Meme stocks, Biden, Google AI: Market Domination Overtime

Meme stocks are once again on the minds of Wall Street traders as GameStop (GME) and AMC Entertainment (AMC) have popped off for a second day after a well-known contributor to Reddit's "WallStreetBets" forum, Keith Gill ("Roaring Kitty"), returned to social media. President Joe Biden spoke to Yahoo Finance in an exclusive interview about new tariffs imposed on Chinese imports in the US, with some experts saying this might not do enough to fix manufacturing. Alphabet (GOOG, GOOGL) kicked off its Google I/O Developer Conference with a keynote speech from CEO Sundar Pichai who helped usher in the "Gemini Era" of an AI focus for Google.

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

Video transcript

And that's the closing bell on Wall Street.

And now it's market domination over time.

We are joined by Jared to get you up to speed on the action from today's session sponsored by Tasty Trade.

I'm going to start with where the major averages ended up and up is probably the operative word here because we see the highs of the session for the dow up about 126 points about a third of 1% here, but really ticking up in the last hour or so of trading for the S and P 500 similar, although a little bit less dramatic leg up there, up about a half of 1%.

The NASDAQ up about three quarters of 1%.

As we've been discussing today, there's been real out performance with the Russell 2000 as well, perhaps helped in part by this sort of resurgence of the meme trade may be part of what is going on there.

And we're also looking at what's going on in the bond market.

A little bit of relief on yields, also not hurting matters, Jared, what are you seeing?

Well, I'm seeing broad based strength and tech and go to the Wi Fi Interactive, I will show you the sector results for today.

Tech closing the day, up about 89 basis points or 9/10 of a percent.

Only two sectors in the red industrials and staples and uh not far in the red.

The other winners here that are outperforming today are real estate and financials, both interest rate sensitive.

So that's a theme we've been tracking as well.

Now, here's our leader board, an interesting mix of leaders we have X RT.

That's a retail ETF it's up almost 3% of upper left, followed by cannabis solar stocks.

Then you get arc so unprofitable tech, then chip stocks and IPO regional banks, etcetera to the downside.

Bitcoin was the biggest loser down 2.5%.

Also, Chinese stocks taking a little bit of a stumble and not a whole lot moving.

I thought we'd take a look at Chinese stocks real quick.

That's one of the few red boards you're going to see today.

But if you want to see some green, let's take a look, a final look at this meme stock board guys.

Some green, not as much green perhaps or not as big gains as total the two day total.

And we're going to see some bigger gains perhaps at least for some of these guys.

Thanks a lot, Jared.

Appreciate it.

GME of 183% over the past two days.

Well, markets closing higher today.

The big economic data point today, another hotter than expected inflation report this time on the whole sale side, producer prices rising more than estimated in April comes ahead of tomorrow's CP I consumer price print for more on what that means for investors.

Let's bring in Bryant Van Cronkite portfolio manager at all spring.

Thanks for being here.

Appreciate it.

Thank you.

Um So this is not the relief that people were hoping for perhaps on the inflation front today.

But I know that CP I is seen as more important the the market.

But how are you sort of weighing the PP I report under the covers?

The PP I report was more benign than maybe people feared on the, on the on the surface.

So I think it's a good sign for, for maybe people who are worried about inflation staying sticky in the market, I think moved higher in that today.

But there's a lot of pressure on the CP I tomorrow.

I think that there's a the market clearly is hoping the fed can jump through that ever closing window with a prospective rate cut, but inflation has to co-operate and every data point we have going forward is one more chance for that window to slam close on them.

So tomorrow is a big day, the market could be volatile around it and we'll see what it has in store for us.

And Brian, are you in the camp that confident that actually inflation, you know, the trajectory that we do get back to J Powell's target and he is able to cut this year.

I'm actually concerned we're not gonna get there at the pace.

The market thinks we're gonna get there.

I think inflation could stay sticky largely because the problem here is, is the employment situation, both the quality and the quantity of labor is not meeting the needs of the small businesses and large businesses and what they need to drive their businesses forward.

And so unless we see that employment situation get fixed, I think inflation is gonna stay a little bit sticky right now.

The only thing that could maybe change that in my mind is the consumer weakening faster, putting pressure on GDP, putting pressure on the economy.

But that's not a good situation, but that could be our reality, right?

I mean, that's what we've always heard from people over and over again.

If the fed is cutting for quote unquote good reasons, right, then the market can still go up.

If it's cutting for quote unquote, bad reasons, there's too much slowing, they'll be judged not by what they do, but in which context they do it right.

And if we're seeing GDP dropping, unemployment rising is not going to care that they cut, they missed that prospective window.

Now they're reacting and that will not be a good thing for markets.

So, on the consumer spending side, are you seeing concerning signs it seems like we're hearing sort of anecdotally from companies that they're seeing some, a little bit of weakening the consumer has been remarkably resilient for much longer than I think most of us anticipated.

Certainly more than I anticipated.

But our channel checks this week even show it's slipping further and further up in the, in the income cohort.

So it started out as maybe the lowest end consumer starting to make tough choices trading down to more value categories.

Moving in a private label.

We're now hearing just this week that a lot of our grocery channel checks, our restaurant channel checks.

Even the retail, that consumer is now the the $100,000 household, which is, it's moving up now and as it moves into the middle income, that's when things get a little bit more dicey for me.

So I'm getting more and more concerned uh in the last week or two.

I mean, I should, Brian.

You know, we've been talking a lot on the show today, Biden imposing these new tariffs.

Um And obviously a big part of that is just, it's just raw politics, right?

You're trying to win votes in key swing states.

It brings the election kind of back in focus.

How, how much are your clients asking you about that right now, Brian, the they they recognize the elections bring volatility, but ultimately, a lot of what we're hearing today is, is more politics, less economics, right?

The tariffs impact about 8% of the imports from China right now.

It's not, that wasn't a huge news, event clients are just worried about what's the plan going forward, right.

The regulatory backdrop for a lot of industries matters.

And it seems like whenever someone else comes into the White House, we cancel everything.

We just did the last four years and start again.

And that's frustrating for investors.

It's frustrating for a lot of people in every line of work.

And so when people want a stability, they're not gonna get it right now.

So we're just gonna kind of trudge through and the way to trudge through it is focusing on what a company can control.

Our approach to investing is really understanding how a company's financial freedom as measured by their balance sheet allows them to kind of navigate any market environment.

That's the key for investors right now is focus on what you can control, use balance sheets to measure that and then drive forward with your investments that way.

So who's doing the best job controlling right now or I guess I can ask that a couple of ways, what sectors are best poised to do that right now?

And are there examples of companies that are doing a good job of that?

Well, staying with the consumer for a minute, I think consumer discretionary is a more dangerous place to be.

So I would underweight discretionary right now and overweight consumer staples, consumer staples have been left behind valuation wise, I think for good reason because the consumer has been resilient because the economy is stronger than what we expected.

People were kind of ignoring the 3 to 4% top line growing staples groups and, and putting capital elsewhere.

We're starting to see that reverse now.

And what I'm seeing are names like Keig, Doctor Pepper or Tristan Dwight, doing a really good job investing through innovation to drive higher market share drive and maintain higher pricing.

That's gonna show up as stable and growing free cash flow even if we see the me slow down.

So I like consumer staples and those two names in particular relative to consumer discretionary.

You also like the construction market, Brian or at least names in that, in that, in that sector.

There's opportunity there for sure.

The infrastructure bills got passed a few years ago now and we've sort of forgot about them.

But so much of that money is not just now flowing into the economy.

So a name like Vulcan materials that provides the aggregates that go into roads and bridges and buildings.

They're seeing a very strong demand pipeline right now and good pricing.

Jacobs Engineering.

Another company is benefiting from the Chips Act.

They're doing a lot of the engineering and design work as companies move semi manufacturing into the US.

So there are packets of opportunity in construction and building that I think are still undervalued because they have long duration uh on the revenue streams.

Um Brian, actually, I have one last question for you because you know, we talk to New York City people a lot.

You are um based in Milwaukee.

And I'm just curious, like, you know, we talk a lot about the vibes, right?

The consumer vibes.

And I'm just curious if you see a difference in the Wisconsin vibes versus the east coast or the sort of bigger media narrative, I think that the way someone reacts to news is different based on where you live.

I have the luxury and the pleasure of traveling the world and some people in certain locations respond very quickly and sentiment drives that in other places that seem to be a little slower, more relaxed pace out of the Midwest is known for a lot of things and maybe on the investment side, maybe for that longer time horizon, right?

We're not so worried about the sentiment, the short term, we focus on the long term.

And I think that's what differentiates maybe our Milwaukee presence versus some other coasts, but make no mistake, having the ability to work with people.

And my team is all over the country, having the ability to work with them and understand what you're talking about because a better, more diverse view of the world and what people are thinking makes sense.

Right?

Thanks so much.

Appreciate it.

Well, coming up shares of Alibaba trending lower today, we will speak to an analyst on the other side about that company's latest earnings, stick around more market domination over time.

Still to come.

Let's get you up to speed on the action from today session sponsored by Tasty Trade.

I believe we did see a record close for the NASDAQ today, but not for the Dow and the S and P 500 just verifying those numbers.

But you heard our j earlier talking about the broad based strength in take today and indeed, we saw that out performance of the NASDAQ.

All right.

Take now at shares of Amazon as Adam Sippy, CEO of Amazon web services is stepping down from his role after spending 18 years in Aws.

Sippy knowing he is taking the opportunity to spend more time with family and says the future is bright for Amazon.

Similar sentiment he shared when speaking with Yahoo Finance earlier this month on our opening bid podcast, we're optimistic about the business outlook for Aws and I think it can continue to grow uh really rapidly.

I don't really see uh an upper limit on it.

Uh Of course, it's not our birthright, it's not guaranteed and uh we'll only be as successful as what we do tomorrow for customers, you know, so interesting, Julie s lipsky, I mean, very, you know, well regarded executive, interesting career because he was at Aws early days goes to run Tableau which sold to sales force then returns to Aws three years ago.

But certainly helped turn Aws just to a juggernaut and he was there pre revenue, of course, now reaching a $100 billion annual revenue run rate.

Yeah, and he was only running the place for about three years even when he came in.

Reportedly I was seeing some, some reports that some um internal executives were surprised uh that Matt Garman was not then getting the job.

He is now getting the job, by the way, he is the one who is replacing Slips as head of Aws as of June 3rd.

Um So Garman had to wait a little bit longer, but eventually he ended up getting the position.

Yeah.

And the team at Bayer actually told their clients, they, they like Matt Garman in this role.

They called him a solid replacement to lead Aws say that he's well respected both internally and with Aws customers says he has a strong product background.

So interesting.

I mean, they obviously now kind of the next for investors.

They wanna see Matt now kind of drive growth in A I gen A I um to reinforce Aws leadership.

Um So it'll be interesting but, but he has Bairds.

Baird's uh full, full.

Yeah.

And you know, Aws did perform well last quarter, they did see uh better than estimated growth there.

That's true.

So coming into a good position uh by the way for full, for that full discussion with Aws CEO Adam Solis, be sure to check out Yahoo Finance's opening bid.

You can find it on our website.

You can find it across other platforms including Spotify, Pandora and Amazon music.

I listen to it on Spotify actually.

And there you can also find uh the latest uh on the opening day, Brian Sazi streaming every Monday and Friday from 8 a.m. Eastern time shares of Alibaba.

Well, in the red today, after the company posted an 86% loss in profit year over year for more on the latest quarterly results.

Let's get in here, Angelo Zino CFR Research, Senior equity analyst, Angela.

It's always good to see you.

So uh let's just talk Alibaba there, Angelo because they report investors clearly disappointed that stock got hit today finished down about 6%.

Give it, give us your reaction to the report, Angelo, what did you make of it?

Yeah.

No, thanks for having me guys.

So, you know, as far as the results were concerned, I think, you know, part of the reason we sold off was we kind of ran into the numbers a little bit.

Um You know, over the last week or so, I'd also say, um you know, definitely some disappointment as far as their e commerce business is concerned as well as their cloud business when you kind of look at those two businesses um over 50% of their revenue, that kind of being more their they're trying the ecommerce business.

So um you kind of look at what's going on in the ecommerce side of things in China continues to continue to see uh pricing pressure out there.

Um You are kind of, you know, seeing, you know, improvement in terms of kind of um you know, the the order volume there.

But that said, um when you kind of look at the the the growth of that business segment only growing about 4% year over year.

So that continues to be, you know, disappointing in our view, the other side of things as far as the cloud business is concerned, that is a critical part of the valuation story.

We think for Alibaba here that has been a business uh that has disappointed here, investors over the last several quarters, you look at the growth rate here again, low single digit growth, that has been the theme here over the last four or five quarters or so.

So really kind of they, they did highlighted an improving trajectory later this year, but that's that we're not seeing it in the results at this point in time.

And that continues, we think to, to, you know, disappoint a lot of investors out there.

Yeah.

And Angela, one of the things you highlighted in your note is that uh you know, you've got the Chinese government sort of hovering over the company.

What do you think that what risks specifically do you think they pose at that at this point?

Yeah, I mean, as as far as the, the government can, you know, whether it be the Chinese government or even the US government for that matter.

I mean, there, there are clearly geopolitical pressures out there uh to be honest with you.

And um I think the biggest risk is we just don't know, you know, what could potentially happen out there um from a geopolitical side of things, you know, what kind of initiatives can be announced um in the future.

But that said, um they are absolutely in the eye of the storm here.

Um When you kind of look at, you know, some of the pressures that they're facing clearly, um their inability to kind of have access to, to certain advanced chips out there is definitely gonna hinder their ability to kind of create the large language models out there that could potentially generate significantly higher revenue or, or the type of capabilities that you see from um their US counterparts here.

Um So, you know, there are a number of issues out there.

Um you know, that they faced from a geopolitical perspective.

And um you know, one thing I would highlight here is the fact that they also did announce that they, they're going to kind of revisit the fact that they were gonna move their primary listing, I believe to Hong Kong.

Um you know, later this year.

And I think that's interesting because I think, you know, they are clearly concerns out there or were concerns out there back in, you know, 23 years ago about a potential delisting and implications that that could have to investors out there.

But um the fact that you are kind of, you know, shifting your primary listing out there also, I think kind of, you know, if something were to happen, um you know, from their US listing here, um you know, allows them to continue to have that um listing, you know, overseas Angela.

I'm just curious, you know, how good a read in your opinion is Alibaba on, on the Chinese consumer.

And, and if so, you know, what did this earnings report kind of tell us um about the health and resilience of that consumer right now?

Yeah, I mean, and, and I think you, you're getting, you know, counter, you know, different views from, you know, different companies out there.

But, you know, at the end of the day, you kind of look at um these results here.

I mean, it definitely tells you that the consumer is um trading down that has been kind of the um the story, at least on Alibaba side of things the last couple of quarters.

But that said again, I mean, the the the volume looks like it's improving when you kind of look at the t from a number of end markets out there, whether it's, you know, certain areas I cover kind of more on the tech side of things like smartphones.

Um you're definitely seeing kind of, you know, improving prospects on the China side of things.

Now, whether or not that is sustainable, um as we go into the second half of the year and into 2025 remains to be seen.

But um as far as this quarter is concerned, you know, we've definitely seen some improvement from the China consumer out there, Angela, I wanna switch gears because today uh Google holding its IO conference, right, introducing some new A I powered search capabilities as well as Gemini capabilities.

Um And I know you cover alphabet as well.

So I'm just curious, you know what you thought of what they announced and whether alphabet is successfully making a case that it is going to be one of the big leaders in A I, I mean, we think so I I when you kind of look at at what they announced here, a lot of it very incremental in nature, I'd say kind of maybe that the biggest uh you know, news was maybe the fact that um they're going to start featuring A I overviews um by the end of this week um in the US.

And then, you know, in the coming months you'll, you'll see it um on a global basis, but A I overviews essentially kind of A I powered summaries out there.

Um And you look to do a search out there.

So um they're throwing kind of more A I capabilities across their search business.

It's something you know, they've clearly been in paid beta mode here, um, over the last couple of months, they're now kind of, you know, go going full gear into it.

And, um, I think that's a, that's a good thing.

I think that kind of, you know, showcases them kind of, again, you know, looking to kind of get more A I enabled out there in a very sensitive area, um, in an area of their business that could potentially be disrupted over the next couple of years.

Um And then, you know, they also kind of announced a number of kind of, you know, model upgrades with um uh with Gemini and, and one, you know, 1.5 as well as flash.

So, um and then, you know, we, we also saw a number of improvements on the android side of things um that they could potentially launch here um as the year.

So, um incremental improvements is how I would kind of look at what alphabet is doing here as far as A I is concerned.

But our view also is kind of what they're doing on the infrastructure side of things, what they announced that Google next last last month, um kind of shows really, they are best in class on that side of things.

So we do like the incremental um improvements as well as their kind of best in class uh infrastructure out there.

I'm just curious, Angelo, you know, we, we also just heard from, uh you know, Sam Altman and his team at Open A I uh um if and when open A I launches their own search product, Angelo and that's been reported on, um, what kind of competitive risk do you think that poses to Google's bread and butter search business?

You know, it's, it's definitely a risk out there.

I mean, we, we did write a note about it yesterday and, you know, it, it's kind of wait and see and we kinda have to see exactly what they roll out with and, and how they roll it out.

Um I think it'll also be interesting to kind of see what Apple has to announce next month.

Um And whether or not, you know, they, they strike a partnership with open A I and how that kind of looks across their ecosystem.

But, um, you know, the way we look at it is alphabet continues to be that old to make consumer um company out there.

And um they are essentially the internet in many respects.

So, could they potentially see some disruption across their business model?

Could they potentially see some share loss?

Of course, they can.

Um And in fact, we know we anticipate it to some extent, but in the same respect, they've also got a number of opportunities across other parts of their business specifically, you know, areas like the cloud.

So, um we do continue to like the story.

We do think they will continue to, you know, be fine on the, the search side of things with some share loss.

But that said, um you know, open A I is a formidable competitor out there.

And um it will be definitely interesting to kind of see what Apple has in store here um with partnerships that they announced, whether it be with, you know, Gemini on, on alphabet side of things or open A I. Um So wait and see, wait and see.

We got a lot of a lot of big tech news coming Angelo.

Thank you so much for joining the show.

Appreciate it.

Alright.

Thanks for having me guys time now for two watch, Wednesday, May 15th starting off on the economy.

The latest consumer price index data is coming out tomorrow morning economist forecasting the April report to rise 4/10 of a percent from March and 3.4% year over year is coming after another higher than expected inflation print today.

Producer prices rising more than expected streak of sticky inflation readings as investors pushing back expectations now of a rate cut to September and moving over to the Federal Reserve.

Speaking of which, we will be getting another round of fed commentary tomorrow from Minneapolis fed President Neil Kashkari and fed Governor Michelle Bowman, fed chair Jay Powell speaking today, he reiterated that he expects inflation to but is not as confident about it as he was in the past.

And finally, we're gonna get a few more earnings tomorrow including Cisco company reporting third quarter earnings after the close analysts expecting Cisco to get a boost in sales from its acquisition of the software company Splunk back in March but also anticipating demand in its core networking businesses to remain weak and that will do it for today's market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to.

And after the closing, I would stay tuned on the other side, we hear from us, Trade representative Catherine T and who spoke to our Brian.

So the about the new China tariffs, the more finance on the other side.