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Bull markets, Airbnb, AI boom: Catalysts

On today's episode of Catalysts, co-hosts Seana Smith and Madison Mills delve into market dynamics, trending tickers, and the rising popularity of generative AI.

With key inflation data set for release this week, markets are in the spotlight amid the potential impact of Federal Reserve rate cuts. Invesco Global Market Strategist Brian Levitt joins the show to discuss the current state of the market, while Oppenheimer Head of Technical Analysis Ari Wald shares his bullish perspective on market momentum moving forward.

The episode also covers key trending tickers, including Texas Instruments (TXN), Norwegian Cruise Lines (NCLH), and Airbnb (ABNB).

AI takes center stage as Yahoo Finance's Jennifer Schonberger breaks down the new bill from the US Senate called the NO FAKES Act (Nurture Originals, Foster Art, and Keep Entertainment Safe). Ernst & Young Global Vice Chair of Strategy and Transactions Andrea Guerzoni also joins the show to discuss CEOs' growing focus on incorporating AI in their businesses.

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This post was written by Angel Smith

Video transcript

10 a.m. here in New York City.

I'm John Smith, alongside of Madison Mills, let into the catalyst moving markets today.

A slew of economic data in the last trading week of the month here, we've got consumer confidence coming in right now.

A little hotter than expected.

That is ahead of PC coming out on Friday here.

Now that is the Feds preferred inflation gauge.

So watching it closely and it could set the tone for markets head into the month of June and we get results from a discount and specialty retailers this week, Costco D sporting goods best buy and all all said to give us a little bit more insight into the strength of the consumer and Apple iphone sales could be rebounding in China.

A new report showing that shipments jumped over 50% in April.

Now, Apple has been under pressure in China for several quarters.

Now we're going to dive into what a potential bounce back could mean for the company moving forward here.

We wanna get to some breaking news out right now.

The consumer, the conference board's Consumer Confidence survey coming in better than expected.

Rising to 102, the estimate was for 96 and this is for the month of May.

That's a from uh that's from a revised 97.5 in April.

So coming in better than expected an improvement than what we saw the previous quarter.

Remember that this comes after three consecutive declines here in the gauge.

So again, confidence, very critical when we talk about the health of the consumer will be getting a little bit more information on consumer spending trends when we get the results from a number of earnings that are set to report this week.

But again, consumer confidence for the month of May coming in and better than expected right around the index at 102 flat mat.

Yeah, this is important to watch particularly because of the confusion around a lot of the major data points.

We were just talking about P ce coming up on Friday.

That is the fed's preferred inflation gauge, particularly with super core which strips out the volatile sectors like energy like housing, but it mirrors a little bit of what we heard from Loretta Mester this morning saying that she is hopeful that they can have some changes in the Federal Reserve moving forward with things like additional word count in the policy statement because there is so much confusion coming from the fed to consumers in terms of what the inflation and economic picture looks like in this late consumer confidence data indicating some of that as well.

And the Feds desire to kind of increase the amount of communication from FED.

Speak to consumers as this picture about the economy continues to be a little bit gray here on all this week's treasury auctions kicking off with two and five year notes.

And it's not just about bond traders who are watching the auction closely.

The S and P 500 has moved about one person in either direction on auction days.

This is going back to some of the patterns that we've been looking at since 2022 according to leave that out from Citi.

So here to take a closer look at how this week's auctions could impact the broader equity market.

We wanna bring in Brian Levitt.

He's investor is a global market strategist here.

And Brian before we get to that, just your quick reaction to what we're getting on the data side of it when it comes to consumer confidence and exactly how the equity market you think is looking at some of these sentiment numbers.

It's not a surprise that the consumer is feeling well.

It's actually had been a little bit more of a surprise that the consumer had felt a bit challenged.

We have a historically low unemployment rate and the wealth effects of investing in the market continue to go up.

So it shouldn't be a major surprise that consumers are feeling well, I guess uh still high cost of living and that's likely with us now but the rate of change has improved.

So consumers hanging in there, which is um should be good news for the markets.

I mean, again, a better growth backdrop is, is certainly, is certainly better for markets than a weaker one.

And stocks here wing just a little bit by not looking like a major reaction, at least on my end from these latest numbers here.

But I am curious from your perspective, what do you think will be the single biggest catalyst in this final week of trading for the month coming off of five weeks of high, at least for the S and P here.

Yeah, you mentioned it.

It's the personal consumption expenditure report on Friday.

I mean, this is a market that has been very focused on inflation, very focused on what the Federal Reserve is gonna do at least over short term periods.

So when you get a miss on inflation meaning higher than expected, um the markets start dealing with policy uncertainty again, you get some and you get some drawdown.

So if we're talking about the next five days, you have personal consumption expenditure should be front and center on investors' minds, Brian, what do you think the likely move is going to be if that report comes in at least showing that the trend line has continued to improve.

The FED has made some progress in taming inflation.

How much has that already been priced into the market at this point?

Well, I mean, we've, we've priced in some good results.

Um, but I still think the market would be very enthused by it.

Um, you know, look, the, the market has been driven at least over the last 12 months by a handful of names and that's broadened out a little bit recently.

But what will start to happen as, uh, inflation gets firmer into the fed's comfort zone, at least on the P CE and the expectations that were either on hold indefinitely or may be able to start slowly normalizing the yield curve that's gonna help broaden out market participation.

So there's many names trading at pretty reasonable valuations that are waiting for uh perhaps a lower rate environment or a a normal yel curve environment to be the catalyst to unlock some of that value.

Brian.

I'm interested in your take on what happened with PM I and NVIDIA here because we saw that in video, obviously a huge beat but PM I data continue to put some pressure on the market.

Do you think that the PC data could have that same market dynamic?

And what does that tell you just about what's driving the market right now and the importance of economic data right now?

Yeah, it is a very macro environment because we were at a high inflation environment and you know, the market sold off 25% in 2022 expecting AAA mild recession that hasn't happened.

So as the market has as the economy has remained relatively stable and inflation has come down.

That's been a good backdrop for risk assets.

Peak inflation is almost always a good backdrop for risk assets.

Now we're looking to stick um either no landing, I guess that's not sticking, we either have no landing or we stick the proverbial soft landing.

So things like PM I Purchasing Manager index and the personal consumption expenditure are front and center because there's signs, they're indicators to suggest uh whether the economy is heading in the wrong direction or whether inflation is heading in the wrong direction right now.

Um a little bit of a mixed picture on the economic side, but still largely resilient economy with some pickup and growth overseas.

Um And inflation seems to be at least on the fed's preferred measure in their comfort zone.

So it's a good backdrop for risk assets, but that certainly could be disrupted in the short term by uh a bad data point here or there on inflation or growth.

And Brian to the point, it brings me to something I read from Goldman's note out this morning, they were talking about how soft data is under performing hard data and they were saying that looking ahead to ISM manufacturing, looking ahead to ISM services all consistent with near near zero real GDP growth.

My question to you is is that at all worrisome or what potentially that signals then for the markets at this point?

Yeah, I mean, it's, um, it, it's certainly something to watch.

I mean, it, it's an economy that's not gonna, you know, stay at the levels.

It's been forever.

And so things are all we are expecting to monitor and survey data tends to do a good job of capturing it.

The good news is as the US, is, is perhaps moderating a bit.

Other parts of the world are picking up China Europe, the UK.

So in general, global growth remains fairly stable and it's a market that's enthused.

I mean, it's not a market that's telling us growth is gonna deteriorate meaningfully, the market tends to lead the economy, not vice versa.

So, you know, the market is telling us that that growth is going to to hang in there.

But, but yeah, I mean, the the risk Shana is that, you know, we're, we're sitting here after the most significant Ray Pikes that we've seen with the Fed on hold indefinitely waiting for the lag effects of policy tightening.

Perhaps they should be starting to get out in front of that a bit.

Um But certainly they're gonna remain data dependent at this point.

So I do want to go back to the treasury auctions that we came to on Brian because I know that you mentioned that they're not much to write home about.

But given that we don't have a clear central thesis from the Fed, I feel like we are all grasping at straws to get a central thesis here.

What are you going to be watching at auctions to indicate where we are at with demand?

And what will that tell you moving forward?

Yeah, I mean, we're just looking to make sure that these things pass without incident, that there's no significant, um, disruption that there's, there's more than enough demand to match the supply without a meaningful move in rates.

I don't spend a ton of time, um stressing about treasury auctions because if you look at how the treasury markets have been behaving, they're not trading on um any type of fundamental cons concern for the US government, they're trading on growth and inflation expectations.

And so, you know, rates are in line with where investors believe nominal activity will be or should be.

And so these options, yeah, they may cause some hiccups if we don't see the type of demand we want.

But again, there's very little to suggest that treasury yields are trading um on anything but nominal growth expectations and where the fed is likely to be really good point.

Brian, thank you so much for joining us and chatting through that breaking news with us at the top.

We appreciate it.

That was Brian Levitt.

He's invesco's global market strategist.

Turning now to a trending ticker on the finance platform.

Apple shares are rising on news that sales of the iphone are rebounding in China with shipments up 52% in April.

Here is what that means for the company moving forward is our very own fo how significant is this?

We certainly a big relief for investors.

Given that Apple's revenue, roughly 20% of it comes from China.

You're seeing that reflected in the move in shares as you pointed out up about 1% although the stock is still down on the year now, the latest data comes from research firm, the China Academy of Information and Communications Technology.

It points to a 52% jump in shipments of foreign brands in a month where overall smartphone shipments continue to gain momentum.

Now, the data does not break out Apple's numbers.

But those 3.5 million units shipped are largely attributed to Apple given that it is still the dominant foreign brand in the market.

The momentum follows a rebound that we saw in March a bit of a reversal here after the company started the year seeing double digit declines and it comes on the heels of an aggressive price cutting strategy by the tech giant back in February, Apple's third party retailers began slashing the devices but as much as 10% that was seen as a direct response to increasing competition the company faces from Huawei in the premium smartphone market.

Remember, the homegrown player has been chipping away at Apple's market share since it launched its own premium smartphone in the fall of last year that led to a 19% drop in shipments for Apple.

In the first three months of the year, the company reported an 8% roughly drop in its most recent quarter for the greater China region.

Now as good as the numbers were for Apple.

In April, the expectation is that momentum can build even more because of those aggressive price cutting campaigns.

The company has engaged in earlier this month.

Apple upped its discount slashing prices by up to $320 on select iphone models at its T mall sites that are certainly hoping that this is the beginning of a continued momentum here as Apple and Huawei continue to go neck and neck face off in the world's second largest smartphone market.

All Akiko.

Thanks so much for breaking that down for us here.

Keep right here on Yahoo Finance.

You've got much more of your market action ahead again.

You're looking at a mixed picture just about 45 minutes into the trading day.

You've got the NASDAQ and S and P holding on to gains the dow off just around 140.

You're watching.

Catalysts stocks are a little change on this short and we here take a look at the major indices about flat on the S and P, the NASDAQ just above the flat line at about of about 3/10 of a percent here.

But the S and P did hit a record high last week despite some of the pullback that we've seen as of today, our next guest does see more highs ahead with more on this.

We have a wall.

He is Oppenheimer's head of technical analysis are thanks so much for being here.

I know that as a technical guy, you're always looking at the chart patterns and in your latest note that we have here, you show a chart that has the S and P 5200 day moving averages compared with nice volume.

What is the single biggest takeaway that we should derive from looking at those charts together?

Yeah, I I think it's looking at the volume flows going into the recent uh price high last week.

That what the uh volume line is capturing is that volume into advancing shares is outpacing volume into declining shares.

Uh So we view that as a sign that investors are accumulating stocks rather than distributing them.

And typically that is a sign of a trend that should continue.

It's viewed as confirmation.

And so it's really just reiterating the point that we make that the second year of this bull market cycle is intact.

Investors should be looking to buy Pullbacks in anticipation for higher market highs over the coming months.

And ari what are some of the technical trends that you're noticing here within the Russell 2000?

Because you also make a case in a recent note just in terms of the fact that we, that it is holding above its 200 day moving average that that is significant just in terms of the market participation that will likely see or RC.

Uh That's right.

If, if you think back to, and, and again, uh for us, the bull market started in the fourth quarter of 2022.

But through the first year of that, in 2023 it was very driven by large caps.

Uh And you really didn't see uh the Russell 2000 part to as meaningful of a degree.

And we haven't really had this broad-based breakaway in the market.

We, every time they're showing some signs of an everything rally small caps pull back and we're seeing some signs that that could be changing.

That one key difference between now and the action last year is that the Russell has been able to hold its 200 day average and wasn't able to do that throughout 2023.

So again, it, it hasn't been able to really sustain this breakout.

But for us, that could just be a matter of time as we think about the second half of this year.

You know, we want our clients to be embraced for what could finally be the broad based breakaway in the cycle that we haven't seen yet.

When you look at the charts, when it comes to the broadening out question, particularly with the Russell, are you seeing signs that it's driven by individual company news or is it more a macro picture that indicates that there is a real hunger for a market broadening that could have legs.

Uh That's a great question where we have seen uh the, you know, bottom up uh dispersion widened to a certain degree that there, there are stocks working in the small cap space despite the action uh in, in the Russell.

And, and I think that speaks to being held back by some macro issue that being uh some issues in regional banks which have really uh pressured our, our big component of the Russell 2000 and have pressured that benchmark.

Uh I think there's uh obviously the fed cycle has a lot to do with it as well.

Uh And um a a again, those are all the reasons why the Russell hasn't worked.

And uh I guess, you know, our, our point to investors, you know, as we kind of think about what could be that catalyst for a move is that absolute participation more important than relative leadership.

What we have seen is this large cap l move to the upside and I'm OK with that, but we do need small caps to participate in absolute price terms.

So ari it doesn't sound like you're seeing any signs of a market top now and you're actually seeing higher highs here on the horizon.

I'm curious though, for investors out there who want to be prepared for some of the um patterns or trends that they would see if a market was nearing its highs.

What do you normally look out for just in terms of gauging whether or not we are approaching those high levels.

So we, we have a uh a mar our market top check checklist, what we'd be expecting to see or credit spreads beginning to widen.

We'd expect to see the leadership of the market turn more defensive and we'd expect to see internal breadth begin to narrow and we really haven't seen any of that and, and one indicator in particular, we watch closely to suggest that we could be getting to that market top condition.

It's an internal breadth metric.

It measures the percentage of YSE stocks that are trading above their 200 day average.

And what we have found looking at most of the major market tops over the past 20 plus years is that there will be a new S and P high and it's undermined by fewer than 60% of the nyse above their 200 day average.

And for that reason, we are encouraged that that current reading is coming off a level of 68%.

So that is arguing against a market top.

It would suggest that market conditions are, are stronger than that.

And um but conversely, it would be something we're going to be watching for.

Looking ahead to suggest.

Uh we are at that reversal point uh often that happens in the post election year in the third year of a bull market cycle.

70% of these uptrends typically make it to at least their two year anniversary.

Uh So with our indicators currently confirming the road map, um uh you know, all signs point to additional gains as we think about the balance of the year.

So for seeing additional gains ahead, I wonder if you still think the sell in May narrative is going to come true as we had to the end of the month, this week, one of my favorite technical phrases sell in May and go away.

It didn't seem to happen this year.

Is that because of in video or is it because of just momentum, bringing momentum?

What is that?

Yeah, it's um it's, it's, it's a strategy that we always talk about at this time of year.

Something that no one has actually ever put to use.

Nobody has ever actually sold every April 30th and bought back uh every October 31st and there's some nuance to that as well.

And, and sometimes we think about the four year us election cycle and, and how that overlays with that type of strategy and what we found that in uh in an election year, specifically, one with an incumbent candidate.

Uh Typically that strategy hasn't worked that you'll typically see a summertime rally we came into the year showing that um uh in an election year, a first term election year, March to May is the weakest three month stretch of the year.

Uh But then that's typically followed by the best performing stretch of the year, June through August, which we're now entering in.

So we, we're almost making, we are making the case that seasonals are a tailwind.

Looking ahead, at least as we get into that June period.

And so for all those reasons why we're looking to buy weakness and not sell in May and go away, Ari Wald.

Great to talk to you.

Thanks so much for insight here this morning, Oppenheimer's head of Technical analysis.

Thanks again.

Thank you.

Well, activist hedge fund, Elliott has made a $2.5 billion investment in the semiconductor company, Texas Instruments.

As part of this, Elliott is proposing what it calls a quote dynamic capacity management strategy that would allow the company to achieve free cash flow of as much as $9 a share by 2026.

Let's take a step back and talk about why they're prioritizing a free cash flow when it comes to uh growth per share because this has been a priority.

We have heard it from Texas Instruments from their executives in years past.

And when it comes to what Elliott has said is that when they have prioritized this, especially when you look back at some of the returns that they generated from 2006 through 2019.

They say that Texas Instruments grew their free cash flow per share at an annual rate of 17% while its stock generated a 440% total return since the rampant capacity.

So what has played out over the last two years since 2022 is free cash flow per share actually declined by more than 75%.

So Elliott making the case that they want them to prioritize this, they've laid out the proposition here of uh Texas instruments, adopting that dynamic capacity management strategy, which we just mentioned introducing a free cash flow per share target of $9 in 2026 we bring this up because Elliott given his track record, given the changes that they have uh advocated for at various companies over the last several years.

A lot of times when Elliott management comes into the room, it takes a position like this.

Many of the companies, many of the, many of the executives do sit up a bit and listen to what they have to say, they pay attention, they're often heard in the room.

So again, this is significant, we're not seeing a huge impact on the share price right now just about 4/10 of a percent.

But again, they're advocating to a return of what had been the priority here of Texas Instruments or what had been proven performance of Texas Instruments for over a decade.

And that was that free cash flow per share growth and an rate of 17%.

Yeah, it's a great point sha particularly when you look at the stock still up appearing back some gains, it was up a little over 3% earlier today.

In the statement, they note that investors are concerned that the company appears to have deviated from that commitment to free cash flow.

So that is the key data point to watch when it comes to Texas Instruments.

Also a reminder that this is the chips company that's going to provide the chips that go and things like calculators, refrigerators, some of that machinery as opposed to some of the A I power chips that you hear about from an NVIDIA.

And these specific chips have been lagging when it comes to demand over the past couple of years here.

It has been kind of part of the industry that has been struggling as part of a wider slump in chip orders in recent months.

So their latest earnings do indicate a resumption in some of that ordering of chips after working through some of those gluts.

So it'll be interesting to see whether or not this latest activist stake in the company starts to kind of fuel a little bit more growth moving forward here for T I.

Now, moving over to Airbnb up slightly this morning after we Bush updated its price target from 160 to 165 with the rating going from neutral to outperform.

Now, the reasoning they're citing that investors should take advantage of the company's current period of relative weakness and we have seen a period of relative weakness when it comes to the Air B and B picture here.

This upgrade coming after we Bush noted that airbnb has had strong web traffic growth throughout the quarter and commentary from other competitors in the space looking at a company like trip.com, even Norwegian signaling healthy demand for consumers.

But my question is, is the web traffic for Airbnb going to translate over to revenue?

That is the big thing to watch for a company like airbnb obviously up off of this news, but they have certainly been struggling when you compare them to the growth story that they've had in recent years.

Are they going to be able to pick that up as consumers are getting tired of some of those hidden fees and transitioning over to more hotel purchasing as well.

Yeah, exactly, man.

And I also think it's this return to normal, right?

We have certainly seen so much pent up demand.

People had this flexibility of work from anywhere over the last four years and even of the headlines that have been coming out over the last couple of weeks, more and more companies, even more banks mandating this return to office.

So you no longer have this flexibility or at least as much flexibility many workers as they had had over the last couple of years.

And that is something I bring that up because it's something that we have talked to Air BNB CEO about time and time again.

Yahoo Finance is one of the driving factors, driving um really drivers of their business over the last couple of years, is this the ability to work from anywhere?

And people then taking advantage of that and booking longer term stay at Air BNB.

But beyond that, I think this re return to normal is what we have seen play out in airbnb's most recent results or lackluster earnings report that they did just report Scott Devi at least viewing this as a buying opportunity.

But again, the question like you just brought out how much of this search in terms of that activity?

Yes, it is strong when it comes to Airbnb.

How much is that of that is actually going to translate into actual bookings?

Yes, maybe they could see a bump in this current quarter, looking ahead to the third quarter, even when we talk about some of the trends that we likely see in the travel industry.

But again, you got a question, just what that return to normal looks like and what the real demand is going to be here for Airbnb moving forward and beyond.

Just the US is also obviously an international story and then also the bookings they're seeing on an international basis is another focal point as well for analysts.

I think it's a great point though, is the COVID recovery finally kind of wrapping up?

And what impact does that have on some of these consumer names?

Another one in terms of services and purchasing from consumers cruise line stocks rising this morning on an upward trend.

This is one month after Viking Holdings did debut on the New York Stock Exchange, the Viking Ip raising $1.5 billion making it the largest public offering since last September on the exchange.

Now, Norwegian cruise lines also hiking its outlook on Monday ahead of its Investor Day presentation that we're going to be getting out later this week.

I do want to just take a quick look at how Viking has been doing since that IP O Day.

Taking a look at the stock here.

It's still up on the day.

It's looking like it's up about 1.5% so good move for them and then year to date, they are also up as well taking a look at the one year that stock is up 15% here.

And when you take a look at some of the arguments being made, at least out here when it comes to Norwegian from Zuo, they raised their outlook here to buy on that upgraded guidance that we are getting from Norwegian.

So I think going forward just whether or not the trend that we have seen within many of these cruise lines, because again, many of them showing that they are cutting costs, they're looking to capitalize on that greater than expected demand in terms of bookings, their bookings even going out to the rest of 2024 into 2025 some of the commentary that we've gotten out from Norwegian and its competitors here in the most recent earnings results, pointing to the fact that demand will likely stay strong here for quarters to come.

But exactly what that means for the business going forward and the ability here to offset some of the higher costs that they are seeing on the inflation front is something that investors, analysts have really been diving deep into here.

But again, raised outlook from Norwegian Mizuho at least so that that's enough to raise their outlook on the stock to buy.

And JP Morgan also setting their share target for Viking holdings as of this morning as well.

Putting a price target of $34 on the firm.

We are gonna have all of your markets action ahead.

So stay tuned right here on Yahoo Finance.

You're watching Catalysts.

Let's do a quick check of the markets here.

It looks like the NASDAQ is breaking above 17,000 for the first time ever.

At least they just did moments ago looking like it's coming off of those highs a little bit but still up 3/10 of a percent largely driven by NVIDIA continuing to rise.

It's up three point 3% following their earnings driven rally here and that is no doubt driving the tech heavy NASDAQ forward a little bit.

You can see that the NASDAQ outpacing the S and P which is just about flat in the dow just trending below the flat line as well.

So we'll see if we cross that 17,000 mark again for today on the S and P. Now moving to oil, global oil prices are up a little bit this morning.

You can see wt I crude up over 2% and Brent crude up over 2% as well.

Now those moves to the upside coming ahead of opec's June 2nd meeting where they are expected to maintain oil supply curbs as well as continue to fuel hopes for stronger demand for oil in the US to come over the summer months for more.

We're gonna welcome in Martin Ratz.

He's Morgan Stanley's Chief Commodities Strategist Martin.

Thank you so much for being here with us this morning.

I know that it's not necessarily that OPEC is going to be driving prices moving forward given what we expect to get from this June 2nd meeting here.

What do you think will be the single biggest catalyst then that is going to impact prices and how high do you see those prices getting?

Yeah.

Um Thank you for having me.

Um I wouldn't dismiss the importance of the OPEC meeting in terms of prices um, in the next couple of weeks, next few months.

Um, we've now settled into OPEC meetings sort of twice a year during COVID.

They were every month, but we're back to uh once every six months.

So these meetings are kind of sort of few and far between.

Um, it is very likely that OPEC will extend the production cuts, but there is a small chance that it will not, if it will not, the price could fall quite a bit.

And sort of with, with that prospect ahead.

As far as we can see, there has been a fair amount of deris into the meeting, people taking some chips off the table just to kind of avoid, avoid the uncertainty of the OPEC meeting.

If OPEC simply does what we broadly expect them to do, I would suspect prices can rally back if you then overlay that as you rightly point out with the seasonal trends in oil demand, which should really be quite powerful for Meron between May and August.

You typically see global oil demand rally a little bit more than 3 million barrels a day and then the combination of flat OPEC production, seasonal strength demand should lead inventories to start drawing the curve to move deeper into back relation and prices to rally.

We think to something in the order of 90 bucks again, Martin go back to what you just said a moment ago that we shouldn't dismiss exactly what the outcome of this meeting is going to be if they don't extend the cuts.

And we do see then further pressure on the price of oil.

How low do you think prices could potentially fall?

Um Yeah, that's a good one.

Look over short periods of time.

Those things are extraordinary and difficult to forecast.

Um But what I would say is that if you start to think about structurally, prices say below $75 rent, it gets very difficult to, to, to, to stay there for a very long period of time in a sort of, you know, temporary shock type of moment.

Of course, you know, we can fall, uh we, we can fall lower than that.

But um the marginal barrel in the oil industry is still us shale.

If you start to think $75 Brent, that is about $70 double T I, $70 double ti a quarter of us shale doesn't work.

Uh And so there you then start to find a bit of a floor.

So I would say short term hard to know.

Um but there is somewhat of a support level around a sort of $75 rent mark.

If there's a support level around that 75 benchmark, then to what extent does demand driven by the summer months impact that potential number.

Uh Well, yes, summer demand is very important and the oil market is not tight uh right here right now, but um uh between sort of April May and sort of the August September time frame, um you typically get sort of 3, 3.5 million barrels a day of seasonal demand upswing, then Refiners need to run harder.

Um They are coming out of maintenance as we speak, so it looks likely that over the next couple of months, refined recruit runs will go up by a similar amount over the last couple of months.

Um, we've been slightly building inventories in the global market by, in the order of sort of a million barrels a day that has been slightly higher than we had modeled.

You know, it's not a huge amount of oversupply but nevertheless, some inventory builds.

But of course, if you don't go for the summer and you get that 3 million barrel day till wins, yeah, then you know, like a million barrel a bills can turn into a 2 million barrel a stock draw for the third quarter.

And that is quite, um that would be quite a punchy level of stock draw.

So, um in the third quarter, we do see quite a tight market getting us to that $90 a barrel level, we need to get the OPEC meeting out of the way.

But as soon as that is done and seasonal demand kicks in, I think that prospect is there, Martin, don't you?

Just about because you have two charts.

I'm looking at your most recent note here talking about what's underpinning demand here underpinned by flight schedules and capacity expansion.

To what extent I guess is that driving the demand story?

And I guess how big of drivers do you see that being even just beyond the near term focus here for, for oil?

Um Yeah, and it's been quite interesting what's happening to oil demand uh in uh in 2024.

Um most of the sort of the research community would put oil demand growth this year at something like 1.41 0.5 million barrels a day.

Um That is above the so called trend rate of growth, which is in the order of 1.2 million barrels a day.

Now, the reason why that is interesting is that this is really the first year where we can talk about um oil demand not being impacted much by post COVID recovery.

We've had a couple of years of tremendous oil demand growth north of 2 million barrels a day in 21 22 23.

But that was just post COVID recovery that is now behind us.

And as soon as that was behind us, we thought we would be worried about electric vehicles, energy transition decarbonisation and that those efforts would drive oil demand still to grow for some time, but a rate below historic trend.

And what we're actually finding is that this year, we are still looking at a year of oil demand growth above historic trend.

And despite post COVID recovery done, and I think that starts to say something about 25 and 26 oil demand can continue to grow at quite a decent pace for some time to come.

And the strength in oil demand growth is remarkable because it's not because the renewables are disappointing.

The renewables are racing ahead.

Electric vehicle sales are growing, the energy transition is gaining pace and yet people continue to buy oil.

The energy demand is simply strong for all forms of energy.

All right, Martin Ratz Morgan Stanley's Chief Commodity Strategist.

Thanks so much for joining us here this morning.

Thank you, Tesla shareholders are set to vote on Ceo Elon Musk's $56 billion pay package that's on June 13th.

Well, there's a group of shareholders encouraging others to vote against it.

Some new developments within this story are very impressive.

Romanian joins us now with the latest details on that prize.

What are we learning?

Aha.

So uh Glass Lewis, the proxy shareholder advisory firm is saying that shareholders should vote no to to for Tesla and Musk, in particular for uh moving Tesla state of Incorporation to Texas to Texas, but also for Musk's $56 billion pay package.

Uh The group is concerned that the the pay package would sort of dilute existing shareholders uh stakes in Tesla and that it would make Tesla make Musky the number one largest shareholder by, by quite a healthy margin.

And the the board has not provided rationale to sort of combat these concerns of, of, of overly sort of dude of nature of the, of the new pay package.

So that's a concern there.

I'm not, we're not surprised with that class loses would say, hey, shareholders, you should be aware of this.

We probably don't want this for us to have that much control over the company and, and I think, I think that it, it, it sort of makes you think about right now from like a, uh, governor's point of view, who is the board really working for?

I think that's what, that's what Glass lew is saying.

Is it working for the shareholders or for Musk?

Uh, we'll see what happens later than June when the shareholder board happens.

Currently, Musk has a little less than 13% of the total shareholding uh, that of Tesla currently right now.

All right, pros, thank you so much as always for bringing us that news this morning.

Really appreciate it.

Now, coming up open A I is launching a new security committee.

We're gonna dive into what that means for the industry after the break.

Open A I is forming a safety and security committee led by board members, including its CEO Sam Altman.

The committee will make recommendations to the board on safety and security decisions for the company's projects and operations.

Now, this does come after Scarlett Johansson accused the company of using a voice that sounded a lot like hers for latest chat, bought in that conversation coming after her and all men had spoken previously, she had expressed that she did not necessarily have interest in that happening.

And then it turns out that a voice that was very similar to hers did get used.

But it's interesting to see the formation of this new safety team, Shana following a lot of the volatility that we have seen at the company, particularly given the safety concerns that led to the uh short term ousting of Ceo Sam Altman.

Now he is re instituting this new safety team.

And this has been a concern for a lot of people who are involved in the A I SPACE, particularly research and of course their co founder and chief scientist who has now departed from the company.

Yeah, I know Matty, you've been talking to a number of your sources and a couple of them have mentioned just the safety aspect of this, right?

And just some of the unknowns there and why that brings so much risk here to the future of A I technology and really more broad based even outside within this industry.

Just, just the risks at large right now, when you talk about A I adoption, exactly what that is going to entail and what that looks like here over uh the future years to come.

But again, this new committee is going to be responsible for making recommendations to the board on safety.

Obviously, also security decisions for open A is projects and its operations.

In addition to Sam Allman, they have a couple of other directors that will also be part of the leadership of that committee, Brett Taylor, one of them, Adam d'angelo, as well as Nicole Sling.

So again, this was posted in the company's blog here.

And you a question whether or not this was an answer to some of those concerns that were voiced, uh, pretty loudly last week as we got news of the disbanding and that they did have of their safety team.

But again, exactly what this entails, we will hope to learn more just a bit.

But again, some of those safety concerns about A I models as they become more and more powerful is something that has been talked about now for quite some time.

Absolutely and incredibly important to continue to monitor as well.

Well, CEO S are prioritizing a transformation as they look to boost productivity and growth in the coming quarters.

That is according to a new survey out from ERNST and Young looking at CEO sentiment, about 47% are focused on A I transformation.

So joining us now with further insight into how executives are feeling about the future.

We've got Andreoni, he is, he was Global Vice Chair of Strategy and Actions and Andrea.

Thank you so much for being here with us to talk through this survey.

I am curious, you had so much data ranging from, you know, how CEO S are feeling about the broader market, how they're feeling about A IESG.

Talk to me about the single biggest data point that you indicated that CEO S are feeling more optimistic moving into the rest of the year here than they had been previously.

Hello, everybody And thanks, thanks for hosting me.

Uh Yes, I think that the most uh probably noticeable uh piece of information that uh we have been gathering through our uh co outlook survey.

It's really the fact that uh there is uh some sort of uh understanding that uh the complexities that have characterized the last 18 months in terms of uh geopolitical tensions, uncertainty regarding rates and, and the impact of new technology, including A I I mean, something that they have to live with in the near future.

So there is, I think that sense of understanding that this is the future and that they need to cope with this level of complexity, which has brought about an increased level of optimism.

According to our service survey, actually, more than 60% of the CEO S um are actually thinking that there is an improvement in uh in the level of their revenues.

Uh and uh and 65% actually, they think that uh the profitability is gonna go up next year.

So I think despite uh and the uncertainty and the complex environment and there is um an increasing level of that there is somehow a news andre beyond A I and some of the growth opportunities there.

What else do you attribute that optimism to?

I think it's, it's really um the uh the the realization that uh uh by managing this complexity, uh they can actually achieve great results and the focus on cost cutting on reducing the complexity of the business, rationalizing the portfolios of their corporate.

I mean, it's, it's the right strategy really to get that the same result.

And they, they, they used to in the past really dealing with this complexity and the impact of A I in particular can be massive in terms of increasing productivity and ensuring that actually, and the bottom line is in line with analysts expectations.

And the last 12 months actually have demonstrated that A I can, can really be a game changer in this respect.

And probably this is just the tip of the iceberg.

I think the most sophisticated corporations are looking at A I not just in terms of productivity play but also to improve really the top line to change the way in which actually they do business so much more strategically going forward.

Well, we've had a lot of uh positive chatter here, but I do want to go to some negatives that CEO S might be concerned about, particularly when it comes to cyber security or survey finding that only one in five chief information security officers and C suite leaders are considering their approach effective for the challenges of today and tomorrow when it comes to cyber threats, uh that freaked me out.

So what is the indication that you have in the survey results about how executives are preparing for that and how A I might play into that preparation?

This is really uh I think it, it provides really the uh the figure of the complexity of the, of the current environment and now uh rapidly and enterprises have been transforming what we call digital transformation.

And uh this is obviously posing a, a lot of uh opportunities in terms of uh uh effectiveness of their operation and getting uh really and the customer taste, right, ensuring that they can deliver the right products at the right time, keeping inventory under control and so on and so forth.

But at the same time by digitizing everything, you expose the organization to a much broader range of threats and and the battle really to ensure that security remains high and there are no data leakages, et cetera is top of mind to everybody.

And it's something that is evolving very quickly and it absorbs a huge amount of resources that requires a very peculiar talent and it's really an organizational wide issue.

That's why it's so concerning Andrea Garzon Eys, Global Vice Chair of Strategy and Transactions.

We appreciate you taking the time to join us.

Thanks so much, my pleasure.

While A I can boost productivity for some, it could become a headache for others.

Just last week, Scarlett Johansson accused open A I of using a voice that sounds similar to her for its new chat.

But now Hollywood and the music industry are lobbying Washington for new rules that protect artists, bi partisan group of senators are responding with a new bill joining us.

Now for the latest on that is Jennifer Schomer.

Jen.

Good morning senate aides telling me that senators are pushing to introduce a bill in June that would regulate the use of artificial intelligence in the movie and music industries as artists and actors have seen their voices and likeness replicated without permission.

The no fakes Act which stands for the nurture Originals Foster art and keep entertainment safe is a bipartisan proposal that would stop individuals companies from using A I to produce an unauthorized digital replica of their likeness or voice musician, Cheryl Crow, telling me, quote, we're going to have to try to figure out some way to create parameters and guardrails.

We've seen artists already whose voices have been used after they've passed on.

We're also seeing artists being used when they have nothing to do with something that's been put out.

And that's terrifying.

The bill's sponsor Senator Chris Coons along with Senators Amy Klobuchar, Tom Tillis and Marsha Blackburn have been hashing out details with the music and movie industries.

The specific areas still being worked out include whether this law would pre empt a certain patchwork of state laws already in place.

How long to place restrictions on licensing and transfers of an art digital replica and how long post mortem rights would last.

A draft version of the bill would extend authorization for digital replication to heirs of a deceased person for 70 years that's modeled after the term for copyright protection.

But some in the movie industry want zero years while some in the music industry would like it to last in perpetuity.

And while the movie industry supports protecting artists, digital replica, it has cautioned about not limiting first amendment rights and regulating the content of speech.

Now, legislation on protecting the music and movie industries from the risks of A I is something that Senate majority leader Chuck Schumer has been closely looking at, he hasn't settled on any specific legislation yet, but when he does, I'm told it is likely to be attached to must pass legislation in the Senate guys.

All right, Jennifer, thank you so much as always for bringing us that story.

That was our very own, Jennifer Schomer.

Thank you.

We're going to do a quick check of the markets before we wrap here looking like not a ton of conviction.

The S and P just about flat.

The Dow Jones turning to the downside a little bit here, but the NASDAQ, the tech heavy NASDAQ actually hitting above that 17,000 level.

That is a record high for the NASDAQ up 5/10 of a percent here.

If it holds on to those gains, that would close with another record high.

It will be interesting to see the, and he catches up to the NADA throughout the day when it comes to games and of course, whether or not the not that can hold on to those highs here coming up next right here on Yahoo Finance that Smith has all of your personal finance needs.

Well, kick off in just about three minutes.

We see you tomorrow.