Google's search monopoly, El-Erian talks the Fed: Market Domination

It's a rough day for equities as the US stock market sell-off (^DJI, ^IXIC, ^GSPC) continues ahead of Monday's closing bell. Julie Hyman and Josh Lipton tackle the biggest market stories and bring on expert guests to make sense of what exactly caused today's pullback.

Allianz Chief Economic Advisor Mohamed El-Erian joins Market Domination to explain why it may not be in the Federal Reserve's best interest to cut interest rates before their September policy meeting: "To do an emergency cut would give the completely wrong signal to the marketplace."

ExxonMobil (XOM) Chief Financial Officer Kathryn Mikells discusses the oil company's latest earnings results and its ability to remain resilient despite volatile energy market conditions.

A federal judge ruled Google (GOOG, GOOGL) to be "a monopolist" as it illegally maintained a lead position in the search landscape. The Abundance Institute Head of AI Policy Neil Chilson joins the program alongside Yahoo Finance's Alexis Keenan to talk about the ruling.

This post was written by Luke Carberry Mogan.

Video transcript

Hello and welcome to market domination.

I'm Julie Hyman.

That's Josh Lipton live from our New York City headquarters.

We are giving you the ultimate investing playbook to help, tune out the noise and make the right moves for your money.

And here's your headline blitz getting up to speed one hour before the closing bell rings on Wall Street global sell off.

Uh, which suggests that a lot of, uh, money was raised in Japan at zero interest rates and used to speculate in other parts of the world.

So I think that's all coming unglued and, uh, I think it's a lot of margin calls and I think it's going to happen pretty quick and, uh, the unwind should be over by the end of the week.

That's actually our base case is that we are going into a recession.

We, we very well might already be in it.

Um, you know, the issue is recessions are usually defined a year or so after the fact.

Um, and what we're seeing now in, in, especially the unemployment rate, it does look like what you would normally see in early stages of, of recession.

What's not happening is somebody didn't wake up this morning and say, Apple Amazon and Microsoft are worth five percent less than they were on Friday.

That's not happening.

And so that's what's important to remember right now is that fundamental based investors really haven't changed their mind about the world.

Since Friday, we got one hour to go until the market close.

So let's take a look at the major averages, things not looking quite as badly as they did earlier in the session, but still not great.

Right.

We've got the dow off more than 1000 points down 2.7% down the S and P 500 still off 3.2%.

I should say stocks sort of came up to the highs of the session around midday, but then they've been trending back lower and the NASDAQ, the big loser here down by almost 4% right now as we see just the shift in sentiment, but also it seems like a sort of technical shift in the markets as well.

Yeah.

And bringing up some other questions too, Julie folks were asking, you know, how should the fed respond?

Should the fed respond?

That was interesting.

I was going back and forth with Joe Brusuelas over at RSM and we both know Joe and, and I checked in with Joe to get his take and he did think, listen, if, if this keeps up and he said you had a flat, another flat CP I and, or P ce reading that he thinks an inter meeting fed rate cut.

And by he, he was saying a super size one, not 25 but 50 in his opinion, that that would be on the table.

I mean, at one point that was being priced into the markets today, it's gone a little bit less to that.

But a couple of the things that we got to point out here, the huge spike that we saw in the vics at one point on a point basis, the increase today was the most going back on in data to 1990.

And the other thing that we've been, well, a couple of other things we've been watching closely, we've been watching the 10 year yield, which earlier was down much more at one point, it was positive now is negative again.

And then the other thing we have to talk about, which we just heard um Eduard Denny talking about is the Japanese Yen.

And I'm gonna pull this out to get a better look at the big movement here in the yen.

Now this is dollar yen that we're seeing here.

And so this unwinding of the Kerry trade, which we heard Edgar Danny refer to effectively means the folks who were borrowing in yen to invest elsewhere.

When you see a big abrupt move like that, you see a reversal of those trades, which helps explain at least in the minds of Ed and many others part of what's happening today?

All right.

Let's get to young finances, Jared blicker now with more on the market action, including a major sell off in crypto.

Jared.

That's right.

I'm really glad you started with Eduard Denny and also the Japanese Yen did an excellent job of explaining, uh, the dynamics involved here and just real quickly on the yen within the last five days it is down 6.5%.

That is astronomical in currency terms.

That is just a lot of upheaval.

And I think that's what's really just kind of leaking into the rest of the markets here.

You know, the Vicks just had that huge spike up the biggest jump since 1990.

That's when the VX began.

So that tells you a lot that this was a record move today.

Now, here's the NASDAQ 100.

I'm going to actually come back to that in a second.

I want to switch over to the sector action.

Interestingly, excuse me, only tech is uh under performing that's down 3.5%.

Uh But you see everything in the red here, industrial is down 1.7% and that is the best off.

Also consumer, consumer, discretionary, financials, communication services, health care, materials, real estate, all of those down more than 2%.

And you really see an unwinding here when we look at the mag seven at one point early this morning, around the lows had been down by the most ever.

I think it was $800 billion worth of market cap, but they've clawed a lot of that back.

NVIDIA was down 14%.

Guess what?

It's only down 6.5%.

So this could be a one off scenario.

We're not gonna know until we have confirmation over the coming days and weeks.

But it's looking more like a one off than the start of something much more protracted.

But again, it's really in the early innings, wanna check out our leaders here because Bitcoin is the worst off today of everything.

But that like stocks is also off the low.

You can see Bitcoin down 9% over the last two hours, but it is actually up about 10% from the lows that we saw this double bottom that we saw earlier today.

So a bit of volatility here, things trying to make a comeback.

We just have to see if it sticks, we will.

So we'll be counting on you in the coming days to help us keep track of that, Jared.

Appreciate it.

The global market sell up, reflecting a wide array of worries facing investors.

One top concern being the health of the US economy and the Federal Reserve potentially being behind in cutting interest rates to check that pulse on market sentiment.

We have former Pimco Ceo Cambridge Queens college president and all Chief economic Advisor Mohammed El Arian joining us now to discuss Mohammed, as I said to you in an email earlier.

There's almost no one I would rather speak to today to get perspective on what's happening.

So I'm really um happy you could make the time to speak with us.

Um I wanna start with something that you have said to us frequently over at least the past six months, if not longer.

Which is that the longer the fed waited to cut rates, the higher the chance of something breaking.

Is that what we're seeing happen right now?

Thanks for having me, Julie.

We're seeing red lights on three things, fundamentals, policy and technicals and they are feeding on to each other.

And the question is, will they simply run themselves out or will they result in something even worse?

So, on the policy side, you know, I've been of the view that the fed had waited too long should have cut, they didn't and now they're perceived to play catch up.

And it's incredible to hear people calling from an inter meeting cut.

That is quite amazing that that's what some people want to see.

It's not going to happen.

But that's what some people want to see.

Why is this of concern because the economy has been slowing faster than the fed and others have been anticipating.

Thus, the red light on fundamentals and then you get the technicals, the unwinding of levied position, including out of Japan.

So, what we're living through right now are these three blinking red lights and we need them to turn yellow and then green Mohammed.

I'm curious because I was talking to uh Joe Brusuelas economist over at RSM.

He was making the case.

Uh Mohammed to me that listen, if what we're seeing continues like this and we got, you know, another flat reading in the CP I or P CE, then he did think an intermediate cut um and a super size one, by the way, 50 would be on the table.

You seem skeptical Mohammed, why are you skeptical?

Because I think that would signal panic, it would signal total panic.

You normally get those sorts of cuts when there's a major exogenous negative shock.

When for example, you have the pandemic when you have Lehman failing, when you have something that is comes from nowhere, what we're seeing here is simply an economic slowdown and the fed that's behind for it then to do an emergency cut would give the completely wrong signal to the marketplace.

And in fact, it could contribute to a recession because people could get more worried and spend less.

And that's what we need to avoid this self reinforcing negative spiral.

Well as it is with the economy slowing, as you probably heard, we've heard from some folks who are saying we are already in recession or we're close to it.

I'm curious to get your take on that.

And if we are at least close to recession, where is that slowing coming from?

I think of, you know, recent past recessions, obviously, the pandemic precipitating effect event, um you know, the housing crisis and subprime crisis for the precipitating event for the financial crisis.

But what is that thing this time around?

So truly, as you know, from, from months ago at the beginning of the year, I put the probability of recession at 35% it is not dominant, it's not over 50% but it is a fat tail.

What was I worried about two things, the lower income part of the household distribution and small businesses, they were already under pressure on the household side.

Pandemic.

Savings ran out.

Credit cards have been maxed out and all they could rely on now is labor income.

So if anything happened to employment, that segment was very vulnerable, small businesses had also run down their cash balances and were finding borrowing costs very high.

Now people responded saying you over worry, it's nowhere near 35%.

It's more like 10% because this is a K shaped economy.

Yes, the lower part of the distribution is doing badly, but the other part is doing fine.

So on average, everything is fine.

What we've discovered is that the weakness is migrating up and that's what the employment report told us.

That's what the ism employment Index told us.

I'm curious man for investors who are, who are watching right now and, and they see the reaction in these markets.

They're trying to, they're trying to gauge what comes next.

What should they be watching Mohammed?

Are they, are they watching the yen?

Are they watching the bond markets?

What are you watching?

I'm watching Market Technicals.

I think we are an overshot territory in several segments of the marketplace already.

Certainly in fixed income, in terms of government bond yields.

The sort of declines we've seen, especially at the front end of the curve are in my view, an overreaction.

So look at whether this overreaction start getting corrected or not.

The ISM service number today reminded people that the economy is not completely in recession, it's a risk of recession, not, not in recession.

Um So look at that, you need to see the technicals stop feeding onto each other.

And when we spoke with Eduard Denny earlier, and I also saw this in a Wall Street Journal column from uh James mckenzie mcintosh today.

Excuse me, they were comparing this to 1987 right where you see a Black Monday event, but that wasn't in fact followed by a recession, not for a few years.

Um And we sort of had a technical snap back after that.

Is that the best sort of analogy for what we're seeing?

Yes, if we can find an anchor.

So the big difference with 87 and, and today is that the fed was not an amplifier of volatility.

The fed was a stabilizer.

Um Today, unfortunately, because the fed became so backward looking and the Fed has lost a lot of credibility in the last few years.

They've become an amplifier of volatility.

And we, the, the way you get back to an 87 scenario is by the fed, regaining control of the narrative and the fed making their forward policy guidance more effective and taken more seriously.

Right now, the the markets truly believe they can bully the fed into doing whatever the markets want.

How does the fed do what you're describing?

Mohammed?

I mean, obviously we have Jackson Hole, but that's several weeks from now, which feels like a long time in these markets.

Is it about?

And we don't have a lot of fed, speak on the calendar.

There is some.

So how do they retake control of that narrative?

But I think Austin Goolsbee today, the president of the Chicago Fed was quite effective and he did act as a mini circuit breaker um in the morning at a really critical time uh when the fix was out of control and, and there was a lot of fear in the marketplace.

Importantly, is to take advantage of Jackson Hall.

There's a number of things that are forward looking that the fed needs to share their thinking things as basic as what do they think?

The usual interest rate is that's really important unless you give guidance to the marketplace and stop this excessive data dependence.

Um The fed ends up being the amplifier of volatility and that's what we don't need a central bank for that.

The markets can, can contribute to volatility all on their own.

They don't need the central bank to amplify it for them.

Mohammed.

You know, another issue uh I've heard raised and so I just want your take is whether you think uh politics is playing any kind of role in the nervousness and the selling Mohammed and, and the, the idea being, listen, we have an election, the polls show now it's basically a dead heat.

Do you think that is an issue that plays any kind of role Mohammed?

So I had this image of family feud.

You're too young but you put up what the what the main factors are.

So politics, domestic politics is fifth.

The first one is a growth scare then concerns about a policy mistake, then the bad technicals, then their politics and the possibility of an escalation of the Middle East War.

And then finally, it's domestic politics.

So is it there?

Yes, but its influence is very small compared to the other four.

If only we were too young for family feud.

Muhammad, I feel like I should like be hitting a buzzer even just hearing that phrase Mohammed.

El Arian.

Always a pleasure.

Thank you very much.

Thank you for having me.

We have to get you caught up with some breaking news here.

Google losing an antitrust lawsuit brought by the justice department over its search dominance.

Now a federal judge has ruled the company's payments to make its search engine the default on smartphone browsers actually violates us antitrust law and this decision coming down just in the last few minutes here as we try to figure out what exactly uh are the implications of that.

Um This is a number one of a number of uh suits that have been brought and different regulatory actions that have been brought by the US government here.

Yeah, I mean, I think Google would probably, you know, trying to make the case and listen, I mean, consumers have choice and you know, partners want to team up with this because we've got the best product when Julie and Josh wanna search for something they use us, but that apparently is not um what the judges decided here saying that really um Google uh the payments they're making and of course, it's a lot of money, it's billions and billions of dollars.

Um the judge deciding here actually, that's blocking um rivals from kind of really competing and, and succeeding.

Yeah, $26 billion in payments total here is what we're talking about and the judge in the case, judge Amit Mehta writing in his ruling, Google is a monopolist and it has acted as one to maintain its monopoly.

Now, as I mentioned, there are a number of different actions that are outstanding.

This is one of the most significant ones and um one would think it will be um it, it will be pushed back upon by Google, but we'll end up seeing what happened, what happens the stock did fall to the of the session or toward back towards the lows of the session.

It comes at a time, Julie just, and we talked to any number of smart analysts about this and they have different opinions.

But obviously, you know, comes at a time when, you know, investors certainly have new questions about Alphabet's bread and butter search business and the age of A I.

How is that gonna be upended and, and redefined?

It's a great question.

All right, we're just getting started here on market domination.

Obviously, very busy day here.

Stocks heading for a big loss to kick off the week.

Stay tuned much more still to come.

Stocks under serious selling pressure here.

But all the lows after what started as a scary open for investors and joining us now is Mark Newton fundstrat, Global Advisors, managing director and global head of technical strategy.

Mark.

You are the perfect pro to have on today, my friend.

Uh let's start big picture.

What do you make of this sell off?

Mark?

What are the charts telling you?

Thanks, Josh.

Well, look a lot of this has been specifically technology related and I think investors are trying to come to grips with this new era of really cross asset volatility that's affected not only large cap technology within equities but also interest rates and effects and we're seeing Cryptocurrency declines.

And so it, it's really a new era where a lot of these have been declining at once.

I mean, the one thing I would say is that you really haven't seen that big of a degree and broader market weakness.

It's largely been technology.

Uh however, that is, of course, something that affects most of our major indices and ETF S and it makes the market seem like it's showing a big decline, but there are a lot of healthy parts in the market and we can talk about that in a minute.

Well, mark, that has been true largely in recent days.

But today, the selling has broadened out, right.

We're seeing it a little more um pervasive throughout the markets.

Does that tell us anything?

Are you, are you sort of taking away anything about how long this could last?

Uh My thinking is it, it likely bottoms this week?

Uh tough to say that it has bottomed as of yet.

But I, I specifically think that either this week or next week will bring a short term low for this decline.

And I say that specifically for a few reasons, one is that dollar yen, which is one of the, at least, one of the reasons why equities turned down so sharply was a huge change in policy.

Boj cut their bond purchases in half and, and obviously hike rates.

So we saw a big surge in the end and now we see this, uh you know, the, the the entire trade is being unwound in, in the last uh few days.

And so I think that's really interesting and, and when you look at the, the carry trade where people borrow cheaply in the end to potentially buy large cap technology issues, uh some of that has been alleviated.

Now we're seeing yen uh rise right to near prior uh peaks or in this case, lows for dollar yen, which is 1 40 23.

So that's gonna be pretty significant support in the short run.

And so I think that is really, really important.

Um The second is that you're seeing sort of a dislocation finally in excessive volume to the downside.

We never really saw that over the last few months.

And so volume was a very orderly type decline.

Now, you're seeing a huge amount of advanced decline to the negative, meaning huge amounts of declining issues versus advancing volume into declining issues.

That's giving you your first real whiff that we're getting close to a low at a time when the vics got up near 60.

And a lot of these fear gauges when you look at just traditional sediment polls have turned very negative in a very short period of time.

So when I look forward and I see, you know, the fed now has basically what we're seeing in the market pricing in a good likelihood of 100 and 25 basis points of cuts by December.

That's interesting.

Uh, for the first time, the chance of, of cutting in September has been raised from 26 basis points to over 50.

So 225 basis point cuts, a 50 basis point cut which Powell was dismissive of as of last week now is at least built into the market.

So the market's gotten fairly valued, huge sell off in technology.

Uh, people have gotten scared.

Obviously, it's it's a difficult time of the year in an election season between August and November.

But I sense that, you know, this is gonna bring opportunity for those that like to buy dips because I don't sense that this fear is really, uh you know, makes a lot of sense based on looking at broad based nature of of what's happening across the globe.

Mark.

You mentioned how there are some, some healthy parts of the market, which is welcome news on a day like this.

Where are you seeing that Mark?

Oh, just as early as really look at last Thursday and we saw the XL V the health care ETF hit new all time highs and, and keep in mind this is right in the midst of an ongoing sell off in the market that started back on the 16th of July.

And so this has been going on for over three weeks and now you have health care hitting new highs.

Uh a week before that you saw equaled industrials and equated financial ETF, SRSPN and RSPF from invest go both hit new all time highs.

So we have a few different areas of the market that actually were acting quite well.

But all of this continues to be disguised by, you know, technology.

This big tech wreck has served to really camouflage the market.

And yes, it's very painful.

I think investors have been overexposed, have huge concentration in technology.

So a big sell off like that in an area which is a major focus.

Uh certainly perks.

But I would say that honestly, for those that diversify, there are plenty of parts of the market that are still working well.

And now with a big breakdown in the dollar that eventually is going to start to aid emerging markets when we can see a little bit of stabilization to this mark.

I want to ask you about one other area of the market that's not doing well.

And that's crypto you guys, your firm has been Big bs notably on Bitcoin and one of the thesis with Bitcoin, is it being quote unquote digital gold is that people should flow into it at a time like this.

But I guess if you're borrowing in yen and buying Bitcoin in dollars, you know, that that's not necessarily gonna gonna help you out.

So II I don't know, I'm just curious what your thinking is right now.

Well, as, as a, as a technical analyst, I would say that despite the fact that there is no perfect correlation between really Bitcoin and, and the NASDAQ anymore.

I mean, Bitcoin largely has been going sideways since March at a time when the broader market really was going sideways for a number of months before breaking out.

So Bitcoin largely has been range bound, you know, for the last few months.

It hasn't, it obviously feels pretty severe when you see a big move from the highs like we saw.

But compared to the move that we saw, you know, in the rally from last year, you know, it's really just a drop in the bucket.

And if anything, you know, ahead of digital assets, uh, Sean Farrell remains very constructive and, and, you know, my own thinking is that I don't see much more deterioration beyond really the mid to high forties and I think we will bottom and we can pull out of this, but it is going to be important for look the broader risk asset space to stabilize.

It's very unusual and unlikely to see Bitcoin simply surge back to new highs if, if the rest of the world is falling apart.

So we need to really see some effort and, uh, and dollar yen holding to see rates go down a little bit less severely as, as, you know, they've really been, uh, hastening in terms of how quickly we've seen the two year fall apart and the 10 year and a lot of that started off based on disinflationary, you know, promises it was a good news and then recently that's turned into a little bit more of a growth scare.

So that's, um, you know, I wanna see rates stabilize a little bit.

I wanna see the dollar, uh you know, despite it being in a downtrend of late and, and really see technology sort of hold where it is the charts of RSPT, which you showed at the beginning of the interview, you know, that's getting down to very important levels.

And so technology, um you know, might take a while to get back to the highs, but it is certainly a very, very intriguing area to consider.

You know, you look at nvidia's four pe now of 26 very reasonable, you know, ahead of the Fed and of course set to cut as many as five times over the next four months.

Um, you know, for me, that seems pretty attractive at current levels, we'll see how things play out the rest of the week in the month and the year mark and we'll catch up with you again.

I'm sure good to see you.

Thank you.

Getting to one individual trending ticker that we're watching.

It's NVIDIA, those shares are under pressure as its new A I chip could face a delay.

That's according to a report in the information.

Now that report came out late last week, but it's still affecting the stock here this morning as it pushes back by 7%.

The information saying that there was some concern about the design flaws and most of the analyst chatter I've seen about this has said they think that NVIDIA can overcome this and then it'll be fine, but the market is definitely um punishing any negative headlines today.

Yeah, Bernstein, Stacy Razon telling clients is not panicking at this point.

A push out slash delay of shipments if they occur, may shift timing of some revenues but seems unlikely to impact broader demand.

So in other words, Stacey is saying, if there is a delay sales, he believes, you know, deferred, not destroyed.

Outperform targets 130.

And we should mention we got a statement from NVIDIA on that report and they said as we've stated before, Hopper, that's their uh chip set is demand is very strong broad black whale sampling.

The next generation has started and our production is on track to ramp in the second half beyond that.

They said we don't comment on rumors.

In the meantime, NVIDIA shares are down some 25% since their record high in June 18th.

That is a raised market value of about more than 840 million dollars um in that period of time earnings coming up later this month.

All right.

Meanwhile, Warren Buffett's Bhi halfway slashing its stake in apple selling nearly half of its apple stock.

So this certainly generate a lot of headlines and attention.

Julie Berkshire cuts the apple steak roughly in half.

How do Bulls respond to a headline that, that Julie?

Well, Dan Ives or Wedbush uh does Note Bhi still has Apple as its number one position.

It is more than double its next biggest position, which is Bank of America.

We strongly caution.

Ive says that Buffett is a core believer in Apple and we do not view this as a smoke signal for bad news ahead.

I mean, there are a lot of defenders out there of not just Apple, but of Berkshire's selling of Apple and saying it's sort of technical here because it had become too large in the portfolio because of its gains.

Uh 2016 is when Berkshire Hathaway first disclosed that stake and since then, the shares are up almost 900%.

And so obviously, it's gained a lot in the portfolio.

By the way, I just told you how much NVIDIA is down from its record Apple down about 11% from its record um a few weeks ago and that has wiped nearly $400 billion from its market cap in that period of time.

We don't, we don't expect more news from Apple now for a bit in September.

That's when we'd expect leaks to make the stage.

We'll see.

I always count on a few leaks.

All right, stay tuned.

We're gonna be right back with more market domination on the other side, Wall Street, sell off intensifying to start the week declines hitting every sector with oil sliding to a new seven month low on signals of faltering demand in the US.

And China and Exxonmobil is fresh off results that beat estimates on earnings and revenue for the second quarter.

Joining me now is Katherine Michaels Exxonmobil, Chief Financial Officer Kathy.

Thank you so much for joining us.

We really appreciate it.

Thanks so much for having me, Julie, really happy to be here today.

So I just wanna talk about the backdrop a little bit here because we do have this sort of shifting sentiment that's reflected in risk, assets and stocks and oil, um shifting sentiment around the Federal Reserve and economic growth.

And I'm just curious what you're seeing in your business, whether you're seeing any signs of an economic slowdown, what, how that's affecting demand dynamics right now?

Yeah, I think it's really important to put it into context for our industry because we were coming off of record highs last year, especially in terms of refining margins and gas prices.

And what we've seen more recently is that price and margins have come back into what we would call the 10 year range band.

Um So that's pretty consistent with a still pretty constructive market overall.

It's really only our chemical business where we've seen and continue to see bottom of cycle conditions.

And importantly, the work the company has done to improve our underlying earnings power that's put us in a really good place in terms of just resiliency of that earnings power through any uh market.

And so just this quarter, we saw our earnings increase a billion dollars relative to the last quarter.

And I think that really reflects the decisions that we're making around our portfolio and investments and continuing to drive efficiency across our business.

Um And then looking over the much longer term here, something that your Ceo Darren Woods mentioned on the earnings call is that your global oil outlook is about to come out.

And he kind of gave a little teaser here that global uh energy demand should rise 15% between now and 2050 A as you think ahead.

And obviously that it's tougher the further out you go.

But what would be sort of the main risks to that kind of outlook?

Ultimately, as we look at the outlook, we continue to see really strong demand.

And so last year was a record high in terms of oil demand, we expect this year is going to build on top of that.

And that 2025 we see yet another build on top of that in terms of overall demand and that's really driven in large part by countries trying to address energy poverty, right?

Having low cost, reliable energy is one of the things that really drives economic growth and pulls people out of poverty.

And so that's a big driver of growth.

And then overall oil demand is a feedstock that's used for industrial capabilities like chemicals.

And so you continue to see the wide variety of uses for things like plastics and other chemicals that again drive oil demand.

As we look at your last quarter, you had record production in the permian because of the pioneer acquisition in part record production in Guyana.

Um If you could just briefly say what you think uh investors need to know about pioneer the integration.

Um and what's that gonna mean for cost savings and production going forward?

Yeah, absolutely.

We had record production in our own permian operations as well along with, as you mentioned, record productions from pioneers operation, record productions in our Guyana operation.

And so it was just really a strong operating uh quarter for the company overall.

And you know, as we look at the combined now near Exxon Mobil Permian Operations, we see even more opportunities for synergies there which we're getting out in front of already.

And so just as an example, pioneer has a remote logistics operations that Exxonmobil has now taken on and added into our remote wells and completions operations.

In order to drive more synergies across logistics and procurement.

We are starting to utilize what is a very large water recycling infrastructure in the Midland Basin that pioneer brings to the table.

And so looking to get those synergies which are also environmentally friendly, help us to reduce our environmental footprint.

Uh We're beginning to align overall specifications for the materials that we procure again, that'll drive both procurement synergies as well as supply chain synergies.

And then finally, I'd mention we're beginning to use our techniques in terms of what we call cube development, longer laterals in order to get at higher resource recovery more efficiently on the pioneer acreage.

So we feel like the integration planning and execution is going really well and that we can already see the opportunity for more synergies than we laid out at the time that we originally announced the acquisition.

So everything's going really well.

A and Kathy finally, I feel like I gotta ask you a guy in a question as well.

And now this arbitration hearing over Chevron's proposed acquisition of hess, it's been pushed back.

It looks like at least to mid 2025.

Um If Exxon does not prevail in that proceeding, what's the kind of game plan there?

What, what will Exxon then do?

Yeah.

So importantly, I'd start by saying we felt really good about the arbi arbitration panel timeline.

So we always felt like uh this was a situation that deserved for people to take time in order to really inform all the data and all the circumstances to the joint operating agreement, which is what the arbitration panel has in front of them.

And so they've set a hearing at the end of May of next year and said they'll make a final ruling by September.

And we think that's a timetable that allows them to really digest and take all the facts and circumstances into consideration.

And then to your question, Julie, kind of what happens if for some reason we were not successful in affirming the preemption, right?

That we have our expectation would be that the Chevron has transaction would move forward.

But in the next breath, I would tell you, we feel very good about our position in this arbitration being one of the parties that actually negotiated the agreement that's being discussed in the arbitration.

Gotcha.

All right, Kathy.

Thank you so much for your time again.

Appreciate it.

All right, thanks so much, Julie really appreciate being here today just over 20 minutes till markets close.

Let's get a check in on the markets with Yahoo Finance's very own, Joshua Schafer.

Hey, Josh, yes, you're seeing all three major averages still trading near their lows of the day coming up a little bit, but I've sort of been asking strategists throughout the day today, just essentially what they make of the market action, what they feel like has been driving it and sort of where stocks go from here.

So the large take has been sort of something that you guys have obviously already talked about on the show.

Kind of the unwinding of this carry trade from Japan being what's what started weighing on markets.

You could really probably even go back to last Friday's jobs report saying that also was partially what is weighing on markets, right?

This economic data shift and how we're receiving data and sort of bad news, becoming bad news.

What I thought was interesting that I heard from two different strategists though was essentially that when you look at what's being pulled down the most, it's the most crowded trades.

And that's kind of a call that we've been hearing for really over a month now and maybe six months, maybe you could say it's been a year that people have been circling that concentration though, right?

And saying at some point, this is going to unwind at some point, this is going to unwind.

And when we just think about this market action, you guys were just talking about NVIDIA down, I think over six or 7% at this point today, probably 30% in the last month.

Now, that's a call that people have been talking about and sort of the take away from the team at city was, well, if the crowded trade was what brought everything up, that's what's gonna happen on the way down too.

And also getting to the point of maybe that's not a bad thing.

This is what people have been talking about, right?

We want that unwinding to happen.

So then you have more of a normal market and essentially the big tech earnings that we got last week didn't meet these really high expectations that we have.

So then you get a little bit of jitteriness.

A couple of technical things happen and then it all starts unwinding.

Well, and let's talk about the magnitude of that unwind because those always get a lot of attention.

So, the Magnificent Seven in particular, what the market cap erasure today is that a record?

Is that what, what, what, what's the current?

I think it was close to a record.

We had a record last week.

Right.

So we're sort of, we're recreating their own records, I guess at some point when you start to look at that.

So that's been definitely an area to watch Julie.

And I think the interesting part of that is what's the near term catalyst to bring the magnificent seven trade back.

And I don't really know if you have, I mean, we gotta wait until the end of the month for NVIDIA.

We were talking about that earlier.

The timing of Nvidia's earnings is inconvenient, I think for the rest of the market and for from catalyst purposes or it's a boon if they're gonna come out and, and beat as they have been.

And, and, and I also wonder though when you think about them, we talk about these big tech stocks in that group all the time, right?

Does it, how much will it matter if NVIDIA does the NVIDIA earnings thing again?

And they surprise and their earnings are going up, like, does that tell me that the other stocks are going to monetize their A I strategy?

It seems like we're getting to a point right now in market sentiment where investors are questioning that thesis more that just the broad A I trade is all one thing and if A I is hot then everything in A I can go up.

I think one of the bigger takeaways I have from the last two weeks of action is just the A I trading general is under more scrutiny and is being viewed differently depending on what company you are.

And so I don't know, it would be interesting to see when NVIDIA does come out.

Can they sort of bring that narrative back or are we at a point where the, the A I trade is never just one trade anymore or selective, we'll find out, but we have to wait.

Ok.

Thanks a lot, Josh, appreciate it.

Coming up.

A federal judge has ruled that Google engaged in illegal practices in order to maintain its dominance in internet search.

Z Brown will speak to a former FTC chief technologist on the other side in today's Yahoo finance playbook, we're taking a close look at the biotech sector and opportunities outside of G LP ones.

Joining us now, Salvin Richter, lead analyst for the US biotechnology sector at Goldman Sachs within global investment research.

Salvi, thanks for being here.

Thanks for coming in.

So I wanna start a sort of big picture because we are on a day here where we're seeing this very dramatic sell off across assets and I just wonder kind of how you think about biotech as strategically as part of a portfolio at a time like this.

Well, I think when you look at health care, you tend to want to gravitate towards the more defensive sectors in a period like this within biotech, there are defensive aspects but they're non defensive aspects.

So with regard to rates, you know, obviously a positive for the sector, we start to see a rate cut.

But if you're in a recessionary environment and then, you know, you can kind of pass through that situation and people will determine where they're going to allocate for, for growth and, and more of a defensive play, which will probably be these larger cap, more quality oriented names and which among those names, Salvin in your coverage of this right now, where do you see the opportunity?

So, Amgen's won their reporting earnings this week um that we're focused on and, and they um they do have a next generation glip angle um but they are for obesity, but they also have a slew of pipeline products of that have come out via internal R and D and um and then M and A and so we're looking at them from an earnings execution standpoint and then the ability to kind of own in different verticals within cancer with autoimmune disease.

Um And they also are um basically leveraging the A I side of, of the world with regard to kind of bringing it in house and mixing it with genetic medicine.

Um And then we, Vertex and Regeneron are two others.

We should highlight really strong R and D first execution stories.

And with Vertex, they're looking at um not only furthering their cystic fibrosis monopoly essentially, but also bringing in a non opioid pain version and then going further into rare diseases.

Vertex um is looking to build a cancer vertical and also looking to go into kind of innovative spaces in autoimmune disorders and others.

So I I think it's much more about where do you see innovation and sustainable growth and a kind of a first in class outlook, first in class, best in class outlook.

And it it sounds like are you also looking at the biotechs that are not sort of, I mean, even though Vertex has that dominant product in cystic fibrosis, they have some other others in the pipeline, you just mentioned, are you sort of focusing also on some diversified plays, right?

That aren't just sort of betting the farm on one particular um treatment area exactly.

I mean, I think Vertex has done extremely well being a focused player, but the idea of diversification is is key right, as you think about growth levers as you've penetrated a market.

So they do have they've been acquiring and innovating to kind of create that diversification diversification.

So has Amgen to that point and um and now we're seeing Regen run have to do it So we've seen this with the large BioPharma or even just large farmers when they get to a point where they're too concentrated, they do have to work on diversification here.

So I'm curious, you know, one kind of mega trend, no surprise we talk a lot about on the show is a I, how are the companies in your coverage universe leveraging that technology and how, how do you see it sort of just reshaping the biotech sector?

I think it's gonna reshape the biotech sector um in terms of being a tool that, that everyone brings in and now it's already, it already exists as computational biology.

So as we think of it's, it's more of a um I would say a gradual um you know, uh step wise function towards can maybe greater integration here.

And so some companies, some large companies like Amgen have gone out and been acquiring tools that they're bringing in house to, you know, quicken development, lower time to um market, therefore, lower costs, but also go after un drug targets, right?

And so there's work on that front that's being done.

Um And so you've seen several large pharma come in that way and, and then you're seeing this emergence of a group that are calling themselves tech bio and they really are tech companies and drug companies that have kind of merged and culturally, they are interesting because they're different from models we've seen and working to create kind of next generation drugs here and, and we'll see.

I think some will succeed.

Some won't, but we're in early innings here.

Great Salve.

Thank you so much for joining the show today.

Appreciate it.

Thank you.

Moving on Google losing an antitrust lawsuit brought by the justice department over its search dominance.

A federal judge ruling the company's payments to make its search engine the default on smartphone browsers does violate us antitrust law.

Joining us now with more is Neil Chilson, head of A I Policy with the Abundance Institute and former chief technologist for the FTC, along with Yahoo Finance's Alexis Keenan Alexis, maybe I'll start with you.

Just bring us up to speed on on what do we know?

Right.

So uh just a huge decision, I'm still parsing through it.

So bear with me here what the judge has found and this is the judge in the district court in DC.

Judge Ahmed Mehta.

He says that Google is a monopolist and it acted to maintain its monopoly.

That's a violation of section two of the Sherman Act.

And what the judge held is that there is a relevant market here.

The the place where he's saying Google is a monopolist one.

General search, right?

When we go to google.com and we type in that field in general search, the other is general search text advertising.

So Google's distribution agreements, that's what's underlying this case.

Google enters into distribution agreements that really make Google's search platforms the default on mobile phones, on browsers, on places that touch the internet.

So that's the foundation of this case.

That's the trouble that the judge has with these exclusive agreements here.

The judge said that Google also charges competitive prices for its general search text ads.

And also there's part of this decision that does though favor Google and that is in search advertising.

The judge said that Google lacks a monopoly in that space and therefore the inquiry stops there they go no further.

So the judge says they're not liable, Google, not liable as an anti competitive violator for what it would be targeting.

There is its a 360 product.

The judge also said that there's no product market for general search advertising.

Uh But look, this is two thou 237 billion of Google's 303 107 billion in total revenue uh for 2023 is advertising.

Uh Search advertising is 100 and 75 billion of that.

So it's a big deal.

It's a huge deal.

We trying to say sections of their revenue pertain to this holding here.

All right, I wanna take it to Neil now because Neil Google's argument has been, we have these agreements because we're the best se search engine.

Um And I, I'm just curious why you don't think that the judge found that argument compelling.

Well, so the, the judge I think here focused very much on whether or not, a lot of these cases are lost in the sort of market definition.

And they, once that was found, Google does have a significant market share.

And I, I like the judge parts the fact that Google is a monopolist in this market.

And then said, the, the problem here is maintaining that monopoly, not earning that monopoly.

So being the best is how you might earn, how you might earn a monopoly.

But then if you maintain it using anti competitive conduct, that's what they were focused on here.

And so the judge said that these contracts maintain that monopoly in a way that violates section two of the Sherman Act.

And so, Neil what are possible remedies here, then, uh it's a, it's a great question actually.

Uh I think that the court will have to look at that next.

And, uh, uh, you know, the divestment would be extremely severe here and I don't think that that's, uh, that, that seems like unlikely.

Um But probably it's more in the form of invalidating these distribution agreements and saying that uh Google can no longer pursue those types of things, which uh is an interesting problem because in under these agreements, Google uh sometimes pays significant amounts of money to these, uh these platforms for a product that consumers might switch and choose as their default anyways.

And so if Google is the best, a lot of those revenue streams could disappear to some of these say browser manufacturers or Android platform uh creators that uh that they won't easily be able to replace through uh other other streams of income.

And Neil I want to ask you about the changes that have happened in the past year, years since this case has been pending.

Now, we have a I assisted search that is really changing the landscape of search.

What do you think that will imply if we ever do get to a point where we are talking about remedies, barring appeals and all this case, how does that change the possible fix here?

Uh I don't know if it changes the fix exactly.

But if the judge takes that into context, uh this, we we're at a time where general search, the market that's at most issue here is, is under significant threat, not just from A I, but also from specialized search.

So the most um the most money producing parts of general search are those where people are searching for products and, and fewer people are using Google to do that now.

But many people start their search for products on amazon.com for example.

And so uh so I think the court will have to take that into um context.

The fact that general search is not quite the the the sole destination for the internet search user as it used to be in the past.

And the new competitors from A I I think are putting even more pressure on this type of this business model.

Uh And so the, the findings here are a little bit ironic that they're, they're about a technology that is under significant pressure, not within the market but from outside of the market in which it competes.

Neil Alexis.

Thanks so much for joining us today on the show.

I appreciate it while wrapping up today's market domination.

Don't go anywhere.

We've got you covered with all the action following the closing bell.