Housing market, portfolio tips, restaurant trends: Wealth!

On today's segment of Wealth!, host Bradley Smith explores a range of topics, from the impact of high interest rates in the housing market to strategies for navigating market volatility and the restaurant industry's resilience.

As mortgage rates soar above 7%, Yahoo Finance's housing reporter Dani Romero joins the discussion to shed light on the supply and demand dynamics within the current housing market. She also delves into homebuyers' perspectives on renovated properties, followed by Yahoo Finance contributor Ross Mac, who shares valuable tips for cost-effective DIY home renovation projects.

Amid continued market volatility driven by factors such as the upcoming election and geopolitical tensions, TCW Senior Portfolio Manager Eli Horton and Nuveen Investments CIO Saira Malik offer their expertise on how investors can best position their portfolios during these times.

Closing out the show, the restaurant industry provides a glimpse into the state of the consumer. Cornell University Professor of Services Marketing Michael Lynn discusses the evolving tipping culture, while Yahoo Finance's Madison Mills analyzes Toast (TOST) earnings.

This post was written by Angel Smith

Video transcript

Welcome to Wealth everyone.I'm Brad Smith and this is Yahoo Finance's guide to building your financial footprint.Our community of experts will give you the resources, the tools, the tips and the tricks that you need to grow your money on.Today's show housing hurdles.We talked to an expert about when it'll get easier for people to buy homes.Yes.So listen up for that.Plus prescription drug prices, we dig into the steep prices of medication for millions of Americans.That part of our health is Wealth week plus tipping customs.We ask an expert here to help us to find some of the social morals around giving extra cash for services.All that and much more coming during today's show.Let's kick off the day with housing though.It's a tough time for home buyers who are contending with elevated mortgage rates and low inventory.And now a new survey from Fannie Mae reveals 80% of Americans think it's a bad time to buy a house here with more.Is Yahoo Finance's Danny Romero.Danny take us into this Brad high home prices, rising mortgage rates aren't going anywhere.Data from the National Association of realtors shows that more than 90% of the metros across the US had price gains in the first quarter of this year.The median sales price for a previously owned home grew 5% over the last year from a year ago to $389,000 for a single family home.And the reason the low supply is just not keeping up with consumer demand.Some of the regions that did see some of the strongest price gains.One of them being the South home prices appreciated three about 3% on a yearly basis in the Northeast, 11% in the Midwest, uh 7.7 0.3% and in the West 7.3%.So in the West region really is an interesting um equation here because last year, we saw price declines in the West and we're really seeing a turnaround story happen there.But another key point from this data is really that the monthly mortgage payment for a previously owned home with a 20% down increased 9% from a year ago and it's about $2000 Brad.So, Danny home buyers, they don't seem like they have a lot of choices right now.So how desperate is the situation here, Brad buyers are saying no, go to those fixer uppers.Uh They don't really want to be chipping Joanna right now, even though that new listings have increased somewhat, the quality of those properties have not.And data from John Burns research and consulting.They surveyed about 1400 resale agents and they found that 99% of those agents said that they have seen those home listings need some form of repair.Uh there was and repair and or updates.Meanwhile, two thirds of those agents also said that they saw homes that needed severe updating of kitchens and bathrooms.So really this this data from John Burns really reflects that buyers are not that desperate right now.They want those move in ready homes and that's something where the builders have been able to step up the game and capture those customers.Brad.All right, Danny, thanks for setting up the coverage here for us today, especially as we continue this conversation around housing, aside from tight inventories, another major hurdle for home buyers is high mortgage rates, the 30 year fixed currently sitting at 7.22%.And with the odds of a rate cut being largely pushed back to September and maybe even beyond, depending upon who you ask buyers are surely wondering when they might see some relief with mortgages for more on this.Let's turn to Lawrence Yon National Association of Realtors, chief economist, good friend of the show here, Lawrence.Always a pleasure to speak with you.You know, just as we think about the broader housing environment right now and, and what you're seeing show up in the data, what is really at play here.Are we going to see this scenario continue to play out until rate cuts come into the picture?And, and what is your best guess for when we might see that?Uh Well, thank you for having me on the show.You know, the most interesting situation from my perspective at the moment is that we have very high mortgage rates, 7.27 0.3% rate.Despite that multiple offers are still happening, the buyers are in the marketplace is simply that there is not enough supply to fully satisfy the market.Now, of course, there are some home buyers who simply cannot get into the market at the current rates.So they are looking for better affordability when the mortgage rate declined.I do believe that later this year, the reserve will be cutting rates which will help some the 30 year fixed rate mortgage.But let's look at the longer term, whatever rate cut the federal reserve is delaying this year will simply get pushed into next year.So I think from the US economy, we are looking at maybe 6 to 8 rounds of rate cuts all the way through 2025 which means that mortgage rate will surely be lower over this time span and people buy a home.And we know from past experience, people always refinance when the mortgage rate declined.Multiple offers still happening, Lawrence as you mentioned.But at what socio economic class is that more outsized from what you're seeing.Uh you know, the cash transaction has really risen.Maybe, you know, people are saying I don't need mortgages, mortgage rates are not important part is that homeowners have built sizable housing wealth in recent years and especially who are moving to more affordable regions, whether it is from say inner suburbs of a major city going into the next county where things are a little more affordable or in some cases, people moving from expensive states say California to Nevada and they can buy all cash.So we have seen a notable increase in the all cash transaction.But let's remember the first generation buyer, first time home buyers, they're not cash buyers unless their family was can help them out.So most first generation first time buyer, they need mortgages.They are looking for more inventory.Perhaps it will begin to show a little later.Builders are ramping up production.Now new home construction is not for the first time buyer, but at least it provides some trade up opportunity among existing homeowner who will then release their starter homes on to the market.And when the fed does begin cutting rates and they perhaps get in uh not just a single one off uh instance of a cut but perhaps a few cuts come forward.What type of rush to refinancing do you expect to happen?Uh You know, the refinancing always very sensitive to rate changes.But I think what is key is that we know we are going to have more buyers when the rates decline.That's almost a certainty.The key question is whether we will have adequate supply to meet that demand.And I think that some of the current homeowners who are in so called golden handcuffs, that is to say that they are loving their previously obtained mortgages, 3% 4% they don't want to give that up.But we know that there are life changing circumstances, having additional child in the family.Uh maybe there is some new job at different town or maybe they were looking for a better school district.So all this more life changing big decision impact, I think people will begin to list their property, look for their next home.So as a consumer be on the lookout for more listing as we proceed through the year, you know, II I saw a stat about the number of millennials turning 40 every day here and it was, it was eye popping here, Lawrence and a lot of millennials are having those key life decisions and, and changes happening right now, which also very much dovetails into the thinking about what the space is that they occupy for home.Do they need to upsize and you know, get ready for more family formation.What more largely are you seeing among that cohort?Uh you know, the prime home buying age is typically in the uh the early thirties I mean that has been pushed back in recent years to about mid thirties or even pushing into the late thirties.So we know that there is a strong desire for that ownership, but perhaps it's been delayed a couple of years because of a higher mortgage rate than what had been previously, lack of inventory condition.But the inventory is clearly turning for more inventory we are seeing in the data, more inventory now compared to one year ago.Now, this does not mean that we are in a balanced market.We're simply moving from super tight market to more availability.That's a good trend.And I think this is a very early indicator that the home sales will be pushing a higher later in the year, the more home prices, 90% of the country right now experiencing home price growth.You know, there have been a few reports that have emerged about uh another generation that's Gen Z about the amount of debt that Gen Z is relying on right now.To what extent are you monitoring that as how it will play into the home ownership scenario for, for that generation.Uh You know, the younger generation, uh you know, trying to understand the importance of financial literacy, get that credit score uh under check, uh improve those credit scores, make those rental payments on time, try to save up for down payment, uh you know, study hard and try to get that job that pay a little higher income.So all that past factors, the traditional way of getting into home, I think is still at play.But of course, there is a larger debt than normal compared to the past generation.So I think that is delaying some of the entry time of the homeownership.But nonetheless, when you look at the data, homeowners, typical wealth $400,000 typical renters only at 10,000 people know these figures.They want to be on the ownership side even though it is a delay entry point for Gen Z to come in.But they understand the importance of homeownership.Lawrence here, who is the National Association of Realtors, chief economist Lawrence.It's always a pleasure to speak with you and great to get some of your insights.Appreciate it.Thank you.Certainly, a new survey finds 99% of current and expected resale listings are in need of some sort of repair.That's according to John Burns real estate consulting.So if you are trying to sell your home, is it worth it for you to do some work before putting it on the market?Yahoo, finance contributor, Ross Mack is here with some tips to get the best return on your diy or your renovation investment here.All right.So what do the homeowners out there that are undergoing these projects need to keep in mind?Well, one I think everyone has to understand right, more than half of Americans would much rather renovate their home and actually try to buy a new place.Right.It makes sense.Right.If you're locked in and call it sub 3% for your mortgage, do you really want to go out there and get over 7% on a mortgage?Right.And I, I think when you're thinking about renovating your home, you need to ask yourself, am I trying to sell it?And if that's the case, how do I get the biggest bang for my buck?Because when you think about it, you're gonna be like, oh maybe I need to redo my kitchen, my bathrooms, maybe I need to finish that basement.You know, those are the things that for you are gonna make you feel better, but it might not actually add to the value, right?When it comes to, I think it's very important to actually survey the land and maybe go on Zillow and actually look at what some of the other comparable homes in your neighborhood are selling for to actually get a sense of does they, do they have finished bathrooms?Do they have, you know, updated appliances in the kitchen, etcetera?But one of the things that I learned in doing the research of the show is that when it's all said and done, there's a shock value.So what actually would give you the biggest bang for your buck is the exterior of the house followed by then the interior.And so when we're talking about the exterior.We're talking about that garage door, we're talking about that entry door, maybe stone veneers on the sidings, right?And then that then you can get to the kitchen.But when it's all said and done, I think it's important to understand from an aesthetic standpoint, that shock value is what's gonna give you the first biggest bang for your buck.A garage door.Kitchen walkout is on my Pinterest board right now, Ross.So that's something that I'm keeping in mind for when I do own that house.Ross.Thanks so much.Appreciate it.My man.Thank you.Coming up everyone.Amazon is expanding same delivery on medications to over a dozen cities by the end of the year, same day delivery there.So should you trust and can it save you money?That's next.Let's do a quick check of the market sponsored by Tasty Trade.We're taking a look at the major averages in the US mixed right now.The Dow Jones industrial average holding on to gains by about 1/10 of a percent.But that's the only bright spot at least among the major averages.The S and P 500 the NASDAQ are both in negative territory right now.The S and P 500 down 1/10 of a percent and the NASDAQ composite lower by about a quarter of a percent.Well, while shopping online dominates retail, about 90% of consumers, they still purchase their medications in person at pharmacies since 2020.Though Amazon has been trying to gain a foothold in this market even announcing this year.It expects same day delivery services for your meds to be available in up to a dozen US cities.But for the consumer, a major question is how much this will actually affect the overall price of prescription medications for more we bring in Doctor Vin Gupta who is Amazon Pharmacy's Chief medical Officer, as well as our own, Angelique Him, Lani, uh, uh Doctor Gupta, first and foremost, here, a lot of people are just wondering what the Delta and the prices that they're paying will be when they're thinking about a same day delivery type of service versus going in person to some of the pharmacy benefits managers and picking it up the old fashioned way and the way that many of us have been accustomed to for decades at this point.Well, Brad, first of all, thank you for having me and I great to see you again.This is a service that we're launching in select cities across the country.We'll have 12 by the end of the year.We're really excited about it because we know that cities like New York City and Los Angeles, the two New cities where we have this capability if you, if you get that prescription and if your provider can get that prescription in before, say five o'clock, uh, we're able to get that to your door before the end of the evening and that matters for acute conditions.And this is something that we're going to be growing again across the country.But that time to treatment is critical Brad.We've talked about this so much during the pandemic, early triaging, early diagnosis paired with early treatment.We can be at the door and people are used to Amazon being at the doorstep with their retail needs.Now we're doing it for health care and we're building that trust.Uh What about the cost of it to, to Brad's point?Are they are patients expected to pay any different?Is insurance covering all this?And are we looking at, you know, sort of a status quo in that realm or is it more expensive even though it's more convenient for patients to use Amazon now where, where we offer it?Uh, it, it it's included in, in, in just in the checkout experience.So no additional charge for that sub same day delivery experience.Uh And that's exactly what people expect from Amazon.If, if this is something where you're in a in Staten Island, in Manhattan, in parts of Brooklyn Queens, this is something that will be offered to you um, in the checkout experience and something that again, if you're within that serviceable zip code, we will offer it no additional charge.Then tell me when you're talking about the in person pick up.I know that just like Amazon's past when bookstores were the target.We're now looking at pharmacies and the in person pick up part of that equation for pharmacies.And we look at what the, um, you know, the, the push is to mail order and online ordering that hasn't necessarily picked up, uh, to the point of that stat that we shared.But at the same time, Amazon is opening some of those in person locations.What does that tell you about the market right now?And sort of the trust that people have in digital versions of health care.Well, I'm, I'm a pulmonologist, Angela, as you know, and, and home delivery of medications to me is an area of incredible growth because it means something meaningful.It's useful significant to clinical outcomes.We know that 30% of people don't pick up the refills on time or if ever because it's an inconvenient experience, especially if you're acutely not feeling well.So home delivery us being the modern pharmacy meeting the needs of the modern age.We're doing something we exist for a reason because the existing legacy pharmacy experience isn't meeting those needs.And so yes, 10% to your exact point.Let's acknowledge the fact.10% of prescriptions are through home delivery, 90% are sold through that legacy system where people spend hours every year in line in aggregate, waiting for their medications to get picked up.We are providing an alternative for patients and for their providers across the country.I'm at the bedside, if I know that my patient who is not feeling well with the COPD exacerbation can get their refills on time or their antibiotics on time.That same day in a place like New York City, why wouldn't I want to do that?So I think part of this is just building the awareness that there's a better alternative home delivery.The modern pharmacy for the modern needs to the patient that we need to start moving away from the legacy system that isn't meeting those needs is Amazon able to negotiate materially different with drug makers to the extent that your customers, prime members subscribers or not, would be able to see the Delta and what they're paying or you know, whether they were going to be purchasing that via pickup uh through one of the PB M competitors or through Amazon.Well, Brad, what I'll say is we have created a, a storefront experience that, that might be evocative if, if you've used amazon.com for your retail needs, Amazon pharmacy, very different uh uh portal experience, fine or experience.We keep health data separate and private from, let's say if you have a retail uh profile.Uh But some of there are some similarities in terms of pricing transparency based on how you want to pay.We offer a multiple different ways to pay either through estimated insurance pricing, if you haven't input your insurance or through, through a direct estimate of your copay.If your insurance is on file.We have a discount savings program, the prime prescription savings discount program that, that is essentially reflecting a cost plus model for a variety of drugs.And then critically, and I think this is the real differentiation here, Brad for branded medications like insulin products.If there's any manufactured coupon for one of those insulin products that we, we have for this on our, on our website, uh, that were as part of our coupons program, we will automatically apply that to the end cost.That is not something I should emphasize this.That is not something that is commonplace across the industry.People have to go hunting for it.85% of the time that coupon goes unapplied.So if there is a way to save money on medications, whether it's a branded medication or a generic medication, you will find that at Amazon Pharmacy through a very easily navigable website and the store fund experience.Then, uh, finally, we're looking at, you know, the, uh, the entire industry and where it's going PB MS in particular, uh, you know, have a lot of say in this industry and there have been a break up.Some employers are looking at in, uh California Blue Shield, for example, partnering with you to provide certain, uh, certain prescriptions in order to reduce cost.And I think that's the point that patients are looking for is where can costs come down for them.So how do these partnerships uh including the one with Lily Direct that was recently announced and likely other Pharma companies that are coming in line for Direct to Consumer.You have that avenue with the Amazon network.How does that translate into a better experience but also lower cost for patients?Well, well, you just, you said it right there, the, the pilot that we announced that's going to go live in 2025 of Blue Cross or Blue Shield of California and some of our uh some other peer stakeholder groups like cost plus.Uh and, and a few other stakeholders, we're really excited about the potential of that because exactly to your point that the journey of the prescription medication is different in that model where it's sourced directly from the manufacturer, where we're able to directly deliver it direct to the patient.And so if there is going to be a mark up in price that historically sometimes might be happening in different ways to acquire a prescription, this is potentially offering a different alternative or you may not see that level of markup and the patient is going to ultimately benefit with a lower cost.So if there's an ability to innovate with traditional stakeholders and by the way, that pilot includes many traditional stakeholders, we will do that.We've shown a willingness to do that.Lily direct to me is very interesting because that's Lily saying uh they can choose any pharmacy to partner with.We're one of two to do home delivery and, and there's a reason why they did that because they recognized, by the way, this is not only just limited to, to Gops and zep band that's also insulin medications and migraine medications.But what's important to them, they're, they're really concerned about proper prescribing of these medications, making sure the patients at the need, these medications on Jane Brad get these medications.And so what do we have beyond a home delivery, rapid delivery in places like Seattle and California and New York City or Los Angeles.Rather, we have clinical excellence.We have a team of clinical pharmacists that I work with closely that can answer questions on side effects that are available 24 73 65.So when you couple that with the ability to have home delivery, you, we're truly building the modern pharmacy that the future needs that the patients need right now.But certainly the pharmacy of the future.That's why a Lily is, is partnering with us bringing responsible prescribing of these critically needed medications to patients that need them the most.Dr Vin Gupta, who is the Amazon Pharmacy Chief medical Officer and our own Angelique Kla.Thanks so much for the time and the conversation.Thank you.Coming up, everyone.The energy sector is up over 11% this year.So is it time to consider an energy ETF?We ask a portfolio manager.That's right after the break.President Biden unveiling an over $3 billion investment in a Microsoft data center today.But data centers guess what they require a lot of energy, they consume about 1000 kilowatt hours per square meter.That's about 10 times the power consumption of a typical American home according to C and C tech group.And as new data centers continue to open up to support generative A I power and energy might be a good ETF play for investors to consider especially thinking about the sector and how it's up over 11% year to date as part of the ETF report brought to you by invest.Joining me now we've got Eli Horton who is the TCW senior portfolio manager here.OK. We, you just laid out the chart and looking at energy and the performance over this year so far.I mean, is this an area where investors could potentially see some continued upside momentum here?Yeah.Well, thanks for having me.It's good to be here.I think we are really starting to see the beginning of what we consider a mega theme or a transformative investment opportunity in the transformation of our energy system.Um If you, if you think about it, we are in the very early innings of migrating from using all fossil fuels to 100% renewable power generation and we are only about 15% of the way there.There's been a lot of lofty targets that will make it by 2050 to a net zero state.We won't.Uh this is a very complex challenge.The world is investing 5 to $6 trillion per year to solve this problem.And within this broad system and it's very broad, it's not just energy companies, there's a, there's a litany of really energy opportunities.What is the real time line then that investors should be keeping in mind as, as kind of the core thesis around the energy landscape right now.So, so look where we uh where we focus is is very long term.So certainly multi year in nature last year 2023 was a very informative year for uh this thesis.So uh there was a large developer of offshore wind farms that walked away from two wind farms off the coast of New Jersey, $3 billion that they sunk into the ground and these wind farms were deemed uneconomic and they walked away from it.Um Hertz sold about a third of its EV fleet, why it was too expensive to maintain them?They couldn't charge enough to the consumer because of some range perceptions.And so those are two examples of how difficult this transformation is.Where does it create the opportunity?We think it's more in the brown businesses, the legacy companies, rather brown businesses.So, so think like uh Exxonmobil, for example, um not just your classic green company, we'll invest in both, but we are seeing businesses that have sort of been left behind by the market as they focus on growth.Um that are really interesting and a very attractive from valuation perspective.You think about some of the infrastructure and, and even the investments that we we're talking about a moment ago with the data center that President Biden visited with Microsoft's President Brad Smith.Um And we think about where that also leads into this broader kind of correlation between generative A I and energy.I mean, how have you been monitoring that?So the power and electrical grid is fascinating and it is a problem that is going to persist for years.And let me give you some context because A I has just kind of lit a match on the dry kindling in here.So the past two decades, power demand in the US has been dead flat over the next 25 years, power consumption is going to double.What's the risk to that though?Well, here's the risk.Our grid is already a mess.Think about all the brown nuts that we have.Uh I live in California.We have brownouts all the time Texas declared a state of emergency in its grid last fall.So the grid already cannot handle the current demand.Now we are going to double demand.It's from electrifying vehicles, buildings, it's from bringing manufacturing back here.Um Rejoining it's from A I.So demand is going to grow, how we're going to solve that.We're adding wind and solar to the grid.That's great.Those are intermittent sources, wind has to blow sun has to shine.So it's less efficient.So to meet a doubling of demand, we need to triple grid investment.That's a lot of capital dollars.And the businesses that are providing solutions there uh would absolutely benefit.And the ETF S that you're tracking right now that seem most apt to keep pace with this demand right now, right?So, uh there's a, there's a couple of strategies that are very relevant here.The first is called transform systems ticker and ETZ Nets um that focuses on this energy transformation.And then the second is transform supply chain Tup supp which really focuses on bringing manufacturing and reshoring back to the US.Eli Horton TCW, senior portfolio manager, Eli.Great to see you here in studio.Thanks so much.We've got much more on wealth after the break.Everyone.You're watching Yahoo Finance.So what's the next move in markets with fed rate hikes or cuts in focus?Let's dive in new cio Sarah Mali.Sarah, good to see a per for change.Yes, great.Finally off the off the Zoom video.Yeah.Right.I I was telling the Kiko, I love what you wrote recently about may potentially being weeds for Marcus.Explain that to us because I'm like, wow, I got to ask Sarah about that.We already saw the rain showers in April.So the question is, will weeds be coming up next.Markets are really fixated on what's the next move by the fed?When will we get rate cuts and what's going to be the magnitude of them?And really, there's two things for bulls and the Bears for the bulls payrolls missed for last month.And also manufacturing that has been weak with Q one GDP missing estimates.But the bear is still point to inflation which is well above the feds target and consumer spending.And until that inflation number hits the 2% that target and stays there sustainably.The f not going to be cutting rates.Is it fair to say you're cautious on stocks here?I think it be near 5200.I am cautious.I see it more trading range.I don't see any imminent issue to take the market down.But my concern is that without these rate cuts coming in the near future, what does that mean for the economy in terms of its ability to hold up?And we are seeing those cracks already somewhat in the employment market with manufacturing on that point that we heard from Minneapolis, that president the car here at the conference on the ground of raising a number of issues.Number one, you know how much of where inflation is right in the control of the Fed?But also whether in fact we're landing softly at 3%.He said that keeps me up at night.You been in the camp that you don't think inflation is going to reach that 2% target this year.Why I think you with the FED has been battling is inflation and they're trying to raise interest sort of t inflation.But what we've seen is, you know, more couple of years of great hikes and inflation is still if anything starting to aerate the beginning of this year.So what is, and then another thing that out of the Fed but does drive markets and that's earnings, earnings have been very strong and they've been led by technology companies.We have the large digital shift to artificial intelligence that's been driving earnings higher and that could continue to and that's really out of the feds control too.So it is a challenge for them right now trying to slow the economy enough so that they can clamp down on inflation.One of things that, that we heard from that last week, the cash seem to reiterate here at the Milken Conference is the labor market may be sort of that impetus that drives a potential rate cut.In other words, even if inflation remains at 3% or above, if they start to see more deterioration in the labor market, that would be a reason.How are you thinking about those two right now?Well, first of all, April employment consensus was a high hurdle.It was one of the highest consensus numbers we've seen since 2022.So it was going to be a hard one to beat like we've seen in prior months.So I wasn't surprised to see payrolls, but they're still reasonably strong markets rallied last week on the Fed's comment because they were actually relieved that rate hikes were taken off the table.I'm not convinced that we're not going to see another rate hike if infl inflation accelerates and the economy remains strong.I think you could be bringing a hike back on the table.It's not our base case, but I think it's still an issue out there.Let me just check some of these off job market slowed down a little bit.Economic slowdown is happening based on GDP election season, inflation is still high.Our investors still being very complacent economy slowing moderately.So not in a recession, election years do tend to bring higher volatility but markets tend to go up in election year.So that's, you know, kind of a neutral even somewhat on our side so important and let's go back to earnings which are the real key driver of markets or have been strong.80% of companies in the first quarter of this year have beaten earning consensus.That's a positive for the market.It's led by technology.So I agree we need to be a little more selective but that earnings as long as they continue, I think markets could say, even though they are a little bit expensive as you look ahead to the second half of the year, the election on the calendar obviously, where is political risk factor into your overall?I say short term volatility, long term, less volatility because we'll go back to the economy and earnings once the election happens.But leading up to it more volatility in the markets and we do have new things to consider this year even though the candidates are known, which would be sort of a positive for the markets because they like transparency and clarity.Think about artificial intelligence, potential misinformation, international issue issues.We're dealing with all of these geopolitical issues.Those are going to be important to the voters and that could also impact market movements and election volatility.Mark Lasry, the founder of Avenue Capital told me because everybody is so over, I guess over allocated or over invested in the magnificent seven names.NVIDIA, Apple Amazon, you name it.We might be now looking at a year of underperformance because everybody is invested in these names.Do you agree with that?I think it's the year of being selective and you saw that last week with meta which actually put up a good quarter with 27 revenue growth.The whisper numbers were for 30% revenue growth stock goes down because it's over over.Now you look at Apple or if you look at the fundamentals of the quarter, it's more about the next iphone cycle seasonality trade, but stock was on your own.So Apple goes up.So I think that crowding in the tech stocks is important for, for the stock.But then we have these more resilient ones like Amazon Microsoft with its multi year head start and artificial intelligence, he should continue to be like the little engines or the big engines that you mentioned.It's time to potentially for defensive assets.Is an Apple or an Amazon, a defensive asset.Apple is pretty defensive because it's under owned.Amazon, I think just as from investing in their logistics during the pandemic.When we see when we say defensive assets, we're also talking about areas like infrastructure, multi year positive trade for us because not only are we near shing on showing our businesses the shift to renewable energy.Both of those require more investment in the US and the components of infrastructure like utilities and waste management tend to be less sensitive.You mentioned the huge swings we saw on the back of some of the back seven names.It's interesting to me that there seems to be on the one hand, some concern about the scale of investments that are needed to ramp up their A I offering.And yet you look across the, you know, me, I had a big number of investments that seems to really affect their stock investors concerned.But that wasn't the case with a name like Microsoft or even in Amazon.Yeah, I mean, I would say that, you know, the long term head start though that companies Microsoft and NVIDIA have are important to go back to the late nineties where we were shifting to more use of the internet.There were so many companies out there.I remember I had companies you could buy which really weren't resilient businesses.Companies like Microsoft and NVIDIA, I think are long term places.They have gotten such a head start in terms of investing in A, I think those are going to be the long term winners bar a little bit of up and down because of their valuations and where people are positioning in the stock, you talk to a lot of investors.Let's focus on the average investor.What's the number one mistake?You still see that making cash on the sidelines.I studies have shown that when you market time you lose money relative to if you just stayed invested, this started, you know, last year, everyone expected a recession to come.They are holding their cash and 5% returns, nothing wrong with 5% returns.But when the market is that multiples of that and even fixed income markets of yield that are higher than that today, you you're losing money.So I really recommend say invest in like into the market average and that I think is the mistake investors make.And then of course, they eventually get FOMO fear of missing out when they come piling back into the market when the market is already out.I feel like that's kind of right where we are right now, right?So basically you just told me I'm making a mistake.I thought I was doing pretty good.My 5% CD or maybe, you know, it's funny, Brian.I sort of checked myself when you said that, as I say, 5% is good.In 2014 we leave it there.The Cio Sarah m, see you in person.I appreciate it.Thanks for having me.It's, um, been a bit like too much now lately.You know, um I've seen it go from like 12 to 15% to where you go somewhere and it's automatically 25%.The pricing of food has gone up.So tipping has gone up.It's a double edged sword, but at the same point, we are getting the server here in the States, a lot of servers are making minimum wage, you know, they depend on that.Uh on that tip, it's also the server and, and the, the establishment to give that service as well.So if you are not giving the service, the proper service to your clients, do you really deserve that 20%?Usually in Italy, we don't use tipping because we assume that the waitress and so on are paid by the owner of the enterprise.And so it's very different from here where tipping is requested to customer.Now, today, it's actually you're kind of more forced into it.You know, the moment that you pull your card out, they're like it's on the machine.Do you want to, when they flip the laptop around it, when they flip the little thing around?You feel like you're watched, like, somebody's, you know, bearing down on you.It's almost giving you that, that guilt feeling that if I do or don't, and I don't feel that that's the right thing to do for in a business.It's really about the experience you have with the service person having waitressed and made a living that way through college and graduate school.But I don't like to have to do it and feel like I have to do it if you wait on somebody or do a service.Absolutely.You're entitled to a tip when it's like a self service culture.I don't know that that the tip is warranted.Normally tipping should be a reward towards a service or something that's exceptional.And it's almost like you need, you're forced to do something that you may have not done because the service wasn't necessarily exceptional.The advice I would give is if you don't have the tip, don't go out and that's not really for coffee.I guess it's more to its restaurants, et cetera.We've all been there.We're just picking up a sweet tree perhaps.And then the employee flips over that ipad and you're met with the dreaded tip screen, then comes the guilt and the question, do I have to tip?Some businesses often depend on the consumer to supplement their tipped employees wages.And there are a lot of them, nearly 4.3 million tipped employees in the US.According to National Employment Law project, as part of Yahoo Finance's small business, big opportunities week, we're breaking down the psychology around tipping and Michael Lynn Cornell University professor of services marketing is here to tell us more.So perhaps we begin with that very question.What are the D OS and don't, what's the perhaps rule of thumb here that we should be deploying when we're kind of going tap of the button?When that ipad is turned around, I don't really like to tell people what they should and shouldn't do.I don't think there's a god of tipping and I'm certainly not it.Um But I can tell you what people do do, right?When pe when people flip that screen, it's not just the anecdotes that you began this section with research tells us that people do feel pressure, they will leave a tip but they're not happy about it.Ok?But what perhaps you don't know or your viewers don't know is that in these kind of counter service settings, the majority of people are still not leaving tips.Uh only it for baristas for restaurant, carry out uh and other counter service uh situations.It's typically 30 to 40% of customers who are leaving the tip, which means that most people are not.And I think you should take some uh feel some freedom to join the majority if you don't want to tip.Interesting.Ok.So how, how important is tipping and how does it help small businesses as well?You know, I'm not sure that it helps small businesses as much as people think because while it does save labor costs, uh those savings typically are passed on to consumers in the form of lower prices.So that the real beneficiary, I mean, what tipping does is it gets price insensitive customers.People who are willing to pay more than they have to.They're effectively subsidizing uh the patronage of more price instead of customers who aren't willing to uh pay more than they have to because of tipping those price, uh sensitive customers are getting lower menu prices.And so all of these things considered, we were just taking a look at the screen here and we had a graphic that we were showing our viewers talking about where people most often tip and, and who they don't tip.What have you seen in some of those behaviors?Yeah, look, we most often tip waiters and waitresses.Uh, we also tend to tip, um, delivery people, uh, bartenders, uh taxicab drivers, people that we don't tip no one tips effectively.People like doctors, tax accountants, lawyers.Uh and then there's this middle group of where a substantial number of people tip but not a majority.And that's things like hotel maids, um Uber drivers, um and counter service.Even baristas, the majority of people aren't leaving the tip.Should, should small business and, and even larger businesses as well that are in the service industry.Should they be accounting for what an employee would make in tips and factor that into the wage that they're offering?And, and when do you believe we'll see that be a reality.That is a reality.You're allowed to pay a sub minimum wage to tipped employees provided that they make up the difference in tips.All right, Michael Lynn, who is the Cornell University professor of services Marketing Michael.Thanks so much for taking the time here with us today.It was a pleasure.Thank you for inviting me.Well, you've seen it in restaurants when you're paying your bill.Toast.We're not talking about the bread.We're talking about the cloud based restaurant software company.Toast reported earnings that beat wall street expectations and guess what?It's top trending ticker on Yahoo Finance for more on what the results say about the consumer.We have Yahoo Finance's Madison Mills.Hey, Mattie, did you like that?Toast intro?I just for you.We did that just for you.I mean, you know, I order a croissant bacon, egg and cheese every day, but we'll go with toast right now.Well, it's interesting because I know the last guest was talking about how tipping maybe is used to kind of save money for the business and then they can pass that on to consumers.But when you look at these toast earnings, I get an indication of the complete opposite story.I get, I see a picture of restaurants that are utilizing something like tipping to be able to keep profits strong.There is evidence of that in this toast earnings print, we saw 100 and 42% I A beat that is telling me that restaurants are doing really well just to back it up for anyone who's not familiar if you have not seen toast before.This is the P Os system that restaurants are using for things like your apple pay.For example, if you have a waiter come over to your table with a little credit card looking machine, you can look for that toast logo.My boyfriend and I are obsessed with this because we're nerds.So we're constantly looking to see what P OS our restaurants are using a lot of the times it's toast.Uh You can also use this product to do things like change up the menus.They have a kitchen option they can use as you can see on your screen, what I'm talking about here.Uh And also it can be used as a reservation tool for restaurants as well.So what's interesting in this earnings print again, huge growth for the company.We saw several uh folks coming out of across the street raising their price targets for toast following these earnings.Uh And again, what I think is interesting for the consumer to look at is the profit gain that indicates to me that restaurants are doing well, which could be an indication that the consumer they're still eating out.I mean, I like it because I think I collect points whenever I eat at a place that does have toast or one of the, it's, it's either toast or one of the competitors here.I mean, at the end of the day, the pandemic has completely reshaped the dining experiences and for the point of sale systems that we have just become accustomed to.At this point, toast has cemented themselves.It was a question of whether or not they would be able to retain the same type of merchant or client base that they had in the immediate kind of receding of the high the or the crest of the pandemic.It's a great point, Brad because also they have one of, one of the products that they offer is the one where you can kind of do the ordering yourself.And a lot of restaurants were using that and picking up on that product during the pandemic.So they did have some struggles during COVID.They instituted a restructuring.They recently did another one that is weighing on their profits a little bit still.But I would love for every restaurant to let me just order.I don't, I don't like talking to people what I have to order.I mean, one of my first jobs was a waiter.So, uh, I get nervous.It's not the waiter.It's, I also wasn't good at it.So there's that, let's do a final check of the markets here.Everyone taking a look at the dow, the S and P 500 the NASDAQ, the dow is holding on to gains.That's up by about 2, 10 of a percent.S and P 500 NASDAQ down right now.That's it.For wealth.I'm Brad Smith.Thanks so much for watching.We'll see you tomorrow and stay tuned for market domination with Julie Hyman.Josh Lipton.That's coming up 3 p.m. Eastern time.You don't want to miss it.