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Stocks close higher, Trump tax cuts: Market Domination Overtime

All three of the major market averages (^GSPC, ^DJI, ^IXIC) ended Monday's session in the green, with the Dow Jones Industrial Average snapping its losing streak and rising by almost half a percent. It continues to fuel the bullish sentiment with multiple financial firms raising their target goal for the S&P 500.

Trump-era tax cuts due to expire in late 2025 could take center stage this election, as both leading candidates — sitting President Joe Biden and former President Donald Trump — say they are willing to extend the deadline.

Eli Lilly and Company (LLY) unveiled a new manufacturing plant in North Carolina on Friday, which, according to the pharmaceutical giant, is expected to alleviate manufacturing bottlenecks for GLP-1 weight-loss drugs in high demand.

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

Video transcript

That's the closing bell on Wall Street.

And now it's market domination over time.

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

We start with where the major averages ended the day.

Pretty steady here for the dow in the last couple of hours of trading here with a gain of about 190 points.

That's a gain of a half of 1%.

The S and P 500 back at a record here up about three quarters today and closing um higher, substantially above 5400 as we talked about earlier, we have a number of Wall Street strategists coming out and raising their targets for the S and P most notably are the highest from ever core.

I SI S Julian Emanuel at 6000.

That's where he is putting the S and P 500.

The NASDAQ also uh closing at a record again today and that makes it, I believe six sessions in a row that we've seen those records.

Here's the 10 day, look at the NASDAQ up 6% in that period of time.

What's interesting to me about today.

Though, however, is that you don't just see participation of a big cap tech.

You also see the equal weight index of the S and P all most keeping pace with the S and P 500 not quite but close up 7/10 of 1%.

And the Russell 2000 people keep, still love small caps even though we have still seen them under perform.

But we still see a lot of folks talking about how they like the small caps, including Mike D at the top of the show from Roth MKM.

That index up about 7/10 of 1% as well.

So couple of things I noticed here, I'm sure Jared noticed a lot more.

Let's go to him now for a closer look.

Well, I like that really interesting observation that you got the rus 2000, the S and P 500 the S and P 500 equal weight all up 7/10 of a percent.

So maybe those concentration issues I was talking about a moment ago, finally disappearing a little bit.

I think they'll come back.

But here's a sector action how we close today.

Consumer discretionary.

That's XL Y that was number one up 1.77%.

Then you have tech, then you have industrials, all three of those over 1%.

And to the downside, we got utilities down 1%.

Then real estate and health care.

Well, and if we take a look at some of the leaders here, you can see a lot of green, not a lot of red.

So what did poorly solar energy that's at tan A TFIBB is biotech and LQD is safe us treasury bonds a little bit boring there.

But you don't have to worry about that.

Today, we got gambling in the top spot up 3% followed by cannabis, New York Fang.

Um That's a lot of these chip stocks that we're talking about.

Bitcoin regional banks participating.

So let me just skip over to the uh semiconductor heat map.

And you can see NVIDIA taking a little bit of a tumble but check out Broadcom to another record high of 5.4%.

Guys, Jared.

Thank you.

Mark is closing the day with gains across the board and new records for the NASDAQ and S and P 500.

It is the 30th new high of the year for the S and P and some may consider taking some cash off the table, but our next guest says it's important to stay invested.

Joining us now is Tim Urbanowicz, innovator, capital management, head of research and investment been strategy, Tim.

Good to see you on set live.

Great to be here with you, Josh.

Let's start here.

Interesting headline in the journal, I want your take on Tim.

It says here's the headline, right?

Investors fear long stretch of calm in markets can't last with stock indexes at record highs.

They say market volatility has been exceptionally low.

What do you make of that, Tim, give me with all this calm.

How nervous should I be if at all?

Well, it's, it's, it's been an incredible run and on average right now we're hitting an all new, all time high every four days on the S and P 500 this year.

That, that is significant.

And this is actually the number one conversation we're having with our advisor right now.

Everybody's getting a little bit nervous even though it's all good.

There's this undercurrent of uh some nervous.

Yeah, it feels like that.

And what we continue to remind our advisers is that the all time high is not a catalyst for a selloff.

Never has been, never will be.

In fact, quite the opposite.

It tends to be a very good time to be invested in the equity market.

If you look at all time highs historically, the average 12 month return that we see after that all time high is right around 12% 77% of the time we're positive.

OK.

So that's significant.

You also tend to see these all time highs, they tend to be clustered together.

So what we're seeing right now every four days is not abnormal.

You look at the stretch from 1989 to 2000 every nine trading days, we saw a new all time high 2013 to 2022 every eight trading days.

So not only is it not a catalyst to be out of the market, right?

You have to be in the market.

It's a good time to be invested.

You gotta stay in despite the concerns.

Ok.

So let's take the other side of that then why should you be in despite, besides just like things tend to go up which they do over, over even.

I mean, you look over the long term as well, stocks go up as we like to say here, kind of tongue in cheek.

But what are the fundamental reasons that people should be still invested?

Well, I think the fundamental reasons are a little bit different.

We'll get to that in a second, I think right now, the next 3 to 4 months, it's all gonna be about this immaculate disinflation narrative.

The pause is a very profitable time to be in equities.

It's all about investor sentiment.

Everybody gets excited.

We it's been all about inflation this whole time.

Once you start to see some relief, once it looks like the fed is gonna get to that cut, it tends to be very profitable.

And I will say that even when the fundamentals are not going to be good, moving forward, if you look at the last four hard landings, there has been a time when short term rates peak where it's always profitable.

Begin.

In fact, the S and P 500 runs an average of 20% after short term rates peak up to 47% in some instances.

So regardless of what's next, regardless of what the fundamentals might look like, regardless of what the economic outcome might be when it's all said and done right now is very important because all investors are always focused on that disinflation narrative.

But it gets a little cloudy after that 3 to 4 month stretch.

Le let me ask you, Tim, um if you want to see over eight equities, is your advice, then just stick with what has been working.

Is that what you know, you're telling clients?

So, so it's large cap, it's tech A II.

I think you have to at, at this point in the in the game for, for a couple of different reasons.

One we don't think the interest rate uh conversation is in the bag like the market has it priced in right now.

So you have to be cautious on that front.

I think a lot of the, the big tech names, mag seven names have been doing very well.

Despite rising interest rates, I look at that subset of securities, you're up 75% since the rate hike cycle starts clearly rising rates, higher rates is not an issue for these names.

So you, you really hedge yourself from that perspective with that risk.

But you also got to remember the other side, we still don't know what the the end game is gonna be when we have inflation coming down.

You have disinflation right.

Companies have been able to keep margins up.

They've been able to keep profits high because they've been increasing prices as prices have been going up.

Now, that narrative is starting to shift and you're gonna have to look for other ways to protect margins, protect revenues.

Right.

And is that, is that layoffs that could start to have an impact on the economy?

So I look at other pockets of this market.

Small caps.

Yeah, they look cheap.

They could be a good place to be if we have this soft landing.

But that's not in the bag.

They get, they're gonna get hit with higher rates, they're gonna get hit if we see the, the economic downturn.

So I think it's much safer to stay in those larger cap names that we've, that we've been seeing working so far.

I mean, we have seen some research that shows that the sort of premium that those names are getting though and that they're earning also may start to shrink here.

Do you think that that is a risk?

I think it's certainly a possibility, longer term, especially when I look at a stock like NVIDIA is the assumption that they're gonna keep a 70% margin moving forward.

That's gonna be very tricky in a society that's not monopolistic.

Right.

So, I do, I do think you have to broaden the horizons a little bit, but in the short term again, where you have those risks on both sides.

We think you gotta stick with what's been working thus far.

And Tim I'll get you this one theme that's bubbling up.

You're noting is clients maybe getting a little nervous.

Another theme I'm just interested in.

We are an election year first debates coming up.

Has that been kind of bubbling up to where our clients asking more about that now.

And if so, what, what's your advice?

What's your guidance?

We're, we're starting to see it pop up more and more typically, when you look at, you know, 2016, 2020 the volatility spikes happens a little later in the year.

So my guess is you're gonna see that bubbling up in the next couple of months.

But regardless, we still have clients asking, obviously, there's gonna be a lot of differences in, in, in, in, in policy.

You look at uh traditional energy companies doing well under uh you know, a Trump administration, uh the the Green Energy Clean Energy Companies really having a little bit more of a difficult time.

What we're encouraging clients to stay focused on right now is really the consistencies of, of what both administrations might look like.

And the one thing that is consistent like we saw over the last two terms of these presidents is that they like to spend money, right?

And, and you know, in our view that is going to keep pressure up on interest rates, uh and, and you need to focused on that gonna be spending, it's gonna help keep the economy going, uh, in our view.

So you gotta focus what's on what's known right now.

And as we get closer we start to see what the polls look like.

You're gonna see more of that uncertainty, that volatility kicking up.

Interesting.

I was gonna ask what could possibly both sides spending money.

That's, that's what they both like the thing.

Yeah.

All right, Tim.

Good to see you.

Thanks for coming into our studio.

I appreciate it.

Well, that's a perfect segue here because as voters prepare for presidential debate season to kick off next week, one thing that will be top of mind for some Americans is expiring tax cuts.

President Joe Biden and former President Donald Trump have both suggested they would extend the deadline for some Americans.

But is that the right move?

Yahoo Finance's, Rick Newman joins us now with more.

Speaking of spending money, Rick, hey guys.

Uh that's right.

The battle is underway over the tax plans and a lot of interest groups are getting in on the act here.

So, uh when uh Trump did those tax cuts in uh uh 2017, they went into effect in 2018, uh the uh those ended up costing about $1.3 trillion.

That's about how much they added to the national debt.

So when Trump did that, the national debt was only around $20 trillion.

It is now 30 ft $33 trillion.

And uh the latest analysis on what would happen to that number if uh all of these, all of these tax cuts stayed in place.

Uh It would uh the national debt, it would add about 4 to $5 trillion more to national debt.

So you can make a pretty coherent argument that we just can't afford to keep all of these tax increases in place.

Now, it's important to break this down because there are a bunch of different things here.

What expires are the tax cuts for individuals, the tax cuts for corporations that was lowering the corporate rate from 35% to 21% and a bunch of other changes, those don't change, that is, that is permanent.

However, President Biden has said, uh since he was running for office in 2019, he would like to see a higher uh corporate tax rate.

So, um, you know, there's gonna, this, this really, really matters, not just who wins the election, but what, but who takes control of Congress uh, in this year's election that is going to determine how this negotiation goes and what happens at the end of 2025 when, uh, when those individual tax cuts expire.

Um That is probably the biggest policy issue looming that we know about and rick sticking with taxes, the IRS aiming to close a loophole used by some.

What, what's the plan there and, and what could come in?

Yeah, this is, this is for certain businesses.

Uh I mean, it's complicated.

We're not going to get into the details, but it has to do with how you depreciate assets.

Uh And if you sort of transfer things from one column to another and you have expensive uh lawyers and accountants who know how to do that.

Uh You end up paying a lot of, a lot less additional tax um for certain types of businesses.

Um Now let's go back uh when Biden signed the uh the so called Inflation Reduction Act in 22 that included $80 billion in new funding for the IRS and 60 billion of that is still there.

They had to give up 20 billion uh on a part of as part of a different deal last year.

But that extra money is for better enforcement.

It's for hiring the experts who can go toe to toe with expensive corporate lawyers and corporate tax accountants and, and, and, and uh hang in there in the courts and fight these battles.

So um the Biden administration wants to make this policy change, but it really takes that extra money, money for the IRS to do it.

So, um if you feel like businesses uh are kind of like putting one over on the government and not paying their so called fair share, I think you want greater enforcement because this is, this is where the tax avoidance really is.

It's not working people who are avoiding paying taxes and there's no sign that the IRS is using that extra money to go after ordinary people who just go to work and have tax taken out of their paycheck.

It's these complicated uh uh corporate structures that have a lot of opportunities for avoiding taxes.

Uh So the IRS is trying to claw back some of that money, Rick Newman.

Thank you, my friend.

Appreciate it guys.

Eli Lilly has unveiled its newest plant which will help believe manufacturing bottlenecks for G LP One.

Drugs take an inside look when market domination overtime returns.

On Friday, Eli Lilly unveiled its newest manufacturing plant in Concord, North Carolina which the company says will help relieve manufacturing bottlenecks for G LP One drugs here with more young finances, Angeli Kamlani, who got a first hand look at the plant, there is a lot of demand for these drugs as we know.

And one of the only limiting factors has been supply, one of the limiting factors has been parts of the supply chain so that yes, the supply chain is the problem.

And so what Eli Lily do is in unveiling this plan.

They're talking about one part of that, which is the injectable pens.

That's one of the key shortages as well as of course, the drug product itself.

So this specific plant is going to be helping with the relief on those injectable pens.

The company expects this plant which is a million plus square feet to be live by early next year.

So 2025.

So this is not even something that we're going to see within the next couple of months.

It's something still as a next year timeline, we did get a chance to look inside.

There are some really interesting things that they sort of stood up.

They're looking at how to make it more efficient faster.

So that includes, you know, robotics as part of the process.

So, automating parts of the process where humans are not necessarily needed, that's one of the areas.

And we do know also that they were able to stand up this building in basically about two years, five years is about the average for a plant like this of this size and magnitude and they were able to do it in two years.

They also doubled the amount of they were investing initially $1 billion increasing it to 2 billion.

So that is a lot about how much the company is really looking to invest in, not just this but other plants as well.

And that's, that's an important part to remember.

This is just one of the plans of about seven total that the company has planned.

And I will let you listen to Edgardo Hernandez who is head of manufacturing at Lily.

Tell you a little bit more about that.

We have announced $18 billion of investment since 2020 today.

I mean, so we're building two facilities here in North Carolina, there's two facilities that we're building in Lebanon and north of our facility in Indianapolis.

Uh we also announced investments in Ireland as well and in Germany uh recently and also, as you probably know, I mean, we announced the acquisition of a facility in the Kenosha County in Wisconsin as well, which is part of a parenteral fleet of facilities.

So as you know, the race to get more manufacturing is one of the problems, not just Eli Lilly but its competitor, Novo is also facing Novo.

We know of course the parent uh holdings company did acquire Catalan or is it trying to acquire Catalan manufacturing plant?

So they're really, you know, double sided efforts to try and get more international manufacturing as well online in order to feed this craze.

All right, thank you for the update on Friday.

The National Association of Real Realtors will release its monthly snapshot of existing us home sales economists, project sales of previously occupied homes, fell in May for the third month in a row.

Spring home buying season off to kind of a sluggish start this year as home shoppers contend with elevated mortgage rates and rising prices and joining us now to discuss is Lance Lambert Rei Club founder and Ceo Lance.

It is good to see you and it's been a bit uh since we spoke to you since I had you on the show, Lance.

So it's good to see you and get your take on all things housing it, it feels lance like some of the same big trends are in play here.

Meaning, you know, it seems like the demand is there.

But you know, on the other hand, affordability is still an issue for a lot of folks.

But you tell me how, how does it look from your perspective?

Yeah, affordability supply, affordability supply.

That's the story.

And we are in one of the periods with the fastest uh affordability strain ever in terms of going from 2021 to now.

That's a historic deterioration in affordability.

And that rate shock at the end going from 3% to 4% to 5% to 6% to 7% really just strained affordability.

And so the market still doesn't have a ton of churn occurring turnover.

Think someone who has a home who's like, you know what, I'm going to sell this and go buy something else.

That's the piece of the market that's been missing.

We we still have the debts, we still have the divorces.

We still have some of the first time home buyers out there struggling but it's that churn that's been missing.

Now, we are starting to see some of that slowly come back into the market because at the end of the day, people can only put off the move so long.

If you have more kids.

If there's a lifestyle change, you have a job in another market, you start to get pulled back into the market and we are starting to see those new listings slowly move back up as the lock in effect eases.

But we're not seeing a response in existing home sales.

We're not seeing that also jump up.

And so what that means that gap there is rising inventory and so the actives in the market are slowly starting to rise and that will mean that in some markets, it could begin to soften price growth and that's needed.

Because in these Northeast markets in the Midwest, there hasn't been much relief at all despite mortgage rates going so high.

And so those markets need inventory to get up.

And in the southeast and pockets of the southwest and around the Gulf, you could see a little bit of price growth and even some slight declines in parts of like Louisiana, Southwest Florida, the condo market in the coastal Florida and patches of Texas.

Well and Lance it seems like we're maybe starting to see some of that already.

Um Liz Anne Saunders over at Schwab flagged some red fin uh data today that showed that 19.2% of the homes for sale in May actually had a price cut, um which is quite an increase in the number of price drops that we have seen.

So, is that a good leading indicator or how would you read those numbers?

Yeah, that, that's not too out of the ordinary, you know, we are at the peak of the spring season.

And so some of the part, people coming into the market at this point, they've just come in with higher expectations than they should have.

And the next several months, you know, some of them, you know, might have to lower their expectations and cut less price a bit to be able to sell if they want to sell before we really get into the fall period of the year.

But are we seeing a huge jump in terms of falling prices across the country?

Not, not really uh not, not yet, you know, we still have year over year home price growth.

Uh It could begin to start to decelerate as inventory continues to push higher.

But in terms of a steep decline in prices, we're not seeing that right now national, although we are seeing some softening and like I said, pockets of Texas areas in Louisiana uh around the Gulf into Southwest Florida, those markets where not only did prices go up a lot, not only did mortgage rates go up a lot like everywhere else, but they're also seeing these home insurance shocks and then condominium market in Florida has another shock, which is that surfside condo collapse back in 2021.

And now there's a bunch of regulatory changes that have happened into the market that's really putting downward pressure on those older existing uh condo buildings down in uh Florida around the globe.

Around the coast.

Lance le, let's say the fed cuts in September.

Um What kind of impact would that have on the 30 year fixed?

Uh Lance, which by the way, according to mortgage news daily, I'm looking here 7.04%.

Yeah.

So a lot of these different groups like Fannie Mae, the Mortgage Bankers Association, Moody's uh Goldman Sachs Morgan Stanley.

They all believe that mortgage rates, the average 30 year fixed mortgage rate is slowly gonna start to roll over closer to 6.5, 6.26 0.3.

If that actually occurs, that could be a bit of an affordability improvement.

Um And that could also bring some of the churn turnover back into the market.

Those people who were, you know, on the sidelines didn't want to give up their three or four for seven maybe as we get down closer to six or if we could get into the high fives, they might be like, you know what it's time to make the move.

Uh But again, that's speculation.

Uh we've been hearing for two years that any time now, you know, within a few months, mortgage rates are going to come back in and it just hasn't happened.

And so far they've been fairly stubborn closer to that uh seven figure Lance always good catching up with you, getting your inside, appreciate it.

And anytime time now for what to watch Tuesday, June 18th us retail sales made coming out in the morning, economists forecasting sales to increase 0.3% is coming after Americans halted their spending in April giving us some more insight on consumers as they continue to battle inflation.

Meantime, outgoing Boeing Ceo Dave Calhoun on the hot scene, he'll be testifying in front of a senate subcomittee on Tuesday focused on the safety culture of the aerospace giant and it follows a new report from the Wall Street Journal saying the company is running into some hurdles finding Calhoun's successor on the front KB.

Home is reporting second quarter earnings after the bell and I expect the home builders to expand home orders by about 20%.

They also be keeping an eye on the company's outlook for gross margins given that volatile rate environment.

And finally, Yahoo finances, Jennifer Shaon Beger will have an exclusive interview with Boston Federal Reserve President Susan Collins.

That will be coming up tomorrow at 4:40 p.m. Eastern.

That'll do it clear today's market domination overtime.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell, but don't go anywhere on the other side of the break.

It's asking for a trend.

I've got you covered for the next half hour with the latest and greatest market moving stories so you can get ahead of the themes affecting your money.

Stay tuned.