Solar industry, AI chip stocks, Fed rate outlook: Market Domination

The final trading hour of the day is here, and it brought Julie Hyman and Josh Lipton to break down the biggest market (^DJI, ^IXIC, ^GSPC) stories and economic themes ahead of Thursday's closing bell.

In today's episode of Market Domination, Wedbush senior equity analyst Dan Ives talks chipmaker earnings for this quarter as the AI chip trade recovers from yesterday's selloff.

Former Federal Reserve Bank of Kansas City President Thomas Hoenig outlines the Fed's patience in waiting to cut interest rates, reminding officials of historical examples of what could happen if you cut rates too fast.

Other top trending tickers on the Yahoo Finance platform include Abbott Laboratories (ABT) after reporting second quarter earnings, Meta Platforms (META) as it seeks to buy a stake in European sunglass maker EssilorLuxottica (EL.PA, ESLOY), Broadcom (AVGO), and Blackstone (BX) on its latest earnings print; Julie Hyman interviewed Blackstone President and COO Jonathan Gray this morning.

This post was written by Luke Carberry Mogan.

Video transcript

Hello and welcome to market domination.

I'm Julie Hyman.

That's Josh Lip in 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.

This is about as fast as inflation has ever fallen in the US and we did it without a recession.

That's what I call the golden path.

It's not done.

But uh but it makes me feel a lot better when you both see it for multiple months in a row and you see the components that you're finally starting to see the declines of housing inflation that we've been anticipating.

And you're seeing improvement on the services side too.

I do think that as the fed cuts rates as we move out of this tightening period that will give investors more confidence, it will make the cost of debt capital lower.

Um It will help transaction activity.

I think it will help the IPO market and I do think the Fed is getting more and more air cover to cut rates.

The Fed's medicine is working.

I think it might be an overhang on the stock and deal.

There is more clarity on.

Um you know, the the future potential for Dominos.

I mean, Dominos historically has had in the international market growth engine.

So clearly it in the United States was very relevant for Dominos in 2023.

But all life and years are going to be increasingly more into the international market.

And so not having clarity on what the future potential might look like in terms of unit expansion might spook some investors, we got one hour to go until the market close.

So let's take a look at the major averages here.

And I guess, you know, I was gonna say the rotation continues today, but it's only going out, it's not coming really back into something else.

So you got a rotation really just a plate all sell off.

Maybe that's what we're looking at here today with the dow down 445 points off 1.1% the S and P 500 not down this much but still down three quarters of a percent and the NASDAQ is down as well.

So you don't see the kind of convergence necessarily that we've been seeing in recent days and guess what?

The money's not going into small caps.

It's doing even worse down almost 2% today.

Yeah, I mean, it's, it's taking a rest there because you know, we talk about this at the same time we're down today, but that move was so sharp and quick and aggressive.

And if, if it's still true that if you just backed it up, even though, I mean, it's 10 days, even a week you would see, you know, still, well in the green and, and solidly outperforming the spy.

Right.

So, um, interesting where that trade heads from here.

Yes.

Let's look at some of the other uh groups that we're watching here today.

Now I say the money is not really going into anything.

It's going a little bit into energy and communication services today, but really small gains, big selling in health care, financials, consumer, discretionary.

And then I wanted to dig a little bit into what we're seeing in tech here today, NVIDIA is coming back, which is kind of interesting metas coming back.

Tesla's coming back but Apples in the red and there were some um uh a tweet in a report today, a closely watched Apple journalist who said maybe those sales aren't coming back as much as people think they are alphabet Microsoft Amazon.

They all down.

You mentioned ship switches because yesterday I the storm getting whipsawed by these, these headlines couldn't find a, a friendly politician on either side of the aisle today.

I mean, relatively if you look at the S mh it looked like some relative stabilization, Julie.

And I thought some of the movies were interesting like I NVIDIA have, you know, getting here Broadcom, you can see up and Intel, by the way too was also in the green and Intel quietly over the past month, actually, up nearly 15%.

And I kind of did wonder, um, just recently it's our, our investors feeling like, well, maybe I'll be moving to Intel because at least I know Seo Pat Gelsinger, he's building out those domestic chip facilities here in the US.

And so he stays on the right side of some politicians.

Maybe it's a theory, I don't know.

All right, for more on the latest market moves.

Let's welcome in Ryan Grabinski, managing director of Investment Strategy at its research partners.

A bay company, Ryan.

It's good to see you.

So you just heard um Julie and I talk and Ryan we're talking about, of course, the small caps.

Ryan investors have been talking a lot about those pint sized companies and they're down today Ryan, but such a quick aggressive move higher.

I'm not sure what you you make of it.

Um because your notes, Ryan were interesting when you look at that small small cap rally, what you're suggesting is you really see it as kinda maybe more of a trade rather than, than the start of something bigger and broader.

Yeah, so it's first off, it's, it's great to be here.

Thanks for having me on uh you know, uh the one thing I will say about small caps is you know, I, I would say I'm probably a little more skeptical uh than most of the, the, the street right now in terms of the durability of the rally rally within the space, we've generally uh saw, you know, 10% move uh higher here.

And what largely, what that was was it was a rating of multiples uh due to uh uh uh odds.

Uh I, I'd say lower fed rate expectations.

Uh And that's a way of saying that the terminal rate for the fed funds rate is, has come down to about 3.5%.

Uh So there were an additional two cuts that were priced in.

So multiples, uh the NTM multiple for small caps basically jumped from about 22 times to about 24 times over the past week.

What we didn't see was any follow through uh uh in terms of the fundamentals overall.

So I look at the NTM PS for both the, the S and P 600 the Russell 2000 and it continues to be uh sort of on the low end of the range of where it has been, it really hasn't seen any uptick.

So until I start to see some sort of fundamental follow through, uh with regards to the small caps, I'm a little skeptical about the durability of the rally now.

Sure, I do understand that uh you know, the banks make up a large portion of the small cap index and, you know, everything that's going on in Washington, there's certainly some, uh, you know, might be some regulatory reprieve that that comes should the, the, the Republicans ultimately win.

Uh And there ultimately be a Republican sweep.

But, you know, I think that's, that's probably more likely going to be a, a trade rather than an investment opportunity.

There's not necessarily a story that would be associated with the banks more longer term.

And so obviously that that kind of hurts uh hurts the fin uh the small cap space overall.

So Ryan, as I was just talking about, you know, in recent days, we've had this rotation, right?

Where things have come out of mega cap tech um out of some other winning areas gone into places like the small caps today, it's not going much of anywhere in terms of winners, right?

And so what kind of risk are we seeing from that rotation and the broadening out that could be supportive of a continued rally to just be in a, a plain old sell off?

Yeah, it's, it's a great question.

So one of the things that clients have asked me today is say, have we seen the top in the markets?

Uh you know, this this cycle and you know, are we in a bigger sell off?

So I think, I think it's a good, good question to ask.

I'm I, you know, II I think there's getting into this earnings season, the earnings overall, the, the bar is pretty high for the, for the, the overall index, I would say, especially on the large cap side of things.

Obviously, there's, there's been a lot of uh growth that's associated with the magnificent seven and that's kind of where we're seeing, uh seeing that rot out of.

I, I, um, you know, I, I'm gonna, I'm gonna wait for where the earnings season to really come about to kinda to get, get a better picture.

Obviously, we saw the earnings report from a SML.

Uh you know, things were looking a little weaker.

Uh Their guidance was a little weaker.

Um You know, thinking about TSM today, obviously, if things seem to be ok.

So it, it, it starts to, you start to think about, ok, have we had this sort of a I euphoria that market has been facing over the last six months, is that sort of turning into an A I disappointment?

And so, um you know, I think, I think generally speaking, that's the biggest risk heading into the next 6 to 8 weeks.

Is, are we setting ourselves up for this A I disappointment and do all of the trades that were associated with A I ultimately begin to unwind themselves and that's not only associated with the tech sector, right?

You have uh some of the nuclear indus uh nuclear companies have been associated with, OK.

There's gonna be more power demand.

Uh and you know that power generation is gonna come from the nuclear space.

And so, uh you know, those names had started to see a bit uh the other, the other trade which um you know, I think it kind of goes underappreciated here and uh you know, is starting to see some of self is actually the the selloff related to the weight loss drugs.

Uh And so Willie and Novo, the mind specifically there uh within, within uh the healthcare sector, right?

They had, they had accounted for a lot of the gains uh within healthcare and to the extent to which that story starts to starts to change.

Uh It may be uh you know, I I it may, it may not carry the sector.

Obviously, healthcare hasn't been one of the great performing sectors this year.

Uh But Lily has, has ultimately held it up uh more than uh would have otherwise been Ryan, you over at Chagas, you work with folks who know politics in Washington very, very well.

I'm just curious, Ryan, how, how the team mayor is thinking about, you know, the possibility of a Trump Vance White House and what that would mean for the markets.

Yeah, so, so I don't wanna, I don't wanna speak too soon.

I don't want to speak uh you know, for our Washington DC team.

But obviously, um you know, we have to, we have to kind of get through uh the, the nominee portion.

Obviously, we know uh you know, we, we know who the Republican nominee is.

Obviously, there's still some questions out there about who the Democratic nominee.

I think ultimately, you know, trade is gonna be a big focus.

Uh uh um you know, uh should, should the Republican ultimately win the White House?

Uh You know, obviously there's, there's a lot of concerns about what that means for, for China and, and the tariffs.

Um You know, so, so I think that's also playing into some of the selloff that we're seeing here with regards to technology.

I'd say the other thing ultimately that comes up is uh you know, there, there's a lot of talk about what's ultimately gonna happen with uh uh some of our closer trading partners like Mexico.

Are they being used by China right now as a um you know, as, as a, as a uh uh uh AAA building block to kind of assemble pieces and then distribute them into the US.

Obviously, there's been a lot of foreign direct investment from China into Mexico.

And will that ultimately uh come to fruition, uh will that will that come to a head during uh say a Republican presidency?

So these are some things that are left out there.

Um You know, I think, I think the, the, the biggest thing uh will be ultimately on the tax front, which obviously, we're starting to get ahead of ourselves when we really start to talk about that just given the amount of of stuff o of events that are ultimately going to occur between now and actually the election and then, you know, the investment implications will be even further on from there.

It's a long way between now and November for sure.

Thanks a lot, Ryan.

Appreciate it.

Absolutely.

Thanks for having me.

We're just getting started here on market domination.

Coming up.

Chicago Fed President Austin goals be signaled in an interview with the finance that the central bank is closer to cutting interest rates up next.

We've got one former Fed president asking why the central bank is telegraphing that move plus shares that laboratory sinking today on the back.

Its latest earnings report will tell you why and checking on some of our other top training take later in the hour, all that more when market do returns, the more months of data you get like the last seven months of last year for sure.

That's what the path to 2% looks like.

And that's the golden path as I called it, that inflation has come down very rapidly in historic terms without a recession.

And that's never really happened before in the US or in almost any of the advanced economies.

So let's let's stick with the program.

Uh Chicago fed President Austin Goolsbee declining to say when he expects rate cuts in an interview with Yahoo Finance's Jennifer Schonberger, but he did note that keeping policy restrictive could be a risk to inflation's golden path.

In his words, he's the latest in a string of Fed officials suggesting we are closer to a cut ahead of the FO MC July meeting.

Joining us now is Thomas Honig, former Kansas City Fed president and distinguished senior fellow with the Mer Center.

Thank you so much for being here.

Um So what do you make of this sort of what now seems to be a drumbeat to a cut likely in September?

at least that's what the markets pricing in.

I've, I've heard the drum beat before um last, last um late, last fall.

Uh there was improvement in the inflation.

Numbers were all ready to cut.

Uh They announced basically, they were gonna do three cuts and then suddenly inflation picked up, the economy remains strong and they had to postpone it.

And it was, I think unfortunate uh because they, they actually led the economy in terms of their announcements to uh uh to, to ease, to ease financial conditions and it had its other effects raising inflation back.

So I think they're perhaps um again, very anxious to cut rates.

I understand that.

But if you think about it, uh the Atlanta fed just uh revised its GDP numbers raising them to 1st, 2nd quarter to 2.5%.

Um The, the labor market is still strong, even though they say it's weakening, it's actually becoming more in equilibrium.

We're still adding over 200,000 jobs.

The average is still fairly high.

Uh and most importantly why they keep saying inflation is coming down.

It has for the last 2 to 3 months, but actually inflation for the last almost year has run just about on the CP I around 3% consistently.

And on the P ce still 2.5 to 2.6% they're not at 2%.

So I think they should be careful and I think that's why they're saying they're not saying when, because they don't want to suggest uh something that might not happen, but they are leading the market by keep saying we're gonna cut, we're gonna cut.

And I think they should be more cautious in their excitement about cutting rates.

You know, Thomas, um you mentioned the labor market there when, when we have economists on the show, Thomas who um argued they should be cutting, they often do come back that labor backdrop.

Uh Thomas and, and in part, you know, they, they're certainly very focused on the unemployment rate rising, but you don't sound concerned about the labor market.

Well, I'm, of course, I like everyone else.

I watched the labor market but the unemployment rate is still 4.1%.

Histo in, in some sense, very historically low.

Uh I think that part of it is uh very positive.

I like it.

But the fact of the matter is uh inflation is still 3% year over year 2.6% using their.

So called favored uh measure, which is still not 2%.

And they're talking about rate cuts in September.

I think that's, that is, uh, kind of, uh, getting ahead of the game.

Uh, if you will, in terms of cuts, I think the labor market is stable.

Uh I think labor wages are increasing.

That's a good thing.

Uh, retail sales were very strong.

Those are all very positive things and they don't suggest that we need to cut.

The other thing I keep reminding them is I I've seen this before in the seventies, they bring, they bring inflation down a while and then they quickly cut and then inflation would reignite.

I know they're worried about leaving rates at five and a quarter for too long.

And I understand that, but when you think about those rates, inflation is, is uh is 3% using the CP I close to 3% using their other measures, but uh the rate is five and a quarter.

So real rates are around 2% that's not exceptionally high.

Uh In, in the terms of the long term run of real policy rates uh that give you, I think uh a stable economy for the long term and in that environment, uh they're gonna, they're gonna, it's gonna take a while to get their inflation numbers year over year down to 3%.

So why not be patient?

Watch it carefully when the year over year numbers are, are clearly coming down and staying down then they can cut rates, but I don't think they have to anticipate it and they keep promising the market that's having its own effects.

I mean, you right now the bet is pretty safe if you, if you invest right now and interest and the only way interest rates are going is down, you have a pretty safe bet.

And I think that has its own effects that the fed should be aware of and taking into account.

You know, we have talked to a lot of folks who say the balance of risks are in waiting too long and not in cutting too soon.

I mean, if you talk to folks like Mohammed El Arian, they talk about that the economic risks, the risks of to the labor market, for example, that those risks are mounting.

Are you?

It sounds like you don't see evidence of that, of the sort of recession risks climbing here.

Well, I, I can't predict recessions and I, and it's hard to know and I understand the dilemma was there uh as to whether they are leaving rates too high too long.

But I think if you look at real rates, they're not exceptionally high.

2% is not a particularly high level.

Number one, number two, if they ease too soon, they will, I think risk reigniting inflation and that is the heavier tax.

Uh I think they have room to wait.

Uh and why not be be cautious.

I don't mean to say I'm not saying raising rates, um, but they should be very cautious in terms of how quickly they cut, given the strength of the economy 2.5% growth, a good labor market overall, a good retail sales overall.

These are all positive things.

A very strong stock market, despite some volatility, very strong stock market, real wages are increasing.

So, so I wanna, I wanna do the right thing, but I wanna do it prudently and I wanna make sure we don't, the fed doesn't have to reverse itself again.

And, and that would be, you know, you talk about a loss of credibility if they eased and inflation took off, they would be, I think they would lose a tremendous amount of credibility in the public.

And among politicians, Thomas quick question here, you know, you saw former president Trump gave an interview to Bloomberg Business Week, Thomas and he said the fed should abstain from cutting rates before the November election.

It's something that they know they shouldn't be doing.

Trump says, I'm just curious how does the election if at all impact, if and when the fed cuts, I think the, the, I think the Open Market committee will be, try not to be swayed by those by political events.

They're very careful about that.

Now, you can't talk about it over and over again and not hear about it, hear it.

So they have to take that into account.

But I think, I think they will do when it really comes down to it, what they think they should.

And I'm hoping not because Trump is speaking.

Biden is speaking or any congressman is speaking, but because they know it's prudent to wait that they wait, uh, beyond September, depending on, uh, of course, if they get a shock, the banking industry gets under significant pressure.

They will and should, uh, ease rates at least for a while to get through the shock just like they did in March of 2023 but not for political reasons.

Thomas, thank you so much for joining the show today.

We appreciate it.

Glad to be with you.

Thanks for having me.

Now, let's get to some trending tickers on Yahoo Finance today.

First up Abbott Laboratories, you can see they're down about 4% company beating second quarter earnings expectations, raising its 2024 guidance in the process.

And joining us with more is Yahoo finance is very own.

That's right, Josh, I know you saw a really positive earnings report, but you're seeing that stock down and it's actually a combination effect.

Firstly, some of the concerns for Abbot include a, a court case going on, going back to that baby formula issue that they had.

So that's putting pressure on the stock and then there's the broader story of health care stocks today.

Let's sit on Abbot for a second.

Really good numbers increased there general outlook.

And importantly enough, I wanted to break out, not just a beating on both eps and revenue, but also one really interesting part of it was the glucose monitoring devices.

And that's playing a really big role in this G LP one boom that we've been watching.

They actually saw an increase in the sales of their glucose monitoring devices used by diabetics.

And that's been an interesting story to follow considering what you've seen is sort of doomsday predictions for these types of devices in the wake of greater G LP one use and the potential therefore to not have to use them.

But Abbot has been one of those companies who has said they have continued to see.

So they saw 20% year over year growth for the quarter 1.6 billion they brought in for that.

So really good story there for Abbot, really good story, but the stock is down and it's not the only one that I mean, as you said, there's this sort of broader health care story today where we're seeing Eli Lilly in particular, that stock's been trending all day and it's been lower.

Yes.

So it's kind of confusing thing, but bear with me.

So what is happening right now for health care, which by the way is having its worst day since October of 2022.

Uh The what's happening is sort of a correction.

I I spoke to a few folks earlier today and they're saying that, you know, the in general, the, the stock in particular Eli Lily, but also the industry at large has been growing at a pretty decent clip and for the last six months and has continued to do that.

And so what's happening right now is bit of a correction on that side.

It's, you know, falling into this track of not being as defensive as a sector as before.

And in addition to Lily, in particular, because of that boom, it's been getting from the G LP One sales.

Um It's just been going up and up and up and this uh the slight trade down from the Roche news yesterday, that is not the huge drag.

It just started a cascading waterfall if you will of downfall, excuse to sell, perhaps, perhaps.

All right, thanks so much.

Appreciate it.

Next up.

We're watching Taiwan Semiconductor and the Taiwanese chip giant did report its second quarter earnings.

It posted a beat on eps profit rising 36% from a year earlier, raised its 2024 sales outlook to signal confidence in the boom.

The chip maker CEO saying on an earnings call quote this time A I demand is more real than two or three years ago.

And this coming just a day after reports of potentially tighter trade restrictions from the US that of course sent chips to lower all of that said TSM is not recovering today.

Those shares are lower now they have been bouncing around a little bit.

They're off their lows of the day right now.

But it's really interesting, Josh, that, you know, they're still seeing some selling pressure despite these positive numbers.

And not only that, we are seeing a more mixed trade within the chips more broadly.

In other words, as we were talking about earlier, you know, NVIDIA is up today, so it's not like you were this sort of wholesale selling like we saw yesterday.

It's interesting.

I mean, do you, you know, they reported they beat, they raised their projections for 2024 revenue growth.

Um companies saying it's, you know, likely to meet its gross margin target at 53% or above.

So the these sound like good headlines to your point, the stocks slipping here.

And it is interesting to see though in the chip space where people are to decide they want to put their money today because NVIDIA is working, Broadcom's working Intel's working.

Yeah.

So it's hard to tell exactly what's happening.

All right.

And our last training ticker is Blackstone shares of the company rising after releasing their second quarter earnings, the firm did miss on profit expectations but it did increase the pace of its investment activity.

Blackstone seeing more than $39 billion in inflows.

It deployed nearly $34 billion in the quarter which is up 70% from the prior year.

And I spoke to Blackstone's president and chief operating Officer Jonathan Gray.

And here's what he said about the quarter earlier.

Oh, actually, I'll just paraphrase what you told me earlier.

You did.

So I did the interview.

So I recall what he said.

He talked basically about the fact that, um, even though, uh, we have not yet seen the fed cut rates that costs of capital have already started to come down.

It's kind of what Thomas Honig was just referring to here because the FED has telegraphed what it's gonna do, cost of capital started to come down and Blackstone has decided it's not way for that first rate cut.

It's going to start deploying capital.

How is it deploying it?

Well, it's made some acquisitions.

It bought something called Air Communities.

It's a huge real estate investor.

It bought tropical smoothies, which is a chain of smoothie stores as the name would indicate and it's been investing a lot in its um private credit business.

Remember, we've talked a little bit about that business before, not just to Blackstone but a lot of different companies.

It's been big area of growth in alternative investments over the past couple of years.

And when you chat to Mr Gray, did the election happen to come up as Stephen Schwarzman, co founder of Blackstone, we know supports Trump, right?

Well, Gray is known as a Democratic donor, so they're on different sides of the political spectrum and that it must be.

But, you know, he sort of emphasized both in the call and in our discussion that, you know, their job running Blackstone is really to keep it on the steady path.

Um I asked him about JD Vance's sort of incendiary anti Wall Street comments last night, Barons, I think.

Yes.

And he didn't really react directly to that.

He did seem to think that there would be sort of advantages in either sort of administration and that they'll just have to navigate it no matter what.

So they will, which they will all meta is reportedly in talks to buy a 5% stake in ray band maker sol for more bringing in Yahoo finance tech editor Dan Howley, the maker of ray bands teaming up with meta potentially what's what's up, what's going on here.

Give us the story.

Yeah, Julie, this is being reported by a number of sources.

I reached out to meta and they said no comment uh obviously at this point.

Uh but really this kind of lines up with their plans for uh essentially uh mixed reality glasses or, or augmented reality glasses right now, they sell their uh meta uh ray bands uh through uh the obviously the uh Esler uh loo um they're basically ray bands, they're way fair style ray bands with cameras.

On either side, you don't get any kind of mixed reality features with them yet.

Uh You basically use them as cameras.

Um They do have uh some built in artificial intelligence where, you know, the, the cameras can look at something and you can ask what it is or you can use them to translate texts that they see.

Uh But overall, you know, that that's essentially where it ends.

It's not something like, uh you know, Star Trek style lenses or anything along those lines, but that's where meta wants to take this.

Uh And since they don't actually own the hardware maker of this, a major product for them, they want to get a stake in that.

And that seems to be uh what's going on here.

Of course, they already own uh previously purchased Oculus, which makes their uh meta headset, the Meta Quest headset.

So this is kind of a push in the opposite uh the the kind of side direction uh of that augmented reality.

And you know, Mark Zuckerberg has said that eventually he just wants these to be regular old glasses that you can slide on.

Uh give you information about the world, see uh augmented reality people uh who are in other parts of the world as if they are appearing directly before you.

And kind of the pitch trailer for why they renamed the company Meta.

He showed himself uh uh fencing with someone uh around the world, presumably uh while wearing a pair of advanced glasses and they continue to work on these kinds of capabilities.

Uh but it's not a huge market.

I have seen a few people wear them granted I am, you know, in tech circles, uh with fellow dorks.

Uh And so that's probably why, although one friend not in tech does have a pair, it is kind of unsettling when you see them, I think for most people, it's kind of weird that there's just people walking around with cameras looking at you, although we do have them on our phones at all times.

But yeah, it's not, it's not a huge uh uh revenue driver for meta at this point though.

If they're able to kind of make this more enticing, add those uh mixed reality, uh augmented reality capabilities, it could be something for them in the future.

It's gonna take a lot to get the technology though in there and, and get the sizing right.

So it's just a pair of glasses and not some bulky headset that you're wearing like, you know, the vision pro or, or the meta quest.

All right, Dan, thank you so much for joining the show.

Appreciate it shares of pound tier higher today on the back of a bullish call, we'll dive into that note with the analyst behind the Note, Dan Ives on the other side, stick around more market domination.

Still to come breaking news.

Now, Broadcom reportedly has been in talks with open A I to develop a new chip and Broadcom shares have been jumping on this news, although right now they're just about 1%.

But if you look at the chart, you see an increase here.

This is according to a report in the information um which says that open A I has been hiring former members of a Google unit that produces Google's A I chip.

Um And then has been talking to chip designers like Broadcom uh about now working on this chip.

Yeah, I mean Broadcom, listen, if, if you just look at the stock, it's had this incredible run.

Um And in part, that's because investors have decided that Hock Tan's company is one of the smart ways to just play the mega trend of A I and the street loves Broadcom as well.

I mean, like Bernstein Stacy Razon in front of the show, one of his favorite names in part because again, he just thinks it has one of the best A I stories in the industry.

Right?

There's been a lot of talk about various um of the so called hyper Scalars developing their own A I chips and that's sort of materialized into differing degrees.

So we'll see if this actually, you can just say words like Sam Altman and open A I and probably get a positive response.

That's part of their true.

Yes, they do.

All right.

Well, the 2024 presidential election will not actually take place for another four months, but the solar sector is already paying close attention since whoever is in the White House could mean major changes.

Joining us now is Mahima and Loy Mizuho, Director of Clean Energy Equity Research, thanks for being here.

Um And, you know, just to sort of put a fine point on what we've been seeing in this history just today, we're seeing a plunge in shares of sun power because it sounds like effectively, it's getting close to going out of business.

It's not going to support new wall installations, not gonna have new shipments even with all of the sort of government support there's been for the industry.

So I guess let's start there.

Ma what is the status, uh the current status of the solar industry at this point?

Sure.

And thanks for having me, Josh and Julie on this industry, the residential solar industry, which is where sun power and all the companies listed over here.

Look at that industry is more impacted by higher interest rates.

And so the double whammy on that is interest rates obviously make it expensive for the homeowners to buy and finance residential solar roofs on for them.

But it also makes the credit tighter for the installers.

That's where we have seen.

A lot of private installers go bankrupt in the last few quarters over here.

And the other part of the equation was also that California removed the incentive or reduced the incentive to sell electricity back to the grid for solar homeowners.

So I think the California issue probably just correct itself over time, but I think the interest rate aspect is probably much more important for the sector.

We do have some tailwinds here.

The cost of solar panels have gone down, batteries have gone down, but that will probably trickle down over a longer period.

I think once interest rates come down, we should definitely see more improvement in this space.

And I'm just curious how does just overall US demand as it stands right now sort of compare and contrast to what you're seeing in Europe.

That's a good question.

So in the US right now residential solar demand for 2024 if you look at what experts are saying, it is almost down 20% year over year.

And this is just solar.

If you look at solar batteries are slightly better, batteries are more popular now because of prices going down.

Europe is slightly different.

I don't recall the numbers top of my head, but in Europe, the demand was much higher in 22 2021 because of the gas power crisis over there.

So a lot of folks were installing solar on their roofs.

So there you have some slowdown as well.

Uh But but it's not as acute as we are seeing in the uh the US markets right now.

So Mahi, um now let's take a a theoretical situation where former President Trump wins re election.

What then happens to this industry and how are they preparing for it?

It's a great question.

It's something a lot of investors have been asking us ever since early this year.

But the coal volume has definitely increased in the last few weeks over here.

The one thing or rather the Trump team or the GOP has not yet released a detailed platform or a detailed point on what they want to do.

So I'm just thinking of how the President Biden's team five years ago came out with their detailed plan for build back better.

We haven't seen that yet but absent that the one thing we've definitely seen is they want to as the Republicans do want to scale back or repeal the inflation reduction act and potentially impose tariffs on China and imports from other countries.

So these two were the biggest things, we did some work around it and we saw generally these two policies together could reduce demand or evaluation for the solar space by around 20 to 30% later this year.

Mahe thanks so much for joining the show today.

Appreciate it.

Tha thanks for having me.

Let's get to some calls the day now, Wedbush out with a new bullish call for palant raising its bull case price target on the stock to $50 for 2025 notes saying that the messy of A I is in a prime spot for the A I revolution for more.

We are now bringing in the analyst behind that note, Dan Ives, senior equity analyst at Wedbush, Dan.

It is good to see you sue this note, Dan.

Um You maintain the out form, the target's 35 but the new bull case is 50 for 2025.

Walk us through that note, Dan, how come?

Yeah, Josh, the A I revolutions here and when I look at the next step, the use cases palent here I think is gonna really be the one that's front and center in a lot of these deals.

And we're seeing that through a lot of these cloud channels, a lot of the work we do in boot camps, investors look if you've seen they're negative at six, they hate it at 12, despise it at 18 and screaming at 25.

And I think this is a stock that has a massive move ahead of it given where the A I revolution is heading and that's why it's the messy of A I. Um I was curious Dan reading your note um what had changed or what different information that you had to take you to that bull case because it, it looks similar to the case that you have made before for the stock.

So uh was there more data that you were gathering to get you to 50 here?

Yeah, ju it's just in the almost 100 customers that we've spoke with.

The conviction levels increasing, I think deals accelerating.

And I think what we're seeing on a IP conversion is even stronger than we expected.

Now, does that mean for this quarter, for next quarter?

When I look at the next 6, 12 months on Punier.

I think this is gonna be a golden child of a I and right now, I mean, institutionally speaking, it's very negative because I think many don't understand or appreciate the true and what I view as the competitive mode, that Carp and Poer built what, you know, it was interesting.

Uh Dan, I was talking uh not too long ago with Brent till over at uh Jeffreys and covers Poier and he, you know, he was encouraged by what he saw in Pound's business and fundamentals, but he, he was staying on the sidelines and it was a valuation call.

He just thought it looked pricey but you, you don't share those concerns here.

You know, Josh, I get the valuation and argument but it, it's very similar to how I viewed Microsoft and Apple and has on so many other names that you have to view it as a sum of the parts.

You got to view it on.

What's the commercial business worth?

What is a IP gonna drive and then put some multiple in the government business.

And I think when you start to put those together, I mean, you could start, I mean, 35 is our base case, but then you start to get bocas $50 into next year as this goes to the 2nd, 3rd, 4th derivative.

And I don't know how you could have a basket of A I stocks and just dismiss palent here.

I mean, that, that, that's sort of our view and that's been our conversations with investors, even though it's a very contentious name.

Um, Dan, I'm sure you're aware of some of the chatter you kind of referred to it that's out there lately.

There is some skepticism creeping out there on A I um, Edison Lee over at Jeffrey's just writing today.

Uh, that what we're seeing right now in tech in terms of the selloff isn't actually about geopolitics.

It's not actually about concern over China and Taiwan.

It's actually about concern over A I's return on investment.

Um I, I know you don't agree with that clearly, but, you know, are people, what do you think that's about?

Is, is it just that people are getting impatient here?

What do you think or do you think that they have a point?

I mean, look this sell off, I can tell you from all my conversations the last 48 hours.

It's the Trump Taiwan, China word, right?

I mean, those comments and obviously he'll speak tonight, you know, and then you factor in what potential Trump?

Second term.

What does that mean in terms of the A I trade?

So I think that's this sell off.

But Julie, I think when me and Josh talk in the next few weeks and Josh is wearing his pink sports jacket, I, I think we're gonna have a massive tech earning season for tech for semis for software that changes the narrative.

But I always say, I mean, you can see A I on your spreadsheets or in the 10th floor of the New York City office building.

And I think that's why we, you know, we spend so much time around the globe and there is no denying this A I revolution is probably the biggest tech trend we've seen the last 4050 years switching gears here, Dan, another name you cover, I wanna get your, your take on Apple because we did have, you know, well known analyst Ming Qi Kuo um was writing today that there's been a sort of these rumors of increased orders for iphone 16 from time to time.

But uh looking at recent earnings calls from some Apple suppliers saying, you know, hinting that the iphone 16 orders may not have increased.

Where, where are you on Apple?

A as we head into that earnings print as well, Dan, you judge many yell fire in a crowd theater on Apple, you know what 1 61 70.

So I get it at 230.

You know, people are gonna double down those calls.

I mean all of our checks show rising demand for iphone 16.

The A I story is coming to Cupertino, but I think a lot of investors have been caught off sides on this one and I think a year from now we have a $4 trillion market cap.

But again, I get the skepticism.

A lot of haters in Apple at 1 51 60 at 230 they, they really hate it.

Dan.

Good to see you.

We'll, we'll rejoin you soon with the pink jacket on uh on my esteem co I could see.

Whip in wearing that pink or purple sports shirt.

I want that shirt, Dan, I want that shirt.

That's what I want for Apple Day.

I'm, I'm bringing it to you.

I know I can count on you.

I'm so excited about this.

Thank you, Dan.

Stay tuned.

We're market domination on the other side, Wall Street facing increasing turbulence this week, particularly with big cap tech stocks and NASDAQ sliding again after its worst day since 2022 marking a continuation of the shift away from tech with this move out of tech shares.

Does it leave an opportunity on the table may be worth taking for investors?

We're looking at how to the big picture with the Yahoo Finance playbook spar invest founder and Cio Ivan, the LSA joins us now.

She is a tech investor.

And so Ivan, as we are seeing this pullback here, does it make sense for people to add to positions?

And if so how should they be thinking about doing that?

Thanks for having me, Julie.

So we do still see a lot of opportunities in the data center value chain and I think it makes a lot of sense to add to that on this pullback.

This has been a pretty meaningful pullback on what is a headline risk, right that you always have in the sector and the stocks are down more than 10% from their, from the levels.

So I think it's a it's a very good time for investors to take a look at the data center value chain.

And when you say data center value chain of honor, what what name specifically are you talking about?

So the core of the data center value chains would be, would be opportunities inside the rack.

So would be processors like in via a MD.

But then the opportunity is broader than that, right?

It's basically the entire infrastructure build out around data centers.

So there is opportunities in thermal management, power management, even at the utilities level because energy is one of the big constraints that we see.

So it's really gonna be across the board, Ivana.

Earlier today, I talked to the Blackstone president and chief operating officer, Jonathan Gray Blackstone, a huge, huge investor in data centers.

And I asked him sort of how he's thinking about a little bit of the skepticism that's been out there right now.

And he talked to me about that investment.

Listen to what he had to say, we think there are going to be a lot of changes, some of that may take a bit of time.

But our focus has really been on building the the backbone, the infrastructure of the 21st century, which is the data centers and the power that goes with it.

I think this will come, what the profitability will be, which applications will win?

I think that is uncertain but I think the path here towards more A I more compute power and therefore more infrastructure needed is the way to go.

So you were just talking about the infrastructure as well, but it does seem like at least some of the sell off.

Well, yes, it was spurred by concerns over China also has to do with real questions about the not the infrastructure but like what you do with it, right?

The software, the end users.

Um how are you thinking about those questions?

That's right, Julie.

So that's really the main question here is are there end applications that are useful that are justifying all of this investment that is going in place?

And seemingly if you look at what's come out apart from Cha GP T at first sight, there doesn't seem to be a ton of large multibillion dollar applications.

But what I think the market is missing is that some of the early investors like Meta like Google, uh they're investing significant dollars into this, they're doing it to defend their current business, right?

So if Google doesn't keep up with Cha GP T, their entire business is under attack similar with meta, they were able to really do a good job with Rios and Insta and reinvigorate their business.

So just these two applications of recommendor are just huge investment and require significant investment going forward to keep up with it.

And then as we go forward, it's gonna take 2 to 3 years to see real applications come through.

We are already seeing it on the early side with customer service and product activity improvement tools that are really leveraging the large language models.

But the next level, the next layer of opportunity will be in the physical like robotics, autonomous driving.

And that's gonna take a little bit longer to play out.

Nevertheless, you do need to make the investments today in compute, to be able to advance these applications even a little bit.

Ivana.

Another another space I know you you monitor closely is the cyber security sector.

Ivana, I'm interested what names you like here at uh at these levels and also in that same theme, Ivanna.

Any thoughts on these reports we're seeing of a of a potential alphabet whiz deal.

Yeah, absolutely.

We really like the cybersecurity space.

I think it got caught in the software sell off while the fundamentals for cybersecurity are significantly improving.

So we're seeing a lot of opportunities there today.

We like Zscaler, we like uh data, do we like many companies and we disclose our holdings on our website just for your, for your viewers on the Wiz uh on the Wiz Deal.

I think it would at first sight, it look like a low probability deal.

But the more we dug into it.

It makes a lot of strategic sense for Google.

Even though we is one of those companies, they just, they're very rapidly growing.

They just raised their new round.

It didn't seem like they would need to be doing an acquisition or they would need to sell themselves.

Um But the more we looked into it, it does seem like a very good strategic fit.

The price tag that they're paying is pretty significant and has pretty positive implications for the rest of cybersecurity, both for the companies that their next gen leaders with similar growth profiles to as well as smaller cap players like Sentinel one, for example, that is in that same boat, very high growth but hasn't been able to really get a good valuation in the public markets.

Ivana always great to have you on the show.

Thanks for joining us while wrapping up today's market domination.

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