Tech sector growth, EU considers fining Apple: Morning Brief

It's a new trading week — and the last of June — so start Monday off right with Brad Smith and Madison Mills on Yahoo Finance's The Morning Brief as they guide investors through the top stock stories and the market's opening bell.

MacroPolicy Perspectives Founder and President Julia Coronado joins the show to discuss the forecast on any Federal Reserve interest rate cuts ahead of Friday's PCE (Personal Consumption Expenditures) index data.

Later, Commonwealth Financial Network CIO Brad McMillan talks about the tech sector (XLK) trends becoming apparent in the broader market (^DJI, ^IXIC, ^GSPC).

European Commission regulators are suing Apple (AAPL) after finding its App Store payment practices in violation of the EU's Digital Markets Act.

Several other top trending tickers on Yahoo Finance this morning, include bitcoin (BTC-USD), Target (TGT) and Shopify (SHOP), Eli Lilly (LLY), and Boeing (BA).

This post was written by Luke Carberry Mogan.

Video transcript

It's 9 a.m. here in New York City.

I'm Brad Smith alongside Madison Mills this morning.

This is Yahoo Finance's flagship show the Morning Brief.

It's a big week.

So stocks working to gain momentum here as we enter the final days of June, the final first half of the year to investors eagerly awaiting Friday's PC report.

Hoping for further evidence that inflation is moderating.

We're going to talk about all of that and more with Treasury Secretary, Janet Yellen.

Yahoo Finance has an exclusive interview with her.

You can catch it at 4 p.m. 440 PM Eastern.

But first, let's get to it.

The three things that you need to know this Monday morning as you prep for the trading day.

Yahoo Finance is Jared and as for a and Josh Lipton have more stock futures are mixed this morning after reaching new heights last week, S and P futures near the flat line after the index closed up for the week and touched an intra day high of over 1,005,505.

On Thursday, the Dow saw it best week since May finishing up more than 1% and investors are looking ahead to a number of economic data points.

We're going to get consumer confidence.

The second GDP revision for the first quarter, a number of housing related prints all culminating in Friday's PC inflation report.

Now Wall Street expects prices on a core basis which excludes food and energy to have risen just 1/10 of a percent last month.

That would likely mark the slowest monthly rise since last November and Bitcoin extending losses hovering around 61,000 after a bad week for crypto.

Bitcoin fell more than 5% over the last five trading days spot, Bitcoin ETF suffered more, suffered more than $500 million and outflows in the last week.

The decline reflecting cooling demand for Bitcoin ETF.

It all comes after the Cryptocurrency hit a record of above 73,000 back in March and Apple is in hot water with regulators.

Once again, the European Commission saying Apple is in breach of new rules meant to protect competition on its App Store.

The commission says under the terms of the Digital Markets Act, developers on Apple's App Store should be able to inform their customers of alternative, cheaper purchasing possibilities and be able to steer them to those offers all free of charge.

The investigation finding Apple is not in compliance.

Eu regulators are also opening a new probe into Apple over the contractual terms.

The tech giant has laid out for developers.

Well, our top story this week stock futures, they are mixed as we enter the final trading week of June and as Mattie mentioned the final trading week of the first half, one h 2024 year, right?

Things have been ripping to record record highs as we wrap up the second quarter of the year.

We've already seen some of those new record highs hit during the second or the first half, second quarter of this year.

And there we're taking a look at the Dow Futures here this morning up by about 2/10 of a, uh, let's also just rejigger this for a hot second here and we'll show you what the S and P 500 Futures and the NASDAQ Futures are doing.

They were mixed as we were mentioning just a moment ago here.

And even as we're considering all of the movement that we've been tracking here pre market as well.

It's a quiet but loud type of trading week here with some of the companies that are gonna be reporting earnings over the course of this week, Mikron, Nike, Fedex, Paychecks General Mills.

So you have everything from the High Seas and Carnival corporation covered all the way into what's on your feet, what you're wearing out there and what's being talked about at the dinner table coming up over the course of this week, even some jeans action coming up here.

Yeah, it's interesting because we are definitely nearing the close of earnings season and a little bit of a quiet period when it comes to catalyst for the market.

But you take a look at some of these big names.

A Levi's certainly a Nike really giving you insight into how the consumer is holding up against record breaking inflation.

You've also got carnival, this bifurcation between these names, right?

You've got consumer goods and consumer services.

The spending on each has been a critical thing to watch when it comes to consumer health.

Whether or not people are diving into services, even though they're struggling with their finances, we will be able to get a good look at that when it comes to the spending along these things.

And as Brad's mentioning on deck this week, we've got two reads on the consumer with consumer confidence and sentiment.

We're also getting a bunch of housing data as well as GDP for the first quarter.

This will all comminate in Friday's big inflation print.

That is the personal consumption expenditures index.

Now this is critical because this includes within it, the core PC index that is what the Federal Reserve looks at as their quote preferred inflation gauge, giving them the cleanest indication of how the fight against inflation is going.

The street is anticipating 2.6%.

The critical thing to hear there is that number two, right, the fed wants to be seen 2% inflation.

That is, but the record breaking interest rate hike cycle has been gearing towards this entire time.

So if we do see that 2.6% that could be a boom for markets moving forward.

Yeah.

And a question of whether or not a two handle is enough for the fed so far it has not been, but of course, coming into the projections or the projections at least coming into that print as of right now, the first instance where we would see potential cuts coming from the fed September is what the CMB FED watch tool is looking at right now that sits at about a 60% chance of a cut in September.

And then you gotta look out to December for perhaps the next highest probability among a range of possibilities uh for a 45% cut there in December as well here.

So that's what we're gonna be watching closely.

And of course, we're also going to be listening closely to the words of Treasury Secretary, Janet Yellen Yahoo Finance has an exclusive interview with her that's today 4:40 p.m. Eastern time.

You do not want to miss that.

But first, we're going to get to our top story here.

The next big catalyst for the Federal reserve markets currently pricing in 65% chance of a September cut.

That's according to that CME said watch tool.

So how could Friday's P CE print that includes the fed's preferred inflation metric impact the path forward for the central bank.

Joining us to discuss.

We've got Julia Coronado founder and president of Macro policy perspectives to weigh.

And Julia, thanks so much for being here with us this morning.

We really appreciate it.

Talk to me about what you're thinking is heading into Friday's P CE print.

If we do get that estimate that 2.6% what does that do to the chance of a September rate cut?

Yeah, thank you for having me.

Um I think, you know, we already have the May CP I, there was a lot of broad based declines or Moderations in inflation there that it will show through to the P CE plus some of the other details we expect to be quite favorable as well.

So we could even see the annual rate round down to 2.5 it should be very close and that's more progress.

So the fed has seen said it needs to see more progress so far.

What we've seen this year, even with the upside surprise to Q one, the monthly prints have been beating last year's monthly prints.

And so the annual rate keeps coming down and we expect that pattern to continue right through into the September FO MC meeting.

They'll have several more data prints in hand and we think that they're going to be favorable and that the fed will, you know, open the door in July and actually move forward with a cut in September, it's progress and a pattern but not the target we know, of course, for the fed.

Do you think that they need to change their target.

Well, the other thing, uh, well, actually, no, I think that the changing the target before we get to 2% would be something.

I mean, Chair Powell has been abundantly clear that he is not interested in doing that.

They are coming up on the strategy review, this sort of uh every five years thing that they're going to be doing and they will re evaluate uh potentially something like the target.

Should it be a range?

Should it be a point estimate?

But I think that's not for now, for now.

They want to get close to and hit that target before they ever have discussions about, you know, changing it.

That that would be a hit to their potential hit to their credibility.

You don't want to move the goalpost in the middle of the game.

Well, it's interesting the conversation about that upcoming debate about, you know, the feds tools because we recently got some housing data in that I want to get your take on Julia.

We're seeing housing starts not really there.

Supply isn't there?

It's making prices sticky in the housing market.

How much will the dynamic between the feds rate hike cycle and the impact that has on housing potentially continue to weigh on something like core P ce moving forward?

And does that indicate kind of a sickness within the tools that the fed has given that raising rates keeps people locked into housing which then leads to inflation in other areas.

I'm just curious, you're thinking on that broader dynamic.

No, that's, is a great question.

And really the fed they have time but they are starting to get closer to those tradeoffs of is, are your high rate policies actually gonna do more damn edge than good?

Uh You know, the trade off they're facing is, do you start a process earlier and go slowly?

So you can calibrate, what is the neutral rate?

Um Versus waiting until the economy really weakens and we've seen a little bit of cooling in consumer spending, some cooling in the labor market.

I think so far, it's within the realm of what the FED wants to see.

But again, that means you're getting closer to those tradeoffs might be binding in one direction or another when it comes to housing supply, that's an excellent point because high rates do impede supply.

There still is excess supply of multifamily housing coming onto the market.

Really, this will be a full year of excess supply more than likely, which is going to keep downward pressure on rents.

But the fed is going to need to begin lowering rates uh soon if it doesn't want a more uh you know, binding bottleneck and supply to materialize over the next couple of years at this rate.

These rates, we are not seeing interest in building housing and we know we need more supply there.

So uh I I think it will be very constructive for the fed to at least initiate a sequence of cuts.

They don't need to go all the way back down to zero.

But maybe un inverting the yield curve and getting mortgage rates to a point where we actually see movement in the housing market would be a very healthy development for the US economy.

Julia.

Just a few minutes ago, we were discussing some of the companies equity market companies that are at the tip of the tongue for a lot of households out there that are navigating their own personal or household economy.

And we're going to hear from some of these companies that are going to be describing the economy in their own macro lens.

What do you expect to continue to hear from companies like Nike, like fedex as they give us a little bit more of their insight on that macro lens over the course of this week and, and kind of set up what the tenor may be for the next earning season.

Absolutely.

You know, it's been an interesting earnings season so far because consumer facing companies have reported a few key themes.

One is that consumers are price sensitive again.

Uh That's good news for the Fed.

That's good news for inflation.

Consumers want a deal.

They are now spending their hard earned cash, not stimulus and they are spending the full range of goods and services unlike during the pandemic.

So they're actually quite picky and they want a deal to part with their cash.

So, you know, I think we would not be surprised to hear that from companies like Nike and fedex might also indicate that consumers still remain a little bit tilted towards service spending over good spending.

Consumers binged on good spending during the pandemic.

They've kind of loaded up a lot and are less interested in it uh lately.

And so we might hear that as well and that all of it says that these higher interest rates are doing their work, cooling the economy down, making consumers uh more cautious, more price sensitive and, and uh you know, we're still in the realm where that's good news, but we don't want to necessarily see that go much further.

Julia, I'm gonna ask you to hop in and do our job for us here because we've got an exclusive interview with Janet Yellen from Yahoo Finance later today.

If you could sit down with the treasury secretary, what is one question that you would want to ask her about the current state of the economy?

You know, Secretary Yellen, I saw her speak at an event uh last week or the week before.

Uh And uh she was describing what she's calling modern supply side economics and I don't think that's necessarily gotten the attention that it deserves.

So one question that I have would have for Janet Yellen is, you know, back in 2016, she described what she called the high pressure labor market.

And maybe if you ran policies such that you have a high pressure labor market and some companies would be incentivized to invest and we could actually see a boost to productivity.

So I would ask her secretary Yellen, do you think you're seeing the dividend you expected to see from running a high pressure labor market, a more productive, efficient resilient economy is that part and parcel of the policies that were chosen during the pandemic, Julia Coronado, who is the founder and president of Macro policy perspectives.

Thanks so much for joining us here today.

I really appreciate it my pleasure and for more on the feds path forward.

Yahoo Finance is gonna speak to Treasury Secretary Janet Yellen for an exclusive interview at 4:40 p.m. Eastern time today.

You do not want to miss that.

Well, Bitcoin siding today already heading for its third worst week of the year and to break down the currency's moves.

Yahoo finance is very own and Nes Fay is here with more.

Hey, hey, Brad.

Yeah, and Bitcoin losses have been mounting with the Cryptocurrency seeing a more than one a month low.

Now, there's a couple of reasons why this could be happening first, the Japanese Crypto exchange that was hacked more than 10 years ago, Mount Gox.

Well, that and uh exchange announced that they would start repayments of Bitcoin and Bitcoin cash in July.

So the question is whether that will lead to a wave of selling by creditors and whether more Bitcoin will hit the market and the markets may also by the way, be seeing investors preferring to put their money perhaps to work in other asset classes, especially as we've seen tech outperform this month as sending the markets to new highs U spot.

Bitcoins have seen six straight days of outflows and this is coming after funds are preparing to launch Et F's investing directly in ether.

Now, the level to watch for, for Bitcoin right now down more than 5%.

Remember that it trades on a 24 7 basis.

But here is this level that we're watching.

It did hit near the 60,000 level uh earlier this morning right now, we're at 61 just above 61,000.

But if we take a look at a year to date chart, you are still seeing Bitcoin is up nearly four, 40% year to date because last year Bitcoin had ended just around the 43,000 level.

I just also want to point out what's been happening with crypto related stocks.

We are seeing pressure on these stocks today over a 10 day chart.

You can see uh some of the pressure that they have been facing as Bitcoin has been selling off guys.

All right, Yahoo Finance's own Anne re all tracking all things in the crypto landscape right now with those major moves in Bitcoin, Anne, thanks.

So much.

Well, the European Union is charging Apple for failing to comply with an anti comp competition law uh regulators there alleging the iphone maker's app store prevents developers from steering customers to alternative ways to make purchases.

Now, if the eu proves that the tech giant broke the rules, Apple could be fined as much as 10% of its worldwide revenue taking a look at shares here, extended hours pre market on the back of this news, they are flat, still barely holding on to gains here.

But this was significant, especially considering some of the changes that the European Commission has made with regard to its Digital Markets Act.

Uh as they are saying that Apple is preventing app developers from freely steering customers to alternative channels for offers and for content as well.

Um And they're also looking across Apple's new core technology fee saying that that falls short of ensuring effective compliance with Apple's Apple obligations under the D A as well.

Yeah, it's interesting because this follows another similar move that the Eu made against Apple.

This is back in March and that led to fines totaling around 1.8 billion.

So about about $1.9 billion.

Initial estimates that we're hearing this morning indicate that the fine for Apple this time around could be similar could be another $2 billion fine based on kind of the regular tracking that analysts do in this space.

But $2 billion that's obviously not necessarily a massive downward pressure for a company like Apple, but it's not nothing.

And it's more so related to, if in fact, this does lead to pressure for Apple to change its practices.

What could that do to its revenue moving forward?

Given that this is a company that's already been under pressure in other areas, Brad, including sales of the iphone, right?

We are just getting started here on the morning Brief.

That was a APL but coming up, we've got TGT and Shop Target and Shopify announcing a new partnership.

We've got all the details.

And later on, we're talking about investing in the new frontier space and stay tuned for our exclusive with the Treasury Secretary, Janet Yellen at 4:40 p.m. Eastern time today.

You don't want to miss it.

We'll make sure you don't.

Let's get to some trending tickers that we're watching on this Monday morning.

Let's start with Tech NVIDIA getting another price hike this morning this time from Jeffrey analyst Blaine Curtis saying that the company remains both the king and king maker boosting his price target to 100 $50 from $135.

Meanwhile, you've also got Mikron getting some action, getting some love ahead of earnings that's coming this week.

Citigroup here calling the company a top pick ahead of those results all because of A I exposure.

So a significant set or slew of announcements here this morning or at least some of the target changes that we've seen come through.

And one of the things that I'll focus in here on here specifically is just Miron.

And especially within what we're seeing, they're talking about the expected upside given the Dr M upturn and increasing A I exposure, that's really kind of behind their top pick status.

And then this, uh this by rating as well raising their estimate and price target and believe they should continue to trade at a premium to that historical range.

Given that A I exposure.

Yeah, Brad, I'm just taking a look at what that stock has been doing year to date here because it's interesting seeing this city call given that the stock has already done fairly well year to date.

It's up.

Yeah, pretty well over 69% here when it comes to my.

So interesting to see that positive upside.

Having said that really quickly want to mention on NVIDIA, given the moves that we're seeing in that this morning, they could see a sell off of nearly $300 billion wiping out of their overall market cap.

That is due to a couple of things, one a broader opportunity regarding triple wedging that led to a little bit of a market sell off.

Also seeing some executive presence selling off that stock.

I'm talking about Jensen Juan here getting now also some significant other tech investors in the space including a rebalancing with one big tech ETF leading to a little bit of downward pressure in NVIDIA upside performance in Apple shares.

That's why you're seeing a lot of pressure on this stock.

We're gonna continue to cover that throughout our show because a lot of analysts would argue that this is a fine opportunity still for NVIDIA.

Meanwhile, in retail, we got target, turning to Shopify to add new and trendier brands to its website.

Starting today, companies that work with Shopify can apply to join Target.

Plus that is the retailers third party marketplace, Target and shop.

I did not disclose financial terms or the length of the deal, but Brad this comes as Target is clearly to compete in the e commerce space.

And when I mentioned e commerce, what name comes to mind?

It's Amazon, you guys, I'll let you in on the secret, right?

So Target plus potentially their attempts to move past some of that competition.

They've seen a lot of headwinds in their foot traffic in stores, but also when it comes to online purchases and I think they're hoping that any additional data they can get about what consumers are purchasing could help them to target customers more efficiently moving forward.

Yeah, I think no further back than to the Q one earnings call here.

And a lot of our viewers remember us talking about this, Brian Cornell, uh the chairman and Chief Executive Officer for Target had actually talked about this most recent quarter talking about uh the reliability the digital channel where trends are improving meaningfully over the past few quarters.

And then in that first quarter, they actually saw an increase in digital sales for the first time in more than a year growth driven by some of the same day services drive up in store, pickup, same day delivery.

So why does this all matter?

This is just another element for even more merchants to be able to have their products be visible within this target platform and merchants that largely already work with Shopify.

So there's gonna be a verification process and uh eligibility requirements.

But this deal with Shopify to discover new brands.

And they're saying for hot items for the third party marketplace, I mean, it's a lot more of that experience that you've seen kind of analogous with Amazon and what they talk about with their third party merchants and even Walmart as well, how they've started to let more third party merch into that platform too.

And so all of these things considered, it really is just bringing targets operation, especially on the digital side.

A little bit more up to par.

And I think it's good for a lot of small business owners out there.

Ones that have leaned heavily into the meta platform subsidiaries.

I'm looking at you Instagram primarily when you think about the shop ability that they've tried to make for that app and make it into essentially the the new shopping mall if you will.

Uh not, not as many of us going and spending as much time in hot topic as we used to in the past.

I mean, maybe I'm speaking for myself.

I don't know.

I'm in the target.

I'm not necessarily be in all the time.

I got a hot topic still.

I'm not sure.

I, I don't, I don't, we live in New York City all blacked out and just, you know, I'll go in there Anyway, let's talk a little IBM shares here, big blue shares moving higher after Goldman Sachs initiated coverage with a buy rating analyst James Snyder saying that the company is in the middle of it's a middle innings of pivoting its portfolio to a suite of modernized application and infrastructure software here.

Take a look at shares this morning, the moving higher by about one and a quarter percent on this.

Yeah, it's really interesting, Brad seen this call again.

This is analyst James Schneider saying that this tech giant they're going to get a buy rating from him implying a 16% upside from where the stock currently is saying quote, we believe IB MS in the middle of those innings, as you mentioned, Brad, but they think the company is on track to sustain 5 to 7% long term revenue growth growth, 10% free cash flow growth driven by nothing else than A I and growth in its core software portfolio.

Now, this is important to look at kind of the track record of IBM.

I remember covering their earnings from the New York Stock Exchange just a couple of quarters ago.

And the kind of talking point on the floor was, this is not your traditional IBM when it comes to hardware driven services and product offerings.

Rather, uh, they've invested heavily in A I, including a $500 million venture fund that's gonna be focusing on A I start up.

Their A I business has been doubling quarter after quarter.

They are a play that has figured out a way to go in on A I as a way to ride the A I rally that we are seeing.

They've also consolidated and done some defensive work on their balance sheet, including closing some offices, the CEO pressuring folks to come back into the office to make that expenditure on that real estate be kind of worth the bang for the buck there.

And also that flow that we mentioned that Goldman Sachs talked about that has been on the up and up over the past couple of quarters for IBM as they have been able to make a profit off of their A I service offerings as well in the space.

This is a very different play than some of the other names that we've seen kind of faltering in the face of A IIBM.

Certainly riding the wave we should note this isn't new for Ibmibm and, and Watson for essentially two decades, essentially, like since I've been in high school, I've been seeing Watson commercials here.

So artificial intelligence is not new for IBM.

It's just this new wave of how they're infusing it in two different elements of either their consumer facing products.

Some and those services.

Some people see, even if they're engaging in sports, all those people that were watching the masters just going into the app and trying to figure out some of the data analytics on swing by swing calculators, yada yada yada.

And if they'd be able to pull it off, who knows?

But then it correlates into some of the business solution as well that they put out there too.

So it's really just that next iteration of how they're going to be advancing Watson as an A I play, I think, really good point.

They've been in the space for a while and they found a way to capitalize on not new to this, not new to this, just finding a way to ride the way of moving forward.

We are just minutes away from the opening bell right here on Wall Street.

We're gonna be watching how the trading day is shaping up.

Looking at a mixed picture.

Some pressure in the S and P the NASDAQ down 310 of a percent.

We'll cover all this and more after the break.

Oh Yeah.

Listen to that bell.

All right.

It's Monday, everyone.

This the last Monday in June for a trading session, I believe at least.

Um, yeah, we'll do the math later.

Anyway, that's the opening bell.

The Nyse and the NASDAQ.

You're seeing both the bell ceremonies.

Only one of them has fun.

Betty.

Unless you guess which one or you just look at the screen and still see it raining down.

Anyway.

Taking a look at where the markets open up today.

We've got the Dow Jones industrial average right now.

Starting off today in positive territory.

We're taking a look at fractional gains right now by about a quarter of a percent.

The NASDAQ composite though uh the opposite move there as things are calibrating.

You're seeing that calibrate lower by about 3/10 of a percent S and P 500 flat trying to make up its mind out of the gate.

Let's populate this chart for you.

Nobody likes a blank chart.

So let me give you a five day view right?

There's some green to be found there.

Anyway, let's take a look at these sectors real quick, Mattie and I'll let you take it away from there.

11 S and P 500 sectors that we got loaded up on the screen.

Yeah, interesting seeing XL K the biggest downward pressure point when it comes to the broader sector action.

That's the technology sector.

Of course, obviously a great performance year to date.

But seeing a little bit of pressure primarily driven by the downward pressure we've seen in NVIDIA stock, that company is set to wipe off $300 billion of its market cap heading into the trade today, depending on how the movements go as we lead into the close.

But one thing that I've been looking at and I know Jared will talk about this is, yeah, you can see NVIDIA clearly down a little over 2% there.

Uh We saw the Russell outpacing the broader market last and I know I keep bringing this up, but it's a question about whether or not that can be a catch up trade for folks who maybe didn't get in on NVIDIA when the time was right.

You could also argue that right now we're gonna buy an opportunity for NVIDIA because of that downward pressure.

Yeah, the Russell is still down about a quarter of a percent year to date.

But heading into the close last week, we did see some upward momentum and now we're seeing the Russell up nearly a quarter of a percent today as well.

But we're gonna get into more detail with that because we've got Yahoo Finance's, Jared Blick looking at what moving Jared, what do you got?

Well, thank you, Matty.

Let me just start out with the broader index.

This is the S and P 500 on a year to day basis.

And all I want to point out here is that we are just by record highs.

The S and P and the NASDAQ have been up eight of the last nine weeks looking to make it, I believe nine out of 10 now.

And so a lot of people are saying, well, is a market due for a pause.

I would add that seasonal headwinds don't really come into play until at the very least mid July.

In fact, seasonal tail winds are extremely bullish for the next few weeks.

Doesn't mean that we have to go up.

But that is what would be more likely than not.

So here's the vix, this is also year to date.

But I want to point out we're at the highest level in three weeks there.

And uh when you como when you combine this with some other facts last week, we had huge inflows into tech.

Um we saw, I think it was the biggest record.

It was the biggest flows that we've ever seen into tech.

Sometimes that is a sign of capitulation and here we have uh we're just talking about XL K that is a large cap sector sector ETF we just had that big rebalance.

Remember that this is the first day of that rebalance when Apple is going to be waited less and there was about $10 billion worth of selling and NVIDIA supposed to be bought.

But if you're looking at here, the movements are about opposite what you would expect there, Apple up and NVIDIA is down.

This is because I think all of that rebalancing footwork was probably put in last week and we're just seeing some uh broader risk off today in the chip space having said that let's move on to the chips.

NC.

Yes, NVIDIA down 2% Qualcomm down 3.5% super micro computer.

Uh down there.

S MC I, that's also down about 3.5%.

So all in all um kind of a mixed market to start the week.

Some people looking for a broader sell off.

But again, those uh the tail winds, the bullish tail winds just last a few more weeks guys.

Yeah.

Really good point, Jared there on XL K kind of dumping apple expected to load up on NVIDIA perhaps a little bit of that already priced in though.

Thanks so much, Jared as always, really appreciate it.

We're going to focus in on in video because those shares moving to the downside at the open, it's down about 1.8% right now.

The two giants down over 6% in the last two days dragging the index a lot lower with it.

You can see over the past two days and videos down nearly 5% there.

Our next guest saying despite all that continues to be a top pick, joining us to discuss, we've got Brad mcmillan.

He is Commonwealth Financial Networks, Chief Investment Officer, Brad.

Thanks so much for being here with us.

I just want to get your broad take on positioning in tech right now.

What are you seeing?

How would you categorize the positioning that you're seeing in the tech space.

What we've seen, Matty is a significant run up in some of the headliners and via, of course, we've been talking about that all morning, but at the same time, you're starting to see a bit of a pullback there and that's fine because we've seen some insider selling, which makes sense.

But when you look at the underlying trends, yeah, there are some, there are some companies coming up underneath NVIDIA in the um in the Artificial Intelligence market.

But at the same time, NVIDIA is still amazingly dominant.

So you know, a little bit of a pullback that doesn't worry me necessarily in the short term as long as the trends remain positive and they are and those other companies give you other opportunities going forward.

So I don't see this as a NVIDIA story.

I see this as a continued growth story for the industry as a whole.

How do you kind of really separate what we're seeing within Nvidia's tech story and the orders that are coming in from the the business to business side on anticipation of how generative A I will be utilized versus the consumer technology story where you've got firmly within their companies like Apple that are trying to continue to make their own rebound over the course of this year, given some of the slippage that we had seen out the gate to start 2024.

Well, when you look at NVIDIA.

And let's, let's stick with those.

For example, they are selling the, they're selling the picks and shovels to the miners and then the miners are actually going out and trying to dig the gold.

So I think it's, I think it's an iterative process where you see the business to business, take immediate advantage of that because obviously a company like Apple wants to be ahead of the consumer and then the pickup demand from the consumer comes to that.

So to the the extent that Apple can make this happen.

And of course, I would bet on Apple, I would bet on Microsoft, I would bet on IBM as you said earlier to make artificial intelligence work for the consumer.

That's just gonna create more demand that's gonna drive demand for the underlying chips in the first place.

So I see this as a virtuous circle.

OK. Well, talk to me about where small caps play into that circle.

Brad.

I was mentioning that we saw the Russell sort of starting to tip into competitive territory very lightly with the broader market at the end of last week.

Could this be evidence of broadening out or are we kind of overstating that at this point in hopes of seeing broadening out in this market?

Well, I certainly want to see broadening out of the market as well.

So certainly hope is a is a part of the picture here.

But at the same time, when you look at the attention that's been paid to some of the largest stocks again.

Let's look at NVIDIA and people are starting to look at that and say, well, maybe there's some opportunities in other sectors besides tech.

And I think that's a good thing.

I mean, one of the things that I think has been underappreciated is consumer staples.

Now, what we see here is we can see continued growth in jobs in wage growth in spending ability and we're seeing a lot of those companies continue to move up kind of quietly.

So I do think we're seeing a broadening and just because we hope it's so, doesn't mean it's not true.

Brad, you, you're continuing to see inflation at a range of 3 to 4% this year.

I mean, we're, we're clearly watching it right now.

Try to get towards the Fed's target.

What do you think are some of the hiccups in the road that would actually keep it in your target range?

Well, with respect, I think that's the wrong question.

You know, we've been saying, oh, it's going to go back down.

We've been saying, oh, it'll go back to the Fed's target.

And we've been saying this for a couple, well, a lot of people have been saying this, I haven't for the past couple of years and the truth of the matter is we don't see any signs that it's going to continue dropping.

You know, it stayed about where it is for most of the past year.

And if I look at it from the Feds perspective, I now have to see proof that it's going to go down because it hasn't been.

And that changes the decision calculus for the Fed.

So, you know, I look at it and I say the question is not, why would it stay up the question at this point?

And I can give you a lot of reasons, But the question is why are we going to assume it's gonna go down because we're just not seeing it.

Well, Brad with respect to you here, that's the question because the Fed has not given us any sort of central thesis to go off of.

So we're all just kind of wearing, you know, cloak over our eyes trying to guess what the FED may or may not do because they're just data dependent, data dependent.

Where do you get clarity given the lack of a central thesis from the central bank?

See, I think the Fed has actually been extremely clear because they've been saying all along we're data dependent as you say.

But then that begs the question, what data are they looking at?

But let's go back to, let's go back to their statutory mandate, which is employment and inflation.

So right now, they need, they want to see inflation down and they want to see employment up right now employment is up, but inflation is also still high.

So they have absolutely no reason to cut.

I've been saying all along, you know, the question is, when is the fed gonna cut that?

I think that's the wrong question.

I think the question is why would they cut and they have no reason to cut until job growth falls apart or inflation goes down?

Brad mcmillan Commonwealth Financial Network Chief Investment Officer, Brad.

Thanks so much for taking the time this morning.

Thank you, Greg.

Great to be here.

Certainly.

Coming up, Eli Lilly announcing results of its sleep apnea trial for ZEP bound.

Why should you care?

And what does it mean for wi Gove?

We've got the details on the other side, Eli Lily announcing results of its sleep apnea trial for that bound saying the weight loss drug helps resolve sleep apnea and up to 51% of patients for more.

We got Yahoo finances on.

Came on what you got.

That's right.

This is an exciting sort of new chapter for Lily because this breaks open the Medicare reimbursement channel for them, which is exactly what happened with what go for novo, no.

Once you get that additional label, that's when you can get that government reimbursement which is still blocked from covering weight loss drugs.

So that's really the big news for Eli Lilly.

We did know these results were coming, we saw positive uh outlooks from the earlier stages in the trials.

Meanwhile, Eli Lilly has already applied with the FDA for approval So let's take a look at what happened.

So they said that Z Bound, quote un, quote resolved, uh, a sleep obs obstructive sleep apnea, which basically means that it is less than five incidents in an, in an hour, in a night.

They looked at 43% reduction in those that are not using those pat machines, those mask machines at night and 51% reduction for those that did, that's a higher percentage of patients were treated with the higher dose of the drug.

So 10 or 15, depending on what their tolerability was, if you recall the weight loss drugs do have higher doses than their diabetes counterparts.

And so with that Lily is opening the door, this could impact some analysts are saying the sleep apnea machine maker.

So Phillips is one of them is ResMed is another.

So there are some companies that have actually seen their stock go down as a result of this news, but some others are warning that it may not be as bad considering those results that you saw.

Meanwhile, we also know of course that this then opens the door like I mentioned one analyst from J PM saying that uh quote, this clearly supports the addition of the label expansion for expansion for sleep apnea and that will allow for a reimbursement from the Medicare population.

We know that there is a bill in the house right now looking to open up weight loss drug coverage for Medicare.

So, two ways for this to really open the door for both Eli Le and Nova.

No, it's remarkable.

What can you tell us about the new study on Al N La's drug?

I, you got pronounced that correctly.

You're close, you commercials for you to show me how to pronounce it.

So, yeah, I know.

I know.

So they have a drug that helped cut the risk of death and hospitalization by 28%.

They had two different subgroups for this, which was interesting.

A part of the population of the clinical trial was already on another heart medication.

And then they had the ones that were just on this therapy alone and that, that group scored higher with a 33% reduction in the risk of death and heart uh hospitalization.

So, really good news.

It's been closely watched.

It's one of those things where, uh, you know, the heart group and uh heart disease we know is a big part of the broader, one of the biggest uh diseases and killers.

So this is really good news for that population.

Why can't they just make these drugs easier for?

Now, that's the real question here.

You know what?

I have a tiktok for you on that?

I don't know why I can't wait to see.

Yeah, we've come a long way since your user name.

Next time I gotta follow Angelika Mani.

Thanks so much for bringing it down for us.

Appreciate it.

Well, everyone, this is an interesting one that we've been tracking here blowing up my social media feed.

I don't know about yours.

Astronauts are stranded in space stemming from issues with Boeing starliner spacecraft for more on this.

Let's bring in Yahoo Finance's Anez fare here on earth with us to break this all down my goodness on earth.

And this return to earth from the astronauts that are at the international Space station has been delayed now a few times and this, we're referring to Butch Wilmore and Suny Williams.

They were scheduled to return on June 13th.

The return has been extended for the third time and after years of delay, Boeing starliner had successfully launched back in June 5th.

You'll recall of that launch.

But what happened was during the flight engineers discovered some helium leaks to the spacecraft's thruster system.

So in order to give time for these engineers to troubleshoot those issues, NASA said that it is going to push back the return to flight and officials have tried to calm concerns basically saying, look, there's no reason to believe that starliner won't be able to bring back the astronauts back home stating they really want to work through the remainder of the data.

Um But this also of course, brings more questions as this has now been delayed again.

And it's not uncommon for astronauts to extend their stay aboard a space the space station for days, weeks, sometimes even months, Boeing Starliner program manager said at a news conference in June, June 18th said, well, albeit manageable, it's still not working like we designed it.

So we've got to figure that out.

NASA and Boeing have not said when the astronauts exactly will be returning.

There is a spacewalk that is scheduled for July 2nd.

So it would be after that July 2nd spacewalk.

But of course, what is very concerning is that is these delays and uh even though it's Boeing has sort of painted this as OK, this is a learning experience and we're working through the data and we're figuring out these issues.

It's still obviously uh a string of challenges that Boeing has faced uh this year.

And the most critical part really of these is is the take off and the and the and the landing when you talking about these aircrafts, uh the spacecraft because when they are coming back into the earth's atmosphere, that is really the most crucial time.

So nothing can go wrong.

Absolutely.

You know, it was interesting facts that actually had mentioned Boeing with in their earnings insight, their weekly insight that came out uh last Friday talking about the industrial spec sector, seeing the largest decrease in EPS estimates and Boeing leads the earnings decreases since March 31st here.

So it's gonna be a critical report when they do finally publish those results for the quarter that's wrapping up in just a few days here as well.

But once again here and focus for Boeing.

And thats thanks so much for tracking this story.

Absolutely.

Coming up everyone.

Dilly, Dilly Bud Light Parent A B and Bev gets an upgrade from U BS shares their love in the news.

We'll explain why the analyst is bullish.

On the other side.

It's all uphill for Anheuser Busch.

According to U BS, the bank upgraded the stock to buy from neutral, citing an inflection point in growth margins and cash returns as a catalyst.

Shares are moving higher this morning here.

You're seeing them up by about 3% on this.

This is a significant move here and more largely here as we're taking a look at shares of bud over the course of this year.

This has been a company that's been trying to rebound.

Of course, last year's debacle that took place where the company's messaging and then ultimate kind of uh see sawing within its own trying to figure out, ok, who is it going to market to ultimately created a lot of backlash for the company?

Um I think for a lot of people they were trying to and for those who were at least open minded enough seeing this as an attempt to try and bring in a new type of consumer demographic and consumer cohort uh into a relationship with the company but ultimately did backfire in the way that they handled themselves as well.

Yeah, it's a really good point.

Brad, it was really sad to see the reaction to that having said that that on terms of the stock performance, it is up the most that it has been up in the past seven weeks.

And when you take a look at the quote from this analyst saying over the next 12 months, they believe A B I is at the cusp of delivering the ideal consumer staples growth profile, which it's never consistently achieved since pre 2008, namely consistent volume growth.

While pricing in line with inflation margin expansion and strong cash conversion, they expect growth in IDA as well.

That is pushing the stock to the upside here off of that upgrade, which as you mentioned, Brad haven't seen that positive commentary on the stock in a little while here.

All right, I've been excited to talk about this next story as well since I was sitting at my desk in the newsroom earlier this morning, Disney crushing it at the box office.

Another record for inside out too.

The film becoming the highest grossing of the year domestically scoring $100 million in its second weekend.

That brings the total to.

Ok, let's run some quick uh back of the notes math here and I think it was about 270 or $724 million.

I got my numbers mixed up there but $724 million globally.

Yeah, that's crazy.

I mean, this is massive.

It's it.

I I just I gotta admit, I, I haven't seen the movie yet.

I've only seen the teaser, the extended teaser for the movie here.

And I mean, look, the kids these days get everything, man.

They got, they got fidget spinners, they got generative A I, they got good video game graphics here.

We only had, I mean, we only had essentially, you know, uh uh angel on one shoulder and the devil on the other shoulder.

really walking us through our thoughts that these films are being able to like name the inner monologue that's happening here.

And I think it's a, a good kind of perspective into, you know, just maybe mental health at a more kind of Pixar ish type of realm, name, your feelings, name, the name, your feelings, a lot of different parts inside of you.

You can see all those parts in inside out.

I will say I have not yet seen this movie.

I know that our executive producer is gonna freak out in a second in my ear over that.

So I've got to go see it just to feel like I'm part of the Yahoo finance, our executive produce saw this already.

Oh Val is obsessed with inside out, but maybe she has seen it yet.

Ok.

So I'm in good company.

We'll all go see it as a team, team building event and then talk about, talk about all of our feelings after.

But as you mentioned, Brad, it is incredible to see just the sheer amount of gains that this movie has seen, particularly when the overall Hollywood picture has been a little bit rough over the past year.

Following Barben Heimer, there weren't a lot of positive catalysts.

Now seeing a film like this bring a lot of people back to the box office, bringing a little bit of hope back into folks in that space about potential growth to come.

Well, health is wealth.

Maybe we should just go see it during the 11 am hour here today.

And Oh, absolutely.

I just Instagram live it.

We heard an instant.

No, actually.

So uh I I will not be doing that.

And now they're telling us to wrap this incredible coverage that we're doing right here.

But coming up, we're going to dive deeper into the catalyst moving market.

And later Yahoo Finance.

Another reminder here sitting down the treasury Secretary J Yellen for an exclusive interview that will be at 4:40 p.m. Eastern today.

You won't want to miss it and stick around for wealth with Brad Smith at.