Stocks mixed amid debt-ceiling talks, retail sales data: Stock market news today | May 16, 2023

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thank you

good morning everyone it is Tuesday May

16th here in New York City I'm Brad

Smith alongside Julie Hyman this is

Yahoo finance live and here are the

three things that you need to know to

start your morning a brutal earnings

report from one of the nation's biggest

retailers Home Depot warning on sales

after its biggest Revenue Miss in over

20 years the Home Improvement retailers

fiscal first quarter net income came in

at 3.87 billion dollars that's down from

4.23 billion dollars last year the

report spells bad news for the economy

with consumers backing off from Big

projects and spending Less on things

like patios and grills shareholders they

don't like it one bit the last time Home

Depot missed this badly Justin

Timberlake was still in in sync April's

retail sales coming in at four tenths of

a percent on the month that's been low

estimates for growth of eight tenths of

a percent now it's still a notable

improvement from the drop that we saw in

March the number underscores a still

resilient labor market and adds to the

debate over fed policy a Kim meeting

Looms in June with investors largely

expecting the central bank to Hold

Steady on rates though expectations for

a hike haven't been completely

discounted

and Berkshire switches up its Bank

holdings fresh regulatory filings from

the SEC more commonly known as 13fs

coincidentally also the title of my golf

game showed that the Oracle of Omaha's

investment house exiting the U.S bank

and Bank of New York Mellon now on the

flip side here it has begun investing in

Capital One this is a lender known for

having a large share of the U.S auto

finance market and the moves come amid

turmoil for regional Banks we'll keep an

eye on that with the svb and Signature

Bank hearings on the hill this morning

yeah you know Justin Timberlake big DIY

guy but I guess he wasn't doing any

projects uh this quarter shares of Home

Depot falling in pre-market trade down

about two and a half percent the Home

Improvement retailer hit hard by

softening sales growth guidance for the

year was Bleak as well to say the least

Yahoo finance is Brook to Palma is

joining us now with uh more of a look at

those earnings so really the company

it's unusual for it to make commentary

like this right well I think that the

Home Improvement sector just has such a

stark difference than what we saw during

the pandemic and now we're really seeing

that come to fruition this latest

earnings results taking a closer look at

the numbers they mostly Miss aspencia

Revenue coming in lower than expected at

37.26 billion dollars adjusted slightly

beating their adjusted earnings per

share slightly beating at three dollars

and 82 cents but here are my top three

takeaways from the quarter we saw

consumers spending last CEO and

president Ted Decker saying in the

earnings release that after a three-year

period of what he said was unpressed at

any growth the company expected that

fiscal 2023 would be a year of

moderation for the Home Improvement

marketing customers seem to be going to

the store last we saw transactions

decline here 4.8 percent year over year

and they're also buying less Big Ticket

items think less appliances than maybe

we saw people bulk up on during the

pandemic less flooring kitchen and bath

items ticket sizes only increased about

0.2 percent also keeping in mind that we

saw higher inflation year over year but

as you can see here overall sales down

four and a half percent here in the US

specifically down 4.6 those were far

lower than what Wall Street analysts

anticipated here what's driving those

sales lower here's my second takeaway

Lumber deflation extreme weather also

impacted the quarter we saw unfavorable

weather particularly out west and

extreme weather in California the CEO

said that disproportionately impacted

our results so think less grills being

bought and perhaps less money spent on

patio furniture as consumers didn't make

their way outside perhaps put off those

Home Improvement uh projects because of

this weather and ultimately that led to

this the company updating its fiscal

2023 guidance we haven't heard too many

companies update their fiscal 2023

guidance given that it only is the first

quarter but Home Depot certainly did

hear based upon the results the CFO said

that they expect continued uncertainty

regarding consumer demand and they now

expect comparable sales to decline

between two and five percent compared to

fiscal 2023 now previously in Q4 the

company expect uh sales growth to be

flat year over year in addition to that

they also noted that they expect

operating margin rate between to be

between 14.3 and 14 fiscal year 2023

that's slightly lower than what the

anticipated previously a 14.5 percent

but you have to keep in mind that this

uh earlier this year the company did

announce a one billion dollar in wage

investment so that also Weighing on this

guidance as well but as you noted

earlier Home Depot shares dropping in

pre-market here if they dropped as much

as 5.5 earlier today yeah and the call

is starting right now so we should get

some more color from that thank you so

much Brooke appreciate it we're also

going to get some more color and more

perspective from Michael Lasser UBS

Hardline and Broadline food and food

retail analyst he's coming up in the

next hour to react to those numbers

let's also talk about retail sales more

broadly they came in lower than analyst

estimates but still a rebound it Rose

0.4 percent for the month of April

snapping a streak of monthly declines

when excluding autos and gas spending

picked up more than wall Street's

expectations up six tenths of one

percent and economists had been looking

for a gain of two tenths and one percent

so basically what that tells us is that

Brad a big weight uh in the month was

coming indeed from Autos from gasoline

gas station sales down 14.6 percent so

that was an area of weakness Electronics

and Appliances down 7.3 percent

furniture and Home Furnishings down 6.4

percent so a lot of areas of weakness

but what stuck out to me as well were

some of the interesting um area oh

excuse me I'm quoting numbers year over

year by mistake that's what I I get for

looking at the wrong column on the chart

we've got some of the months right now

those are the right numbers wow and

looking at some of those key segments

it's really interesting considering the

earnings reports that have already come

out and those that are still coming over

the course of this retail portion of the

earnings season and I think back to the

electronics category and really what had

been mentioned already over the course

of Apple Amazon all of these different

companies that are waiting for the

consumer to get back into a purchasing a

cyclical purchasing

um kind of tenor and as of right now

that's continuing to hit those

electronics and appliance stores we're

seeing that year over year and in the

month over month here still but then

additionally some of the other character

characteristics on the other side where

consumers are perhaps leaning into the

little luxuries whether it's that cup of

coffee or just even the beauty category

Beauty continues to outperform here and

that is what is typical of a time where

consumers are pulling back on some of

those discretionary dollars Beauty tends

to outperform and even things like you

know that seven dollar Starbucks cup of

coffee you might be getting as well yes

we continue to see food service and

drinking places up six tenths one

percent so obviously I was looking in

the wrong column wasn't going to ear

over a year but directionally similar

sentiment here gasoline stores Autos

down Electronics down furniture and Home

Furnishings down up food and drinking

places as I mentioned non-storm retail

stuck out to me as well because that is

sort of code for Amazon and the sort of

pure play online retailers which is

interesting given what we heard from

Amazon about the first quarter so still

seeing some spending there the biggest

percentage drop it looks like month over

month was in Sporting Goods hobby

musical instrument and bookstores a few

companies that this is not good for

sporting equipment especially if it's in

the store category Dick's Sporting Goods

company like Peloton even that has the

Topgolf we just heard had a bad quarter

sorry you hit my type off like that okay

well yes it's true though and then on

the other side of that you think about

where and in those declines the other

one that you mentioned a moment ago that

was escaping me for a hot second year

but even across the clothing and

clothing accessories uh that is

something to continue to look at even as

we get into the Foot Lockers of the

world later on uh this this week

actually and then even as we begin to

hear about some of the other

manufacturers of those um of those goods

the the Footwear and apparel even though

one company that we're going to talk

about later on they actually had a

standout quarter and that was on uh

we'll talk about that a little closer to

the Bell but all of these things

considered I think the way that

consumers tend to purchase especially as

they're looking across the dollars going

out of the household it shifts back to a

lot more comparison shopping in an

environment like this given that they've

heard the word recession now for the

better part of a year it's likely that

more consumers on that e-commerce or

digital spending side that you were

mentioning a moment ago they're looking

to see okay where can they get the best

deal and that leads them back into a lot

of the digital landscape and the digital

shopping Trends yeah that's even you're

year-over-year grocery store sales are

up a month over month down four tenths

of one percent oh wow yeah all right

here with a deeper dive on the market

Direction following the latest economic

indicator we have Quincy Crosby LPL

Financial Chief Global strategist Quincy

great to have you here with us this

morning first and foremost you see data

come through like this where immediately

does that pivot your attention to

well you know you look at it but you

also see that Americans are traveling

and we know that ticket sales have been

higher and yet the planes are filled

we've heard from the airlines so perhaps

what we're seeing is that Americans are

being more cautious they are budgeting

accordingly uh to you know what they're

going to be doing over the summer and we

again we see that they're that they're

traveling we also interestingly heard

from Disney now that was disappointing

but one of the things that Disney did

mention is that Americans and globally

uh visitors to the uh Parks so that's an

expensive Endeavor and many Americans if

we're just looking at the U.S data uh

you know plan for that well well in

advance so that they're going to cut

elsewhere but you nailed it I mean when

you keep hearing recession recession uh

even if you have a job you're beginning

to wonder by hearing this over and and

over again when is it going to hit you

when is it going to hit your family so I

again Americans are being more careful

and more judicious in how they spend

we're using our credit cards and that's

something uh that is you know being

circled right now because we're seeing

late payments picking up not so much

delinquencies but late payments and

credit card payments and also auto loans

late payments so all of this points to a

Slowdown but when you have an

unemployment rate of 3.4 percent it's

hard to Envision that a recession is

just uh around the corner

well and we'll get more information of

course on that front when we get Target

Walmart some of the other retailers the

initial read from Home Depot does that

give you pause does that I mean is that

I know obviously it's very different

businesses and products but still what

is that sort of initial Lush tell us

about how consumers are doing

well it's it is concerning because if we

remember you know Home Depot would

always be the the the the earnings

report that basically said oh everything

is okay everything is fine so to hear

from them that there you know was a

Slowdown although the weather related

issues are are real but the it is it is

concerning because again we know that

consumers are slowing down we know that

we're using our credit cards more and

more one thing about the uh Home Depot

numbers I didn't hear this because I

haven't been on on the call obviously is

what are they doing in terms of

employment remember they introduced uh

higher wages they said we're preparing

for the future we need to do it now the

question that I have is is this going to

lead them towards uh cost cutting in

terms of uh their their staff and also

again having to pay for those higher

wages that they introduce just recently

yeah that's a really good point Quincy

and we'll be listening to the call which

as I mentioned is happening right now

we'll be listening to them from the

other retailers too yeah I want to ask

you from consumer sentiment to investor

sentiment we showed this chart a moment

ago the Bank of America fund manager

survey that they conduct every month

um showed that investors are the most

bearish that they have been yet this

year you see the big decline there in

investor sentiment of course this can be

a contrarian indicator

where are we going from here Quincy you

know we're heading into debt ceiling

talks you know what's going to happen

with the FED are they indeed on pause

Etc what's the sort of setup going into

the summer

well you know there there's concern we

know that the market itself has been in

a tight trading range and we also know

that there are just a handful of stocks

keeping this Market higher and they are

in the big Tech names so that's a

concern insofar as a healthy Market has

a much broader representation that's

something that we would like to see but

as we go through these data releases and

we have a host of them and we have a

a Litany of fed speakers I don't think

I've seen this heavy a program of fed

speakers wondering what their message is

sometimes they come out uh with a

definitive message and the question that

I have is are they telling the market

stop talking about the rate cuts that

are coming in uh you know September of

2023. I I don't know because we haven't

heard as many but there is a question

because we are seeing the probability

for a rate hike in um June tick up now

it's not dramatic but it is ticked up

from very very low levels last week so

that is a question and it that is

something I think that the market is

most concerned about the market overall

does think that we're going to see a

deal come out of Washington even if it's

a temporary as they say temporary

default

but overall there are concerns that

there are remnants of inflation left

into the economy and the question is

does the FED feel that it has to stamp

it out now before it turns into a

stagnation underpinning this is

something that is of concern but the

question is you know what is the Fed

going to do because it is a split fed

now and uh Federal Reserve speakers are

coming out with their opinions but I

we're going to see Bernanke and Powell

at the end of this week and that's going

to be incredibly important as will

Walmart and Target as you pointed out

the consumer is spending that is still

good right but it is all predicated on

3.4 unemployment and that that equation

has not been

um

ripped apart yet it's still a solid

equation right and when we heard

Cleveland fed president Laura Mester

this morning saying that the data

showing us rates are not at a

sufficiently restrictive level yet to

your point about all this fed speak

because you got to leave it there Quincy

Crosby LPL Financial Chief Global

strategist thank you so much really

appreciate your time this morning

we've got investment news from Berkshire

Hathaway Warren Buffett's company making

a big bet on Capital One Financial

disclosing a 954 million dollar stake on

uh late on Monday the shares are up

about 3.2 percent today at the same time

Berkshire exiting Regional Banks amid

the recent turmoil shedding its

remaining shares and Bank of New York

Mellon and U.S Bancorp those shares

though are trading higher here this

morning this is something that he had

talked about a little bit at a

shareholder meeting this all coming out

though in filings that were released yet

late yesterday Executives from Silicon

Valley Bank and Signature Bank meantime

will testify in front of the Senate

Banking Committee at 10 A.M Eastern

about the failures of their institutions

and we'll talk to Rhode Island Senator

Jack Reed that's at 9 45 a.m just before

he heads into those hearings

time now for today's morning brief where

we're checking in on the financial

sector if the bank failures since early

March was not enough stress for

financials debt ceiling negotiations

they've added a new wrinkle of worry the

already challenged sector is down over

six percent year-to-date and after a

turbulent few months investors become

more focused on the added concerns for

banks that sailing mentions in the

financial sector have risen over the

past months according to RBC Capital

markets now this comes as Executives

make more noise on risks surrounding the

debt ceiling debates compared to other

sectors in the S P 500 financials lead

the way with the most mentions of the

debt ceiling financials speak on the

matter twice as much as the next concern

sector Industrials while pastimes point

to Congress always resolving debt

ceiling negotiations investors concerns

they grow is the deadline of a defaults

that nears we spoke with RBC Capital

markets Lori cavacina yesterday on how

past debt ceiling drama has hit markets

and here's what she had to say

if you go back and look at every debt

ceiling drama since 2011 you've gotten

at least a five to six percent hit to

markets before Congress has gotten

around to acting in major drama years

like 2018 15 16 2011 where there was a

lot of other stuff worrying investors

those heads have been more like 10 to 19

percent in my mind we're looking at

something potentially like a five to ten

percent hit if Congress really doesn't

pull things together soon

with more on what debt selling

negotiations mean for markets we've got

Katie Kaminsky Alpha Simplex Chief

research strategist and portfolio

manager now Katie we could be surprised

to the upside maybe there's some massive

breakthrough that happens later today

but I think that highly unlikely as of

right now

yeah I mean I think the challenge of

these type of discussions is that

they're very low probability events that

have huge impacts and I think when you

think about the banking sector I mean

they're clearly right in the thick of it

if we were to deal with a default or

even a technical default clearly it's

going to be the short-term obligations

and things that they're holding on their

balance sheets that are in front and

center hence you know it's clear that

that sector is the most affected by that

um we'll have to see I mean I think

guessing from my perspective it's going

to take some time to figure out

uh is this a situation where you're

putting on any Hedges to sort of prepare

for I mean there are different scenarios

that you can prepare for right you can

prepare for stocks falling in advance of

the deadline and then forcing the hand

in their an agreement coming you can

game out stocks falling and then them

not coming to an agreement and then

falling more right are you are you sort

of hedging against those various

scenarios

so this is where the point that this is

such a rare event scenario it makes it

difficult to hedge because it's such

it's so hard to estimate the probability

of this type of event and the agreement

of different parties that I think in the

financial markets you're seeing a little

bit of indication of moves inequities

you're seeing some momentum signals

moving towards short signals and

equities but then bouncing back again so

I think in general it's very very hard

to hedge something that's this extreme

in terms of how large of an outcome with

such a low probability so I think from

our perspective most Financial investors

are really waiting to see more

information and that's why you see

markets aren't going anywhere what would

be the piece of information that would

absolutely just you know put wind in the

sales of of investors

well I think the challenge here is we'd

have to see a resolution and I'm sure

when we see a resolution then we'll move

on to going back to thinking about

inflation worrying about Regional Banks

and wondering if a recession is coming

so I think the sad part is there's not

it feels in some sense that the debt

ceiling discussion is more just another

thing to worry about and there's really

no you know Silver Bullet of something

that we can find that's going to kind of

make conditions change I think we need

to see inflation back down to Target

levels because today's retail numbers

basically show us that the stress and

this unsustainable impact of inflation

is affecting the consumer how long is it

going to take I don't know

um and so if that's a question I mean

nobody seems to know least of all the

FED right how long that's going to take

I mean I mentioned earlier we heard from

Cleveland fed president Loretta Mester

this morning saying that rates are not

at a sufficiently restrictive level if

you're looking at the data right now

um so that you know doesn't give a lot

of credence to the idea that the fed's

going to be cutting sometime this year

certainly

I agree and one of the challenges

everybody's looking for fed Cuts they're

thinking oh you know wouldn't it be

great if if we had rain Cuts this year

and what I think is part about that is

you have to think about what we'd have

to see for the for the FED to cut and

honestly it would have to be

deterioration and financial conditions

to a level that's even worse than the

concept of the rate cuts themselves in

my opinion and so I think the better

thing to think about is it's really a

period where we've had a lot of monetary

policy it's a blunt tool to deal with

the inflation problem it's going to take

time and data to figure out how long it

takes to cool down inflation which is

not an easy thing to deal with and as we

move through that we're going to have to

wait and see and hope that we don't have

an over step in policy such that we end

up with a cycle like a deflationary

cycle or recession that causes us to

lose some some value later this year and

I think that's what's everyone's afraid

of to be to be honest well we're going

to talk much more about that Katie

Kaminsky Hangout around Alpha Simplex

Chief research strategist is going to

stay with us as we continue this

discussion and look ahead to the opening

bell and speaking of which heading to

the hill we're going to not finish this

Regional Bank turmoil discussion

attention turns to Washington D.C as

former execs from svb and Signature Bank

face the fire all of that coming up

ahead

thank you

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the stock and bond market cannot seem to

agree on whether a recession is going to

hit the economy the stock market seems

to be pricing in a soft Landing the bond

Market's expecting an economic recession

and maybe rate cuts by the end of the

year as we were just talking about which

one of them is Right Katie Kaminsky is

back with us for the conversation Katie

this has been I mean this is tension

that periodically comes to the foreign

Marcus this year though it's definitely

been there so we were just talking about

it seems like you think that maybe the

stock market's going to be right on this

one which what do you think

oh yeah this has been hard I mean last

year I mean I love this question I mean

honestly if you look at the markets

today you see Equity markets are still

kind of hopeful they're thinking things

are going to be okay they're looking for

the soft Landing we're hoping for cuts

um they're sort of hoping that we can

navigate a difficult scenario but Bond

markets are really still looking

difficult they're saying we have an

inverted yield curve what does it mean

to have a Fed pause with an inverted

yield curve and thus the bond markets

are really significantly suggesting that

either bonds are not priced correctly or

we're going to see some sort of

recession I personally we're hope I'm

hoping that the stock market is right

but I think bonds are often

underestimated by investors they think

of them as just safe and they they don't

realize that in this type of environment

of inflation bonds are what you need to

look at that's what happened last year

last year it was the bond market that

led the way and it told us what was

really happening and the equity Market

was sort of just bound around I don't

know what do you think Julie what I

don't know I think that uh the people

who are betting that we're going to see

a cut before the end of the year well I

mean the FED is effectively said

we're probably not going to cut this

year they haven't said it in so many

words right but

um I think that the I don't know it's

it's a I I don't know either

yeah believing that we're going to to

cut by the end of the year that's uh I

mean there have already been near Mira

was out early on saying that we were

going to see a cut at the last meeting

and right we all know how that played

out uh but the larger kind of

implications of if we were to see a cut

or a massive pivot by the FED would that

signal that there's something else so

dire within the data that they're seeing

that they just have to pause

exactly I mean I think that's what

people don't realize it's not that we're

going back to the old normal in fact

we've moved to a new normal where

inflation is so much higher so inflation

has come down but it is not low and I

think what's interesting today with the

retail numbers it tells us that at some

point it's not sustainable for the

investor it's not sustainable for the

consumer to have higher costs and then

we have to see what happens next and I

think that's why this Market if you talk

to anyone in the space is challenging

because it doesn't seem to be clear

who's right is it bonds is it stocks

um and we have very blunt monetary

policy tools to deal with this issue

um so I really think it's going to take

a couple more months to see

and we know investors are not super

patient a lot of the time either do we

Katie hang on just a second we got the

opening bell coming up in about a minute

here and Futures are pointing now to a

lower open it looks like they kind of

rolled over once we started getting the

likes of Home Depot then the retail

sales data as well because to Katie's

point a lot of this data rather than

clarifying the picture just

muddies it further and makes it more

difficult to say right so consumers are

spending on some stuff and not spending

on other stuff right clearly they're not

spending as much at a Place Like Home

Depot right they're not spending as much

on gasoline in park as prices have come

down so there's a lot of different

tendrils to pull out here yeah the

mention of softening of demand

specifically for Home Depot I think is

something that we could hear show up in

the rest of the retail earnings reports

in one facet or another whether it's

Necessities or in some of that

discretionary category even for a

company like Walmart which yeah you

might get your groceries there but

you're also not buying as much apparel

there right now according to the stadium

yes well and that's what according to

Walmart itself right that's what we've

been hearing in recent quarters we don't

know what we're going to hear from them

this week but that has been a trend

certainly at them and at Target as well

that the gross people are leaning into

the grocery aisle in necessities and not

necessarily buying as many of those

discretionary items so you've got the

opening bell on Wall Street on this

Tuesday let's do a quick check of the

markets here now that the Bell has rung

sponsored by Flex shares and we do have

this push lower across the board we'll

see it in Aztec when it opens up in just

a moment but all three major averages

not seeing a big decline here but

nonetheless Futures have been bouncing

around a little bit this morning before

now this lower Cash open all three

averages down about a quarter two in the

case of the Dow about a fourth of one

percent so the focus not just today but

all week as we've been talking about is

going to be on the consumer and the

early indications if you especially if

you look at Home Depot not great yeah

while we're taking a look at the Dow

Jones Industrial Average here out of the

gate this morning you're seeing that

lower as Julie mentioned by about four

tenths of a percent we'll round that off

to NASDAQ Composite also in the red by

about a quarter percent past two days

though still holding on to some slight

gains fractionally Higher by about four

tenths of a percent there S P 500 flat

about as flat as it gets Holding On by a

hair of its chinny chin chin to the

upside here uh over the past two days

but here today it's down by about a

quarter of a percent so let's take a

look at the S P 500 sectors as we always

do just start off your trading session

11 sectors we've got them loaded up here

for you in the the screen pulling up the

Caboose consumer discretionary here and

think about some of those categories

that we were talking about with regard

to the retail sales data that came out

this morning consumer discretionary

that's down eight tenths of percent

Staples actually even even down by about

three quarters of a percent this morning

but look at technology that's actually

the loan Gainer The Lone Ranger in the

green it's up by about one tenth of a

percent speaking of Technology let's

take a look at the NASDAQ 100 here some

of those Mega cap tech stocks trying to

put the team on its back in a sea of red

you've got some green among the largest

of the companies here Microsoft

fractional gains they're out of the gate

that's up seven tenths of a percent

Google alphabet Alpha Google whatever

you're calling them call them in the

green and Nvidia the chip maker you're

seeing that Higher by about two tenths

of a percent plus two tenths of a

percent gains for apple and Amazon just

a little bit more yeah we've got to get

those Nvidia in earnings too that's the

last of the big use I think we have

retailers on uh we do our heat Maps

somewhere there you might need to go to

a different a different list of them we

got a lot of heat Maps but I'm curious

to as we get underway there they are HD

down three percent lows it looks like

it's getting pulled down too and look at

this uh kind of previewing what we're

going to be waiting for later on this

week of course Walmart you're seeing

that down by about one and a half

percent right now Target also lowered by

about 2.9 percent on the same day as the

retail sales data coming out this

morning and even into some of the dollar

store retailers those are interesting to

track especially when consumers are

looking for more of those discounts are

looking for some type of deal wherever

they can find one let's zero in just

very quickly here on Dollar General and

Dollar Tree Dollar uh General you're

seeing that down by about 1.2 percent

even right now and then additionally

dollar tree that's down by about one

percent so largely read across the board

Amazon the only company on this board

well not the only company in this board

that's already put earnings out but one

of the only retail companies on this

board that we've heard from earlier on

in the season yeah because well it's a

big tech company yeah and retail sales

showed them non-store retail actually

went up so let's let's get some other

movers that we're watching on this

Tuesday Morning shares of Capital One uh

rallying after filing showed that Warren

Buffett's Berkshire Hathaway took a

nearly one billion dollar stake in the

company buying 2.6 percent of the shares

in the first quarter this says Buffett

dump shares and Bank of New York Mellon

and U.S Bancorp now this is something he

had sort of talked about that he was

doing here and you know my caveat or my

disclaimer whenever we talk about 13f

filings they are a snapshot of one day

now Warren Buffett as we know tends to

buy and hold Stakes but we also don't

know what's on the other side of the

equation is he shorting is he hedging

are there things he is not disclosing so

it doesn't give us necessarily a full

picture of what's going on but it does

give us a little bit of an insight into

what he is doing yeah you know we even

as our discussions ahead of the show it

was pointed out by our team that yeah

this is also one of the largest lenders

on a financial basis for auto purchases

Auto purchases here especially for

Warren Buffett's Berkshire Hathaway they

have already taken a another stake last

year they took a stake in Ally Financial

and that one of the other large player

in Autos So within that kind of lending

capacity would be interesting to see

where they perhaps are looking across

the automotive landscape and where for

some of the loans that both Capital One

and Ally Financial where that is

appetizing for them to add on to their

portfolio right now yeah I want to bring

Katie Kaminsky back into this discussion

because I think the Regional Bank

discussion is still so interesting is

that an area where you're looking at

either Banks broadly Regional Banks

specifically because it feels like there

are a lot of headwinds still to come in

this group

yes I mean I think this comes back what

I love that you're talking about Buffett

here right now is he's a value investor

so they're looking at companies where

they see value over the long term and we

got to remember that we're very

successful back in 2008 and sifting

through uh the rummage in a very extreme

Financial uh environment but what's

interesting Now is really the fixed

income angle of this and which of these

banks are the best positioned to deal

with a very different rate environment

either inverted curve or as we see

yields might be moving and we see

Capital rolling over and people trying

to refinance it I think that's where the

interesting opportunities come in the

space is figuring out which banks are

going to be better positioned to move as

sort of capital costs have changed

significantly

um going through sort of this tightening

cycle that we've been through right now

and we've already seen that there's

trouble in the waters with what happened

earlier this year and so the question is

going to be which other banks are better

position to move with the situation and

which of them are going to have more

challenges because perhaps they're in an

area like you said Autos that that is

better or another area which is is going

to have more challenges yeah absolutely

uh Katie we have to uh we gotta shift

gears here a little bit

um just after the opening Bill Katie

Kaminsky joining us this morning for all

things uh discussion wide waranging I

might add debt ceiling all the way into

fed policy Katie Kaminsky of alpha

Simplex thanks so much Katie thank you

also here a deal in Jeopardy shares of

horizon Therapeutics they are falling

sharply this morning after Bloomberg

reported that the Federal Trade

Commission was planning to sue to block

amgen's 28 billion dollar purchase of

the drug Maker Now Amgen responding to

Yahoo finance saying that they are not

aware of any decision made by the

commission they also acknowledge that

they are going to provide any

appropriate updates when more

information arises and comes but here's

what you do need to know about this this

deal was announced back in December of

2022 here and ultimately this was kind

of kicking off or at least a bond deal

was moved forward also to try and make

sure that the acquisition could be

financed at the end of the day yeah so

this rates a lot of questions about the

FTC because the these do not have

overlapping areas of treatment they are

both working on treatments in some

overlapping areas but Lena Khan of of

the FTC has said in the past as

antitrust enforcers it's our job to

promote Drug Company competition that

will help create the right conditions

for the next generation of scientific

advances so this is sort of the first

test within Pharmaceuticals it raises

questions about whether they're going to

be other antitrust challenges the FTC

lately has been quite active in throwing

up roadblocks to Acquisitions I was just

looking at some research this morning

Michael gee friend of the show Jeff over

Jeffrey saying he thinks that the deal

is still going to get done after a speed

bump here but that the FTC and the

current Administration is continuing its

more aggressive strategy to deter M A so

it's interesting here as we watch you

know this isn't just specific to this

company it's part of this bigger story

about regulatory attention on what they

say are anti trust challenges here and

especially in an environment where

evaluations for some companies might

look a little bit more attractive and

especially in the broader deal making

kind of construct that we've seen in in

this cycle at least for healthcare or

biotech plays and where there are

different treatments where there are

different overlaps between where they

would just like to be able to add on

more licenses or patents to operations

that they already have knowing that so

many of the existing patents are about

to start rolling off over these next two

years so now they're trying to safeguard

what their revenue base looks like some

Acquisitions have have come forward and

quite quickly as well and so it'll be

interesting to see how the FTC continues

to case-by-case basis in an industry

that's going to see even more of the

attempts to consolidate and to safeguard

for investors and for their own Revenue

base and how they've scaled how they

look at each of these Acquisitions as

they do come forward as well yeah and

one final note uh again Michael ye at

Jeffrey says that he expects Amgen will

go to court against the FTC and so this

will prolong the deal closing process it

was supposed to close in a couple of

weeks but he thinks ultimately they'll

Prevail all right let's see we are going

to watch that one continuously here also

running full steam ahead popular Swiss

running brand on Holdings starting the

fiscal year with another record-setting

performance the company posted record

Revenue a whopping 80 percent increase

in Seeker sales and boosted its full

year guidance despite all of that shares

they were lower this morning here they

were higher pre-markets so interesting

to see them now reverse course and be

down by about eight and a half percent

here what is also noteworthy here growth

gross profit Mark profit margins excuse

me increased to 58.3 percent from the

51.8 percent that they had seen last

year net income margin that increased to

10.6 percent from about 6.1 percent and

and I think for a company that is in

this broader conversation that we've had

with new balance and their CEO Joe

Preston as well as the CEO of Brooks

running who sassy just saw out at the

Oracle of Omaha and Warren Buffett and

Berkshire Hathaway's annual meeting

they've said that running is recession

resilient right now and because it's one

of the easiest forms of exercise that

people can get into as long as they can

get into an affordable shoe now Owen is

one of the kind of more premium tiered

shoes out there but to see them still

doing well at least in this most recent

quarter I think that signals where some

of the athletes activity or purchasing

patterns might still be holding strong

right now yeah I guess so although

lifestyle they've got an increasing

lifestyle business too one note as we

watch the stock decline this morning the

shares have almost doubled this year

remember they came public back in

September of 2021 at 24 bucks a share

and they're still trading well above

that level they've really surged in the

past few weeks in particular back above

that IPO price we should mention the

co-ceos of on holding Martin Hoffman and

Mark Moore are going to join Yahoo

finance tomorrow in the 11 A.M hour

we're going to dive much deeper into

these numbers in an interview you don't

want to miss and coming up Rhode Island

Senator Jack Reed joins Yahoo finance to

preview his line of questioning to

failed banking Executives from svb and

Signature Bank that's next

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Executives from Silicon Valley Bank and

Signature Bank will testify today about

the failures of their institutions

they'll be doing that in front of the

Senate Banking Committee four U.S banks

have now failed since March starting

with crypto friendly silvergate back on

March 8th svb's former CEO Greg Becker

will testify today that the failure of

silvergate and previously ported

reported links between the banks caused

what he says are rumors and

misconceptions to spread quickly online

leading to a quote unprecedented Bank

Run investors tried to withdraw 42

billion dollars from svb on March 9th

another 100 billion dollars the next day

Becker writes quote I do not believe

that any Bank could survive a bank run

of that philosophy and magnitude joining

us now Rhode Island Senator Jack Reed

Senator the most senior Democrat on the

banking Housing and Urban Affairs

committee he'll have of course the

opportunity to question those Bank

executive Senator Reid thank you so much

for being here

looking at that opening statement from

Mr Becker is quite interesting because

it suggests that the bank rent happened

out of nowhere and nothing preceded it

worked clearly there had to have been

some precipitating events what's going

to be your main question for him

well I think the bank was poorly managed

and the managers should be responsible

for their uh poor leadership or

management and uh it should be exposed

today pointed out uh this was a bank

that had been repeatedly worn by the

Federal Reserve that they had problems

uh but they dismissed those problems

this was a bank that did not have a a

chief risk officer on the

premises if you will for at least a year

before the collapse and this was the

bank that had the 93 percent of its

deposits uh uninsured above the 250 000

limit so this is an example of

people who who told us years ago don't

regulate us we're smarter than you are

who turned out uh to make some very

foolish mistakes

Senator the committee has seen three of

the four largest bank failures in

history take place this year does the

committee believe that the banking

crisis is over

I think we are carefully watchful of

what's happening in the market I think

we can assume that uh there might not be

a repetition uh but what we're seeing I

think is uh

these institutions that fail were

outliers in some respects the svb

catered to a very small group of Silicon

Valley uh entrepreneurs uh they had a

huge amount of uninsured deposits they

only had 14 branches this was not a

consumer Bank this was a specialized

bank that was not aware of uh apparently

uh the the dangers they ran or if they

were were ignoring and I don't think

that applies to the majority of major

regional Banks which have multiple uh

branches which which rely on on deposits

which are almost always or significantly

insured

um do you think Gary Becker should have

to give back some of his salary all of

his salary he talks in his statement

about how there were some stock sales

ahead of the collapse of the bank ahead

of the bank run but he says they were

routine he didn't know about them

regardless because of what you say is

this mismanagement should he have to

give money back

well yes I propose legislation that

would claw that competition from

institutions that fail and it's clear

that the failure was uh significantly uh

attributed to the management I I find it

interesting that these stock sales which

netted him two million dollars he was

apparently unaware of uh which I don't

think most people would be unaware of a

two million dollar uh increment in their

uh salary or their benefits I'm I guess

he paid the same attention to the bank

as he did his own personal accounts

do you believe that coming out of this

there will be an issue for regional

Banks of being able to kind of just grow

out their operations be competitors with

some of the largest Mega cap Banks given

that the mega cap banks are often the

ones that are tapped to purchase assets

at often fire sale prices after events

like this happen

no I I think they can I I again I think

the the majority of the vast majority of

uh banking institutions both Regional

and uh and even very small banks are

well managed they understand they have

to be careful about their uh the risk

they assume they have to understand the

climate of uh inflation of interest

rates uh uh and we've done so reasonably

well and I think you've seen in my part

of the country in uh Citizens Bank is

our largest bank

and it's doing very well uh because it's

extremely well managed they pay

attention and I think that's the vast

majority of the banks in the country I

guess for the banks that don't pay

attention though you do need those

Regulators right and I know that you

have called upon Bank regulars to

examine whether we need to bring back

some of the rules that were changed

under the Trump Administration to

increase Capital requirements for these

mid-sized Banks right like an svb for

example

what do you still need to hear in these

hearings today in other investigations

to let you know whether that is

necessary

well I I think we have to get uh from

The Regulators and I think uh

Michael Barr did a very good job to

examine the role of the regulators and

he was unflinching in his criticism and

we have to take steps to follow up there

too uh I think within the Fairview of

The Regulators they can they can change

many regulations and they think they

might one of the aspects I think that

was really uh more important than some

of the regulations was the chilling

effect that the the passage of the bill

and more importantly the Trump

administration had on Regulators they

basically said you know uh in many

respects uh you're wrong and the banks

are right you're saying remember that uh

that's not a good way to regulate I

think changing the the importance of and

emphasizing the ability and

responsibility of regulators to not only

point out deficiencies but to take

corrective action or required Perfection

is just as important and I hope that's

done

Senator this is an extremely busy day

for you not only is this hearing taking

place but there's also still oh yeah the

small debt ceiling resolution that needs

to be pushed over the line and how close

are we to that finish line or perhaps

how how far away at this point and

what's the Hang Up

well uh the hangout is that uh I think

my Republican colleagues are recklessly

flirting with a default that will harm

the country and the world economy uh and

uh they seem to be very Cavalier about

it it's interesting when Trump was

President we passed a three debt ceiling

extensions uh and he in fact came out in

2019 and said you know it would be

Reckless and so many words not to pass

the debt ceiling without any strings

attached we did it but now the

Republicans adhere and flirting with

economic disaster that'll impact every

American household and indeed the world

economy so I think what they've got to

do is finally realize that as we did

visit that we should pass a debt ceiling

and then we can sit down and argue as we

do discuss uh a budget uh that will meet

their requirements and hopefully meet

our requirements and that we can get it

fast in talking to folks on the other

side of the aisle senator

do you think there are any prospects for

a so-called clean debt ceiling to be

passed for that those two things to be

separated how how close to the brink do

you think we're going to come here

well I unfortunately I think we're going

to be we're already too close to the

brain we should have resolved this uh we

should have done this as we did under

the Trump Administration routinely and

frankly uh one of our

it was done essentially with Democratic

votes because we understood even as

president Trump was President the the

devastating consequences of a failure to

pass a new debt ceiling uh so I think we

should move very quickly I think there

are many uh Republicans that understand

this but there's they are I think sort

of standing back and letting McCarthy uh

take point if you will and I think the

speaker McCarthy is now at the subject

to the uh whims if you will of a very uh

radical group of Republicans in the 20

30 40 who are insisting that there's no

problem with the debt default and they

want uh to really set back the economy

United States and indeed the world and

uh we're in a a difficult position but I

I'm encouraged that there are people

talking now that the president is

meeting with the speaker and other

leaders today those talks will continue

and I just hope and frankly this is

where uh Wall Street and the financial

sector which has the most really at risk

has to start standing up and more

luciferously saying a failure to pass a

debt ceiling a clean debt ceiling

hopefully uh would be a catastrophic and

when those those voices so not just

publicly but privately a way in that

could make a real difference Senator

Reid we certainly do appreciate the time

I know you probably have to put on your

running shoes to get on over to the

hearing taking place but thanks so much

for taking some of this quick time here

ahead of that here thank you absolutely

thank you

stocks looking for direction in early

trade amid a big Miss for Home Depot and

a rebound in retail sales let's get to

the NYSC and Yahoo finance contributor

Remy Blair Remy great to see you this

morning

good morning and as you mentioned U.S

stocks have opened in the red and

although we saw a brief pop into

positive territory for the NASDAQ

overall there are concerns about retail

sales figures as well as that

disappointing guidance out from Home

Depot earlier this morning meanwhile

overseas in China we got a slew of

economic data releases and we did get

some double-digit percentage gains but

at the same time they still came in

weaker than estimates taking a closer

look at the April data coming out from

China we saw retail sales Rising 18.4

percent industrial production up 5.6

percent year over year and fixed asset

investment up by 4.7 percent at the same

time we got two readings in terms of

manufacturing PMI out from China but

they both came in below the 50 reading

and moving on to companies stocks let's

take a look at Baidu Baidu reported

first quarter Revenue that did top

estimates now keep in mind that Revenue

Rose by 10 and this stood come as

businesses up their advertising spend

strict uh coveted restrictions were

dropped in the end of 2022 and this was

the first reading for the company

following those uh lifting of

restrictions although we did see uh

gains for the company before the closing

bell we are seeing that stock hover near

the flat line this morning now I want to

move over to Alibaba the company will

report earnings ahead of the opening

bell here in the US on Thursday May 18th

now ahead of that forecast to call for

an increase in EPS as well as

Improvement in Revenue this does come

after the fourth quarter 22 figures uh

did post an EPS Miss meanwhile Alibaba

announced that it is splitting its

business into six separate units and the

company's does this new decentralized

Destructor could save the company a

whopping 1 billion dollars before the

end of 2023. we are seeing shares of the

e-commerce giant uh

trade on the on near flat today but

following that announcement earlier this

year in March we did see Alibaba shoes

pop by double digits and I do want to

mention one thing money manager Mike

oberia of the long a short Faye made a

contrarian bet on Alibaba and this is

according to the latest 13 F filings

that were released on the SEC website on

Monday now keep in mind that China's

economy is still recovering and its

latest GDP figures gained by four and a

half percent earlier this year so

compared to the us we are seeing upside

in terms of economic data but at the

same time it might not be enough to

improve sentiment over in China

Remy Blair Thank you so much appreciate

it we'll let you go say hi to some of

the high school kids it looked like who

were visiting the floor at the NYSE

today indeed I appreciate it well coming

up our attention turns to key

testimonies on Capitol Hill first former

Executives from SBB and Signature Bank

face the Senate Banking Committee to

discuss the recent failures and more

importantly why they happen and that's

not all there's another big hearing

today the AI debate arriving at the hill

the Senate subcommittee on privacy

technology and the law will get up close

and personal with open AI CEO Sam Altman

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welcome back to Yahoo finance live I'm

Julie Hyman with Brad Smith we're

looking at the market today that are

down but I'm watching oil prices as well

we just had an announcement like

yesterday that the U.S government was

going to be buying more oil for the

Strategic petroleum Reserve you see the

intraday action not huge here up about

three tenths of one percent but if you

look at the two-day

um there you don't see a huge gain

either but still oil has been trending

above 71 dollars a barrel once again

um so that's something that I've been

keeping an eye on and we keep talking

about the FED here we keep talking about

what are the prospects for rate changes

in the wake of those retail sales

numbers this morning here's the two-day

chart of the 10-year yield moving up

again today to 3.55 percent so a little

bit getting a little bit of a lift from

these levels even though as you can see

it's come way down this year and back in

this range below or sort of bouncing

around the three and a half percent

range is what we have seen on a pretty

regular basis now as we talked about

we're setting up for a lot of Bank

hearings today if you look at big banks

in today's session we are seeing them

down pretty broadly across the board not

much movement though percentage-wise

except for of course for Capital One

Financial as we mentioned uh Berkshire

Hathaway revealing a new stake in that

on the Regional Bank front we're seeing

a little bit of a mixed picture here but

again sort of trending to the downside

but the likes of Western Alliance which

of course has been one of the banks that

has been beat up during this whole

situation it's up about 2.8 percent

today I'm looking on this uh screen here

for Pac West there it is it is off about

a half of one percent in today's session

Brad all right we're continuing to watch

those Regional Banks as well as the

reaction to retail sales this morning

retail sales climbed four tenths of a

percent from March levels but still

falling short of wall Street's estimates

how will this impact Outlook well how

will this impact outlook for the broader

economy Greg DACA who is the ey Chief

Economist joins us now Greg great to

have you here with us this morning you

read through the data this morning and

and kind of industry by industry or at

least within the retail sectors we

should say of purchasing for consumers

um some of these same areas still showed

weakness that we had already heard about

in earning Seasons prior and even from

some of the companies that are still set

to report here is there anything that

you kind of extrapolate from this report

and say that the economy is in a better

or worse place because of it

I think just broadly speaking first of

all uh it's important to understand that

these data for retail sales are nominal

data so they are not adjusted for

inflation if you adjust for inflation

you're looking at a fairly soft picture

when it comes to the US economy and the

state of consumer spending uh we had a

0.4 gain in terms of nominal retail

sales but when you adjust for inflation

CPI Rose about 0.4 percent so that's

zero flat retail sales for the month of

April core retail sales when you exclude

some of the volatile items rows but they

Rose very lightly and if you look at the

year-over-year trend in terms of real

retail sales they're down about three

percent on a year-over-year basis so

you're seeing people essentially being

much more discreet when it comes to

their outlays they're still spending

more dollars because things cost more

but they're buying fewer goods and fewer

services

are they buying fewer Services though

Greg I mean because these retail sales

data don't include things like travel

right they do include restaurants food

and drinking places those numbers went

up although I don't know what the

inflation-adjusted numbers are so how

much of this can be explained by a shift

in spend rather than an overall decrease

in spend

well I think the shift in spend the

relative shift in spend is a story from

2022. uh we're really at the tail end of

that shift in spending uh the narrative

that people are going out to uh

restaurants and traveling more that

really the bulk of that took place over

the course of the past 12 months I'd be

very curious to see how strong this

travel season is going to be in a

context where prices remain quite high

again even in this report you only have

food services as a service sector

reading and that Rose 0.6 percent so

adjusted for inflation it's a very small

month over month increase that you're

seeing even in the services sector so

yes people are spending more on Services

you do have this environment where

wealthier individuals have more means to

spend and they're still spending on some

of the the services sectors but overall

there is discretion that is being

applied even in the services sector the

good sector is seeing a significant

pullback the services sector less of a

significant pullback but much more

discretion being applied in an

environment of high prices and high

interest rates well even among some of

the more wealthy consumers out there I

mean I think back to some of the the

conference board data that we had seen

about consumer confidence and there's

even been some moderation on the more

affluent side of the the consumer and

and where income levels are right now so

in that moderation and where that's

started to trickle through to either the

services spending or even on the product

spending side does that spell out that

if we see the more kind of affluent or

wealthier parts of the economy start to

really pull back on spending than or at

least put it elsewhere who knows where

that might be on an investment basis

whatever the case may be how does that

signal either a soft Landing a hard

Landing or kind of a I guess a deeper

recession

well I think first of all we're not

seeing the type of traditional

retrenchment that we see in the private

sector Whenever there is fear of a

recession you're not seeing any

retrenchment in terms of business

investment in terms of the labor market

in terms of consumer spending what you

are seeing is a cooling more strategic

decisions being made and increased

elasticity so people are more sensitive

to prices and as prices continue to rise

there is more of that demand reaction

than there had been in the prior two

years what that means in terms of

spending going forward is that we are

going to see this cooling what I'm

fearful of is this environment where

we're seeing growth gradually slow and

being the economy being more susceptible

to downward shocks whether it's the

banking sector shock or the debt ceiling

debacle that we're now going through

these are all increasing headwinds from

a credit position from a financial

conditions position those are weighing

on economic activity and an economy

enemy that is growing at a one percent

pace is much more susceptible to these

headwinds than an economy that would be

growing at a three or four percent pace

and let's remember the FED is not

tilting towards a more dovish stance it

will maintain a fairly tight stance

going forward so that's less of a

Tailwind than usual whenever you have a

Slowdown that susceptibility that you're

talking about the delicacy if you will

of the US economy is that in the economy

itself is that a Market's susceptibility

to these downward shocks and when you

say that you know there is this risk

what is that how does that play out what

does that look like what are the

potential ramifications

yeah I mean I think that the risk is on

both sides right on the economic side

and on the financial Market side on the

economic side we know that the real

economy is slowing we have seen a

Slowdown in terms of employment

initially it started with reduced hiring

now we're seeing more and more layoffs

they're still not that significant

relative to Prior downturns but we are

seeing a softening of labor market

trends we're seeing businesses being

more cautious with their investment

decisions we're seeing consumers again

being more discreet when it comes to

their outlays and being more cautious as

to how they spend their money that type

of environment leads to a Slowdown in

economic activity and then on the

financial markets front you still have a

lot of concerns around the banking

sector you have a lot of concerns around

what's happening with the debt ceiling

in DC and those are leading to a gradual

tightening of financial conditions and

credit conditions and we know how

important credit is in the US economy so

if you have credit starting to tighten

and financial conditions tightening at

the same time that generally leads to a

further hit to the real economy and

that's how this interplay can lead to a

more pronounced slowdown on the economic

front

Greg good to catch up with you this

morning Greg dacao eytv Economist see

you soon

cheers our attention turning two key

testimonies on Capitol Hill today first

former Executives from svb and Signature

Bank face the Senate Banking Committee

to discuss those recent failures and

more importantly why they happened and

that's not all aiai debate also arriving

at the hill the senate committee

subcommittee on privacy technology and

the law is going to get up close and

personal with open AI CEO Sam Altman and

on that latter hearing let's bring in

Yahoo finance's Dan Halley he's joining

us now with the details so what

questions are we trying to figure out

from Sam Altman here today or what do we

think that Congress is trying to get to

the bottom of here

yeah really what's going on here is

basically this is uh Congress saying we

don't know what to do yet with AI and we

want to have these hearings and these

discussions to determine just what kind

of rules and regulations if any we

should put in place now uh some

organizations like open ai's uh open Ai

and Sam Altman have said there needs to

be some kind of guardrails put in place

we've seen the likes of Microsoft and

Google talk about ethics and Ai and how

they're trying to put their own types of

roles in place for this and you could

see there Senator Blumenthal giving his

opening remarks in this hearing

essentially what you can expect is for

uh the Senators to go back and forth

questioning Altman as to what we can

expect from open AI what we can expect

from artificial intelligence and what

kind of Technologies this could then

lead to you know there's been a lot of

questions as to the authenticity or uh

correctness of some of the responses

that you get from the likes of chat GPT

or Microsoft's Bing Google's Bard you

know they're known to produce what's

called hallucinations which is really

just you know making up seemingly

correct uh statements out of whole cloth

there's 60 Minutes interview with Sundar

pichai where Bard made up a book that

doesn't exist and so you know these are

things that do happen and so this is

something that they're going to have to

discuss and and kind of reconcile you

know where you allow the technology to

move forward to ensure that you're

getting the most out of it while also

trying to prevent the worst possible

outcomes which you know could be things

like election interference uh

disinformation misinformation

deep fakes things along those lines Dan

while we've got you since you mentioned

Microsoft and open AI we've seen some

big investments in AI from names like

Stanley druckenmiller and David as well

so what can you tell us there

yeah both of these individuals obviously

you know big names on investing but

they're making moves into AI uh

specifically when it comes to the likes

of Nvidia uh and Microsoft and those are

two of the major plays that people are

using to get into the AI space uh Nvidia

one of the big chip makers that's

available that does produce the kind of

AI chips that are powering this kind of

new technology and then Microsoft

obviously with its tie up with open AI

exposed there and putting those

Technologies to work via its Bing and

then it's productivity Services Security

Services they're all getting that

generative AI treatment so you know in

video one of the the names

um you know AMD Intel still uh behind

but talking about Ai and then you have

you know essentially any technology

company at this point short of Apple

really you're talking about generative

Ai and the capabilities that they uh the

technology can provide but you know I

think the the biggest plays right now at

least as far as what I'm seeing are

definitely Nvidia and Microsoft and

that's why you're seeing these

Investments being made

Dan thanks so much we're looking forward

to your continuing coverage here of uh

the AI hearings today as well appreciate

it

let's take a look at a training ticker

that we're watching today it's Vodafone

the U.S shares as well as the European

chair sinking after the company

announced 11 000 job Cuts over the

course of three years the British

Telecom Company CEO said performance

quote has not been good enough after

forecasting a decline in free cash flow

for the full year the shares off nine

and a half percent coming up a new

development in the Jeffrey Epstein

lawsuit we'll have the details on which

beats big CEO is getting subpoenaed now

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let's do a quick check of the Market's

now sponsored by Flex shares all three

major averages remain in the red the Dow

which has been leading declines all

morning long is now down more seven

tenths of one percent the S P's off four

tenths of one percent is being led by

consumer discretionary and the NASDAQ

off by fifth of one percent

Elon Musk is the latest to be subpoenaed

in the U.S Virgin Islands lawsuit

alleging that JP Morgan aided the late

Jeffrey Epstein's sex trafficking

operation the U.S Virgin Islands calling

on the Tesla CEO to report any

communication between himself JP Morgan

and Epstein Yahoo finance's Alexis

Keenan joins us now with more details

and um you know this has been going on

for a while we've gotten all these

subpoenas what's what are the details on

this latest

yeah Julie so this information it comes

in a new court filing from the U.S

Virgin Islands and the government there

is asking for must to turn over any

documents he has related to the

government's federal civil case that's

filed in New York against JP Morgan

alleging that the bank aided the late

Epstein sex trafficking operation that

involved minors by providing Epstein

with banking services that allowed him

and that he used to pay for Recruiters

in that operations as well as victims in

it now uh the uh importantly here the

U.S Virgin Islands gives no clear reason

for targeting musk here they say only

that upon information and belief musk is

high net worth individual who Epstein

may have and I repeat may have referred

or attempted to refer to J.P Morgan now

specifically the Virgin Islands

government is asking must for as you

said documents relating to

Communications they want documents that

they say would show Communications

between musk and JP Morgan regarding

Epstein or documents between musk and

Epstein regarding JP Morgan also

Communications about any of Epstein's

involvement in this trafficking

operation uh now musk responded on

Twitter yesterday and last night saying

that this is idiotic on so many levels

that cretan referring to Epstein there

never advised me on anything whatsoever

the notion that I would need to listen

uh to financial advice from a dumb crook

is absurd JPMorgan let Tesla down 10

years ago despite having Tesla Global

Commercial Banking which we withdrew I

have never forgiven them meaning

JPMorgan Chase uh that relationship is

something that musk has talked at length

about including in a testimony in a

Tesla shareholder case that concluded

earlier this year uh but Julie back in

2019 there was some speculation that

Musk has since denied as well as Tesla

has denied saying that Epstein had given

musk some sort of advisement after he

had come under regulatory scrutiny for

that funding secured tweet uh so uh so

far though JP Morgan has denied any

knowledge of Epstein's alleged crimes uh

and so we will have to see where this

goes but certainly this uh subpoena

looking a bit like a fishing Expedition

at least right now so who else has the

U.S Virgin Islands targeted with the

subpoena

yeah so there was a one about a week ago

that the Virgin Islands was also trying

to subpoena communication documents

reflecting Communications that is from

uh Google co-founder Larry Page uh so

both of these instances though the

government there seeming to have trouble

reaching these Executives uh they're

trying and asking for the court to allow

it to use alternate means to subpoena

this information so the next step we

would expect here would see a Court's

decision on both of those requests Yahoo

finance Zone Alexis Cannon following all

things of course around the legal

proceedings here that come to life

thanks so much Alexis appreciate it

and coming up Bank executives are

testifying in the Senate over the

failure of svb and Signature Bank but

how did the crisis even begin we'll

break down that timeline for you coming

up next

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Executives from Silicon Valley Bank and

Signature Bank are testifying right now

about the failures of their institutions

in front of the Senate Banking Committee

the banking turmoil began in early March

and has since dominated headlines on

March 8th crypto friendly Bank

silvergate wound down operations after

taking dramatic losses following the

collapse of FTX on the same day Silicon

Valley Bank revealed a massive loss from

withdrawals and plans to raise over two

billion dollars in capital to make up

for it the next day there was a 42

Billion Dollar Bank Run and on March

10th shares were halted and Regulators

took control of the bank two days later

the feds took control of another bank in

crisis Signature Bank Biden tried to

reassure Americans saying that the

banking system is safe but Days Later

Switzerland's Credit Suisse also started

to crack with shares hitting new lows

First Republic was also suffering and on

March 16th 11 big Banks rescued it with

a 30 billion dollar deposit structure

now in the meantime svb they filed for

bankruptcy and UBS acquired Credit

Suisse Regulators then announced First

Citizens Bank would acquire the bulk of

svb's assets but more trouble was

brewing for First Republic and the bank

released a statement saying it was quote

pursuing strategic options about a week

later Regulators seized First Republic

and the bank was sold to JPMorgan Chase

in the last couple weeks The Fallout

from the crisis has stayed with us

shares of pacquest dropped on May 4th on

reports of a sale and shares stayed in

the red on news that the bank lost

nearly 10 percent of total deposits

today regionals yeah well they're mixed

right now however as this hearing goes

on it'll be interesting to see where

that tick-by-tick action continues to

move Julie yeah and especially since the

focus now has turned towards regulation

maybe the banks will actually get a

little break we'll see what ends up

happening but the hearing is underway

for those Bank Executives also for

Regulators to help break down the

implications of the crisis which joined

by John heltman American Banker

Washington bureau chief John good to see

you again obviously it's a pertinent day

to be discussing all of this

um and I guess you'll sort of pick up on

my last Point here

um it is some of the executives who were

testifying today there's also another

hearing that is talking to the

regulators

those two tracks what do you think we

need to be paying attention to which is

more important right now

uh well how's this for an answer they're

both equally important so watch both

good answers with each other on two

separate screens

um there is a Common Thread through both

of these hearings and that is that since

the outset of this crisis

uh at the very beginning Democrats and

Republicans were kind of trying to

figure out what they thought about all

of this and that has since I think

somewhat solidified into two kind of

counter narratives on the Democratic

side the point here like the what you're

seeing here with this series of bank

failures is a failure of Regulation uh a

failure of uh or an inability of

regulators to adequately regulate

because of some of the uh policies put

in place during the Trump Administration

uh and that's their line Republicans by

contrast have sort of solidified around

this idea that it is The Regulators

themselves that are institutionally

unable to regulate Banks and so it's the

regulator's fault and new regulations or

overhauling the regulations to make them

more stringent on mid-sized Banks would

not be helpful but not prevented this

crisis and I suspect that in both of

these hearings today you're going to be

hearing uh hearing basically like

reiterations of those of those dual

tracks has has the flight of deposits

stabilized from your perspective

well The Regulators certainly seem to

think so uh Janet Yellen had comments

out this morning uh at a speech saying

that the uh sort of the the contagion

risk is contained uh that deposits have

stabilized uh Regulators in their

prepared testimony uh for the hearing

this morning uh saying similar things

now they also are saying that there's

some risks out there in commercial real

estate uh potential credit uh risks

credit write Downs there that could

affect Regional Banks and smaller Banks

um but uh but yeah so there's uh the

deposit flight seems to be over it seems

like the the bit there aren't any other

svbs out there that have enormous uh

Reliance on

um business accounts to make up their

deposit base

you have the next those that rely more

on those are more are seen as more risky

you mentioned pack West

um that's kind of the next the next one

uh in line uh Western Alliance similarly

um so we we may see still more failures

but those Banks aren't really on the

order of size that svb or even signature

uh was I I mean as we talk about the

so-called idiosyncratic features of the

various banks that failed right whether

it was in crypto whether it was in

relying on startups or you know sort of

the balance of business that hasn't been

something historically that has been

regulated at all right in other words

the sort of the the type of businesses

that have Bank caters to and it doesn't

seem like that that's something that The

Regulators would consider is it is it so

how how do you sort of address those

risks without

directly addressing those very sort of

specific things at those Banks

so the uh Bank Regulators especially uh

especially the FED but really all the

bank Regulators have uh they have

regulation and they have supervision

right so regulation is uh pursuant to a

law and it will say

um as part of our so for example in the

Federal Reserves uh Guiding Light is the

safety and soundness of the banking

Institute or the banking institutions

they regulate

um they can uh pursue or push a

regulation saying uh you can't do this

or you have to do that and that applies

to all banks equally they also have

something called supervision where there

is somebody looking over A bank's a

banker's shoulder and saying are you

sure you want to do that is that a good

idea and if they if they do it anyway

they can issue something called a matter

requiring attention or a matter

requiring immediate attention which then

goes to the board and sort of forces a

decision now some of the concern again

from the Democratic kind of line of

argument here is that in the prior

Administration there's this emphasis on

not using supervisory actions to sort of

act as de facto regulation right

um and that that's something that I

think Democrats are going to try to push

back on

But to answer your question

um

there's lots of things that bank

supervisors can do to tell a bank don't

do this or do more of that for example

if your deposit concentration is way too

high in one particular sector that might

be something that they would get uh get

dinged for a bank would get ding for now

that they wouldn't have before

there's typically more theater

politically here on events like this

than there is on 42nd and Broadway

um oh yeah especially on these occasions

so how can Regulators signal not just to

banks that they've got a firm

understanding about what they need to do

but also to the broader public that

they're acting in the best system in the

best manner for the broader system at

whole

well they can just say those exact words

um and we'll let lawmakers kind of

question them uh that's part of the

point of these of this exercise of

having bringing The Regulators out

bringing the banks out

um or the bankers out to kind of call

for call to account for their actions

now The Regulators have been up to the

hill a few times and they're going to be

up again uh so The Regulators are in the

house today Bankers are in the Senate uh

tomorrow it's uh Bankers in the house

and then Thursday it's Regulators in the

Senate so everyone's going to get uh get

a taste and I think at this point

especially uh the FDIC put out its uh

its proposal for how to replenish the

deposit Insurance Fund last week uh

which placed most of the onus on uh the

biggest banks to repay that uh that that

loss that was incurred during the uh the

failure of silvergate and signature it

invoked something called the systemic

risk exception uh which means that they

would ensure uninsured deposits at a

loss to the deposit Insurance Fund or

the diff uh and then they're also then

required to do a special assessment to

refill to to sort of replenish those

losses uh and during during uh during

the board meeting the ftsu board meeting

last week during that proposal uh

Republican board member Jonathan

mckernan sort of took exception to the

idea that the biggest banks would be

paying for this

um I would be interested in seeing if

any Republicans sort of Follow that line

of argument during either the uh the

hearings today or later this week

John we're going to continue to keep a

live look on this up for some of our

viewers as much as we can uh but we got

to wrap things here for today John

Helfman who is the American Banker

Washington bureau chief John always a

pleasure getting some of your insights

and coverage around this too thanks so

much

thank you all right talk soon guys

coming up fixer upper much Home

Improvement spending slumped in the

first quarter Home Depot feeling the

hurt in a first quarter earnings report

we've got more on that that's coming up

next

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Home Depot's first quarter was hit hard

by declining revenue and sales growth as

consumer spending on Home Improvements

softened from its pandemic Boom the

worst may be far from over Home

Improvement demand is only expected to

decline further in the year ahead here

with what this trend means for the

retail sector Michael Lasser ubsus

Hardline Broadline and food retail

analyst Michael it's great to see you

because man this was quite a quarter and

quite an Outlook from Home Depot an

unusual one for them right in terms of

not only the numbers but the commentary

I know there were some sort of specifics

in here but sort of writ large what does

it tell us about consumer demand

particularly for the DIY sector

what it tells us about consumer demand

for the DIY sector is that it's

normalizing after a period of outside

strength over the last few years we are

seeing that the consumer is Shifting the

spend to things like Services going out

to eat traveling and that's having an

impact on the consumption of goods

that's likely to continue for at least

the near term now the big wild card from

here is whether or not the labor market

remains stable if the labor market

declines from here that's going to

provide probably another leg of downside

for the consumption of goods as

consumers continue to pull back on their

overall consumption Trends so it's

something that worth is is worth

watching uh but with that being said you

know right now they're the the overall

consumption of goods is seeing some some

weakness what does normalization mean

for margin expectations for companies

like Home Depot or Lowe's in that

specific part of the retail environment

demand normalization for the Home

Improvement retailers means that they

are experiencing some margin pressure

and that's because sales are under

pressure

um what it what you would normally

expect is that the d-leverage associated

with the fixed costs of this business on

negative sales is going to create uh

some some margin pressure and you're

seeing that there is a unique

environment where uh inflation is is

moderating and uh these these companies

have passed along significant cost

increases over the last few years so

it's likely over time that that will

provide some margin relief but for now

what's happening is margins are under

pressure as sales decline

um Michael gotta ask you about Lumber

right because that's one of the other

one of the areas where we've seen lumber

prices come down and explain this to me

because I I assume that that's a problem

because Home Depot can't hold lumber

prices up here if the underlying price

is going down because consumers won't I

guess they're aware that Lumber's going

down and they're not going to pay the

same prices for it walk me through that

you're exactly right well Lumber is a

commodity so the prices change on a

week-to-week basis and the the Home

Improvement retailers pass along the

changes uh on a almost on a real-time

basis so

um versus the same point a year ago

lumbery right now is down about 64 now

normally what you would expect that when

that happens unit volumes will pick up

this is an elastic category and if

someone had put off uh building a new

deck as an example because Lumber had

gotten so costly that consumer might now

think about restarting that project as

lumber prices have come down but what

has happened this time around Lumber's

falling so fast that that we have yet to

see the unit response that should happen

over time and from here as we get into

the second half of the year the lumber

prices will start to laugh easier

comparisons and so the decline should

moderate

um that said though isn't the margin on

something like Lumber consistent in

other words does Home Depot are they

able to sort of Peg it at the same gap

on the way down right um their price

versus what underlying Lumber is

that's right Lumber tends to be a lower

than average margin category it's a

commodity so it's very price competitive

and as a result they tend to price to uh

whatever the Market's bearing at that

time so what actually happens is as

lumber prices come down and this becomes

a smaller portion of total sales it's

actually a good guy because you have a

smaller portion of your sales coming

from a lower margin category now over

time this tends to normalize and uh it's

not as much of a longer term

consideration but as you're rightfully

pointing out this can have some uh

shorter term implications and we're

seeing that in the volatility as of late

Michael you began to tell from this a

moment ago just just kind of want to

clarify or perhaps ask you to add on to

this a little bit more where would you

say that we are at in the DIY cycle

I think we're moving through the middle

stages of the DIY cycle as you uh are

probably well aware the consumer had

binged on the consumption of a lot of

goods over the last few years in areas

like patio furniture grills appliances

and so some of that is being pulled uh

being pulled forward and there's

evidence of that now at some point we'll

get to a base level of demand probably

in the next few quarters and those

categories will start to grow again and

Home Depot and Lowe's should be prime

beneficiaries as a cycle of turns but

whether that cycle lasts another two

quarters or eight quarters it's really

going to depend on the overall state of

the consumer environment and at this

point that's going to depend on the

labor market one more thing I wanted to

mention about this quarter is what Home

Depot talked about on the weather front

particularly in California I'm seeing

some weather effects and the hit to

sales how broad is that impact going to

be for other retailers that have

exposure in those Geographic areas too

so we're going to see some of the same

themes that Home Depot talked about on

its call across the retail sector not

only because of the weather impacts and

we've seen that already from retailers

like Tractor Supply and O'Reilly but

also just the overall environment for

discretionary spending on Goods has

certainly taken a step down over the

last few months and we expect to hear

that from other retailers over the

course of the next few weeks the

question is whether or not this is a

temporary condition because tax refunds

are lower the weather SNAP benefits and

pull back and so do we start to see an

improvement as we get into June in July

or is this just the new Norm consumer is

fatigued on all the things that he and

she have purchased over the last few

years and as a result we're entering the

later stages of the cycle and it's best

to have cautious expectations on the

consumption of discretionary goods from

here really solid insights always

Michael Lasser ABS U.S Hardline

Broadline and food retailers thanks so

much Michael

and coming up everyone a gym Revival

we'll speak with the CEO of Planet

Fitness as the industry it's a renewed

push that's next

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it was an uphill climb for the fitness

space following the covid-19 pandemic

but the sector is bouncing back Planet

Fitness saw its highest quarterly net

member growth since the first quarter of

2020 surpassing 18 million members in

its latest report Planet Fitness CEO

Chris Rondeau joins us now Live In

Living Color here on set Chris great to

see you thanks for having me absolutely

all right walk us through some of the

catalysts for this quarter what really

jumps out to you is the reason why

you're seeing so many members come back

yeah there's no doubts ever since covet

you know started to pass us you know

it's there's a definitely a undertone of

people paying more attention to their

health and wellness we're seeing people

work out more cancellations are down and

the younger Generations Millennials

especially gen Z's adjoining quite a bit

faster than we anticipated as that

generation rolls in there's still about

five more years left of them rolling in

of age but they're joining quite a bit

faster than we ever expected and today

already we have about nine percent uh

almost one in ten of every gen Z in the

country is already a member and in these

other five years I don't even have a age

to join yet believe that so and

Millennials are already at nine percent

as well so it's um it's just a great uh

trajectory we're seeing of them joining

um and then you may have heard we just

launched High School summer pass which

is where we open our doors to teenagers

in high school to work out for free all

summer long no strings attached

um and I I'm what's interesting about

these numbers is not only are people

joining but they're coming a lot right

their frequency of visits is High

um how long when you see in the past

people come and there's usually a burst

of energy when people join right they

want to work out a lot how does that

what's the sort of attrition or stick

with it rate usually of people when they

do that yes how we look at it and as we

talk about the model a lot we can't we

really cater casual and first timers so

we're really not about the person

getting fitter right we're trying to get

people off the couch and introduce them

to Fitness and at ten dollars a month

anybody can can a tailor membership so

we look at what happens after a year if

we can get yours today a year we feel

like we've turned you into full lifer

right and after about that it's about

two and a half to three percent a month

attrition but right now we're seeing

better attrition today than we did a

year ago and even with inflationary

costs of you know moving the wall it's

not going as far we're actually seeing

that better wait and how many people

stick around for the first year you said

it's two to three percent yeah after the

first year we don't even watch it we're

going to track it we want to introduce

you and my people fought the wagon and

but what we like is easy companies you

go and 30 of our joins are rejoins they

come back and that was 20 pre-covet so

not only that is it coming back faster

than they did in the past so they're not

shooting bricks and mortar they're not

true I mean not choosing a home fitness

they're not choosing working on the side

they're coming back faster yeah I I mean

it's well documented in our discussions

in the past I I have been a black card

member over at Planet Fitness and um the

problem for me is that it it is so easy

for one to cancel it however it's also

so hard for me personally to cancel them

because I use it actually more when I

travel than I do around the corner so

how in terms of just making sure that

people are getting the full benefits of

whatever tier they decide to sign up for

and even upselling say somebody comes in

at the low tier membership but they

decide you know what later on I want to

I want to get up to a black tier

membership even sure or the highest

tiers what's in that relationship do you

typically upsell them on and where are

you investing further in those

experiences to get more conversions

towards that top team yeah that's a

great question because most people see

us know us as our 10 membership right

that's BC advertised the most and

believe it or not over 60 percent of our

members walk in end up taking the black

card membership the point of sale once

you understand the value of the

Blackheart membership and to your point

reciprocity use any club in the world

all 2400 of them no additional charge

and that's the most most used one in

five workouts is not at your home Club

you're visiting another club you have

guest privileges you could literally

bring a free guest to work out with you

every day different guests same guests

no no additional charge then we have a

Blackheart Spa areas in the club so you

get access to tanning massage beds

massage chairs we now putting meditation

pods in these areas and that's for you a

severe black member you can use those

those amenities and the new one is our

Perks program so in our app is we do

Partnerships with shell gasoline Crocs

Blue Apron Sam's Club you get on the

list so if you're a member of Planet you

get discounts at these other partners

and if you're a black I remember some of

some some of those get bigger discounts

so we continue to add value and that's

why it drives that black card

acquisition free

um pre-pandemic it really felt like

there was an explosion in Boutique

Fitness right

um in things like Rumble and things like

berries certainly that are very popular

in urban areas like here in New York

City

um how much of that is competition for

you guys I mean I know you said you sort

of are targeting first-timers people who

don't work out all the time so do you do

you see that there's a lot of overlap

there yeah I don't see them as

competition at all you know they're

really they are really uh they're great

exercise but they're they're hard you

know first time has never done it or

maybe hasn't done it for 20 years since

College you're not probably doing like

your first visit in a workout and it is

pricing compared to 10 membership so

um I don't look them as competition I

look at them they're kind of fighting

over the same customer in their own

world people get bored with doing doing

a CrossFit type class they might do a

cycle class they might go to a rumble

box and they might go to a Pilates and

they bounce around I do think I benefit

in the fact that most of those type

boutiques need reservation to work out

you can't just walk in work out that day

you need to make an appointment now if

you can't get in that means you don't

work out that day so I think I benefit

from people who do memberships planet is

your secondary membership so if I can't

get into a class today you can go to

planet and get it on a treadmill we'll

use some weights yeah and I'll take my

arms to your class tomorrow you know so

so I think I'd benefit in the fact that

you know we don't need a reservation you

come in 24 7 on most of our clubs and

you have 20 000 square feet of all the

equipment you ever want you know even

when there was such uh just wave of

people who were looking at Connected

Fitness devices and saying I need to be

doing more in-home Fitness at least

either prompted by the pandemic or

because they had made that purchase

during the pandemic yeah and they had to

continue to spend into or make sense of

that purchase you fast forward to now

2023 where would you say that we were at

in the cycle of in-home Fitness as it

correlates to where you're seeing people

move back into that in-person Fitness

experience at Planet Fitness because you

you had also invested heavily in that

digital touch point for a lot of end

users or gym goers even if you will sure

I look at you know any exposure to

Fitness is great for everyone right and

and I think I still I am still a

beneficiary of that you know and I think

people realize whether they give it a

shot at home or they had to give it a

shot at home because of covet and then

we'll break some water open

um and let's face it at home fitness has

been around forever it's been around

since Richard Simmons in the 50s and 60s

you know but a really true bricks and

mortar experience if it's affordable is

going a far away anything you have at

your house and that's if you have the

room in your house to do it or you have

the money spent on apparatus so but I

think um I think also what what digital

Fitness is good is it's good education

right you don't need to hire a trainer

to learn to work out and pay 100 a

session you can use your digital Fitness

in our clubs and use all the equipment

and I have to hire a trainer and we have

a lot of content in our app and people

use it in our clubs learn how to use the

equipment but they also use other

people's apps which is fine you know if

that's the experience that they like and

they use our equipment so I look at it

it's good exposure it's good education

it allows them to get a better

experience at our clubs which might lead

to more workouts like we're seeing do

you guys still do the free pizza we

don't we haven't restarted it is done no

we have Tootsie Rolls we have those

still but we haven't done that since uh

covet but you know we keep talking the

debate about bringing it back to zero is

not a pizza yes

give you a little boost I don't know

you're mentioning Richard Simmons has me

hearkening back to my mom working out to

his wake up and breathe middle of the

living room very very fun leg warmers

very fun memories of that period Chris

Rondo great to see you as always Planet

Fitness

thank you and we're continuing to watch

former Executives from svb and Signature

Bank testify before the Senate Banking

Committee we're going to bring you the

latest headlines as they come we'll be

right back

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let's do a quick check of the market

sponsored by Flex shares we are mixed

for the U.S major averages right now the

Dow and the S P 500 in the red while the

NASDAQ is clinging to some gains to the

tune of about two tenths of a percent

will be generous and round that up to 20

points in positive territories where

we're seeing but the tech heavy average

s p lower though by about a quarter of a

percent and the Dow Jones Industrial

Average down by about six tenths of a

percent and what better way to leave you

than with some big interviews that are

coming up on Yahoo finance live chechi

BT heads to Capitol Hill where shella

kufa is going to speak with a panel of

experts as open IAI CEO Sam Altman

testifies before Congress you don't want

to miss that and our corporate towns the

future of work Elon Musk seems to think

so Michelle we'll speak with an advisor

on the future of snail Brook Texas yes

plus stay tuned for our very own

Jennifer John Berger's conversation with

Senator Elizabeth Warren that is a first

on Yahoo finance very curious to hear

what she thinks about the bank hearings

today that debt ceiling fight and much

more that's coming your way at 3 30 p.m

today that is the don't miss can't miss

interview of the day and we'll be back

tomorrow have a great one

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welcome to Yahoo finance it's 11 A.M on

the East Coast 8 A.M on the west I'm

Rochelle acufo here's a look at what I'm

watching this morning the AI debate

arrives at the hill a senate

subcommittee has the chance to grill

open aico Sam Altman regulation is the

word of the day but what form could it

take we'll ask our panel coming up next

and a brutal earnings report from one of

the nation's biggest retailers Home

Depot warning on sales offer its biggest

Revenue Miss in over 20 years we'll get

the market reaction from the NYSE and

building a utopian Town should your boss

own your house we laser focus on Elon

musk's reported snail Brook project and

ask if it could solve the nation's

growing housing problem

but first let's take a look at how the

major indices are faring this morning a

mixed picture the dial just slightly in

negative territory there about done

about two-thirds of a percent there but

off about 200 points the S P 500 also

down about a third of a percent down 14

points take every NASDAQ they're the

only ones seeing some shoots of green

there but up barely just about tenth of

a percent or 12 points

let's also check in on the treasury

market here we're seeing shorter term

yields here up about 1.6 the tenure up

one and a half percent and the longest

term yields the 30 up one and a half

percent stocks have a lot to digest here

especially amid those debt ceiling talks

well Business Leaders including open

aico Sam Altman gather to face a Senate

Judiciary Committee over a growing

presence of AI and this comes as

lawmakers grow weary of the potential

risks tied to artificial intelligence

here with what to expect and we what we

expect to learn from today's hearing is

Yahoo finance is Dan Howley and Ali

garfinkel so Ali let's first start with

you

so first things first here Rochelle

there is a lot of talk about history now

why right first things first I mean I

don't remember the last time I heard the

phrase printing press so often in

anything I was covering let alone a

congressional hearing there's also a lot

of talk about the Industrial Revolution

but why am I bringing up these historic

parallels because they're trying to

communicate the gravity of the concerns

these Senators have right off the bat

the Industrial Revolution parallel for

example ties back to jobs concerns about

worker displacement and in this first

hour of the hearing Altman did to his

credit immediately acknowledge that yes

AI will have an impact on jobs but I

think it's important to say these

historic parallels actually belie

something even deeper which are concerns

about society's safety concerns about

democracy Senator Josh Hawley was

particularly drastic in his descriptions

of the depth of his concern

we could be looking at one of the most

significant technological innovations in

human history

and I think my question is what kind of

an innovation is it going to be

is it going to be like the printing

press

that diffused knowledge and power and

learning widely across the landscape

that empowered ordinary everyday

individuals that led to Greater

flourishing that led above all to

Greater Liberty

or is it going to be more like the atom

bomb

the bottom line right now is that in

this first hour the stakes are high and

it's not subtext it's very actively text

it is very very clear that they are

coming into this with a sense of gravity

and a sense for how much AI can really

evolve Society

and I mean and it's tough because you

have the ethical questions and really

try to regulate something that we just

don't know the expanse of at this point

so then Dan what are some of the angles

that you're looking at

yeah I think one of the the things here

is the need for regulation versus the

need to allow the technology to continue

to expand uh there's a lot of talk here

about uh how dangerous the technology

could be if it's left or if the

companies are left to their own devices

if they continue to just push boundaries

and don't look at potential safety

issues that includes inherent bias

included in some of the data sets that

are used to train these Technologies uh

the ability for them to potentially take

jobs the ability for them to be relied

upon even though they provide false

information those are some of the the

risks and something that you know Altman

himself Sam Altman himself at openai is

saying look we we need regulation we

need guard rails but at the same time

if the guard rails are too strict the

technology won't be able to kind of

prosper and we could end up falling

behind in this category and so you know

this is this is very different than the

the discussion uh we were having you

know last year two years ago about the

metaverse where you know everybody was

saying that that's the next big thing

that's the next big thing AI has already

been proven as a technology to push the

boundaries uh of what's uh what

companies are capable of uh provide us

with new real useful functionality for

the things we do every day I mean you

know open up any app on your phone and

it's using AI

um you know so the the idea that it

could be uh kind of corralled and you

know uh kind of regulated to the point

where it's not able to evolve further is

also a real threat especially when it

comes to you know the geopolitical

tensions going on between the US and

China they're the two you know

superpowers that are really trying to

one-up each other now in this space

I mean this is going to be a tough fight

indeed and really tough to navigate like

trying to regulate the entire internet

as it's just rapidly evolving a big

thank you there to our very own Dan

Halley and Ali Garfield thank you both

well in today's Senate hearing lawmakers

will look to shed some light on the

state of artificial intelligence and

address concerns over AI risks here to

discuss the latest we have former FDIC

Chief Innovation officer Salton megji

along with Amy Webb future today

Institute chief executive officer a big

welcome to you both

um Sultan I want to start with you

because obviously this was framed as you

know this could go in a couple of

different directions they mentioned the

printing press versus the atom bomb at

the end of the day though this is a tool

so how should we be viewing this in

terms of how this is regulated given

that we don't know the risks still ahead

well you've framed the question in a

great way because not only do we not

know what it is today we don't know

where we're going over the next few

decades you know artificial intelligence

has been in use in our civilization for

decades now you know I've built some

visual pattern systems back in the 1990s

and so this is part of every feature of

Technology out there and it's just

spreading it at an incredibly rapid rate

so not only do I think we have to

consider that this is a very broad

conversation that's not quite uh at a

point where we know what the landscape

looks like and someone who has been both

on the you know building AI companies

but also trying to regulate emerging

technology for the US government I can

tell you there's a pretty big gap

between the tools that the regulatory

Community has and what is actually being

built in the market and uh it's going to

be up to both parties to to figure out

how to work together in a myriad of

different ways for the next few decades

and Amy asked me here there's Sam Altman

saying you know we welcome regulation in

this space both from the public and the

private sector here but

how do you even start to lay the

groundwork on something like this we

know that IBM's Christina Montgomery

reference some of the things we saw in

the EU model this risk-based but also

some specific cases for more perhaps

sensitive areas

sure well I'd like to unpack that

question

um and and sort of address it in two

different ways first of all it's I think

worth noting that over the past decade

or so and certainly the past five years

uh it's been in Vogue for the leaders of

tech companies to invite regulation to

some degree having this conversation on

the hill as a way of Washington feeling

like they've gotten to action when in

fact no action actually results and

we've seen this time and time again

whether it's Google or meta or now the

founders and and heads of openai so it's

the first thing the second thing is that

we have now forgotten but in February

2020 openai released the second

generation of its tool GPT and uh sorry

it didn't release it it really it issued

a press release and that press release

literally said that this was too

dangerous and too powerful for us to

release which created quite a bit of

Buzz now to be fair uh kovid was about

to to take over the world so we were a

little distracted at that point but in

the few years since we've not created

guardrails regulatory Frameworks

alignment in any way on how we want the

farther future of of AI and Society to

look um it's not like we have an AI

police force so I think that there's

some amount of

you know if if I was an outsider looking

in

um I would be a little concerned with

our lawmakers at this point they're

incredibly late to the party

um making Grand proclamations about what

they think the future of AI looks like

Europe has been far ahead on regulation

as it always has and quite frankly I you

know I don't think that traditional

regulation is the right way forward we

have laws that are perpetually unable to

keep up with the pace of technology and

by the way this technology is classified

as a general purpose technology which is

probably why you're hearing references

to the printing press

um it it will fundamentally alter uh

economic development in our country as

well as other countries so we have to

classify this a little differently and

also think through how we're going to

work with it differently because if we

use the heavy Hammer of regulation in a

traditional sense we potentially thwart

the development of business

so it Sultan to that point I mean some

of these same voices that are pushing

for more guard rails are the ones still

pushing the boundaries at the moment

even this week

um openai launched you know an addition

when it comes to the search engine that

comes with Jack with chat GPT what do

you think lawmakers are going to be

focusing on it are they really even

actually going to be able to tackle this

given that they they really don't have

the skills to keep up with what's

already happening with AI

well that's a great way to frame it I'd

add one other piece to your question

which is is there any consensus across

the two houses of Congress on the and

the white house that can actually get

any laws passed and I think we've seen

even in as much as we've been evaluating

the failures uh across the regulatory

system and the banking sector that led

to this recent banking crisis that there

is no way to get new laws passed and so

for I think a lot of the people involved

in these discussions they're they're

giving speeches that are core to their

constituency you know one side will talk

about open up Innovation and American

capitalism and Liberty any other will

talk about danger and fear and you know

issues with equity and diversity which

is you know they're both right but the

problem is is there's not going to be a

lot of law out of it and so my view is

for what it's worth that we're just

going to see existing statutory rules

apply to these new technologies whether

or not they make sense so you'll see the

banking Regulators say okay you can't

use AI to make a credit or a lending

decision but have no mechanism to croup

but that's not actually happening and so

they'll find a way to declare Victory

without actually doing anything

and Amy Sultan raises a good point even

when you look at crypto and these

complaints about regulation by

enforcement do we risk the same thing

happening but obviously this time you

have big Tech involved you have your

Microsoft and your Googles uh Regulators

already missed this boat at this point

right I mean I I think we what Sultan

said is exactly correct um we have a

situation where again the traditional

mechanisms of Regulation which work in

other sectors don't really make sense

when applied to an emerging technology

that has a long Horizon like AI

um you know open AI uh a couple of

months ago I saw some new components

that will shift what shopping looks like

um which is certainly very interesting

for consumers but could be catastrophic

for Brands

um as as some of that technology starts

to change but by the time that we sort

of get to the point where there's Mass

adoption and Regulators finally pay

attention it's a little too late and and

I think there's going to be this

continual process of trying to catch up

and then once once everybody arrives

from government they've got the wrong

tools to manage the situation so the

Better Way Forward because the chat GPT

function and open AI as an organization

is when tiny piece of an enormous AI

umbrella and you know it's it's been

decades in modern development but quite

literally we can trace back hundreds of

years to the foundations of what we're

using today the more that we punt on

this and I really do view what's

happening on the hill right now is a

punt the worser the the worse that this

gets for us longer uh the further we go

into the future

and to that point Sultan so what are we

looking at in terms of next steps here I

mean you had meta releasing you know

made available to academics its own

version that they then turned into open

source AI models that they then share

freely given how fast this is this is

going what are the next steps here then

after this hearing if this is supposed

to try and lay some of the groundwork

and some of the rules that private

companies may or may not have to adopt

at this point

it's it's going to be the Wild Wild West

for the foreseeable future I mean to the

point where you know I was kind of

hoping out at these hearings we would at

least get to some degree of defining

what artificial intelligence is because

for the most part what's out there is

not actually artificial intelligence

it's dynamic programming it's machine

learning these are you know computer

science terms and you know the internet

wouldn't work without Dynamic program

the internet wouldn't work without

machine learning so getting to a point

where we can Define the conversation so

that we can then decide what appropriate

framework we might want to put in place

next that would be a win sadly I don't

think that's going to end up happening

and this is a multi-year journey for the

U.S Congress and we've kind of set the

table but I'm not convinced we're going

to see anything useful I think if you're

an academic this is one of the most

exciting times to to be working in the

space I certainly think so if you're on

the private sector side there's

tremendous opportunity using tools that

include machine learning and dynamic

programming to drive significant

efficiency into your business or to

build new products and services that

will be highly Innovative and the

private sector in Academia is just going

to run far faster than the the

government will be able to keep up

certainly on that piece already a big

thank you to former FDIC Chief

Innovation officer salted megji along

with Amy Webb future today Institute

chief executive officer great

conversation with you both

all right taking a look at shares of sea

limited trading to the downside of more

than 14 right now this comes after a big

profit Miss in the first quarter for the

internet service giant see reporting

adjusted earnings per share of 15 cents

compared to nearly 63 cents estimated

the company's Digital entertainment

Revenue dropping more than 50 percent on

an annual basis and sales of goods also

drop nearly nine percent since last year

when upside in the report though is C is

sees e-commerce segment Revenue climbing

up 50 year over year and despite today's

drop C has actually been soaring this

year as you can see year-to-date up more

than 44 percent

all right stay with us coming up aerial

property advisors president and founder

Shimon shakuri joins Yahoo finance to

talk about the future of work and the

rise of corporate towns stay with us

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let's do a quick check of the market

sponsored by flexshare seeing that

selling action picking up for the Dow

there now of more than 220 points the S

P 500 also down about a third of a

percent there the only bit of green

we're seeing right now is the NASDAQ

being pushed up by Google Amazon and

Nvidia right now

well in a post-pandemic world office

occupancy hovers just under 50 as

according to a report out from Castle

now many workers still opting for hybrid

or full-time work from home but what if

work was your home or extremely close to

it enter Elon Musk the Tesla cos

purchase land near Tesla facilities

outside Austin Texas where he reportedly

plans to build a community for employees

dubbed snail Brook that's according to a

Wall Street Journal report Now

snellbrook isn't musk's first foray into

a corporate community in 2021 musk

encouraged employees to move near SpaceX

Starship facility in Texas the concept

of a company town is not new and was

popular practice in the turn of the

century for Mining and railroad

companies but in an age where less folks

are traveling to the office could

companies like Tesla incentivize workers

with affordable and nearby housing

Shimon shakuri founder and president of

aerial property advisors joins us now

with a deeper dive into what this could

mean for the future of work great to

have you on the show here so this is a

curious proposition here something you

know I know we've seen it and you know

with companies like Foxconn sort of

building these communities having people

closer how do you see this working there

in this day and age

first of all thanks for having me I

think that we always have to look at the

bigger picture of why this is happening

and one of the things that we learned

about is statistically by 2035 the

United States will be short 4.3 million

housing units based on the national

multi-family Council and I think that's

a really important statistic to

understand we are in a housing crisis

the second statistic is from my hometown

which is New York City the real estate

Board of New York is telling us that

we'll be missing 560 000 units in 2030

and when it comes to that there are two

elements that policy makers public

officials can help with one is they

focus on regulation which is important

for low-income housing but the focus

less unfortunately in many cases on the

incentives to build more housing which

is the supply side of the equation which

is super important so you're mentioning

the uh Elon Musk situation where he said

that he left California yeah

um because of you know over Taxation and

over regulation and that's part of

what's Happening he's looking I think

he's looking for solutions that are

beyond what the public officials uh have

been uh presenting and I can give you

some examples or some successful

examples of what has happened in New

York City over the past few years that

was successful and what's happening now

that's a little less successful

examples because yes that we can get to

the reality of what's been working and

what hasn't been working so far

perfect so between 2010 and 2020 New

York City added 117

000 residential rental units that's 68

of the total uh construction that took

place in the residential world and and

most of it was because there was a 421a

or affordable New York tax abatement so

residential developers had the incentive

to develop residential rentals with a

component of affordability however that

program stopped in June of 2022 and you

see that the first quarter of this year

has only 9 000 plus scheduled permits

and that's that's about half of what it

was the quarter before uh and and I'll

tell you that that's going to decline

because of these uh misalignment

incentives and um incentives by the way

are sometimes something that the cities

can do that doesn't cost them much the

first incentive is zoning

when you provide the zoning to or allow

more density you're really essentially

allowing the um the building to be built

or build a bigger building to be built

within the same location the second

thing is the tax incentive that I just

described it property tax incentive you

have a vacant lot today it doesn't

produce tax revenue if you build a

building if you incentivize and develop

to build a residential rental building

it's adding housing and it's adding jobs

and in the future while that tax

abatement phases out you can benefit

from taxes as well

but you know what about tying your fate

essentially not just now your job if you

take on a job here but also the

literally the roof over your head if you

get laid off and you've already tied

your fate and your housing to a company

I mean surely that's not something a lot

of people are comfortable with

yeah it's a great it's a great question

and it's a social question that we have

to ask ourselves and you know if you

live in a community that provides you

with housing and with your job and you

have to uh move away

um that that could be an issue but it's

not really different than living in any

city right and being laid off and having

to to pay the rent in a way so all of

these items of all of these all of these

items needs to be taken into a

consideration and that's when regulation

comes to place in case of you know

low-income housing or low-income needs

we definitely as a society have to take

care of that but it's the the supply

side of the equation is the one item

that we all have to focus on uh moving

forward to mitigate that uh housing

crisis and that's part of what I think

that our elected official uh should

think about it does need uh political

courage I want to say one more thing

about our elected officials because I

got to give credit to the mayor of New

York City and to the governor

um they have been discussing the supply

of Housing and the incentives of supply

of housing here in New York City in in

the biggest possible way I really hope

it trickles down to the rest of the

elected officials we have great

leadership let's make sure that we build

more housing here

so for some perhaps private companies

who want to sort of take things into

their own hands when it comes to

affordability I mean even Mr Beast AKA

Jimmy Donaldson known for his

philanthropy bought a neighborhood you

know in Greenville North Carolina where

he grew up for his family and for some

of his employees to you know to be able

to commute closer to work some backlash

you know a lot of people a little bit

uncomfortable with that but what do you

think about the role of some of these

private sort of corporate communities

being evolved as they do wait for more

affordability from from lawmakers and

for really for prices to come down

yeah I can give you examples from the

commercial World actually here in New

York City one of the things we've seen

in office that Google is building their

own campus for example here in New York

City

um so private uh companies are doing

that JP Morgan is building their own

Offices here so private companies are

investing in real estate for the benefit

of their uh employees on a commercial

level when it comes to the residential

level I think that uh that that larger

companies are sometimes thinking or

trying to help communities we've seen

that with Amazon we've seen that with

Google they're not acting directly uh

investing in their employees housing

they are they're investing in their

communities and I think that makes a lot

more sense because again you're living

in a certain Community you work in a

certain community and as a corporations

Corporate America you are investing in

affordable housing in these specific

communities which I think uh makes a lot

of sense uh and and the right social

elements to it as well if that makes

sense friends

that makes sense I I prefer that

approach to sort of you know living in

you know snail Brook and wondering if I

you know call in sick or someone come

knocking on my window like we have the

bus coming for you don't come and get

you to work a big pack Edition founder

and president thank you aerial property

advisors thank you so much

all right coming up have the days of

business friendly political parties gone

away Yahoo finance's Rick Newman has

some thoughts on the matter those

details next

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consumer demand taking a toll on Home

Depot's outlook for the fiscal year here

with more on the latest Market action in

retail we have Yahoo finance contributor

Remy Blair Remy there on the floor of

the New York Stock Exchange what's going

on

well U.S Equity markets remain mostly

lower on this morning we are seeing the

Dow Jones Industrial Average as well as

the s p lower and the NASDAQ trading on

both sides of flat this morning and of

course Home Depot Shares are in the

spotlight today following its latest

earnings report and shares do remain in

negative territory earlier the retail

slashed its Outlook and also said that

it expects annual sales for the Home

Improvement retailer to fall as

consumers cut spending and as demand for

home renovations and Home Improvement

Goods uh pull back meanwhile taking a

closer look at the details out from the

earnings report Home Depot does expect

sales to decline by two to five percent

in fiscal 2023 and that is a

considerable pullback considering that

earlier this year the retailer said that

it expects to see flat sales meanwhile

first quarter Revenue missed out on this

forecast as well with our Revenue down

by 4.2 at 37.26 billion dollars this is

the biggest Revenue missed since

November 2002. at the same time a comp

sales fell by four and a half a percent

for the retailer much more than expected

at the same time q1 profit did come in

uh above estimates at 3.87 billion

dollars and this week we will be getting

more earnings out from the retail sector

we have Target as well as TJX companies

Walmart as well as FootLocker at the end

of this week keep in mind that we got

U.S retail sales for the latest month

which did show an increase of 0.4

percent but that was half then the gain

expected and ahead of the reports on the

analysts you expect to see had ones that

are weighing on discretionary spending

as U.S consumers continue to adjust

shopping habits as well as Titan

household budgets

all right thank you for that obviously

Home Depot and economic Bell whether

they're sending some Jitters through the

markets today a big thank you there Remy

Blair

well the court case between Florida's

governor Ron DeSantis and Disney is

still ongoing most recently Florida

senators approved a bill which dissolves

the development agreement between Disney

and the Reedy Creek improvement district

but what impact does this have on the

relationships between businesses and

political parties here to discuss more

is our very own Rick Newman Rick it's

hard to to see who's the business

friendly party here anymore I don't

think there is a business friendly

political party in the United States

anymore and I think this goes Way Beyond

uh what Florida Governor Ron DeSantis is

doing in this battle with Walt Disney

down there I traced this back to the

Trump Administration when Trump did two

things that businesses always count on

the Republican party to do he signed a

tax cut Bill and he liked he loosened

regulations but Trump also waged this

trade war against China and many other

countries in Europe Canada Mexico uh but

so that involved new tariffs on Imports

and that raised costs on thousands of

U.S businesses and it didn't do anything

for the biz business Community basically

Trump was saying he was picking

favorites which a lot of critics say the

Democrats do all the time he was saying

I favor a domestically located

businesses those are the ones that

benefited from the tariffs and uh

companies that rely on Imports for

components and things like that they

were the losers and we now have a lot of

data to show that those the Trump trade

War didn't really help U.S businesses at

all and it hurts some businesses so now

we have Ron DeSantis going after Disney

this is purely political this has

nothing to do with any kind of business

related policy we've got other

Republicans now they're sort of copying

what um DeSantis is doing we're hearing

members of Congress especially

Republicans in the house now talking

about they want to wage their own war on

what they call woke capitalism I think

we're going to see a lot of this in the

2024 election and there's a lot more too

which I've written about recently but it

just does not look at all like

Republicans are the party of business

anymore in the United States

and then you're also seeing a big push

from the bite Administration keeping a

real Hawk's Eye when it comes to some of

these mergers and Acquisitions blocking

them when they can what about that side

of it can we expect to see perhaps less

mergers and Acquisitions although we did

see an exception with the bank Fallout

yeah for sure I mean the Biden

Administration

um yes they they actually favor smaller

companies rather than bigger ones I mean

that I don't think there's anything new

about that on the Democratic side

um but look I mean we we've even got um

Republicans who want to break up big

Tech

um not just Democrats who want to do

that

um in Montana they actually passed a law

recently that bans Tick Tock

um there are some certain reasons to

worry about Tick Tick Tock but I mean

like actually Banning a company from

operating in your state

um so there's a lot of weird stuff

happening Rochelle I'm not saying

American businesses

necessarily going to suffer here I think

of business in the United States always

lands on its feet and it will again but

there's a lot of turmoil in terms of

which political party is pro-business

which is anti-business and it breaks

down much more along political lines

than it ever used to

interesting stuff they would appreciate

that update Yahoo finance is Rick Newman

thanks so much

all right coming up this is Winners

how's your commodity exposure we'll be

delving into the gold and crypto trade

with the Bloomberg intelligence

strategist stay with us

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mood on Wall Street the sentiment among

fund managers deteriorated to the most

bearish this year that's according to

Bank of America's latest survey 65

percent of survey participants are now

expecting a weaker economy the 25-page

survey detailed key findings on the

state of the economy but don't worry

we're here so you don't have to study

the whole report Yahoo finances Josh

Schaefer has you covered with the three

most important charts hey Josh hey

Rochelle so we got the spark notes Here

Right and we're going to start with

negative sentiment what starboard

recessions investors are still expecting

a recession 47 percent say they expect a

recession in the next 12 months that's

actually down from 48 percent last month

but still you can see historically very

high and the key thing to know with this

expectation is many strategists have

pointed to the fact that censor

recession is in some ways so baked in

it'll be interesting to see how that

actually plays out for stocks a lot of

people already expecting a recession so

you could argue maybe that's already

potentially priced into the market

something that's not priced into the

market though that people are still

focused on has been the debt ceiling and

investors right now just don't seem that

worried about it Rachelle so respondents

here we should note this came out May

11th uh this was May 5th through May

11th it came out today but that's when

they were surveyed and 71 said they are

not worried about the debt ceiling as of

now and they are confident that ahead of

that June 1X date there will be a

resolution Now updates from Washington

today do not indicate that but it's been

interesting to watch what's been

happening in stocks you can see when you

take a look at the S P 500 that has not

there has been essentially no worries

because historically what we're looking

at here is a 2011 chart that was when

debt ceiling worries really took hold

look at what happened to the S P 500 so

until we see something really downturn

Rochelle it does not look like markets

are pricing in a deck ceiling crisis

should point out this peak to trough

here was nearly 20 percent in 2011. so

there is concern if this keeps going on

it may not be good news for markets

final chart I have for you today is on

Tech investors Still Loving Tech loving

Tech as much as they've loved Tech since

2020. now what I really want to point

out here so this what you're looking at

is a spread between the short of U.S

banks and the long of big Tech so you

can see when the numbers are down here

in big ways that means more investors

are wrong big Tech than Wong Banks now

what happened here that's interesting

Rochelle is in 2020 you could see

investors were very long tech in 2021

the xlk popped over 30 percent let's go

to 2016. investors were very long tech

2017 a great year for the xlk the same

thing played out in 2011. now when you

look at the xlk already this year Tech

has obviously rallied to start the year

so you sort of Wonder is the rally

already baked in has it already happened

you can see the xlk there up already 22

percent so while we do have Tech

investors or investors long tech right

now I am curious to see if that might

already be priced in and this might be

the end of what has been the rally in

those years past but again three fun

charts to sort of see where we're at

right now interesting to see what

happens with that debt ceiling crisis

indeed got a lot of moving Parts there

great analysis there from our very own

Josh Schaefer thanks so much

well 2023 has been a year of rebounds

for some beaten down assets Bitcoin

perhaps the most notable but with

inflation Rising interest rates and the

growing fear of the US defaulting on its

debt is the tide about to turn a great

time to speak with Mike mclone Bloomberg

intelligence senior macro strategist

good to have you on the show here so we

mentioned Bitcoin one of the best

performing asset classes by return year

to date along with gold so you have you

know your traditional Safe Haven and

something that at one point was

considered digital gold or a digital

safe haven break those down for us

starting with Bitcoin

well Rachel I think it's important to

note that virtually all risk assets have

been helped this year Bitcoin is one of

the riskiest and some people call it the

fastest horse in the race it's up the

most but it looks like it ran into a

wall resistance around 30 000. it looks

like risks are tilted melt towards the

downside particularly if the stock

market starts rolling over yet goals the

opposite amongst Commodities it's the

significant major commodity that's up on

the year and 12-month basis it's up

about 10 percent and you look at the

Bloomberg commodity index on a 12-month

basis it's down 24 but I think what

you're seeing happen is deflation in

Commodities most particularly fossil

fuels like crude oils down 40 and 12

month basis it's fueling inflation for

gold yes we have this budget crisis but

I think the biggest risk now is as we

tilt towards recession that gold

continues outperform most assets and

continue including Bitcoin unless we get

that stock market to take off and it's

kind of counter what I think the feds

wanting

So to that point then what do you think

is going to be the next Catalyst does it

have to be a Fed pause or a Fed pivot in

order to really see a catalyst hit

so the Catalyst I think it's already

kicking in and that's copper you

probably didn't expect that answer but

copper has a very high correlation at

least for the last five years with the

stock market copper is broken down it

was up 12 percent in the year you know

it's the metal considered to have a PhD

in economics it's broken now it's down

almost two to three percent on the year

it looks like it's heading lower that's

typically an indication for risk assets

for the economy and for the stock market

so if the s p files that which I think

it will I think Gold's going to continue

higher and Bitcoin is very risky it's

you know cryptos are the riskiest assets

bitcoin's just the least risky is more

likely to file copper I think in this

case as we kill towards recession now as

far as that pivot from the fed that's

priced in the Futures Market what's

unique about it is most economists say

oh and even the fences we're not going

to be easing in in the in this year yeah

the futures of price work so I think one

way for that to happen is for

Commodities that continued to deflate

which they are and the stock market to

roll over that might Force the fed's

hand a little bit to to they've already

stopped tightening to potentially ease

by the end of the year

another commodity to watch we're taking

a look at oil over the past year down

almost 40 about 38 so far what are we

seeing there because we know there were

issues when it first came to you know

the tail end of what we're still seeing

with the Ukraine crisis and then

obviously you have things like summer

summer oil summer Blends and things like

that what are some of the things that

you're noting in the oil market right

now

it's a bear Market one thing to remember

about crude oil is it peaked in 2008

last year it just bounced to a lower

high and it looks like it's rolling back

over to that bear market so it had a

bounce in the bear Market I see crude

oil WTI had more likely head towards

about 57 dollars a barrel 57 a barrel

was the average price of 2019 before we

kicked in this massive liquidity pump

that was related to covet and the war

and there's a good indication for that

happening natural gas has already done

that natural gas is average price before

it did before it pumped up to around 10

it was around two now it's dropped to

two it's bounced but natural gas is is

the most significant measure of heat

electricity and fertilizer in this

country and and crude oil is significant

but as the world pills towards recession

I think the way I decided it might be

irrational expect demand increase on a

global basis with the U.S heading

towards recessions so I see WTI in a

bear Market more likely to continue

heading lower following natural gas and

in this case kind of in sync with copper

which has been breaking down recently

and I have to ask you about Home Depot

obviously when you look at some of the

deflation that we saw in lumber prices

weaker consumer demand when you look at

it as sort of a Bellwether of

Commodities some of these other home

builders you have all these Commodities

sort of built into the business what is

that telling us right now

bear Market I'm glad you mentioned

Lumber Rachel because it's not a

significant commodity but it's a good

indicator it's dropped to the same price

as it first traded in about 1990 after

that massive pump last year it was the

biggest one of the biggest rabbits in

the bull market and the rabbits have

collapsed natural gas is the more

significant rabbit that has also

collapsed I see The Dominoes falling

copper last week broke down in the year

crude oil is breaking down sugar is one

of the few that's up but it's not

significant and there's only one outlier

all that deflation we're seeing from

Commodities is keeping gold inflating I

think that trend is going to excel right

particularly as we tilt towards a

recession

all right great stuff thank you for your

insights we do appreciate you joining us

Mike mcloone there Bloomberg

intelligence senior macro strategist

thanks so much

all right coming up Tesla is revamping

its model 3. so what does this mean for

China our own price of Romanian has that

breakdown next

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the EV race in China is heating up as

Tesla's long-awaited model 3 refresh

reportedly near's final trial production

in Shanghai this according to Bloomberg

for more details on this we have Yahoo

finances France supermanion looking

forward to this update price

hey Rochelle so yeah this uh the Tesla

Model 3 update uh you said nearing uh

trial production in China according to

Bloomberg

um this version will be longer sportier

sleeker uh a Slicker interior design

that is uh and and it's also very

secretive down there because Tesla's

making workers lock away their phones in

special lockers so they don't uh take

pictures or leak photos of the

production line uh which actually they

may shut down part of the Giga Shanghai

for this for a few days to get ready for

it so you know this rumor kind of goes

back all the way to November when

Reuters first reported that this project

Highland codenamed uh for the model 3

update was gonna come out in China

um because this is an important update

because the model 3 is sort of long on a

tooth it's been out since 2017. uh so

updates certainly needed here but

um I think a big part of this is also a

big move a big part of this is the fact

that they want to improve The Prestige

of the model 3 it's been out for like

for a long time as I said get more oomph

in the market that competitive Chinese

Marketplace and possibly raise prices

too with this new model so it's also

played a boost profitable for Tesla

and one of the things I mean come on I

need I need a new Tesla Model to come

out I need I need something fresh that's

all the way fresh now they're going to

be having their their shareholder

meeting coming up this afternoon at 4 pm

Eastern is there anything that you would

like to hear that you're hoping that we

hear from Tesla today

well uh definitely a few things we're

going to hear about are the the

shareholder uh votes from board members

like Robin denholm and JB Straubel the

former co-founder who came back to Tesla

uh I think people are hoping that that

goes through because he's sort of a

known as a steadying voice potentially

against musk and his firiness but uh

from like things that maybe investors

want to hear maybe Tesla fans want to

hear maybe they want to hear more about

that that model 3 project Highland if

you want to hear more about that that

gen 3 platform I don't think we're going

to see that but we might you never know

Tesla they're known to sort of surprise

here and there so I think you might hear

more about these potential product

updates if you're lucky uh but likely

let's talk about demand pricing and

things like that in terms of corporate

governance too

and certainly less distractions now that

he's not the CEO of Twitter now he's

named a new one so hopefully that will

see that reflected in some of the focus

there as well Yahoo finances price of

Romanian thanks so much

all right coming up big news in the

streaming space what Comcast is saying

about its remaining state in Hulu next

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Comcast will likely sell its remaining

33 stake in Hulu to Disney at the

beginning of 2024. Comcast CEO Brian

Roberts saying at The svb Moffat

Nathanson investor conference today that

it's more likely than not Comcast will

see the full control of Hulu to Disney

the question now is what price Comcast

will ask for the 2019 deal the stream

has made would allow Disney to buy out

Comcast minority stake in 2024 and at

the time the value of Hulu was 27.5

billion cut that into thirds Comcast was

holding on to 9.2 billions in a 9.2

billion dollar chunk of Hulu well now

Robert is suggesting the final price

could be higher than that Disney

announcing days ago in its Q2 earnings

it would combine Hulu and Disney plus

into one app we're taking a look at

shares of Comcast how they're trading

right now to the downside Comcast down

about one percent Disney plus Disney

down 1.8 percent

well let's get you a final check of the

markets before we go we're still seeing

a bit of a mixed picture here only the

NASDAQ and positive territory up just

barely though by about a third of a

percent some of that selling action

slowing down off the session loads for

the Dow down about 210 points the S P

500 also down about 10 points as well

we're taking a look as we're seeing

markets trying to make sense of what

they saw with this debt ceiling debate

that's still ongoing as well as that

disappointing Outlook that we saw from

Home Depot really putting some some some

Jitters here as people wonder about the

economic outlook here and especially a

picture of the retailer industry as well

well that does it for now I'm Rochelle

acufo I'll be back with you at 11 A.M

Eastern I'll see you there

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