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GameStop saga, Nvidia vs. Apple, Campbell Soup CEO: Catalysts

The May jobs report revealed a hotter-than-expected addition of 272,000 nonfarm jobs to the US economy, over 90,000 more than economists predicted. Shares of popular meme stock GameStop (GME) are falling after the company announced it would sell 75 million class A shares of its stock. In addition, popular social media meme stock investor Keith Gill is set to host a YouTube livestream on Friday discussing the stock.

Tech giant Nvidia (NVDA) briefly saw its valuation surpass the $3 trillion mark this week, temporarily dethroning Apple (AAPL) as the second most valuable company in the world. This achievement cements Nvidia's position alongside tech titans Microsoft (MSFT) and Apple as the only companies to have attained such a feat. The Campbell Soup Company (CPB)posted its third quarter earnings, revealing a 6% year-over-year increase in net sales that totaled $2.23 billion. The company says the sales were due in part to its acquisition of Sovos Brands. Campbell CEO Mark Clouse sits down with Yahoo Finance Executive Editor Brian Sozzi to give insight into the company's earnings.

For more expert insight and the latest market action, click here

This post was written by Nicholas Jacobino

Video transcript

10 a.m. here in New York City.

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I'm John Smith alongside of Madison Mills.

Time into the catalyst of moving markets this morning.

Latest jobs data coming in harder than expected with the US adding 272,000 jobs in the month of May.

The acceleration and hiring could be the final nail in the coffin for any potential July rate cut.

We're going to discuss the market implications and shares of gamestop are falling.

They were briefly halted and numerous times since the opening bell.

Now the company releasing earnings early, also filing to sell up to 75 million shares that had been down significantly in early market action that it had regained those losses.

Now, back trading to the looking ahead, we await me trader keep G he set for a live stream on youtube at 12 p.m. Eastern Time Plus app and and video continuing the battle for market dominance.

Apple once again has the second largest market cap just by a hair here, we're going to discuss which mag seven name has the juice to keep investors happy moving forward.

The first big story today is the May Jobs report, the US added about 90,000 more jobs than economists had anticipated.

We also saw year over year wage growth take higher 4.1% for the month.

The fed swaps market no longer fully pricing in a rate cut before December with the labor market remaining red hot.

What can we expect from the FED?

Joining us now to discuss the day?

He is the S and P global ratings.

Us, economists.

Thank you so much for being here with us.

Appreciate it.

We were talking before about before coming into today's print.

You had a December call.

How much more conviction do you have?

Now?

I think I have more conviction from the upside surprises that came out from today's labor data, especially on the wage side.

And it's good to have wage growth running at 4% if you are a household sector.

But for the FED, they would want to, they would probably have like to see a little bit sort of a continuation of that downward glide that we had been seeing just so that the demand led inflation pressures would start to subside.

Yes, I'm curious, how do you think this is going to affect the messaging the narrative coming out of the meeting next week?

It's going to be quite a balancing act that they have to do in their communications.

I do think that they would have to revise their own rate cuts projections to maybe perhaps one rate cut for this year.

Now they had two last time just because the inflation has surprised on the upside in the first quarter.

But having said that, I think we are at that point where things will perhaps moderate slowly rather than just fall off the cliff.

Right.

So it's a good situation to be in.

They can, you know, they have the labor market on their hands, resilient enough to hold through, you know, December.

So I guess my question also at this point of the cycle and the fact that we had a jobs print as strong as it was here blowing past the streets expectations is the current policy.

Is it as restrictive as maybe we initially thought it was or should we be rethinking even how restrictive that current policy is at this point?

Well, at this point, you know, when you look at the interest sensitive sectors like the housing or some of the business investments that they have gone through quite a bit of correction since, you know, the first rate hikes, it does seem to me that maybe perhaps just holding at this current rate is probably the best, uh you know, a policy rather than trying to tinker around the edges at this moment.

But there will be more in between to the upside inflation surprise still rather than the downside inflation surprise.

So that gives me, you know what?

Yes, we have a December for the base rate cut right now.

It could be pushed out the data.

That was a little bit confusing.

And as always you, I could pick any data point to support any view I have about the fed moving forward.

One, I want to point out though the number of number of people working multiple jobs in the US hit a record of 8.4 million in May.

That is the highest it's been since before.

The pandemic.

Is the data here when you take a step back, is it showing good growth or is it showing an economy of people who are starting to struggle with inflation?

And could that be a sign of a potential drop off that we're not anticipating right now?

Well, so there are a few things going on here.

There is one survey showing very solid growth in payroll that's coming from the establishment.

And there's a household survey like the one that you just mentioned that is showing multiple job holders increasing part time job holders as a share of the overall that's also increasing and it's been going on since last year.

So this has been on an increasing path.

This is not something new.

It generally tends to happen towards the later half of the cycle of business cycle where more folks on the sidelines tend to come in.

They have more reasons to come in when there is higher wages, there are more reasons to do multiple jobs just to secure those if it's available, why not kind of So that's the optimistic view of the same number.

You can get the pessimistic view where you think, you know what these guys inflation is probably eroding their income because inflation is high.

And in real terms, they probably need to have a second job just to meet their ends.

And that sort of gives you the more pessimistic view.

So when you take a look at that wage growth number as well, just in terms of how worrisome that is what this ultimately means here for the fed's timeline and, and just how difficult that final mile is going to be for the Fed and its ultimate goal to bring inflation down to 2%.

What does that tell us about?

Maybe what that more realistic timeline could potentially look like?

Well, I think the last mile was always going to be a bumpy one, you know, and these data, they tend to be revised quite often as well, even the data that you are seeing today because of what some other benchmark data have been saying it may be revised down, right?

And there is a divergence between the employment, the unemployment rate number and the employment.

So with all this wages itself, it seems like the quit rates, the dynamic labor market is kind of, you know, slowing and that should give wage pressures moving down as the year goes by, that should help inflation, at least some part of inflation move down to more normal levels.

We do expect inflation to continue moving down, maybe perhaps by next year in the fourth quarter, it will get back down to 2.22 0.3%.

But we're talking about next year, not this year.

Well, next week we get another dot Plot.

So I just wanna get a number from you best guess for the dot Plot next week.

One or 20, they're gonna have one, I think.

Uh I mean, I would be surprised just given the upside surprise we got in the first quarter that should automatically feed into their, you know, base numbers and they uh if they don't, then we would all have to think about their response function.

If perhaps it has changed the way that they see, they will reveal their preference, right?

So it would be, it would be a good report to look at.

I would, I would be quite surprised.

It's always great to have you here in the studio.

Thanks so much for joining us.

Thanks for having me.

Let's move on to another top story that we are watching and that's the mean.

So a game stop is, was falling here initially, had been halted several times since the start of trading.

It's been all over the map.

You're allocating losses of about 17%.

The company announcing plans to sell up to 75 million more shares also releasing earnings early.

That were a bit of a disappointment in us, right?

Has a closer look at some of that movement that we're seeing here today in.

Yes, Rana and the gamestop saga took an unexpected twist this morning as a company, as you mentioned, unexpectedly dropped its latest quarterly results and filed to sell more shares.

Now, this all comes hours before that youtube channel believed to be linked to retail trader and investor Keith Gill uh announced that uh that live stream is going to be happening today at noon.

So let's take a look at what the results are.

Net sales dropped 29% of year over a year to $882 million for the quarter.

Versus estimates for 995 million a loss per share came in at 12 cents versus estimates for a loss of nine cents per share.

Net loss narrowed to 32.3 million compared to more than 50 million for the same period last year.

So between these results and the share sale plan, the second one, by the way, in a span of about a month, the stock is down your in early trading.

This comes after also shares had surged yesterday, 47% and then they gained another 30% in after hours yesterday.

This is after that youtube channel believed to be linked to Gill plans to hold a live stream today.

And the alias on Reddit that also is believed to be linked to Gill posted its portfolio with gamestop stock and on exercise call options, ballooning to more than $500 million with unrealized gains of more than 380 million.

Now, a lot has been said about whether what Keith Gill, uh if it's him uh post these postings, whether these are legal or not, we have spoken to experts uh about this.

Look, it also, I do wanna note that when these posts come out on these uh portfolio holdings, you'll, you'll recall that they come out before um uh the market open or after the market opened.

So it's not during market hours.

We, we do have to say that guys.

All right, thank you so much.

Really appreciate your insights on this name that continues to uh whipsaw.

Let's say that uh Coming up here, NVIDIA briefly passed Apple to become the second largest company based on market cap, but who is set to hold the position in the long run?

We're gonna discuss when we get back with us hiring trouncing expectations.

The big question, is this a sign of growth or a sign of a lot of inflation?

The fed's gonna have to fight for more.

We bring in Nancy Tang, Laffer, Tang, investment, Ceo and Cio Nancy.

Thank you so much for being here with us.

You had a great note that was really informative for me heading into the Jobs report.

So thank you for that, but I wanna get your take on it because you know that we are still, we are starting to see some cracks, particularly in the lower end consumer with personal savings starting to not keep pace with the wage increases that we are seeing here.

We're seeing these cracks come up in consumer earnings as well.

So I'm curious from your perspective, when will the cracks in the lower income consumers start to cause a problem?

Not just for the fed but for markets.

Yeah, Madison, thanks so much for having me.

I I think um this is a slow decline and um you know, we got the numbers today that show average hourly earnings up somewhat and revised upward, but these numbers get revised dramatically.

And so you have to pay attention in the near term.

And so you have to pay attention to the long term trend.

And what we're seeing is that average hourly earnings have declined to um about 3.9 for depending on which number you're looking at.

Uh personal savings rate is down now to 3.6 which is well below pre pandemic levels of 6.1.

So sort of taking out the, the COVID checks uh that, that popped up personal savings and then access to credit is declining.

And so I think what we've seen in retail is a tale of two cities, uh the lower end uh retailers X Walmart.

And there's a reason for that have have really shown uh difficulty in hitting their numbers, but then you have a name like uh Chipotle, which continues to delight uh shareholders and we're one of them uh with, with price increases, but also cost management and then growth.

And so you, you really do have to pay attention to which retail company you own because the consumer low end is getting crunched by inflation uh pretty severely and by higher mortgage rates.

You know, Nancy, I'm curious before we dig a little bit deeper into some of your positions and your views on particular stocks.

I if we just take a step back here and take a look at the market's kind of whip.

So reaction to this print, we have the S and P and the NASDAQ still a negative T but now you actually have the dow back trading above the flat line.

I'm curious just to get your take on this almost whip saw event that we have seen here in the markets and maybe the the downside losses that we saw shortly after the print.

Was that a bit of an overreaction?

Yeah, Shana, I think when, when you're looking at these things um minute by minute, day to day, the algorithms in the hedge funds have an outsized impact on the markets.

So what you see typically is you get these violent swings and then the the institutional investors ex hedge funds that come in and, and look for opportunities.

I mean, we like the volatility that the hedge funds create because it gives us an opportunity to step in and, and take positions at a, at a more reasonable price so that I wouldn't pay attention to the, the, the violent swings in the, in the day to day levels.

Uh I would pay attention to the long term trend and we are in a bull market and I think we'll continue to see stocks um, at the margin go up uh over the medium term Nancy.

This brings me to your commentary about hedge funds piling into NVIDIA in particular, if there's opportunity to go against the grain of hedge fund movements, where is the opportunity when they're piling into name like NVIDIA that's driving this market rally?

How do you kind of follow that wave but also find areas of opportunity outside of it to gain an edge?

Well, it's not easy, Madison.

But um what we saw from Goldman Sachs was that uh the last week uh uh selling and technology was the worst than it had been in 11 weeks, which is still a very short time period, right?

But um and it was 60% the selling was 60% in software.

And so what we've been doing is looking for some of the higher quality names that we own and looking for to add to those.

And so that was why I suggested in my notes that even though it's an obvious name, uh Microsoft is interesting to us here because it is underperformed year to date the the most of the names in the mag seven and it gives you an opportunity to pick away at a company that we think is going to be an easy winner in A I and is going to benefit from A I PC upgrade cycle.

And Nancy, I believe that you're also seeing some opportunity within Amazon as well.

So I I, is that a similar investment point?

Is it all about A I?

Is it all about the growth there or what is it about Amazon?

Maybe that you also find attractive at these levels?

Yeah, so Sean, both those names are hyperscale cloud computers.

And so uh cloud computing story, sorry.

And, and so what we saw last quarter was that Amazon, the big, the big gorilla was up about 17% last quarter year, over year in terms of cloud computing and Microsoft's Azure was up 31%.

So when there's all this debate going back and forth about whether or not uh who's going to benefit from A I, we think that both of these names will, will be winners.

And so you want, you want to be positioned in both plus the other aspects of Amazon uh ad growth.

Uh the retail side of the business and uh Amazon Prime uh video, we think it will continue, continue to be uh drivers of growth.

Andy Jassy is really, you know, when he stepped in, he got what we call Tim cooked uh there was, you know, a lot of doubt about whether or not he could run the company as there was with Tim Cook at Apple when he took over.

Um This is what happens when you follow an iconic CEO.

But in general, um we think he's done an excellent job and the company is poised for growth.

I want to end Nancy where we started by taking a look at the macro.

The fed is telling us that they're going to respond aggressively if we do start to see evidence of a potential significant slowdown.

I don't know that the market is necessarily priced for that potential risk.

You tell me, but how should investors be positioning themselves to hedge against that potential risk of the FED moves against any potential recession?

Elephant in the room.

Yeah, Madison, I don't see it.

I mean, I think yesterday was instructive.

We had a very bizarre uh press conference from uh Christine Lagarde at the E ECB.

Um you know, they, they cut rates but they raised their inflation forecast.

I think the, the central banks around the world.

We got a cut from uh Canada and we've seen some in, in Europe from Sweden and Switzerland.

Uh the, these, the, they want to cut uh they, they believe that maybe they're restrictive.

Um more than maybe the rest of us do, but they, they want to cut.

So I, I don't think we're going to see an, a hike from the fed and I've drawn an analogy for about a year now to the 19 nineties where you had, um, you productivity saved the day.

And fed Chairman Greenspan understood that.

And so he did cut rates three times in 1995 after raising aggressively in 1994 and then held them constant.

So I, I'm not saying we're going to get three cuts, but I think the, the odds are that we get a cut rather than a hike and it will be later this year.

And I think investors are also, I, I think that's why you saw the market to, to some extent, um come back because this, this notion that we're going to get a hike, I think is, is not well founded.

Well, Nancy, since you bring up the ECB, I'm curious, we saw that folks maybe weren't anticipating the idea that the ECB could be one and done at least for the short term in terms of cuts.

What is the potential risk of that being the case for the Federal Reserve that we're all anticipating this potential cut?

But then they might cut and then wait for a long time to do another one.

Yeah, I, I think that's entirely possible and, and I don't think that's necessarily bad for stocks at all.

And what we saw in the nineties was higher interest rates and robust stock returns could coexist.

I was managing money then.

So I remember it very well.

I didn't just read about it.

Um And, and so I think that's one of the things that, that investors maybe are starting to sniff out and in particular technology companies and the two names I mentioned to you are beneficiaries of higher interest rates because they have a ton of cash on their balance sheets.

And so their interest income has grown dramatically over the last couple of years.

So I do think there, there will be losers in this environment.

But there are plenty of places where if you're paying attention and picking, you know, high quality companies, you can outperform and enjoy nice returns in this environment.

All right, Nancy Angler at LA for Tang Investments, CEO and Chief Investment Officer.

Thanks so much for joining us here this morning.

Have a great weekend.

All right.

Well, NVIDIA becoming the third company in history to cross the $3 trillion market cap market this week.

Following Microsoft and Apple, the company also briefly passing Apple to become the second largest company by market cap earlier this week.

But the question is who can hold that position in the long run?

And Mattie when you take a look at the performance of these two names really, since the start of the year, we certainly did see uh a bit of discrepancy.

There are a wide gap in terms of the out performance that we saw from NVIDIA in terms of the fact that A Apple was taking a bit to catch up.

And that was something that played out towards the end of last year as well.

And you can see it up there on your screen just about the excitement surrounding NVIDIA with the stock now up just around 100 and 40% since the start of the year in terms of that out performance.

And the catalyst here for the name when you talk about Apple specifically, I, I think we all know Nvidia's investment story.

That's not so much changing time soon.

I think the streets consensus on NVIDIA, there's still reason to be bullish.

She had Bank of America's uh analysts there coming out earlier this week with the street high price target of $1500 just talking about their continued dominance within the space.

But I think the question for Apple and really that future performance, a lot of that might hinge actually on what we hear at the worldwide developers conference next week and exactly what their plans are for A I, how they're planning to uh incorporate A I technology into their products, specifically the iphone.

And then ultimately, what that's going to do for the upgrade cycle and the demand there for future phones.

So I I think that's critical in the Apple investment story and what could potentially be that next catalyst here for shares moving higher?

Well, I feel like you had great insight into this this week, Shana with your on the ground reporting for us from this tech conference, right?

I feel like you were sending us information from your sources about what they were saying about A I spend and what, how to kind of differentiate between the spend that's gonna be useful and the spend that's just thrown.

Yeah, and, and, and that was so interesting that was through my conversations with uh the new Ceo Rajiv A Ramaswami and then also the founder of pure storage.

And they were basically saying that yes, there is reason right to be so excited about A IA I boom, it is real when you talk about the material impact that's having on so many of these companies.

But at the same time, there almost needs to be this reality check, right?

Just in terms of what is a realistic timeline when it comes to consumer adoption, what does this ultimately mean in terms of the impact that it's going to have on people's everyday lives?

And when it comes to that aspect of it, there were some questions raised uh uh b by, by those two executives just about the fact that maybe we have gotten a little too excited at this point and maybe those expectations aren't necessarily realistic.

And as a result of that, we could see some shake out that happens within the industry and specifically the impact that we could see uh on some of those smaller companies, the start up space.

But again, when you take a look at the leaders within A I.

Obviously in video, when you take a look at the leaders overall within the tech space Apple and you talk about their plans for A I.

There is a reason it seems like to be optimistic at this point.

Yeah.

All right.

Well, coming up, we got a lot more for you here.

I'm Catalyst Exxon getting a downgrade from true is predicting that it's going to underperform its peers.

Despite that though, you're looking at gains of about 4/10 of a percent.

We've got that and more trending ticket for you when we come back, get some trending take here Exxon Mobile hit with a downgrade by true is taking the stock from a buy to a whole rating is also trimming its price target on the stock here.

Those shares recovering a little bit here up by 5/10 of a percent earlier in the trade, they were down close to 1% in pre market trading in particular after this downgrade.

Now we are seeing a lot of positive movement in the overall oil space today as energy stocks are recovering, they were on their highs earlier this week after five straight days ending in the green.

But then we saw a little bit of a selling off there, Shana.

Now we're seeing a little bit of a recovery in the space having said that just to pull out a quote from this particular note, they say while we continue to believe that Guyana World Class asset in the pioneer acquisition for Exxon was positive, they're forecasting shares to underperform piers near term given current valuation.

So that's interesting to me, they're specifically calling out evaluation piece.

Uh and then they mentioned free cash flow yield trailing peers well into 2025 decreasing that price target to 124 from 146 there.

When you take a look at the performance of the stock here since the start of the year, it is up just about 12% nearly 12%.

When you take a look, even the gains that we've seen over the last month is actually off just about 1.5% over the last year.

Those gains much more moderated up about 5%.

So I think there's questions us about ultimately the driver here of the business.

What exactly demand is going to look like for crude here, you mentioned Guyana, some of the points that were pointed out within that truest note and the calling here into question of the current valuation.

So it was enough at least for some analysts for Truist to go to a hold on the name slash its price target here again though, it it's not having much impact on the stock here because here we are today, Exxon is still well above 100 bucks a share.

It's up on your screen 100 and 14 bucks this year.

And that trend had been to the upside here, not so much on the one month, one month chart that we have here, but then the start of the year has been on this uptrend.

So again, we will see how this all shakes out.

And of course, the question was Chevron's also a recent deal here and some of the other M and A uh deals that have been done within this space, just how much that is going to shake up the sector and some of those future gains here uh over the next uh several quarters and several years.

So again, Exxon shares year to date silicon gains about 14%.

Taking a look now at Samsung Electronics Labor Union, representing tens of thousands of workers at Samsung staging a walkout marking the first ever strike in the company's history.

Now, this is significant because we have seen this movement really across the globe here of workers taking a stand in their demands.

We're seeing that affect Samsung here, the union workers agent that walk out for the first time.

Of course, the question is here for investors just ultimately any disruption, what this could mean here for the business here going forward, obviously too early to tell on that.

But again, it was trending here on our side.

And I think a lot of that points to some of this movement that we're seeing.

But also ultimately the question there just about any disruption in terms of production and what that would ultimately mean for Samsung's bottom line?

Absolutely.

I mean, this comes as they're obviously trying to prove themselves as a company that can really play in the chip space, meet the intense demand for chips.

Internal company volatility, not gonna be great for that story.

Now, this was the world's large just chip maker reminder until back in 2017.

Uh rather, I'm so sorry.

Let me correct that Intel was the world's largest chip maker until 2017 when Samsung started to surpass it in revenue.

So see that competition between those two playing out in Taiwan in Asia over the past couple of years, but also specifically over the past week when we've seen these competing companies announcing chips news after chips news.

So continuing to cover that story as the strike continues to happen here, moving on to moody setting sights on six US regional banks, placing a downgrade review and the concerns over commercial real estate exposure.

Some of the lenders on the list including merchants for some Financial and Old National Bank Corp. You can see that some of those names moving to the downside this morning, big movement for Old National Bank Corp down over 1%.

Not a massive surprise when you think about the pressure that regional banks have been under amid the higher interest rate environment, pushing a lot of deposits out.

We've seen this flight to quality and higher rates, things like high yield savings accounts.

This is why we've seen such positive movement in the big banks.

When we talk about earning season kicking off with the likes of JP Morgan, Goldman, Sachs Morgan Stanley, that pain is going to be felt elsewhere.

And these are companies that don't necessarily have the capital on hand to be able to withstand the hire for a longer environment that's causing that deposit flight, but also causing issues with their own balance sheets through things like commercial real estate pressure, Shana.

Yeah, exactly.

And we've really seen investors take note and focus more in on some of these names following everything that's played out with New York Community Bank Corp and their exposure to the commercial real estate uh sector more specifically, that wasn't very much a regional story, very much focused on New York.

But again, when it comes to these names, again, a very, very similar picture.

So not necessarily a huge surprise given the fact that Mooney's has placed these six regional banks on review for a downgrade.

So uh the the talk about the CRE and and the weakness there has kind of started to quiet just a bit and we did start to see maybe a shift in narrative or tone a surrounding CRE.

But I think the worrisome calls out there from many who are closely tracking the sector is that still this is an issue that could be with us here for years to come.

As many more of the loans become due as many more of the, uh, leases are tried to be renewed.

That could be a real issue here in the coming years, which is still cause many people to stick with their initial calls that this could be the next shoe to drop when it comes to some of the weakness that we could see here within the economy.

Yeah.

All right.

Well, we've got much more of your market action ahead.

Stay tuned.

You're watching Catalysts, Campbell's Soup out with its latest earnings.

Lots of things to unpack in these results.

Let's bring in Campbell's soup.

Ceo Mark Klaus Mark.

Always great to get some time with you.

I just wanna start, let's start on the, the SOS integration.

I mean, this is your big acquisition.

We'll talk about earnings.

But what are you seeing in these early days?

What do you like?

What should investors expect?

Yeah.

Well, I, I, you know, I, I talked about this a lot yesterday and it's great to see you, Brian as always.

Um, look, I, I think in the world of having done a lot of integrations and uh a lot of acquisitions over the years, um this, this one literally could not be going better um across the board when I look at the, the elements that and again, fair.

It's early days.

But when you look at the elements that, that indicate um positive of um acquisitions in general, you know, you're looking for really affirmation of a lot of the diligence that you've done and across the board, uh we see check marks on everything.

I think what's been a pleasant surprise is that the growth on the business has actually accelerated um from the time of announcement, which you don't always see.

Um and has been really, really powerful.

And II I think across the board, whether you're talking about uh pasta sauce, whether you're talking about uh some of the category extensions, whether it was soup or dry pasta or frozen pizza.

Um These are just tremendous uh positive contributors to growth.

And as, as we laid out a year ago, um we looked at the things or the reasons to believe for why the growth would continue.

And a year later, I can tell you across the board, uh We've checked every box and then finally, I just would say, oh, what a gift to get the members of the SOS team um as part of the Campbell's family, I mean, they, they are, are tremendous.

Um They've done a great job, hit the ground running.

And so really, I gotta say, Brian across the board, we're feeling great.

I've always, I, I've told you this before, but I always view what you sell and what doesn't sell is a great snapshot in the economy.

Now, you just mentioned Reo's pasta sauce that's accelerating Prego pasta sauce that uh was pretty good in the quarter.

Why is pasta sauce resonating with households right now?

Yeah.

So you know, clearly brand you and I have talked about this before.

Um consumers right now, although there's a lot of reasons to believe in recovery and improvement.

It's important to remember though that for many consumers in the country, they have been weathering the storm of inflation of higher interest rates.

Really pressure coming from all sides for a relatively extended period of time.

I mean, we're talking literally several years and so that pressure has, has trained consumers to find a path um to still feed and satisfy their family, but to do it in a more affordable way.

And when you think about affordability, convenience and uh joy of your family and you put those together really a spaghetti and uh the sauce dinner.

Uh you can't really do better than that.

And, and I think with the combination of a more affordable, more mainstream brand and Prego and then the addition of a really one of its kind, unique distinctive brand in res, um it's really giving us a tremendous 12 punch in this very, very important area uh for consumers right now, every time you and I have talked, the one consistent thing has been um the snacks business has gone.

Well, that wasn't necessarily the case in this most recent quarter.

What is happening there and how concerned are you about snacks pulling off really or just slowing down with some really strong growth rates?

Well, Brian, let's first put it into context, right?

So as, as I've said many times that, that through uh challenging economic environments, snacks historically has been uh among if not the most resilient of categories in all of food.

And I think it's been true uh in this journey we've been on as well.

In fact, if you look at the last three years, the kegger of growth for the snacks businesses have been 8%.

I mean, that's higher, well above food, but also much higher even than historical run rates for snacking.

I think what you did see in this quarter was a little bit of the the normalization of that growth line and some building or mounting pressure as it relates to the economy in general.

And so, although we did see a more um uh certainly off the pace quarter, I am not worried structurally at all about the business.

In fact, when I look at the latest four weeks.

Um so think of the the period really through Memorial Day which which of course is a big weekend uh for snacking, the results have already begun to stabilize and in many of the categories where, where we play uh more of these elevated experience than th kettle potato chips over potato chips or um organic tortilla chips, these categories, all of them moved back into positive territory and generally mid to high single digit growth rate.

So although I do think we'll see a little bit of normalization on growth, I am not worried uh about the long term trajectory and the belief that snacking will continue to be an outsized behavior for consumers mark in our world of finance.

Check out some of the stories that we're tracking here.

So NVIDIA, they make computer chips A I chips, uh $3 trillion market cap.

The jobs report might be strong another consecutive month of strong jobs growth.

We're talking about A I and an Apple event, but you need to tell me we are just at a place in this economy.

And I think this is something going on going overlooked that a bag of pretzels is a luxury.

Yeah, I mean, I wouldn't describe it as a luxury, but I would say that as consumers are navigating um this backdrop in this environment of a lot of pressure.

And remember, you know, as much positive momentum as we see it, I want to be really clear the path to consumer recovery um in in the world of food has never been clearer than it is right now.

You see higher uh consumer confidence as pricing is normalized.

You're seeing volumes begin to recovery, uh recover.

One of the things I look at very closely is the number of categories in food where household penetration is growing.

We're now up over 70% of the categories that are growing.

So there's a lot of reasons to believe.

But nonetheless, if you are a middle or lower income household right now, you're still dealing with high interest rates, higher rent.

Um you probably just took a hit on car insurance, right.

Other than that, I did mark my car through the roof.

It's like double digits.

What the hell is going on here?

Come on.

These are, these are real world um influences on consumer behavior.

And so, although I don't see it as a luxury, what you might see as a consumer being a little more thoughtful, a little more choiceful and maybe willing to try a private label brand or certainly to look for something that may be on promotion uh or deal.

I, I think this will again, you know, when I think about snacking over a longer period of time, the resilience has been astounding.

Um but I do think we're in a moment where you're seeing a little bit of that um consumer behavior that we may have seen on meals and beverages categories, you know, 18 months ago.

And that, that really is a little bit of the dynamic and why perhaps for people trying to pinpoint this recovery in food, um it doesn't move in a linear way and that makes it a little bit tougher to predict is, is inflation?

Do you still find inflation to be frustrating?

I do.

I mean, you know, I think we all wish that we had more of a catalyst of deflation uh to see more relief in pricing.

And I think the reality is, is that uh as we look at the world today and, and, and look a little bit forward.

Um We continue to see somewhat of a mixed bag now, certainly.

Um that inflation level has come down dramatically.

We're not dealing with what we were uh the last several years and, and that is very, very encouraging.

Um but I think this belief of, of cost or prices coming down um in a material way is just not what we're seeing on the horizon.

I think we're gonna be in a period as I've said before.

Brian, where you're going to have some things that, that are deflationary and you're gonna have some things that are still uh ticking up and the, and the balance of that, I'm, I'm hopeful uh is a more benign environment for inflation going forward, but certainly not deflationary in nature.

Mark, maybe you could put me on your car insurance.

I'm thinking you pay a little bit of a lower rate than me.

I don't know, Brian, how old are your kids?

I have no pass to some former relative.

I mean, we kind of look alike.

I mean, I could see the resemblance.

I mean, the beard, you know, I don't know.

You have to tell me what your driving record is.

Brian, before I do that.

It's stellar, just like the phone.

Let's work together.

I agree with you by my record is, is stellar.

All right.

Well, Mark Klaus, it's always nice to see you Campbell's soup.

CEO looking forward to that invest coming up.

Right.

And uh, absolutely in September we'll see you there.

All right, we'll be in touch.

We'll talk to you soon.

Ok, great.

Thanks Brian.

All right, much more.

Yahoo Finance on the other side of the break video continues to drive the market.

Rally companies are looking to hop on the A I train by reallocating capital to A I spend.

Not all of it is created equal.

Yahoo Finance spoke with Alex Carp.

He is P CEO about the challenges facing executives regarding A I expenditures.

Here's what he had to say.

I think what everybody watching this is familiar with is you have a massive high cycle around large language models.

And then when you try to use them in your enterprise, you find out that it's more like self flagellation and it's expensive with no output.

So how can investors evaluate A I expenditure and not go into the self flagellation quote that Alex Carp just talked about for, for more on this.

We've got Luke Bars.

He is global head of client portfolio management for fundamental equity at Goldman Sachs Asset Management.

Luke, great to have you on here.

I you just heard that sound bite.

But from your perspective, what is the correct framework that investors should be utilizing to suss out A I Capex?

And what is, you know, really going to lead to growth on the R and D side versus just something buzzy to say on an earnings call.

Yeah.

So firstly, Shauna, thank you so much for having me.

I I would say first and foremost, we need to reflect on the fact that A I is transformational, it is changing how we operate and it is rapidly changing the dynamics in some of the technology, hardware businesses that we assess and value as, as investors.

Now, what I would say is just thinking through the timing and the sequencing of that, we're at a point now where your hyper scalar are investing every incremental dollar, they can find in staying ahead of the pack as much as they possibly can on the LLM development site.

And that means that if you're a semiconductor business that's aligned to server and hypercar capacity extension, you're in a very sweet spot at this point in time.

Now, I think as we go forwards, we should expect competition, we should see some change in dynamic in that industry.

As we see more companies come to market with capabilities in that space.

And or as we see the shift from the best in class leading edge nano capacity semiconductors towards something a little bit more cost effective in the Asic space, actually changing that a little bit.

But right now, we're still very bullish on the space.

We have to be thoughtful around valuations, but we see a lot of opportunity, Luke when it comes to uh you were recently had had the opportunity joining a small group of investors invited for the day to spend some time uh with Microsoft's senior management team.

I'm curious what your takeaway from those conversations are just in terms of where we are in this A I cycle.

A and, and how much opportunity it sounds like still lies ahead.

Yeah.

And actually just interestingly, our leading investment team on the global and us side have just spent the week on the west coast meeting with roughly 20 companies, both public private and actually also on the VC side.

So I think we've got some real time intel into what's happening in that space.

And I think the very short answer is we're still at the very early stages of this transformation, especially in the public market context.

We're still at the cutting edge of how can you utilize LLM and big data analytical tools in that A I framework and then how can you apply that into real world solutions?

And so I think at the moment, we're seeing a clear cycle of accelerated earnings in the enabling technologies.

We're not seeing the evidence of that passing through into the software businesses in the way that we would expect to over the medium to long term.

And so as we see the long term adoption of A I techniques within those productivity enhancing solutions, I think that's a further ball case for some of those software businesses, especially the bigger names that we know are at the front edge of that development.

Yeah.

Earlier, we were looking at a stat showing that over the last 11 weeks, 60% of the sell off in tech stocks was coming specifically out of software stocks loop, which is no small amount.

What is the framework for thinking about how to time a potential bottom for software stocks?

Is there room for recovery in that area this year?

For investors?

We're taking one step back first and foremost, the the way we're investing is bottom up long term, fundamentally focused.

And so I think it's always going to be challenging to say I can find the exact bottom in some of these names.

What we need to do is differentiate between those that have leading capabilities, market, leading positioning and are adopting these new gen in I tech gen A I techniques into their solution to enhance the offering.

And actually, if you can find those at a level today that looks compelling over a five plus year basis, that's a very interesting entry point.

So actually, if you look at the portfolios, we're managing, we're adding exposure in some of those where we see the best in class software solution capabilities.

Luke, when it comes to some of the trends, I saw shifting gears here just a bit because also one of your big takeaways, it looks like from this note from earnings season was what we learned about the consumer.

And to me, it was a bit of a mixed picture, just in terms of it almost seemed to vary company by company.

I'm curious, what were some of the trends that you noticed here?

Oo over the last several months?

Well, I think the simple conclusion is we're seeing bifurcation in the consumer.

Uh and it actually also parallels a little bit to that recent trend on the software side where we are seeing weakness in the lower end consumer.

We are seeing that trade down effect.

I think my clues you had on from Campbell's who previously very clearly articulated, you are seeing people think about value and how they're spending.

And so as that cost of living issue has started to impact them more significantly, you are seeing that feed through into how their trade in the consumer side of things.

Now the luxury space is still doing very, very well and you're seeing significant momentum in some of that luxury part of the universe that actually doesn't look like it's cooling off too substantially on the software side.

I think the parallel there just to come back to that for a second is that is really weakness in the SME space.

And so as we think about the forward look for, for markets and we think about the opportunity we have from this point forward, the economy in the US looks OK, we've just seen latest payroll numbers, they look very compelling, but obviously, it's just put the fed on a little bit of a pause potentially that to us is a very interesting entry point into a long term growth story in the US because the economy still looks fairly robust as long as you can differentiate away from some of those businesses that are facing the pressures of that consumer spending challenge and taking a step back.

And you mentioned kind of the macro impact of all of this.

And you, you talk about the large number of rollbacks from a company like mcdonald's, you're just talking about Campbell Soup, but you also talk about a company like Delta having the higher end revenue, outpacing the main cabin.

It makes me think about A K shaped recovery.

And I wonder to what extent we need to be worried about when that becomes the next shoe to drop for the economy or as long as some spending is fueling growth, doesn't matter if it's a case shaped recovery.

I think it's important in terms of thinking about how you're investing in the US equity market at this point because there are going to be significant winners and losers.

You're gonna have businesses that are, for example, going back to our discussion around A I at the right side of that A I investment cycle.

And if we're seeing roughly a trillion dollars of investment in Capex in the S and P 508 100 billion of that is coming from your hyper scale scale of businesses, you need to be well aligned to that to succeed over the near term.

But I think looking at it more medium to long term, we know the FED has capacity to cut rates.

I think you had my colleague Greg Torto on talking about small caps yesterday, we think there's a lot of opportunity in the small cap space.

It's hard to say definitively, when does that inflection point come?

But the starting point valuation wise is compelling, the economy looks OK, not perfect.

But if the fed has the ability to support that, should you see a worsening in economic profile?

I think that's a very interesting place to be starting that investment cycle.

I want to end with this new DOJ probe into Microsoft and NVIDIA.

Now typically the Eurozone is ahead of us regulators when it comes to policy surrounding tech giants, social media.

Now looking into A I, how should investors be thinking about playing the regulatory moves coming from the US?

And does it present more opportunity in the Euro zone?

I I think first and foremost, we have to be very cautious as it relates to regulation just holistically whenever you've got dominance in individual industries.

But at the same time, let's recognize that these are businesses that are driving an enhancement in the solution they're able to deliver, which is productivity enhancing and so deflationary in many ways.

And so I think there will always be a waiting against, ok, the dominance of certain businesses with what it delivers to SME S and what it delivers to individuals.

Uh I don't think there's necessarily strong differentiation between us and Europe.

I, I think we have to be sensitive to that in both jurisdictions.

Uh And actually just be very thoughtful in terms of the individual businesses you're buying and their exposure to those potential risks.

All right, Luke Bars.

It was great to have you.

We hope to have you back again soon.

Goldman Sachs Asset Management, Global head of client portfolio management for fundamental equity.

Thanks so much, Luke.

Thanks for having me.

All right.

Well, coming up next, we've got wealth.

It's dedicated to all of your personal finance, finance needs.

Brad Smith.

He has you for the next hour.

Stay tuned.

We'll see you next week.

Have a great weekend.