Lowe's and Macy's earnings, FDIC chair resigns: Morning Brief

The Morning Brief Co-Hosts Seana Smith and Brad Smith are watching markets (^DJI, ^IXIC, ^GSPC) this morning as the major averages search for direction Tuesday morning.

Retailers Macy's (M) and Lowe's (LOW) reported earnings beats for their first quarters this morning, each revealing something about US consumer spending in respective retail categories.

Charles Schwab Chief Investment Strategist Liz Ann Sonders breaks down Wall Street's expectations for Nvidia's (NVDA) earnings tomorrow and the future for interest rate cuts by the Federal Reserve.

Amer Sports (AS) CFO Andrew Page sits down with Yahoo Finance to talk about how consumers are flocking to the company's more "premium" apparel brands in its portfolio.

FDIC (Federal Deposit Insurance Corporation) Chair Martin Gruenberg has resigned from his position after Congressional inquiries into reports of sexual misconduct and a toxic environment at the agency and pressure by lawmakers to step down.

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 Shana Smith.

This is Yahoo Finance's flagship show the morning Brief Stock futures.

They are muted this morning after the tech heavy NASDAQ hits a fresh all time high.

The index was lifted by A I chip darling in the as investors await its highly anticipated report on Wednesday.

I think I'm just going to start seeing it that way.

I love that you're adding some excitement here as we build up to that report out tomorrow.

Also investors, they are still betting on rate cuts despite commentary that we're getting here from policymakers, more fed speakers on deck, we are going to hear from six fed officials throughout the day today.

Let's get right to it.

The three things that you need to know this Tuesday morning, your room for the trading day.

Yahoo Finance is in for the Obama and Jared.

You have more stock futures muted.

This morning after the tech heavy NASDAQ closed at a new day and closing high on Monday.

The moves are tied to A I optimism with poster child in video lifting the index higher.

If the market's momentum can continue as investors away in videos results which are set to be released Wednesday after the bell plus the fresh read on the state of the consumer.

Retailers like Macy's and lows are providing a bit more color on how exactly consumers are faring against inflation may see beat the streets muted expectations as a way of future between a turnaround for a buy out same source sales, there fell 1.2% less than the nearly 3% that Wall Street had predicted.

And home improvement retailer lows beat on earnings and revenue even as consumers spent less on diy projects and crypto prices are surging this morning.

The move comes on the back of renewed hopes for the approval of a new class of us exchange traded funds tied to Ether Bitcoin is up marginally here and we can also see a thee up about six or 7% 22%.

Excuse me.

That's Bitcoin up 7% as of that right now.

Good morning everyone.

Our top story.

A I darling NVIDIA edging higher ahead of its big first quarter earnings report.

That's out after the closing bell Wednesday.

Now expectations they are sky high and we wanna break it all down for you here with the three things that you you need to watch out for in this report is Yahoo Finance's Innes Fre Anne.

Yeah, Brad and of course first up is A I chip demand.

Now in March, NVIDIA announced its new Blackwell chip, that model is expected to come onto the market later this year.

And while some analysts expect to see a slowdown during the transition from the company's H 100 chips, others don't see an air pocket up ahead.

Nvidia is expected to start seeing a rise also in competition from Intel, Samsung and others.

However, prominent analysts on the street are still feel the company will keep its market share due to its platform and software stack which I'll get to in a second.

Analysts will also be taking a look at cap X for the company, how much they're spending on investments.

Now, Capex for NVIDIA appears to have peaked in January of 2024 and lastly, the company's data center revenue, this has exploded in recent quarters and is projected to keep growing out of the more than 24 billion in revenue which NVIDIA is expected to announce about 21 billion of that.

A large majority of it could come from its data center segment.

NVIDIA CEO has said before what NVIDIA sells is data center.

Yes, they make chips but the chips don't work all by themselves.

NVIDIA builds entire data centers for A I and this is what Wall Street is most excited about guys.

All right, Anne, thanks so much for bringing that down for us.

Of course, the street really uh looking ahead to that highly anticipated report and video like Nessa is just saying, pushing the NASDAQ to a record high this week, the chip giant accounting for over 36% of the NASDAQ gains this year.

So for more on how bullish A I sentiment is really driving the broader market.

We want to bring in Liz Anne Saunders, Charles Schwab, chief Investment strategist here to talk that and a lot more Liz Anne, it's great to see you.

So just talk to us just about how important, how significant or maybe not, these earnings reports are from NVIDIA after the bell tomorrow.

What that really means in the context of the broader market?

Well, keep in mind as you guys know, I don't, I don't cover NVIDIA as I don't cover any stocks, I don't do anything with individual stocks, but obviously, as a poster child for the A I boom, not to mention the best performer within the magnificent seven.

I think it's important.

We know the bar is set high.

Um So I think an extrapolation problem could develop but whether that starts tomorrow is, is hard to say, but I I think psychologically at at a minimum, it it's important for the uh profile of those types of companies as well as for the market.

Li what do you make of the market participation right now?

We've been waiting for this broadening out.

We are starting to see that a little bit, especially when you take a look at that sector action.

So then maybe is the market going to be OK, not really specifically just focusing on NVIDIA but really just moving beyond some of those larger cab tech names which the market has been so focused on.

Yeah, I mean, there is still a mega cap bias within the cap weighted indexes, but you've got had much more dispersion particularly developed within the magnificent seven which last year they were not the seven best performers, but you only had to go down to about the ranking number 60 within the S and P 500 to capture all seven of those names.

Now you've got a couple of significant laggards obviously with, with Tesla, Tesla and Apple.

So now it's more the fab four.

But in the past month, you've had this sort of stealthy leadership pick up in areas like the Russell 2000.

Some of that is down the quality spectrum.

And I think more a function of of kind of smaller speculators out there.

But I do think that there is an opportunity, I think active is now operating on a more level playing field with, with passive, with the return of the risk free rate.

There's price discovery again, fundamentals reconnecting to prices that said II I still expect in general there to be a a larger cap uh bias within the market for those who are, you know, counting down the moments until the opening bell here this morning, Liz Anne and trying to figure out if they are deciding to take profits at some of these new highs that we've seen, whether that's in the dow, whether that's in the NASDAQ and where to reinvest that into where are some of the top areas that are peaking your interest right now?

Yeah.

So uh we have um something called Schwab sector views.

We relaunched them early this year after about a two year hiatus because of just the unique aspect of this cycle, massive sector related volatility that couldn't be explained by fundamentals factors.

Having more consistency in terms of where leadership resided and didn't.

But we relaunched sector views earlier this year with three sectors with outperform ratings.

And that hasn't changed since the beginning of the year.

So that's financials, materials and energy.

So clearly a cyclical bias within uh the the sort of group of, of sectors and then the two underperformed ratings that we have are real estate or res and consumer discretionary.

Everything else would be in that neutral or market perform category.

Then when we talk about the likelihood of rate cuts, the timing of rate cuts, what do you, what are you anticipating up until this point?

And the fact that we are starting to hear even more from policymakers maybe saying it makes more sense to wait at this point.

Given the conflicting data that we've got.

Now tell me the data and I might be able to tell you when the fed starts, you know, cutting.

Yeah, I think it's, it's such a parlor game of.

Well, I think it could be July.

I think it's September.

I think it's once or twice without there being backup in terms of, if you think they're going to start sooner rather than later, what is that based on?

What's the math associated with base effects in the core PC?

What the month, over month readings have to be the combination of the labor market data because I think the, the two parts of the fed's dual mandate are in sharper focus right now versus last year during the tightening part of the cycle, it was clearly just inflation.

So data dependency means that it's going to depend on the data.

II, I think patience is the, is the word of the day.

I'm not sure the FED is going to regret that as much as they probably regret transitory.

But um I I, you know, every, everybody that is out there in the, you know, Federal open mouth Committee suggests that they're not there yet with the biggest bears putting some of their pride aside more recently, Liz, I I wonder what are they finally coming to grips with here with this market right now and some of the projections towards year end?

Well, you know, as you know, we don't do year on price targets.

Iii I have sympathy for, for strategists that have institutional client base.

Ours is individual investors that, that have to go through the, the sort of dog and pony show of those year end targets, you know, iiii I know you're probably talking about Mike Wilson at Morgan Stanley, for whom I have great respect.

And, and he actually has said, been pretty consistent in saying some of what I just said, the very unique cycle that we are in right now and how uncertain the environment is in terms of data releases and trying to get a grip on um the fact that we've got response rates down.

Some of the revisions across the spectrum of economic data have been much bigger than usual.

And it's hard.

In addition, you know, the cap waiting that we talked about already masks a lot of the churn going on under the surface.

So the NASA as as an example, obviously up 10% in the last month or so only had about a 7% maximum drawdown this year.

But the average member within the NASDAQ has had more than a 30% drawdown this year.

So a lot of churn under the surface and I think it makes the job of those strategists that have to do year end price targets is if anybody can pinpoint that uh quite difficult in this unique cycle.

Certainly.

Uh I'm gonna get Federal open mouth committee printed on some of the uh finance swag T shirts that we get fired up here at Liz.

Thanks so much Liz Anne Saunders, who is the Charles Schwab Chief Investment strategist.

Thanks so much Liz Anne.

Thanks in a new read on the consumer, two household retail names reported financial performance for the first quarter.

Today, shares of Macy's and Lowe's both trading higher this morning on quarterly results.

Yahoo, finance senior reporter Brooke Dipalma, she's been all over this one working the phones this morning at her desk running around.

All right.

What do we know?

Yeah.

Well, I did have the chance to chat with Macy's CFO Adrian Mitchell.

And what he really said is, is touting that bold new chapter strategy that Macy's introduced earlier this year.

He said that we do believe that we're going traction but it is still the early days, but we're seeing a bit of that play out in this quarterly result.

Same source sales did fall 1.2% but that was less than what Wall Street had anticipated a decline of 2.78%.

And what Adrian really alluded that to is those go forward stores, the stores that they have reintroduced, reinvested in when it comes to staffing and digital and making sure that the apparel and inventory was top notch.

They saw sales growth at those stores as compared to the stores that they plan to close those non go forward stores.

They saw 4.5 drop at those locations.

Now they did also uh tout their, their guidance for 2024.

They now expect net revenue in a range of $22.3 billion to 22.9 billion.

That's slightly higher.

They do expect same source of sales expected to come in between a 1% Euro drop to 1.5% increase there.

And Macy O Adrian Mitchell did say that they're still practicing the changes in our source from a staffing and selling perspective.

But they did take into consideration the consumer standpoint right now where consumers are at when it comes to sticky and stuborn inflation.

And as you can see right here, he also did allude to the fact when I asked him, you know what exactly plays out here when it comes to that buy out bid that's lingering in the background.

And he said, just take a look at our performance.

We're going to be focused on continued simplification of our business to a margin, invest in the cons uh customer experience.

And now really, he said, look at that coms number, look at the sales growth and see what we're doing here to see change.

So it looks like the streets pretty excited about these results.

Let's talk about Lowe's because there is some signs of strength within this report, especially what they're starting to see from the pro side of their business.

How does this stack up to some of the retailers specifically Home Depot that we heard from last week?

Yeah.

Well, it's a similar saga here.

We're hearing about that diy that every day Home Renault customer pulled back here and so, Lowe's did the same source sales fall 4.1% but revenue did come in higher uh compared to what Wall Street had anticipated.

Justin earnings per share also coming in higher.

And what they really alluded here was that, that pullback and everyday consumers that diy customer was partially offset by positive comparable sales.

And pro and online, the company did add that its investment in total home strategy, which is intended to provide a full range of products for Diy R and Pros was reflected in that strength as well.

All right, Brooke Dipalma, thanks so much.

Appreciate it a lot on the retail front of your and then additionally, a lot on the crypto front today.

Yeah, we're gonna get on over to Bitcoin and then Ethereum, we'll get on that in a second hopes of an ETF and Ether ETF approval.

They're sending crypto prices higher here, taking a look at Bitcoin.

But let's get on over to the heat maps because that's where it's all going down here.

As we're taking a look at some of the Cryptocurrency, Bitcoin right now.

It's up by about 6% here.

And then additionally, there, you're seeing that outsize, move to the upside for Ether or Ethereum, whatever you're calling it in your home, don't get in a fight over it.

It will still be up 22%.

1 of the huge things of course that we've been tracking coming into this year is where we could see some of the other smaller coins, not Bitcoin, that's already gotten its ETF approvals that came towards the late end of last year and then really started some of the more chatters momentum around.

Ok. What could potentially come next in some of the other alt coins?

Well, Ether was naturally next on the docket.

This is one that already has mass utilization here.

Think about all of those NFTS.

Where are we still NFT anymore?

That's out for debate as well.

But all of these things considered Ether has had quite the run up year to date, taking a look at the performance here, 60% move higher.

Of course, we're still not back at some of these levels.

We're gonna aim to try and take those out.

We'll see if we can kind of move above the level that we had seen in early March.

But one of the other huge things to remember here going forward too for Ethereum, beyond utilization, beyond it, as a store of value is the amount of people that are looking to trade this on some of the Robin Hoods on some of the other trading platforms that are trying to introduce even more functionality there.

And so the crypto markets don't close and so you'll continue to see it all the way on the move all the time that we've got all your markets action ahead.

Everyone, stay tuned.

You're watching the morning group, let's get to some trending tickers here straight from the Yahoo finance sites right now, shares of Palo Alto networks, they're sinking this morning.

The company's latest earnings results, failing to impress investors company giving a downbeat forecast for the current period.

Renewing concerns about a slowdown in cybersecurity.

Let's bring in Shaul Eal, who is the managing director and senior analyst over at Cowan Shaul.

Great to see you first and foremost.

I mean, it, it's interesting the, the stock price reaction that we're seeing here today and, and I'm trying to wrap my head around what they were talking about on the call with platform organization, the amount of times they said platform, I think it was like in the eighties on the call yesterday.

So all these things considered, what are investors still trying to understand about this new strategy going forward?

Sure indeed, uh platform organization within the broader cyber arena, not just Palo Alto has been topic du Jour over the post over the past few quarters now.

Um I think with platform organization, um is that ability to consolidate um a large number of vendors or security vendors into just a handful.

And I think in that respect, Palo Alto is trying to separate themselves from the path.

They have introduced the number of platforms three to be precise.

Uh And actually, when you look at the past few quarters, despite stock reaction uh last quarter, um given some of the new data we have received last night that strategy appears to be swinging in full mode ahead.

Yeah.

And, and just for our viewers out there that are wondering why I even brought that up out the gate and, and they just like what the heck dude, straight into the, the, the deep recesses of what everybody is thinking about with this company.

But it should be top of mind actually because of how much they time, how much time they spend talking about it on the call and actually how it relates to the conversion of demand too.

How is this company in the demand cycle that we're seeing right now for some of their cyber security solutions going to be able to pull a lot of those corporate customers over to this new type of realm that they're trying to create, you know, given the very toxic landscape uh from a global perspective, um security is likely to remain tough mind in terms of uh C Os and Cio s with that in mind, there are really a large number of vendors uh talking on the customer and knocking on the customer's door uh offering their solutions.

Um And I think right now what Palo Alto is trying to do in order kind of to convert that um is consolidating many solutions in many category, many product category into a handful, pretty much become sort of a supermarket for all of the uh corporate security needs.

Uh And so far we have seen uh and we're probably likely to continue and see great success in that respect.

So right now you go into the customer um selling them not just one product, one point solution, but rather an end to end platform.

And with that in mind, that ability uh to pretty much take the revenue and you know, multiply by three or four or even five times uh for the longer term.

I think that is a very good uh opportunity.

When you take a look at the pullback that we're seeing today, often other 7% of the stock also reacting negatively to their late to their previous earnings print.

Should investors be buying on the weakness or when would you think Palo Alto is more attractive at these levels?

So I think some of the data we have received last night, the fact that we are heading actually into the seasonally strong fourth quarter um with pipeline uh remaining very, very strong.

We think that right now we have gone through some sort of a risking of the model and we wouldn't be surprised to see uh next quarter coming pretty much better than, than expected in terms of the estimate.

So we would translate that into a very, very attractive buying opportunity.

As we think about the next 3 to 6 months or even longer than that.

There was some fear just about customers facing spending, spending fatigue, how long of an overhang that was going to be on the stock when you do see a bit of a turnaround coming, what's going to be that catalyst?

I think, first on, on spending fatigue and, and vendor fatigue, I think given what we have seen over the course of the past um just a few months right now that actually most companies have been reporting solid results maintaining or even increasing their guidance into the latter part of 2024.

Um I think it is fair to assume that security spending still remains um very solid, very resilient in that respect.

So if we take that and, and also interpret that to Palo Alto and, and the entire group, uh we're expecting uh maybe back and loaded on the one hand, second half of this year, but I think that should manifest itself into uh expansion of multiples and better prices.

Xel Cowens, a senior analyst, thanks so much for taking the time to join us here again, Palo Alto shares are under pressure off just about 7%.

Well, Trump's social media company reportedly taking in $770,000 in advertising revenue in the first three months of the year, largely from his truth, the social platform as it continued to incur hefty losses, you're looking to move higher just about 2/10 of a percent.

But take a look into this reporting exactly what we're noting here, Trump media reporting an adjusted E but a loss though of 12.1 million just over half of that one time payments related to the closing of the back merger with Digital World acquisition Corp.

So revenue is 770,000, the second straight quarter below a million.

Lots of ways to look at this.

You can see uh over at least yesterday, it closed off just about 5% today.

We're not seeing too much movement here ahead of the open.

But again, a top trending ticker on Yahoo Finance Brad.

Yeah, the company trying to tell investors that they are well capitalized.

I mean, obviously, if you are going to be losing money over the extended period of time, that's gonna be coming into question any more aggressive clip here.

And uh this is not even, this is like a pebble in the river in terms of the amount of revenue the other social media companies are able to generate here when you talk about hundreds of thousands of dollars versus billions of dollars here.

And so it's a question of advertisers that would actually want to see their campaigns running upside against some of the content, user generated content that is on true social and oh yeah, a media platform that they said they were going to launch too.

It's also a question of what the return on that investment would look like for many of those advertisers when they could probably get a better C PM or cost per click on other platforms as well as a result of being able to bid into the right times and the audiences and targeting as well here.

Oh yeah, and a larger amount of targets that you can go after too.

So all of these things considered, I don't know exactly what their compelling pitch is to advertisers at this time to make sure that they are showing investors that they can actually boost some of the reven.

Uh So that they're making more than a couple $100,000.

Yeah, the company also saying that signed contracts with the data center partner, hardware vendor to launch true socials TV, streaming.

It is money out the door.

They're trying to win the over investors.

They'll see whether or not it works.

But again, like you're saying that the liquidity issue, the ability to keep going.

The company though saying quote sufficient working capital to fund operations for the foreseeable future, foreseeable cool auto zone here.

We're also tracking them.

This Tazo get in the zone.

We're in the zone.

All right.

Well, earnings beating Wall Street estimates the company reported a 10% jump in profits.

Its sales benefited from strength in its international business.

However, shares are down by about 1.9% right now.

And the reason why I was interested in this one actually, before we even stepped foot on set this morning and we were sitting next to each other trying to figure out, all right, what other stocks do we talk about?

It has to be auto zone because of the amount of people who are tracking and go with me on this one, the amount that they're still paying in their auto insurance right now and if you are trying to figure out.

All right.

Is this something that I, I take into a service center or is it something that I can do on my own?

And where are some of the retailers that you would lean into?

At that point in time, it, it would be a place like an auto zone or an advanced auto parts.

All of these kind of different players within the auto retail landscape that could be some net beneficiaries and and they actually did see some in is at least in revenue year over year for the quarter.

Yeah, exactly.

When you dig into this report, it's interesting what they're seeing us versus what they're seeing internationally and international was really an out performer in this most recent report, same store sales on an international basis that soared 18% comparing that to flat year over year sales here in the USA combined same store sales that was up just about 1.9% gross margins, stronger merchandise, uh help helping margins here favorability from non cash inventory adjustments.

Although high store payroll, meanwhile increasing the operating expenses as a proportion of sales.

So again, very important to point out when we're really getting our heads around this report.

But the CEO saying that the quarter's top line performance was hurt by the timing of tax refunds this year and also cooler weather across several areas of the country.

We've heard a lot of this past earning season about the cooler weather, uh, in the winter months and the impact that that is having on so many of these businesses.

All right, coming up next, we've got the opening bell on Wall Street.

Stay tuned.

We'll be right back, uh, to see of green and confetti at the NASDAQ as an act rings the opening bell.

All right, we're getting into act one of today's trading activity as we're taking a look at BT IG at the NYSE starting today's trading activity here.

All right.

Great group of folks there.

Great group.

All right.

Let's take a look at the, uh, markets here.

Let's see how things open up on the day.

We're mixed to start off today.

It looks like, uh, as we're just seeing things calibrate here a little bit.

The Dow Jones Industrial Lab just barely to the upside.

You're seeing the NASDAQ composite open up just a little bit lower.

It's down by about 4/10 of a percent and the S and P 500 also just a little bit lower by about 2/10 of a percent there.

Yeah, right around that 5300 level NASDAQ coming off a record high when you take a look at the chips, we are seeing some pressure there off just about 1%.

Of the Philadelphia semiconductor index.

We're taking a look at that because of the focus on the semiconductor industry here this week ahead of Nvidia's results.

Tomorrow taking a look at that intraday action.

You've got consumer staples healthcare among the out performers there, industrials and technology lagging and inside the NASDAQ taking look at that index following yesterday's record high, we are seeing a bit of a mixed picture.

Although many of these larger cap tech names under a bit of pressure here, you've got NVIDIA giving back some of those gains yesterday off just about 1% here at the open as well as Amazon and then Google Meta also under a bit of pressure.

Today, we also want to take a closer look at commodities and crypto Yahoo Finance's Jared by the closer look at those moves, Jared.

Yes, Shana, we have gold, silver and copper all near the record highs and I'll cycle through them.

We haven't seen a lot of action over the last few days.

We've seen these new nominal highs but not a huge surge.

And so let me find here's, here's crude oil looks like I'm going to be doing this first.

Here's the year to date, crude oil hovering just under $80 per barrel.

You can see in the month of May here just barely doing anything.

Uh We are looking for maybe some OPEC plus headlines in the next week or two.

with regard to whether or not, they're going to cut production in the future or hold the line.

But, uh, we don't have that news today and here we go, here's copper that is up 1%.

And, uh, let me put a candlestick on.

So you can see how close to its record high it is.

And in fact, this would be on track for a record closing high even though we don't have that intra day one, but copper just really surging.

Not only because there was a short squeeze, but because of the inherent demand needs of the A I trade.

Now, here's silver, that's down 1% today.

And silver has been on an absolute tear.

If I put a five year chart, you can see how it is now taken out its highs from 2021 2022.

And before I go here, I got to touch crypto because Ethereum look at this up 22%.

It is having the best two day run since January of 2021.

That was way down here.

That was the very beginning of this huge price rise here.

Are we expecting that again?

Well, the news comes as uh people are excited about these new Ethereum spot, Ethereum.

Uh ETF S however, I would note that when we saw that in Bitcoin, that kind of uh top tick, that rally right there.

We saw a bit of a surge after that.

Uh but not long after we saw the, uh, highs in Bitcoin taken out and here's Bitcoin.

Uh, we did see a back off of that.

So we'll have to see if we can continue the strength or if it is in fact another sell the news event for Ethereum.

All right, Jared, we will closely be watching that here throughout the trading day.

Let's talk about another trender here on Yahoo Finance and that is Macy's beating on first quarter earnings, same store sales falling just about 1.2% less than the 3% that the street had been anticipating the retailer boosting it full your guidance.

And for more on this, we wanna bring in David Swart.

He is Morningstar's Equity analyst, David.

When you take a look at the results that we're getting better than expected guidance raised, you're looking at the stock moving to the upside here on the heels of this report.

What's your first reaction to what we're seeing today?

The quarter was a little bit better than expected.

Uh Expectations were not very high as you mentioned, the same store sales numbers were still negative but they weren't quite as negative as expected.

It was against a pretty easy comparison because the first quarter of last year was not particularly strong.

Um So I think people were a little bit um uh relieved that the quarter was better than expected and also the outlook for the second quarter was a little bit better than what I expected.

And and they did raise slightly the outlook for the, the full year for 2024.

What are you gonna be watching for within this outlook and, and kind of baked into your expectations for that gross margin rate for the quarter?

I mean, that was one area that investors might be lingering on a little bit here, given the, the bit of slippage we saw.

Yeah, the gross margin, I think, uh, was a little bit shy of what people may have hoped for.

Uh Generally the gross margin at Macy's hasn't really been the problem.

It's been more of the operating costs.

Uh The SGN A, uh Macy's uh SGN A is just too high uh for the sales numbers that it's been posting.

And so, you know, small changes in the gross margin won't really matter that much until the company starts generating more sales growth to overcome the fixed cost.

The business Macy's has been cutting costs but ultimately, it still needs to generate higher sales growth, needs to generate higher full price selling.

Uh that will boast that will boost both the total sales and the gross margin and then allow them to overcome the fixed costs.

So as, as part of that controlled management of the SGN A, do you think that this company is gonna have to close some of its location and, and, and the unprofitable locations in order to see a better impact on that gross margin rate?

Macy's is closing stores.

Uh, the new to New Ceo Tony Spring who just came in earlier this year, uh, announced on the previous conference call that Macy's is gonna close 100 and 50 stores.

Uh This was a change because Macy's had been consistently saying that it didn't need to close more stores.

Uh, but now it says that it will, uh, Macy's has said that it's gonna close stores or even at, at the current time profitable, which is again, is a change from what the company has said in the past.

Um So yeah, Macy's is gonna have to down.

Uh Macy's has a lot of stores that are just not performing well.

The company highlighted this morning as top 50 stores uh having a, a positive same store sales growth performance in the quarter and doing much better than the rest of the fleet.

But Macy's still has hundreds of stores that are ultimately not really viable in the long term and will need to be closed.

This is one of the ways that Macy's will reduce costs.

Macy's though needs to operate more efficiently in all of its stores.

David, we also have investors weighing that takeover bid from our house management and brigade capital management.

When you take a look at this print, do you think Tony Spring maybe ha has won a little bit more time in order to implement that turnaround strategy?

Well, I'm sure he didn't come in as CEO and, and want to sell the business right away.

I'm cer I'm certain that wasn't the plan.

Uh The company is gonna need time to really implement this strategy that he's been talking about.

Um since he came in as CEO a few months ago, uh it's really just started and so it's gonna take really a couple of years to really show um complete um benefit if it actually happens at all.

Uh Now Macy's though may not have that time because as you mentioned, there are groups looking to buy Macy's, they've offered $24 a share for Macy's, which I think is a reasonable offer.

My fair by estimate uh Before today's uh performance was $25 a share.

Um So the offer is a legitimate offer.

It's close to what I think is the valuation.

What I think is a fair valuation.

So Macy's does need to consider it, but I don't think that Macy's management wants to sell.

Do you think they should?

It sounds like it?

I think so.

If the, if the offer is strong enough, then yes, and I think the offer is close.

Uh Ac House has said that it may raise its bid.

If you look at the experience of Coles, uh Coles a couple years ago was in a similar situation.

Uh They had potential bidders for the company.

The sale did not happen and coal stock price has not recovered and this is what I wrote at the time.

Two years ago that it was too risky not to sell a business when there's an offer on the table.

You just never know when there's gonna be another one and there haven't been more offers for Coles since then and we don't know if there'll be more offers for Macy's.

So Macy's may think that this offer undervalues the company and you can make that argument based on the value of Macy's real estate.

But you just never know if there's gonna be another offer.

David Schwartz who is the Morningstar equity analyst, talking all things Macy's with us today.

We didn't even get the blue Mercury.

It's ok. My face looks all right.

I got all the makeup on today here.

Thanks so much, David.

Appreciate it.

Thank you.

Certainly.

Well, Zoom reporting first quarter results that beat Wall street expectations helped by a broader artificial intelligence roll out across its products.

But while Zoom's longer term forecast was more upbeat, nearer term expectations for the second quarter were a bit below analysts forecasts here and there.

You're taking a look at the earnings results for the last quarter, beat on top and bottom line there, but it was the earnings call perhaps that the investors are continuing to try and figure out where the demand cycle still remains for Zoom and where they're gonna have to spend further into really growing out.

Some of the services that are gonna entice even more potential clients uh to hop onto this platform.

Yeah, I think when you take a look at the streets, reaction city, not convinced that Zoom is out of the woods just yet talking about that they are encouraged to see limited, limited headwinds.

But I think that question that you were just talking about just in terms of that longer term growth where that demand is coming from to something that's top of mind for analysts and investors right now.

And then also Morgan Stanley, calling out that small amount of upside from the enterprise segment.

So there are reasons to be optimistic about this report.

I think that's why you're looking at shares up just about 6/10 of a percent.

So the takeaway was more positives than negatives.

But there's still reason to be concerned, still reason to question some of that future growth.

And especially when you take a look at that outlook here for the second quarter earnings coming below what the street had been into.

You can see still challenges here for Zoom on the horizon when they try to figure out and try to boost demand more for the longer term of their product.

Yeah, the the company really does point to this RPO as the best indicator of the guidance and go forward strategy and performance for them and that's the remaining performance obligation that RPO and that actually increased by about 5% year over year to 3.67 billion dollars.

So expecting to recognize about 59% of that total revenue as revenue over the next 12 months.

That's kind of consistent with what they saw in the first quarter of last year as well.

Coming up, everyone, Amherst sports reporting earnings today showing consumers so willing to spend big on sports and technical apparel.

It's all about the performance.

We're gonna speak to Andrew page.

Who's the Amor Sports CFO on the other side of this spring E sports, the parent company of Solomon Wilson and Art Taris posting a first quarter earnings be driven by sales of its technical apparel but guidance.

So weighing on the stock here this morning, you're looking at a loss of nearly 8%.

This is the second earnings report since going public Amor Sports last year here.

So here with more earlier this year.

Excuse me, with more.

We wanna bring in Andrew Page.

He's the Amer Sports, a Chief Financial Officer CFO Andrew.

It's great to talk to you.

So let, let's take a step back when you take a look at the market's reaction to this print.

I think a lot of that is based on the guidance, but talk to us just about the spending trends that you are seeing and what you're seeing in terms of the health of the consumer today.

Yeah, I think that um what, what we continue to see, I think the consumer is getting more healthy.

I think it's really a a sentiment issue.

I think sentiment is getting stronger.

Uh We had anticipated the first half of this year, especially in North America and Europe being uh a bit challenging uh from the consumer's perspective, from a sentiment perspective.

Uh And I was built in our guidance um but as you can see in the first quarter, uh consumers continue, you know, our, our demand continued to be high, especially with uh technical apparel in our art to franchise.

Uh and we over deliver even well beyond our expectations of Q one.

So consumers, consumers continue to be uh pretty resilient as well.

You know, it's interesting, I mean, across some of these segments, technical barrel, outdoor performance, ball and racket sports, I mean, it's everything from lifestyle to performance within there.

What where is the consumer spending into the sports experience right now?

And, and where are you being able to capitalize and seeing that flow through to profits for the business?

Yeah, I think um that's a great question Brett, what happens is I think that the consumers and this has been a migration that's been going on for a few years.

You start to see the consumers migrate toward premium and experience or migrate to value.

And obviously we play on the premium side of the, of the spectrum across all of our brands, whether it be outdoor performance, technical apparel or um or, or a ball and racket sports, you know, much of our equipment uh from a price point is at the high end of the spectrum within its categories.

You know, our gloves are, you know, a couple of $100 our bats over 500 bucks, obviously, our tennis rackets are, are fairly expensive.

They're not cheap, they're not cheap.

Andrew.

I've tried to get one I priced out right now.

Yeah.

So you definitely, we definitely see consumers, um, picking a lane and, and the lane that we've, and the lane that we play in is on the premium side.

And like I said, consumers, consumers continue to show resilience.

Um, and you know, within consumer discretionary, there's also a pecking order.

Uh, and I think that what I like about our portfolio is that, you know, even consumer discretionary where, where spending starts to get constrained and you start making discretionary spending, we continue and consumers continue to still take care of their health and take care of their, um, you know, their, their, their ability to exercise their ability to take care of themselves, their ability to feel good and our products play in that space very well.

Andrew when it comes to some of this, uh, some of the trends that you are seeing right now from your partners as they manage through inventory levels.

What are you seeing there?

Are you seeing any sort of change in some of the trends that we had been seeing the past the previous quarter?

Yeah, I think that, um, uh, you know, when I think about Q one of 2024 compared to Q one of 2023 you saw um a lot of our strategic wholesale partners ordering early.

Uh there was a concern of the availability of product and so you saw them ordering early and that actually ended up creating uh a bit of Overstock or a bit of excess inventory in the market as we move through 2023.

Um We, you know, we obviously moved through our inventory.

It's been uh well noted.

We moved through our inventory in the back at 2023 we exited 2023 with very, very clean uh and, and current inventory.

Uh and then it's our turn to deal with our, our wholesale partners as they needed to move through their inventory.

And we always anticipated it probably taken another half a year to start to really get to the point where their, the cadence of their um replenishment order started to pick got.

And as we went through Q one, you started to see, I mean, we, we were taking share even in a constrained market, you start to see our wholesale um partners giving us indications that the sell through of our products, even if the selling was a little slower to sell through, uh was really strong and, and a share taker against our competitors.

So we still see h one ha first half of the year as moving through the challenges and we still feel very good about the back half of this year.

Both our ability to comp last year and grow meaningfully against last year.

As well as the wholesale partners really resetting their inventory levels and getting to a better point where they can pick up the velocity of their replenishment orders.

And just lastly while we have you, this is a massive year for sport.

Of course, we've got the, the 10 pole events, the US, uh for instance, for, for Wilson, that's huge.

And of course, you've got the Olympics, which are gonna be massive.

I, I wonder how you're looking at the environment knowing that this is a time to strike for companies such as your own with these major events and, and such an international consumer that you're gonna have to appeal to, especially within key regions like the US and like China, the two largest economies by GDP.

Absolutely.

Absolutely.

Uh You know, you, you mentioned the US Open, you mentioned, you know, a couple of the, the tennis majors, obviously, we are a big player in the US Open.

We are um a title partner in both the French Open with Roli Gus and uh and as we come up to the Paris Olympics, you know, our brands are, you know, tend to be especially outdoor performance and, and ours tend to be thought about as uh more bias toward the winter sports.

So we're excited about even the Summer Olympics in Paris this year.

We're opening up a flagship store for Solomon and really showcase our footwear offerings on the champs Elyse this summer that actually will be open uh at the beginning of June right in time for the Olympics.

And uh and as, and, and as we get to uh Cortina for the Winter Olympics uh in about a year or so, we are one of the title partners there.

So really, I mean, the moment around this, this summer sporting events and and elevated profile for our brands couldn't be more important.

Uh And then as we close out 2024 and get into 2025 definitely looking forward to the Winter Olympics as well.

Absolutely, Andrew, we gotta check back in in the future.

Andrew Page Amer Sports Chief Financial Officer.

Thanks so much for taking the time.

Thank you.

I appreciate it.

Thanks.

Well, FDIC chair Martin Greenberg resigning this week after a recent probe found a widespread culture of sexual harassment and discrimination at the agency to break down.

What happens now?

Yahoo Finance's very own.

Jennifer Schonberger is here, Jennifer.

What happens now?

Good morning, Brad bowing to pressure to resign at the IC chair, Martin Greenberg now says he's prepared to step down less than a week after he rejected bipartisan calls to do so.

A move that could carry implications for a proposal to impose tougher capital requirements on banks.

Bloomberg says he'll resign once a successor is in place of winning a scenario that would put in place Republican FDIC Vice Chair Travis Hill, something that could scuttle those proposed bank capital requirements.

In a statement late Monday Gruenberg said quote in light of recent events, I'm prepared to step down from my responsibilities.

Once a successor is confirmed until that time, I will continue to fulfill my responsibilities as chairman of the FDIC including the transformation of the FDIC S workplace culture.

Now, just last week in hearings before the House and Senate Runberg refused to step down.

His about face comes after Senate Banking Committee Chair Sherrod Brown on Monday called on President Biden to nominate a new chair of the agency to restore the FDIC S workplace culture after a hearing from FDIC employees now Brown did not call for Greenberg's resignation during a committee hearing last week, the White House says the president will soon put forward a new nominee for FDIC chair who they expect the Senate to confirm quickly.

Now speculation is it would be a woman ordinarily a confirmation process and getting someone confirmed can be a very long drawn out process and adding insult to injury.

This year, we are in an election year and as mentioned, Greenberg's exit carries implications for those proposed bank capital requirements because the FDIC has a vote on those proposals.

The nominee could become a target for banks who have been aggressively lobbying to water down these proposed rules.

While Democrats favor strong rules, both the FDA IC and the fed have said they were the process of broad material changes for these said rules guys.

All right, Chad, thanks so much for bringing that down for us.

Well, coming up, Elon Musk would like Tesla shareholders to approve his $56 billion compensation package.

Now, a group of shareholders are saying not so fast.

You've got the details for you.

In that Elon Musk's proposed $56 billion Tesla pay package has hit another snag.

You'll recall.

The package was originally approved in 2018 when a Delaware judge.

However, but a Delaware judge voided the compensation package earlier this year.

In 2024 Tesla's board needed to bring it to a second vote.

So now the SOC Investment Group and six other signatories are urging shareholders to reject the package citing Musk's distractions with the five other companies that he controls here.

Uh And as we mentioned here, the shareholder vote, well, the shareholder vote is gonna be set to take place on June 13th.

We did not mention that, but a judge did strike this down earlier this year here.

And for Tesla shareholders, a larger question of what are some of the chas of payments that are still intertwined within this package too?

Yeah, and the reason that the Delaware judge gave for avoiding that deal in late January, he said that it was unfair to shareholders who weren't fully informed of the key details of this payment plan.

So again, this is up for the vote.

Like you said, it's going to take place next month.

There has been more and more of the investors that are coming out in opposition some four obviously, but more in opposition of this pay package.

And this group writing in this letter, quote, Tesla is suffering from a material governance failure which requires our urgent attention and action.

So again, they, they are also pushing for the fact they want the re election of the group is also urging shareholders to vote against the re election of directors, Kimball Musk, which of course is Elon Musk's brother and also James Murdoch.

So a couple of things that they are pushing for within this letter, but again, it comes down to that vote that we are going to be getting later in June, the board, once again pushing for the pay package to be approved, we'll see how this all plays out.

And of course, this comes as Tesla stock has underperformed by a wide margin this year with shares still off just around 30% year to date.

In this filing, the fighting words that jump out to me in short, Tesla is suffering from a quote, material governance failure, which includes and requires our urgent attention and action here.

So that coming forth in the filings, we'll see what takes place in mid June.

All right, coming up, we will be diving deeper into Nvidia's massive impact on the broader markets ahead of its earnings report after the bell tomorrow, we will get a read also on the consumer and the housing market.

What exactly that means for lows, we have lows moving to the downside actually today off nearly 2% following its earnings spring more on that when we come back.