your Investments
he’s got that for you stay tuned
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
welcome to wealth everyone I’m Brad
Smith and this is Yahoo finance’s newest
guide to building your financial
footprint our community of experts will
give you the resources the tools the
tips and the tricks that you need to
grow your money on today’s show we’re
heading into a busy travel season how
much debt are you willing to take on for
fun experience and helping your team
become financially Savvy will bring you
three money lessons that all young
adults should learn before heading off
to college plus we’ll talk big toy maker
earnings and the competitive Retail
Landscape all that much more on today’s
show but first we got to take a look at
some of this Market action that’s
transpiring 90 minutes into the trading
day take a look at the red across the
board here after a fresh GDP print
showed the US economy grew at a slower
Pace than expected in the first quarter
the Dow the S&P 500 and the Nasdaq all
down we’re looking at an annual growth
of 1.6% versus 25% that was the
expectation stocks reflecting that soft
reading the Dow off 600 plus points S&P
500 off right now by about 1.3% and the
NASDAQ also slipping by 1.7% so that
lackluster GDP number fueling further
losses in Tech today as the NASDAQ is
really bearing the brunt of that on at
least a percentage basis jousting right
now with the Dow for the biggest loser
and meta shares plummeting on light
Revenue guidance CEO Mark Zuckerberg
spooking investors after revealing meta
will spend more aggressively on
investments in general uh generative
artificial intelligence you know it is
geni in your hood plus let’s talk a
little IBM big blue IBM shares plunging
this morning after the company missed q1
Revenue expectations and posted we
Consulting sales that disappointing
investors those investors sending shares
lower by
9% well we’ve got much more to discuss
let’s dive a little bit further into the
market action today with that Dow off
600 plus points heading for its biggest
drop of the year a soft GDP print
fueling the sell off across all three
major averages here with more on this
yeah we’re going to an expert and what
this means for your portfolio we’ve got
Ben ller who is the eoro global market
strategist here I mean Ben we wake up we
get a fresh GDP print that disappoints
you get earnings that came out yesterday
after the bell and so you know you’ve
got to put on at least some uh safety
goggles here as you go into today’s
trading activity here give us perhaps
some fresh perspective on what we’re
seeing
transpire or you could just roll over
and go back to sleep um I do I do think
we all need to just take a deep breath
here um markets were overdue a
correction you know we’ve had this low
volatility 20% plus rally since October
we’ve forgotten what a pullback looks
like but hey we get three of them a year
your average S&P 500 intra-year draw
down is 14% so I think we’ve just got to
keep that out of the back of our minds
firstly and secondly this GDP number is
is not great but it’s not as bad as it
looks you know the bits that we care
about inflation sorry um business
investment and the consumer are
absolutely fine this weakness was all
about the things that we don’t really
care about and probably bounce back next
quarter which is trade and which is
inventories yes I’m a little bit spooked
by the inflation number but you know
just hold that for 24 hours because
tomorrow we’re going to get the monthly
pce number uh which will give us a lot
more information as to how much we
should really worry about this today and
you know markets have already begun to
sort of push back on uh these rate Cuts
expectations and then just finally you
know on the earning side you know yes
you know tough crowd out there when you
a company the size of meta reports
nearly 30% revenues on the stock comes
off um but you know overall earning
seasons’s been fine 80% of companies are
beaten all sectors uh have beaten so
yeah this piles a little bit of pressure
on Google and Microsoft you know tonight
but I still think the glass is half full
here not half empty you know I’m going
to come back to earnings in a hot second
but just to follow up on what you were
mentioning with GDP we typically hear
this phrase tossed around bad news is
good news especially when we’re within
the environment that we are for the fed
and trying to figure out when that First
Rate cut will come why isn’t bad news
like we’ve seen with this GDP print
actually good news for the markets given
what the typical reaction would
be the typical reaction presupposes that
weak growth is going to be good for
markets because it’s also going to mean
weak inflation and interest rate cuts
the problem this time is the combination
that this is the worst case scenario if
you believe the numbers and I’m not sure
I do but this is the worst case scenario
of lower growth lower earnings but
higher inflation and therefore I’m not
going to get the rate cuts and that’s a
combination that’s the nightmare
combination for investors right it means
earnings are coming down and valuations
are coming down so that’s how I lose a
lot of money that’s what you’ll seeing a
little bit today I’m not sure I believe
it Ben just lastly while we have you
here on the earnings season and and you
teed this up perfectly you know as we
think about what this pertains for some
of the other major companies that are
set to report either after the belt
we’re going to hear from some of those
two of those Max 7 companies or even
later on into the earning season what is
the tenor that meta platforms IBM even
may have struck with their earnings
that’s put the rest of the street and
investors here on notice as they’re kind
of doing calculus with their own
portfolios so the earnings are great
we’ve had 80% beats meta’s earnings were
fantastic uh the problem is not the
earnings the problem is the guidance and
the fact that investors are so sensitive
to this tells us that they’re nervous
and tells us that you know we’ve got the
sort of macro tea leaves sort of
changing a little bit here um so that
with my first point and you know that
helped Tesla earlier in the week Tesla
earnings were terrible but the guidance
was better meta earnings were great the
guidance wasn’t so good so you know it
it’s sort of Shifting around you know a
little bit it you know we were expecting
a lot from mag 7even earnings I mean
remember the backdrop here is mag 7 is
30% of the index so it’s a really big
deal and they’re growing earnings 40 odd
per and the other S&P 400 you know 93
are basically flat so you know we’re
expecting that to rebalance over time
everyone else to catch up but the here
and now is that we are very dependent on
magnificent 7 delivering on the earnings
front all right Ben you’re setting
number next conversation extremely well
for us Ben ler who is the etero global
market strategist thanks so much for
taking the time kicking off the show
with
us good to see you turning to Tech here
and continuing the conversation on meta
it’s going all in on artificial
intelligence at least based on some of
the expenditures that the company
announced spending billions of dollars
more this year on what was already some
significant spending on generative Ai
and it’s more than investors were
anticipating here so what is mean for
meta platform users here to break down
meta’s latest AI offerings we’ve got our
very own Tech DH the designated hitter
The Man Dan Hy Dan what do we know yeah
Brad there’s there’s a few things here
to to look at and obviously you know
Mark Zuckerberg originally trying to uh
like get out in front of the story
basically and assuage concerns about uh
Investments he obviously said that
they’ve done this before with reals and
stories and when they went to the mobile
web uh kind of trying to get ahead of
the narrative that they’re they’re
spending too much but what are are they
spending on exactly well for the the
average user uh there’s the meta AI uh
that’s the AI bot that you’ll see at the
top of Facebook Instagram WhatsApp
messenger and on uh the website met.
that you can interact with essentially
it’s a a powerful chat chatbot uh using
uh meta’s llama 3 large language model
then there’s on the the the the
advertiser side there’s what’s called uh
Advantage Plus and this is one of the
areas where you’re seeing meta actually
kind of service a a consumer need or
customer need uh with AI B basically
what you’re able to do with this is if
you’re setting up an advertising
campaign you can more or less automate
that process uh either to a small degree
or nearly entirely uh using this service
and so that makes it easier for
advertisers to go ahead and set up uh
their whole plan using meta is a way
that the company is actually showing
that AI is useful now there’s there’s
all this talk about how you know
generative AI is going to do this that
and the other thing I mean depending on
who you talk to it’s going to be the the
best thing since sliced bread or I mean
I think uh one executive maybe it was it
Google or Microsoft had said uh it’ll be
better than the internet or fire uh
that’s pretty wild I can’t you know
grill hot dogs with generative AI but
maybe at some point uh but but a lot of
what we’ve seen has been a lot of just
predicting right not enough
showing and so this is a company that’s
really showing look we have this
generative AI we’re using it customers
are using it and it gives them a benefit
that they’re going to want to go forward
with so this I think is something that’s
being overlooked a little bit uh
something that proves that meta uh is
making this actually uh these
Investments pay off to a degree uh
obviously the huge amount of money that
they’re going to be continuing to pour
in uh not just this year but uh as uh
the CFO season Lee said uh in the Years
head it’s still got investor spooked but
they are making this work yeah I mean
look Dan you gave the grilling example
generative AI should be taking the U out
of you grilling your hot dogs at the end
of the day if it’s infused into your
Trager or your Weber grill I don’t know
which brand is your preference but we
will leave that up charcoal there you go
we will leave that up to the companies
determine how they Infuse that into our
broader summer Delicacies thanks so much
Dan appreciate it all your markets
action Straight Ahead plus more here on
wealth on Yahoo finance stay tuned
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
let’s do a quick check of the markets
sponsored by tasty trade the Dow right
now moving lower by about 1.6% as is the
S&P 500 down by about 1 and A4 per and
about the same as the Dow on a
percentage basis is the NASDAQ that’s
moving lower here on the day by about
1.6% the NASDAQ was already being
dragged lower by earnings from meta
platforms but all major averages
certainly reacting to a softer than
expected GDP print here well gross
domestic product also called GDP in your
neck of the woods is out today for the
first quarter the US economy grew at a
rate of 1.6% falling short of the 2 and
half per that the street and economists
expected but let’s break down what in
the world GDP is in the first place GDP
is the total monetary value of all final
goods and services produced in a country
in a specific period of time and this
number essentially is a way to look at
the health of a country’s economy and
growth rate so how’s it measured well
here’s the equation you’ve heard of
Sigma before right well for GDP just
think signex GDP equals consumption plus
investment plus government spending plus
net exports C consumption that’s how
much individuals are spending on goods
and services this is the biggest
component of GDP in the US then there’s
I the investment business investment or
Capital expenditures as businesses
buying machinery for example and then
the G well that’s the government
spending that’s how much the government
spends on things like military equipment
infrastructure etc etc and then we get
to the NX which is net exports which
which is exports minus Imports so if a
country exports more than an Imports
that’s a positive contribution if a
country Imports more than it exports
then that’s a negative to the GDP
equation so let’s take a look at us GDP
historically since the 1950s there have
been notable periods of steady GDP
growth and adversely periods of
contraction for instance 1990s amid the
oil shock the 2000s during the com
bubble and of course a negative shock
during 2008 and 2009 with the collapse
of the mortgage Market in the last 10
years we’ve seen GDP stabilizing upward
Trends in 2016 2017 and 2018 but then
screeching Hall of course comes the
covid pandemic the US suffered its worst
ever quarter a decline of 28% in Q2 of
2020 you see that on the far side so
we’ve seen recovery since and all that
puts today’s number into perspective GDP
growth of 1.6% year-over-year and then
zooming out from the us the
international monetary fund or IMF
recently posted its World economic
Outlook calling it steady but slow their
Baseline forecast for global economy is
3.2% during 2024 and 2025 that’s the
same Pace as 2023 the IMF also calling
for a slight acceleration in GDP growth
for advanced economies that’s offset by
a modest slowdown in emerging market and
developing economies the forecast for
Global growth 5 years from now is at
3.1% the lowest in decades so all this
being said the global economy has
largely remained resilient despite
higher inflation levels which central
banks are globally trying to push back
towards healthy long run
levels well we’ve also got a fresh read
out this morning on the housing market
pending home sales increased 3.4% in
March that’s according to the National
Association of Realtors you can see here
on your screen that home buyers are
looking to buy houses in the Northeast
the South and west region as opposed to
the Midwest which recorded losses last
month so with housing demand reaching
its seasonal Peak how can buyers
navigate this crazy market and shortage
of homes for more on what this means for
the housing market I’m joined by Glenn
kelman redin CEO hopping on wealth here
Glenn great to see you thanks so much
for joining the show first and foremost
I mean I tracked you guys’ data all the
time there’s a trove of insights that
you’re able to really extrapolate from
where the numbers are moving and where
people people on the other side that
make up those integers are moving as
well here so walk us through what you’re
seeing in this market right now as we
just got a fresh read on housing this
morning well that number reflects March
but I think people aren’t as excited
about as we normally would be because
interest rates Rose since then from
about 6.85% to 7.5% which is a sharp
increase so that means there are fewer
buyers but what we’ve noticed about
those buyers is that they’re also more
serious so we think there will be fewer
sales than expected in the middle of the
year but it wouldn’t be the Calamity
that it was last year because people
have already waited so long to buy a
house they can’t put it off another year
so we think buyers are going to hang
tough but it’s still a really hard time
to buy a house because affordability is
under so much pressure well when you say
fewer buyers in the middle of the year
then does that lead you to believe a lot
of these buyers are rating for rate cuts
to come through
Glenn they are they are so affordability
right now is really Under Pressure
normally when you have rates increase
this much home prices go down but
actually home prices are up 5% and if
you compound that with what’s happened
to interest rates the median mortgage
payment is up 133% so buyers just can’t
catch a break in places like Florida and
Texas where it’s easier to build houses
prices have been stagnant but in other
parts of the US we have seen prices
continue to zoom up and so I think
buyers are under pressure and there’s
still not enough inventory so the best
news in the market is that inventory is
up about 10% so I think that will drive
some sales but mostly this Market is
waiting for a rate cut and that looks
like it’s only going to happen later in
the year if at all this year what does
this all mean for firsttime home buyers
Glenn what should they be anticipating
in this
market well they’re the ones that are
really Under Pressure so if you look at
the survey data about 177% of people
renting a home believe they’d never buy
a house last year but that number has
zoomed up to 40% so I think firsttime
home buyers are losing faith in the
American dream because more inventory
has been slow to come to the market
rates have been really high if you are a
homeowner who’s just trying to move up
you at least have the consolation that
your current Equity is worth more every
year but if you’re just trying to get
your foot into the door that door is
being slammed on your big toe because in
2020 2021 2022 it was easy to get into
the market you could move from
California to the middle of the country
and cut your mortgage payment in half
now um it’s gotten really hard because
home prices are higher almost across the
United States so let’s give folks some
actionable tips here as well Glenn when
we think about those who are on the
sideline waiting for rates to come down
or waiting for a prime opportunity to
jump in toss their bids in perhaps how
can they prepare themselves in advance
so that they can perhaps Outlast the
competitive bids or the marketplace as
well once others dive head first in as
well well I know I’m going to sound like
a real estate broker but that’s what I
am and my advice would be to date the
rate and marry the house so you can
refinance a house later we have seen
multiple offers bidding wars ease
somewhat so if you’re trying to get into
a property right now it’s a little
easier to do that if you can afford the
mortgage payment and 6 months from now a
year and a half from now you can
refinance that mortgage and still have a
house uh that’s cheaper than what you
would have paid in 2025 or 2026 so
that’s my first advice and then my
second piece of advice is just to really
be careful about that house the easiest
way to lose money to just destroy wealth
is to buy the wrong house if you buy the
right house you’re going to be able to
own it for five or 10 years there’s no
way that investment isn’t going to pay
off and if you buy the wrong house no
matter what happens to the housing
market you’ll regret it because the
transaction fees will eat you up when
you flip it 18 months from now because
you’re miserable there Glenn I can’t
believe that’s the first time that I’ve
heard that date the rate marry the house
Glenn kelman redin CEO with some
actionable tips folks can remember out
there thanks so much for taking the time
good to see you good to see you man bye
see you well from housing to hospitality
American Airlines Southwest and Royal
Caribbean also reported earnings this
morning and companies are forecasting
strong travel demand in the coming
months despite a more cautious consumer
inflation and tight budgets don’t seem
to be too much of a concern for
Americans this summer in fact a new bank
rate report shows that more than
onethird of Americans are willing to
rack up debt just to fund that lucrative
and luxurious summer vacation and well
needed for more on some of the biggest
travel Trends this summer we’re joined
by Ted Rossman who is the bank rate
senior industry analyst Ted good to see
you as well well thanks so much for
hopping on first and foremost I mean
people willing to take on debt to make
sure that they can get some time in the
Sun or or hey maybe they’re going
somewhere cold to offset all of the heat
especially if they’re in the southwest
us so what are we seeing in terms of
some of the trends right now we’re still
seeing really robust demand it surprises
me because 2022 was supposed to be the
year of Revenge travel right and in many
respects it was but the surprise was
that 2023 topped it the TSA actually
processed about
165% more passengers last year than they
did the year before and then this year
it looks like it’s going to be another
record so far that pace is up about 6%
from the same period last year so I
think really throughout the travel
industry we’re hearing robust demand
whether it’s cruise lines like Royal
Caribbean reporting record bookings or
airlines are upbeat
hotels this pent up demand seems to
still have room to run and so all of
that considered how can people actually
plan to budget for their summer travel
plans I think it’s really important to
set that budget ahead of time set money
aside from every paycheck that way
you’re building a vacation fund you’re
not going into credit card debt credit
cards going to be great if you pay in
full that’s the thing because then you
avoid interest you get rewards use those
rewards points and Miles by the way
that’s a good tip to offset costs and be
flexible about your travel schedule
maybe let the deal dictate when and
where you go that might involve flying
midweek instead of on the weekend or
driving instead of flying or going
somewhere during the shoulder season or
the offseason I think flexibility really
pays who who is showing the most
propensity to take on debt right now to
to finance the summer travel plans I
mean is is it baby boomers is it the
Forgotten generation as they have been
called as well Gen X Gen Y I mean who
who is it gen Z it’s Millennials
actually Millennials love their
experiences and they’re the most likely
to be splurging on travel you know where
it really stood out was a different
recent study we did and we asked not
just about travel but also dining and
concerts and sporting events and other
live entertainment that’s where people
under the age of 40 really stood out
more than half of Millennials and more
than half of Jers were willing to take
on debt this year for those kind of
things versus only 30% of Gen X and 25%
of Boomers you know it it’s interesting
I mean us Millennials have lived through
so much so um I’m not going to fault any
of those Millennials out there those
fellow Millennials for taking that
vacation much needed and a lot of other
people too just lastly when you think
about the number of businesses that
already know what the demand environment
is like right now are we expecting any
kind of price moderation in this near-
term one bit of good news is that travel
prices have actually Fallen a little bit
year-over-year rental car prices are
down about 9% airfares are down down
about seven and hotel costs are down
about two all of that’s according to the
latest CPI so prices have stabilized a
bit they really spiked a couple of years
ago and now they’re kind of back where
they were preo I think that surprises
people because costs in other areas have
gone up so I think that’s squeezing the
budget but the travel plans themselves
may not have quite the same sticker
shock they did a year or two ago Ted
Rossman who is the bank R senior
industry analyst Ted thanks so much
appreciate it no problem thank you
absolutely coming up everyone workers
are pretty confident about retirement we
explore how you can be too that’s up
next
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
[Music]
m
[Music]
[Music]
[Music]
now
[Music]
[Music]
[Music]
let’s retire now that’s a statement that
everybody wants to make but ultimately a
lot of people are putting off some of
those conversations maybe they shouldn’t
this week we spoke to Ali kaar from the
US Labor Department on retirement
planning here’s what he had to
say for a lot of people um retirement is
Within Reach time isn’t on your side
when you’re um planning for your
retirement and the earlier you start
saving the better off you’ll be and so
one really important initiative is to
make sure that things like 401ks are
available to as many Americans as
possible and planning early can help you
feel a bit more comfort able with your
outlook seven out of 10 Americans feel
confident they have enough money to live
comfortably throughout retirement
according to an employee benefit
Research Institute survey that’s out
today to break down how to set yourself
up for success in your golden years
Robert pal retirement daily editor and
publisher is here great to have you back
on the show with us okay how can people
even if they’re hearing some of these
stats about preparedness how can they
take that first step to ensure that
they’re at least starting the planning
in the correct way yeah so what’s
interesting uh about the EB study is
first of all how confident people are
but what’s to me more even even more
interesting Brad is the notion that
there’s a high correlation between
planning for retirement and being very
confident that you’ll be able to enjoy
the same standard of living in
retirement that you did in your working
years um and and that’s really important
that people plan um the other really
interesting note is that people who have
a financial advisor
are also more likely to feel very
confident about how their retirement
will be and so I think put those two
things together um do the calculations
figure out how much you need to save for
retirement and also if you need to hire
a financial advisor or at a minimum
maybe find a financial adviser who will
charge an hourly fee and who will be
your sounding board especially if you’re
working and you’re young um having those
two things in place will definitely not
only lead to higher confidence but I
also think to lead will actually lead to
higher success in retirement you know
the principal Deputy assistant secretary
for the employe employee benefits uh
Security Administration that we spoke to
yesterday Ali kaar I had asked him the
question essentially about what the real
figure is like and that’s different for
everybody right based on how you intend
to have a lifestyle in that retirement
whether you plan to have supplemental um
income or you know just how you want to
maintain a mentality and what not we got
kind of a quasi answer but I I guess
it’s a quasi answer because it’s so
different for everybody right and so
where has that kind of average um
average you know goal moved towards
where is that goal line now yeah I’ll
give you sort of two rules of thumb Brad
one is to sort of think about how much
money you need to accumulate relative to
your salary so companies like Fidelity
tro price um Lincoln others have said
maybe what you need is somewhere between
10 to 12 times your final year salary
set aside in your nest egg to in order
to fund your desired standard of living
the other folks say another rule of
thumb would be to look to replace 75 to
maybe 80% of your pre-retirement income
in retirement as a way to sort of make
sure that you’ll have the same standard
of living I think those are great places
to start um but there’s no substitute
for actually crunching the numbers I
always think of retirement income
planning as a Excel spreadsheet I think
of it as a row by row and column by
column exercise now the one thing I’ll
say about both these numbers is it
varies by income so for folks who are in
the highest income quintile they may not
need to replace 80% of their
pre-retirement income they may only need
to replace 50% uh for folks in the
lowest income quintile on the other hand
they mean they may need to replace 90%
of their pre-retirement income and the
bulk of that money at least in the
lowest income quintile will probably
come from Social Security and for those
in the highest income quintile Social
Security will represent a very small
portion of their retirement income maybe
15% so you’re right it varies and it
varies mostly by income levels but also
education levels and um and and race for
those who want to enjoy retirement but
also want to stay you know active to a
certain extent are there common jobs
that you find people gravitating towards
even in retirements to enjoy you know a
certain lifestyle or a certain kind of
Acuity maintenance
yeah I mean you see lots of um folks who
are going into retirement well two
things I should note a lot of folks at
the moment according to ebre do plan to
retire at age 65 but also to keep
working after they retire from their
full-time jobs and I would say that’s a
good plan for some and a bad plan for
others um the reason it’s a bad plan is
according to ebre only half of those
people who say they plan to keep working
in retirement are able to do so so if
you’re planning to work out of need as
as opposed to out of want I would say
come up with a better plan than that um
and then in terms of working in
retirement if you’ve been a white collar
worker in the past maybe you want to
dial back maybe you want to become a
consultant maybe you want to become a
contractor to the company that you
previously worked for uh maybe you want
to do something entirely different and
maybe work um uh you know in your field
but for another entity uh maybe for a
nonprofit for instance um and part of
this working in retirement U is a matter
of want and need or a combination of
both if you need to keep working because
you need to fund your living expenses
that’s a very different story if you’re
working out of want because you need the
social interaction um you need somewhere
to go in the afternoon aside from you
know maybe going to the local coffee
shop and spending all day there surfing
the web um that’s a whole another thing
as well and then for the other people in
the middle it’s a mix of both in some
cases people do need the income in some
cases It’s a combination of need and
want Robert pal retirement daily editor
and publisher great insights as always
thanks so much Robert appreciate it
thank you br certainly coming up
everyone Chipotle reported its latest
earnings after the Bell on Wednesday we
break down what that means for you and
me too I bought a couple burritos last
quarter we got you on the other side of
this short break
[Music]
[Music]
[Music]
[Music]
[Music]
now
[Music]
[Music]
[Music]
Chipotle posted better than expected
results as consumers like me continue to
think of the burrito chain as a great
value proposition here with the three
things consumers need to know following
the results is senior reporter Brooke
DePalma hey Brooke good morning briad
absolutely on Wednesday after market
closed Chipotle beat the estimates That
Wall Street had expected from the
company so let’s break it all down what
is keeping consumers coming back for
their chicken or their steak burritos or
their bowls well first thing you need to
know is that CEO Brian Nichols said on
the call it is seeing gains with all
income cohorts lowincome middle income
and high income consumers he said that
every group says Chipotle is this a
great value proposition so what exactly
does that mean well that means that
consumers think that they’re getting the
best bang for their Buck paying for $9
chicken burito BS now the second thing
you need to know Chipotle still thinks
that it is pricing power here this means
that as GDP grows at a slower rate and
if consumers tend to pull back or become
Under Pressure well he says that they’ll
still have money for Chipotle take a
listen to what CFO Jack Harang said this
morning when he spoke to her own Brian
sazy
when consumers are under pressure if
we’re executing at a high level
customers tend to keep Chipotle in their
budget longer than they will keep other
dining experience and and and other um
you know things that they want to do um
they will keep the Chipotle in their
budget for a longer period of time and
the third thing that you need to know if
you’re heading to California anytime
soon and you happen to grab Chipotle
while you’re there well you can expect
to pay slightly more you see on April 1
the fast act went into effect in the
Golden State which raised fast food
wages to $20 per an hour now that caused
Chipotle to have to raise wages but get
this nearly 20% and to offset that cost
it raised menu prices by 6 to 7% but the
chicken breed bow there will still only
cost you about $10 and Brad I have to
say I recently went to Chipotle and I
did in fact only spend about $12 for a
chicken breedable but it was my birthday
month so I did get some free walk on the
side work I’m I’m I’m upset I’m I’ve
been running the tally on mine and it’s
average of about $15 so clearly I’m
adding something on that is wrong and
not getting me the guac double protein
look I might just need to take you and
sazy with me next time to see how you
guys hacked the Chipotle cost here uh
but ultimately I will uh I’ll give it a
shot on my own and then we’ll ultimately
bring you back and see what happens but
bro thanks so much for breaking this
down for us appreciate it I’m frustrated
now whatever let’s end the show we can’t
do that we got to talk about this most
adults expect teens to worry about their
clothes shoes dating maybe even their
Chipotle orders but they probably don’t
expect them to be worried about money
according to Wells Fargo’s money study
83% of teenagers actually want to be
better with their money so how can
adults help set them up for Success
joining me now we’ve got Emily Irwin
Wells Fargo wealth and Investment
Management managing director of advice
and planning great to have you here on
set with us Emily great to be here Brad
so let’s dive into some of these results
here Mor teens they they want to be
smart about their spending about their
saving what did the survey really show
and tell about how they’re setting
themselves up for Success yeah well
you’ve already mentioned 80% of them are
really focused on wanting to manage
their money better and that is an
incredible statistic what’s interesting
is it’s in direct conflict with the fact
that most adults shy aggressively away
from wanting to talk about money and so
we have to as adults and as parents
really set that standard for them to be
able to have these conversations
other and so with that in mind I mean
what’s that what’s the kickoff point for
some of these conversations I mean it
can it can be awkward it can be dicey
when you’re saying hey sit down junior I
want to tell you about how you can
really make sure that you’re managing
your money right yeah let’s bring the
abstract and the concrete together for
kids that’s really important and so we
can start small whether it’s things like
showing some of the finances that you
might go through on a regular basis so I
think one of the great ways to do this
is by instituting both onetime expenses
and Rec expenses with teenagers and kids
so for example it might be easy to be
able to set standards for how do we save
for a bike or a new laptop but we also
have to complement that with what the
reality is you know we like to saay for
vacations we also know we need to stay
for rents and utilities we also need to
make sure that our kids are able to save
for cellone plans or maybe streaming
services how do you balance the two and
you can help them start that by being
able to help them set a budget for
example and so teens right now does it
seem like especially with finstagram fin
talk that they’re more excited to talk
about money and financial planning they
absolutely are they’re out there they’re
talking about you know how do we save
money how do we budget how do we make
the most of our dollars and they want to
understand even Concepts that might be
complex such as what is compounding you
know how do we how do we make money on
our money and so as parents what one of
the fabulous things is to really set
them up for success is to be able to sit
them down and say okay you have $1,000
from your summer job for example if you
have an interest rate of 6% you’re going
to have after one year
$1,060 great news you do that in year
two you’re going to earn $63 60 so all
of a sudden you’re earning interest not
just on your original amount but you’re
earning interest on your earnings as
well that can exponentially grow
introducing kids at a young age to that
concept of money growing on top of money
is really important compounding is is
part of the three tips that we want to
give people as well here you’ve got
three actionable tips for kids who are
or just young adults that are ready to
go to college and planning for that as
well what are they well savings and
compounding super important we
definitely want to make sure we touch
upon that understanding credit this is
where I think kids for the first time
you turn 18 you might be on a college
campus and you’re approached about open
up your first credit card don’t have
that be your first introduction to
credit let’s talk about credit and
starting it early explain what credit is
really made out of and why it’s
important it’s going to help you borrow
money lenders are going to want to let
you loan M loan money to you two you’re
going to be able to do it at a more
advantageous rate most likely and on
better terms potentially they look at
credit history credit um the amount of
credit to what you have outstanding and
then of course your ontime payments that
is critical maybe even consider having
your teen as an authorized user on your
card so they can start building credit
and then finally budgeting at WS Fargo
we have a a life sync in the mobile app
experience where you can upload pictures
get inspiration that is a fabulous way
to start thinking about managing both
your everyday expenses checking in with
them intentionally but also
understanding how are you going to be
able to fund those longer term goals
like spring break maybe oh yeah indeed a
big funding topic there Emily Irwin who
is the Wells Fargo wealth and investment
managing management managing director of
advice and planning thanks so much for
Tak the time here with us my pleasure
absolutely well if you’re still
struggling to make a decision on which
college you’ll be attending in the fall
you better make it quick the deadline
for accepted students to decide their
next step is traditionally May 1st but
there’s a lot of financial factors to
consider when making this huge decision
yaho finances relle akufo joins us with
more hey relle hey Brad so I want to
focus on three key financial factors we
should focus on your FAFSA and deadlines
your resources and your return on
investment so we’ll start with FAFSA
because there are lots of ways to pay
for college but FAFSA the free
application for federal student aid is
one of the most important so it gives
you one centralized place to apply for
Grants Federal loans work study jobs and
more now recently scolly by Sally
founder Christopher gray would joined us
at Yahoo finance and talked about the
biggest mistake perspective students
make take a
listen I think that just being able to
start as early as you can and if you do
have to wait the last minute that’s fine
people have different responsibility but
that is the biggest mistake waiting till
the last minute um and then and and just
having to rush into all those essays and
applications you have fast reforms you
have to do all those
things now of course that fast to
deadline is June 30th but many schools
give on a first come first serve basis
and of course it varies by Financial
need but keep in mind there are no
income limits to qualify so don’t think
you or your family make too much you can
still apply but of course do check for
any variations when it comes to your
specific College as well as any state
requirements as well next want to focus
on resources now you still have to
formally accept the offer they have just
sent you an offer you do still have to
actually formally accept it review and
accept the financial aid offer as well
plus send the enrollment deposit a lot
of times people might be you know
celebrating saying you know buying all
the merch please make sure you’ve
actually accepted the offer and make
sure that you check that specific
colleges requirements before you that
video now if you’re a little bit nervous
because you were weight listed or
deferred follow up immediately with a
compelling letter of continued interest
with any sort of added accolades since
your original application and don’t
forget to keep applying for funding for
your next best college choices now third
return on investment now of course we’ve
got to talk about tuition now the
College Board expects the average
tuition for the incoming 2024 freshmen
to range from just under 14,000 for a
national public 2-year cost College to
over
55,000 for a private 4-year College
obviously a lot of range within this so
make sure that you’re you’re picking
college that makes sense for your
pockets yeah and I was still at the top
end of that range almost 12 years ago
Michelle uh that’s my own buy financial
decision it paid off a little bit but
anyway costs go beyond tuition though
here as well break that down for us in
that factor and that’s true that’s
something that people tend to forget one
of the things obviously we’ve been
talking a lot about housing you have to
factor in your student housing beyond
your tuition your transportation cost if
you’re going to be living off campus
depending on your major your technology
and lab cost requirements as well and
then you really have to balance that
with the value of the education that
you’re going to get is this the right
place for you think about the alumni
connections what that opens up for you
some of these soft skills that don’t may
not make sense on paper but when you’re
out there in the world trying to get a
job do make sense also the job
acceptance rates for graduates some of
the salaries also not just for your
major but from that school once you
graduate so really take a holistic view
when you’re investing in your education
here all right thanks so much Michelle
really breaking that down for us a lot
for families to think about ahead of
decision day thanks exactly clock is
ticking everyone we’ve got much more on
wealth after this short break you’re
watching Yahoo finance
[Music]
[Music]
[Music]
[Music]
[Music]
yeah e
toy giants Mattel and Hasbro both out
with first quarter results and both
companies reporting sales declines in
the first quarter Mattel reporting a
sales drop of 1% from the year prior
Hasbro saw a whopping 24% Revenue
decline from the year before there are a
few positives though some of the results
were a bit better than feared and we’re
seeing Improvement in inventories but
there’s no doubt the industry is facing
challenges from inflation to increased
competition from eCommerce Giants here
with more we’ve got James Z editor and
chief at the toy book and Senior editor
at the toy Insider great to have you
here on the show with us James what
happened in this quarter what’s the
biggest trends that is that’s rocking
these companies right now these toy
manufacturers well you know the toy
industry is in a weird spot right now
because we’re coming off of a couple
years with the pandemic we had all those
sales Booms that no one planned for and
then they started to dive down that
softness at the end of 2022 rolled into
23 and now we’re seeing it again coming
out of the first quarter of 24 uh the
big things right now are that families
are dealing with economic concerns
they’re paying more for groceries more
for gas the excitement at retail really
isn’t there because all the newness
hasn’t come in yet so we’re still in
kind of a wait and see until some of
these new exciting products start
hitting towards the middle of the year
I’m reading through some of the notes
Here on the overall industry and my God
Furby came up yet again here walk us
through this because this was a $60
Furby last year I mean look that even
takes me by surprise that it’s priced at
that level when people used to look at
Furby as alt Investments so now we’ve
got the $10
BLS yeah so I remember when the first
Furby came out from Tiger Electronics in
the late 90s and it was about 40 bucks
the new Furby was introduced last year
did very well as a $ 6070 toy but again
that prices some folks out so now we’re
becoming really price conscious and
we’re seeing the industry start to look
at those prices again at the fives $5
$105 well Hasbro came around and they
have fur Blitz now which are a $10 Furby
that’s about half the size of the
regular one but that makes it accessible
to a whole bunch more families out there
you know I was speaking during the break
with the Yahoo finance Chief toy
correspondent Stow of Shauna smith fame
and he was telling me about trucks and
how that’s his favorite toy I see an
Optimus Prime behind you I know that
that turns into a truck as well and that
really comes back to toys that are
really tied into the movie goinging
experience and the content experience
where do you see that to still have legs
perhaps in these next few years coming
off of a year where we already see saw
how well Barby
did so we have a couple things to unpack
here first of all it is a big milestone
year for Transformers Hasbro’s key brand
there it’s the 40th anniversary and
they’re going to sort of reboot things
later this year with this CGI animated
film called Transformers one it’s a new
telling of the lore that ideally will
Captivate a new gener eration of kids
that are going to be in Transformers for
the next 40 years that’s very important
and when we think of content the content
really has to connect with kids now
Barbie last year obviously huge smash
one of the biggest movies ever but the
toys that came out tied to that movie A
lot of them were grown-up skewing like
collector dolls and stuff so Barbie
didn’t move the needle in the toy
department quite as much as some folks
might have thought however back half of
this year we have Barbie’s 65th
anniversary so we’re going to start
seeing more toy toys geared towards the
cross generational audience the key here
is can Mattel get another movie in front
of cameras to keep that momentum going
and if I were to bet I’d say Hot Wheels
is the next obvious choice they’ve got
about 15 films in development but the
vehicle’s category for Mattel is just a
behemoth Hot Wheels is in his sixth year
of growth wow James a lot of our
producers seeing in the background that
you’ve clearly got that that Barbie kend
doll back there of of the latest edition
the Ryan goling Edition here coming off
of the movie there we go all right is he
KU is he KU this this Ken’s job is
surfing all right thanks so much James
appreciate it you’re quite welcome
absolutely that’s James on editor-in
Chief at the toy book and and uh we will
continue to track exactly where uh
people are dancing the night away here
editor and chief at the toy book James Z
joining us here everyone that’s it for
now I’m Brad Smith thanks so much for
watching wealth we’ve got much more
11:00 a.m. tomorrow
[Music]
[Music]
m
[Music]
[Music]
[Music]
#stocks #inflation #YahooFinance #recession #bitcoin #Biden #Stockmarket #coronavirus #memestocks #Fed #YahooFinance #investing #stockmarket #crypto
US GDP growth came in at a 1.6% annualized pace in the first quarter, falling well short of expectations of 2.5%. The reading comes amid ongoing debate about the path of the Federal Reserve’s interest rate campaign.
Treasury yields rose after the GDP print, with the benchmark 10-year yield (^TNX) surging to its highest levels of the year. At last check, it was sitting around 4.71%.
Meanwhile, Meta shares sank about 11% as the market balked at rising costs at the Facebook and Instagram owner, which plans to spend up to $10 billion on AI infrastructure investments. Concerns grew about how long it will take for that spending to feed into revenue, pulling down tech stocks more broadly. Microsoft (MSFT), Alphabet (GOOGL, GOOG), and Amazon (AMZN) were all down more than 3%.
The Meta miss put a dent in hopes that results from the “Magnificent Seven” might juice a comeback in stocks, whose rally has lost momentum recently. It’s also a reality check for Microsoft and Google, also burdened with high earnings growth and AI expectations, as they report after the bell Thursday.
Caterpillar (CAT) shares also sank about 6% after the heavy equipment maker said it continues to see weakness in Europe and economic softening in the Asia-Pacific, excluding China.
On the macroeconomic front, the spotlight will turn to the March reading of the Personal Consumption Expenditures index, the Fed’s favored inflation gauge, set for release on Friday.
To get the latest market news check out finance.yahoo.com