ADP jobs data, Apple's WWDC: Wealth!

On Wednesday's episode of Wealth!, host Brad Smith delves into the latest ADP employment data, investment strategies, the world of AI, and more.

The show kicks off with an analysis of the ADP Employment Report, which fell short of expectations. Brad breaks down the report's details, explaining what it measures and its significance in gauging the overall health of the economy. To provide further insights, ADP Chief Economist Nela Richardson shares her perspective on what the report reveals about the current state of the economy.

The focus then shifts to oil prices (CL=F, BZ=F), which saw declines following OPEC+'s decision to extend production cuts. VettaFi's Head of Research Todd Rosenbluth shares his expertise on investing in exchange-traded funds (ETFs) as a means of navigating the volatility in the commodity market.

Looking ahead, the episode explores the highly anticipated Apple (AAPL) Worldwide Developers Conference (WWDC) beginning on June 10. Yahoo Finance's Dan Howley joins the show to discuss the expectations surrounding the conference, particularly in terms of innovation and new AI offerings.

This post was written by Angel Smith.

Video Transcript

Welcome to Wealth everyone.

I'm Brad Smith and this is Yahoo Finance's guide to building your financial footprint.

Our community of experts is gonna give you the resources, the tools, tips and tricks that you need to grow your money.

Hey, on today's show, it's all about the softening in the labor market.

That might be good news for the fed.

But is it good news for you?

The job hunter.

We'll break it all down and A I on your phone on your laptop in your lives.

We dig into how everyday Americans will start to see.

Generative A I show up in our devices plus alternative investments.

We'll hear from an expert about the growing popularity of investing in everything from private debts to res.

Yes.

All right.

All that much more.

It's a big week though, in the jobs market.

By the end of the week, investors will have four reports to digest jolts ad P payrolls, jobless claims and the big jobs report from the Bureau of Labor Statistics.

And today we're evaluating brand new private payroll numbers from the AD P National Employment Report and the reports.

It attempts to foreshadow the BLS non farm payroll data, but there are some key differences here and we wanna break down what that means for you.

So to start AD P is a measure of non farm, private employment in the US.

You've probably heard of AD P. It might even be on your pay stub.

Ad P is the largest human capital management payroll service and collects its data by analyzing how many people were hired according to its processing systems.

Now, the company, they handle payroll for approximately one out of every six workers in the United States according to its 2023 annual report filings and it comes out two days prior to the Bureau of Labor Statistics report.

So it's kind of a precursor of sorts softening the ground a bit in terms of the market's reaction.

Even now, let's take a look at the non farm payrolls as part of the Bureau of Labor Statistics.

The BLS if you don't like to pronounce bureau all the time and their employment situation report non farm payrolls is a measure of people employed in the US, excluding farmers, private households and proprietors among others.

But unlike AD P, it includes government workers.

So this report represents 80% of US workers.

According to the Saint Louis fed.

The report is released the first Friday of every month and where AD P relies on internal payroll data.

The BLS report, it relies on survey data.

Now each month, around 119,000 businesses and government agencies are surveyed for this data.

So which report is more important or holds more weight?

Well, it depends who you ask, but the BLSS tends to be the benchmark for the labor market here and in the trove of data that we've received here today, focusing back on AD P private employers added 152,000 jobs in May.

Now that's a slowdown caused by a sleep, a steep decline in manufacturing.

This according to AD P research institute's monthly National Employment Report and to help us break down the numbers and what it could mean for the labor market as a whole, we couldn't think of a better person to call in than the AD P chief economist Nela Richardson.

Great to see you as always here.

I just wanna get your read in on this month's report.

Hi, Brad, great to be with you.

I really enjoyed the breakdown.

We look at 25 million paychecks every month for this number and what we've seen over the last couple of months uh compared to May is that the last couple of months have been strong May comparatively has been a step down.

So 100 and 52,000 jobs created, as you noted, it was really the good sector that showed up in the loss category, specifically manufacturing and natural resources.

And so we're going to be looking about at this N number carefully going into spring because it's a mixed bag yes, the headline number is solid.

But what we're seeing is weakness in manufacturing, but also weakness in B to B businesses tied to white collar jobs and professional business services and information.

So this is a not a one note jobs market.

There's some weak name trends tied to both consumers and producers that bears attention.

And so with that in mind, there were two interesting nuggets within this report and, and it was where we saw some of the the drawbacks here, you mentioned manufacturing and that as part of the goods producing.

But then it was also in leisure and hospitality where we had seen that continue to be one of the areas that needed to have the biggest rebound because it was hit hardest during the pandemic.

All of these things considered.

It's almost a little bit of a read through on the consumer as well.

And I, I wonder from your perspective what the state of the consumer is as we're kind of pairing some of the jobs data that we're getting over the course of this week.

Well, it's a great question, Brad and let's, let's note that the labor market is one of the main reasons why the consumer has been so resilient uh over the last two years, uh the labor market and that very low unemployment rate below 4%.

This is the longest stretch of below 4% unemployment since the 19 sixties.

And so having that stability under to under grid.

The consumer has really helped prop up spending.

But we saw last week that both consumer incomes and consumer spending dipped down a little bit.

And this week, we're seeing a weakness in a, a stalwart industry when it comes to leisure and hospitality.

It's really made up a lot of the gains over the last two years.

And now we're seeing that gained slow to just 12,000 jobs produced in May.

So, what does that say about the consumer?

It may be saying that the consumer is a little battle weary that the prices are starting to erode some of their purchasing power.

And that's something that we should be watching carefully as we go into the summer months.

Absolutely.

And it will certainly adjust some of my own vacation spending as well.

Uh When we think about what this all means for the Fed, I mean, at this juncture fed chair, Jay Powell, if he wasn't before, he's a household name and people are trying to figure out what the data that's coming out this week on the employment front may signal about the tenor for the Feds discussion.

Do you expect a massive shift?

And what's the trend that they could be taking away from some of the data that's come out this week?

I think that the Federal Reserve has been very patient in terms of getting inflation back down to their 2%.

So I don't expect massive moves from the Fed what I expect is what we've seen thus far, which is caution a little bit of patience uh to see if an inflation can turn down to that 2% benchmark.

What we also produced in the AD P report is pay growth.

And in some sense, that number is even more important than the jobs number because pay and wages are the bridge between the labor market to inflation data.

And so far pay growth has been resilient as well.

It's been at 5% year over year for people who've stayed on the job over the last year.

Um compared to pre panic levels, that's a really robust pay growth.

It means for the fed is if we're not seeing any declines in pay growth, that means that inflation could stick around a little bit longer than they'd like.

And so they really have to walk this line between a solid labor market which we've seen continue to see and any pockets of weakness as well as stronger uh wage growth that could keep inflation sticking around longer.

All right, Nayla Richardson, we got to leave things there.

Ad P chief economist.

Great to see you as always.

Thanks so much.

Thank you.

Take care.

Definitely.

Well, staying with the labor market, the days of hopping jobs might be over 61% of people are committed to staying with their employer this year compared to only 47% in 2022.

This is according to a wtw survey to break down why employees are sticking with their roles.

We've got Yahoo, finance reporter Carrie Hannon here with much more.

Hey, Carrie.

Hey, Brad, great to be here.

Um Yeah, this is quite an about face from what we saw, uh, two years ago and certainly even a year ago, I mean, people are quitting less than, you know, they were during that great resignation.

In fact, they're quitting less than they were even pre panem.

So this is kind of a big shift in the, in the mindset in the marketplace here.

And, and so I, I took a look at what some of the broad themes, what's happening here.

And one of the big reasons is that employees feel anxious and they're looking for job security.

Um They're looking for a place where they, you know, feel that they can, you know, there's some security in the world and what and also during this time of the tight labor market, employers really ramped up their benefits and their pay because frankly, you're really expensive to replace for them, but they paid attention to how they can retain employees and that employees that are and workers who are staying put today are going to benefit from that and they are seeing that they are.

So when you really pull it apart and I should say two other things that that came out is, you know, fewer people feel that they're stuck in jobs.

Now, you know, it's something like one in four, say they feel a little stuck that's down quite a bit.

And a conference boards, uh, survey came out, they show that those who did junk jobs after the pandemic are the least satisfied workers out there.

So when I looked at and I talked to employees and workers and also in this report from wtw the elements that came, that why people say they're OK, staying put is that they're satisfied with their pay, they're satisfied with their health benefits and they're satisfied with their flexible work arrangement.

And let me tell you, Brad, that is still a number one thing that workers are looking for.

And so what can people do to keep moving ahead without job hopping?

Yeah, exactly.

Because I mean, some people will still job hop uh for money.

Don't get me wrong.

If they see a pay raise for 10% or more, they're gonna keep looking.

But what you can do if you're staying put, I think it's really basic uh just good, good management of your career is to look to do projects that really ramp up your skills, that raise your skills.

So that, that really enhances who you are and your value to an employer and a potentially a future employer as well.

The second thing you want to do is to look for projects outside of your own team.

Can you work across different teams, you know, to help others succeed by your talents where you can really be abused and not really raises your love of exposure across the company.

And this is a big ticket thing when it goes to looking for a promotion for a pay raise, those sorts of things.

So remember you're in charge of your career here.

So pay attention.

We're always in sales.

Even if that's not your actual job title, you're selling yourself all the time.

Carrie Han, an excellent breakdown there.

Carrie, appreciate it.

Thank you.

We've got all your action ahead here on wealth.

You're watching Yahoo Finance, we're getting a fresh read on the cautious consumer discount retailer dollar tree disclosed.

It's exploring a potential sale or spin off of family dollar as the company struggles to counter weaker demand amid inflation.

But no matter how many deals discounts or savings initiatives, retailers roll out sometimes it seems like they can't do anything to change shoppers perceptions on prices.

At least that's what our next guest says for more on the consumer and their spending habits.

I'm joined by Sucharita Kalli, who is the Forester research retail analyst, Citta.

Great to see you here with us today first.

I mean, take us into your thesis right now about where the consumer sits.

I mean, it, it was amazing to hear from the AD P chief economist just minutes ago saying that this is a battle weary consumer.

What do you make of them and how um how would you define this consumer.

Yeah, we've had this expression, the vibe session going on for a while where, um, the consumer has been feeling really down about the economy for a long time.

Pretty much.

Um, since inflation has been prevalent, uh, the consumer just hasn't felt good about it.

Um, there's also a political overtone as well that, um, pretty much dates back almost 10 years at this point where whoever does not have their party in the White House, they tend to be very down on the economy.

So in any economy, you're going to have 50% of people just unhappy with the current situation.

So there is that, but the irony is that retail spending is at a record high and consumers for a long time were spending at the level of inflation.

And then some only in recent months with some of the census census data on monthly retail spend has some of that uh spending not exceeded the level of inflation.

So we're seeing that the consumer is finally probably at their saturation point with respect to spending on some of these discretionary goods in particular and even with spending at a record high, as you noted a moment ago, it seems like the consumer is being extremely value conscious about where they're spending, which brands are winning out or which retailers are winning out as that decision making process is being enacted.

Well, certainly Walmart, um and that is a company that tends to do very well in any economy, but certainly in any, in one where they, the consumer confidence is particularly low.

Um You see, even warehouse clubs doing well and that's another element of this economy which is, it's almost, it's k, it has a K type of recovery, K shaped recovery, um, in which there are the affluent consumers who are doing well.

And even though those consumers, like everybody are looking for value, they tend to, to, to really gravitate toward those warehouse clubs.

Um So warehouse clubs are doing pretty well in this economy.

You have a lot of ecommerce players like Amazon, some of the Chinese upstarts like tu that seem to be doing particularly well right now.

So those are some of the winners, you would think the Dollar Channel would be doing well in this kind of an economy and probably when you look at certain store profiles, they probably are.

Uh but at the same time, the dollar channel is incredibly saturated, there are more dollar stores in the United States than just about any format.

And you also have a lot of the dated dated stores that are part of that family dollar chain.

Dollar tree, of course, acquired that could be part of the reason that people are going to Walmart instead.

Wal Mart has just spent a ton of money renovating a lot of its stores.

So it's just a more pleasant store environment that also delivers value.

That's really interesting, you know, especially as we're hearing about some of the spin off intentions that Dollar Tree is talking about with family dollar, which underneath of it, the same store sales, I mean, a fraction of what we had seen in terms of the rise year over year for this most recent quarter.

What do you make of that strategy?

Especially as they've already been closing many of the unprofitable or under performing family Dollar stores and kind of pivoting dollar tree in in certain elements to getting back towards um these prime locations where it is more focused around selling for a dollar and where they can ultimately kind of retain consumer mind share there.

Yeah.

Well, typically um stores sales are heavily dependent on whether or not, of course people want to shop there and every few years, whether it's a decade, sometimes even longer stores need to be renovated because if they are not, um they get very tired, they get dirty.

It's um there, there will be things that literally haven't been touched in that period of time that need to be cleared.

And uh when a store does not make those changes or it's too expensive to make those changes, which it may not because you have to remember.

Um The Family Dollar Chain has been around since the sixties.

So a lot of those locations may just not be great locations anymore.

Retail locations.

Um cha the the success of retail locations changes, geographic centers change as neighborhood are developed.

Um The uh the Dollar Tree at the Dollar Tree brand is, is much newer and um they likely are seeing better comps as a result of just having some of those better locations.

So, so certainly the renovation piece is a big part of it and it sounds like they just don't want to invest right now in some of that renovation.

And that's, that's part of the reason that they're looking to divest.

But the question then is like, well, where are you going to make, make up the difference?

Well, they did purchase um about half of the 99 cent store chain with what's left of it there.

And that could be an interesting one because 99 cent stores actually has a pretty cult following.

Um It exists to support essentially food deserts in a lot of the Southern California and uh south southwester part of the United States.

So, um that could be some, the ways that they, they look to to have a, a different strategy situated just lastly while we have you here, we got a company that's gonna be reporting earnings later on today in Lululemon.

That could be a barometer of to what extent high income is perhaps continuing to spend or middle income might be trading down into uh an Athleta if you will even, what are you gonna be looking out for there?

Well, Lulu's been doing pretty well.

They've been growing double digits.

So I'd be surprised if we didn't see similar numbers today.

They have been one of the retailers that's absolutely been gaining share while the apparel industry overall has struggled.

Um And certainly even with, with, in comparison to other athletic apparel um merchants and brands like Nike Adidas under Armour Lulu's definitely been outperforming them.

So, um so, so, but if we do see anything soft, I do think that it suggests it could be a harbinger of consumer sentiment.

Finally, um you know, kind of bringing down those inflation numbers probably finally to the level that the fed would like um in, in the coming months.

Sua always a pleasure to get some of your insights and analysis.

Soita Kalli, who is the Forester Research retail analyst.

Great to see you.

Thanks Brad.

The much anticipated Apple worldwide developers conference known in your hood is WW DC will kick off on Monday.

The tech giants is expected to highlight A I integration in their products.

So what does that even mean for your iphone or your macbook?

For more?

We bring in our own, Dan Halley here, Dan, what are we expecting?

Yeah, so we're expecting uh uh a slew of kind of A I offerings from Apple across different product lines.

Uh whether that's I Os Mac Os, Ipad Os, maybe watch Os uh Bloomberg's Mark Gurman basically said that they're re uh inventing Siri from the ground of ne uh Apple is actually teamed up with open A I chat, uh chat G BT creator Open A I also Microsoft uh partner on a number of A I initiatives.

So that's a big deal.

Um I think one of the, the main things to, to talk about though is just what this will mean for the average consumer and out of the gate.

Not too much.

I actually, I have a piece that I've written up for this week's tech newsletter which everyone should subscribe to.

Uh basically talking about how people don't purchase their phones for software, they purchased them for screens, batteries, performance camera, the, the narrative that this is gonna drive some kind of sales super cycle.

Uh for Apple, it doesn't really hold weight to me.

I think that uh these A I capabilities will start to move units when people's iphones start to slow down because they can't run those kind of A I capabilities.

But when they do land, uh I think you'll be able to do things like edit your photos uh more easily.

It's something that Google already has available.

Samsung already has available uh transcription features which I mean, Apple absolutely should add.

Uh Google already has one as well.

Uh real time translation uh will be welcome.

That's something that uh you can find on Google's pixel phones as well as Samsung's phones.

So it's gonna be AAA lot along those lines.

I think really honestly, to me, one of the cooler aspects is the, the smart Siri.

Right now, Siri is dumb as a box of rocks.

I just ask it to, you know, get my set a timer, my wife every morning when we're on our, uh, when we walk to the subway, she says, set a timer, set a timer, set a timer, set a timer and eventually it, it works or she just does it manually.

Uh, a smarter sir would be very welcome.

Uh, outside of just checking the weather and setting timers for how long it would take to cook chicken and uh being able to walk.

I mean, it always seems like there's a little bit of a use case curve with some of the new integrations on the software front.

And I, and I say that because I mean, when everyone was putting a home assistant in their homes, it was ok.

I gotta, I gotta say everything possible to the home assistant so that I can either set a timer or I can make sure that I'm just automating my life in the best way possible.

And then that starts to peter out and fizzle a little bit.

I mean, as you just there now and what's the traffic exactly.

And so it's a, it's a larger question of what is the added elements that generative A I is going to give people in terms of productivity with these devices or simplify what they are already trying to do.

And I, I honestly think it's gonna, we're just having a discussion here, folks.

I honestly think it's going to be through what we've already heard in translation.

There's gonna be a lot of translation services that generative A I can potentially make easier.

And if you have a product like the iphone that you've already got paired with your, your airpods or your ear buds, why wouldn't that be another add on feature that generative A I could potentially weave in?

I think you, you said the magic word, it's, it's productivity, right?

I mean, for, for the average user right now, you know, Microsoft has a few features.

They announced that the recall feature where the, the laptop will essentially screenshot everything you're doing and then save.

It sounds cool and might be awesome, especially, you know, if you are looking to research.

So someone was showing me uh the Microsoft unveiling, uh they were looking for a trip to, I don't know, Bermuda, right?

Uh It would screenshot your, your website so then you can just go into search and say, ok, uh What website was that?

Uh It was Bermuda, June, whatever.

And it'll pull up a screenshot of the website and show you exactly what the rate was.

And so you could pick off from where you left off, it'll even launch a link to that site.

There's also the security aspect of that though.

You might not necessarily want everyone seeing what you're doing on a computer.

It also won't uh necessarily block out certain sites, you'll have to block that out on your own.

So if you're loading up maybe your banking site, you're gonna have to block that.

That said it's an interesting feature.

I think that's something along the lines of where we'll start to see consumers kind of get the, the benefit.

But I, I think right now it's, it's largely Wall Street.

That's saying Apple get generative A I on devices.

You don't really hear many people saying, man, I really wish my iphone had generated a I, you hear them saying it'd be cool to have a better camera.

You know, the cameras are great right now.

Don't get me wrong, but they could zoom a little more or, you know, the screen, maybe the screen folded or something like that or the battery lasted longer.

I mean, right now my battery lasts all day.

But these are things that people actually want uh a thinner design.

They just released the new ipad Pro I, I've, and it's like holding AAA piece of loose leaf paper.

It's like, I mean, obviously not exactly, but it feels that thin.

So I think that's what people actually want.

The generative A I stuff is really what Wall Street wants just so they can say, well, Apple is not far behind anymore.

They're part of this conversation and they see a path to monetization on it as well eventually.

Yeah, Dan, thanks so much for breaking this down.

Very big.

Event.

Yeah, I mean, you're getting ready to travel out there.

I'll be flying out there.

Yeah, it'll be up last, get my Wendy's and Chipotle and hold up in my hotel room.

Go in and out.

Ok. That's interesting.

We're, we'll break that down in, uh, the food segment here.

Dan, appreciate it.

Wanna invest in crude oil but worried about the volatility.

We've got you covered, we explore how you can hedge your commodity bets with ETF S right after the break.

Stick with us.

Crude oil hitting a four month low this week after us, crude inventories rise and OPEC has agreed to start tapering its output cuts this year earlier than analysts predicted.

But if you want cash into the crude trade, how can you protect yourself from the commodities volatility?

Joining me now is Todd Rosen Booth who is the verify head of research here in studio as part of the ETF report brought to you by invest QQQ, Todd.

Great to see you in person.

Great to be with you.

All right.

So let's dive into this.

I mean, sig significant moves in the oil market causing a little bit of volatility.

How can ETF investors protect themselves?

So what we find is that more investors are using uh more broadly diversified commodity oriented ETF S as opposed to going directly with oil.

So there's a United States Oil Fund us o and it's quite volatile.

But what we find is that folks are getting the benefits of diversification.

Aberdeen has an ETF.

The ticker is BC I, it's a diversified commodity strategy.

ETF uh it's tracking a Bloomberg Index.

Energy is its largest overall sub segment of commodities, but there's exposure to agriculture, there's exposure to precious metals, there's exposure uh to, to gold more directly.

And that allows folks that may like gold through GLD the spider gold ETF, they mean like energy through us.

O and they get the benefits of diversification.

We're also seeing folks turn towards more of the free cash flow oriented M LP s which are in the energy space.

So the Larian M LP ETF, the ticker is AM LP.

These are companies that sit in the middle of that energy sector that get the benefits of demand some supply, but these are dividend paying stock buyback, uh oriented companies and AM LP gets you the benefits of diversification.

So we're finding that being quite popular this year and you can see how it's performing up on the screen.

Yes, certainly that uh two year chart that we're looking at up by about 10% over that time spent.

Where else in the ETF market should investors look to hedge right now?

Yeah, so we find that folks are also nervous about the equity market.

So we had vet I recently did a survey of financial advisor and this was took place as the stock market was up more than 10% for the year where do they think the market was gonna be?

The S and P 500 was gonna be over the upcoming seven months of the year.

Many folks are nervous.

They're, they're looking for modest gains of about 5% or even down.

And so what we're finding is even the more free cash flow, more broadly diversified ETF S are gaining traction.

So you have Pacer uh cash cows, ETF Cowz that is the leader in that space.

But a newer product from victory shares, the ticker is VFL VFLO is a more growth oriented strategy and and we think heading into 2024 folks are gonna be more bullish on the markets.

And so a growth oriented strategy like that victory shares, one could make sense, free cash flow and and ultimately how that translates into dividends as well.

Dividends have been a thematic strategy for anyone who's trying to figure out how to also hedge against volatility.

I mean, can you just compare those two?

Is it, is it one and the same?

So the free cash flow sets up a company to be able to buy back stock to make uh to increase their dividend payments, but also the opportunity to then invest for the future.

So we are seeing interest in dividend oriented strategies and technology companies are increasingly turning and paying dividends.

So there's a couple of dividend oriented technology focus TDIV and TDV.

Uh one from pro shares, one from first trust these are more growth oriented dividend paying companies.

We think that's an area of focus, but of course, there's the more broadly diversified ones from Vanguard and ishares.

I was taking a look at some facts that data here and, and during the month of April and May, analysts actually increased their EPS estimates and aggregate for the second quarter here.

What happens if we don't see EPS and, and earnings for companies in the second quarter come into the streets expectations and, and how can investors best position themselves for that in the ETF real well?

So that would certainly be increase in market volatility.

And so we're seeing some investors gravitate towards the ETF S that give you the ability to control uh the downside risk.

So Calamos has launched a series of products.

Uh recently, I think CPSM is the S and P 500 version of that strategy you're protecting against the downside.

And then we're also finding interest in some of those covered call oriented ETF S. Uh So spy I is a Neos ETF GP IQ is a Goldman Sachs ETF those give you some income streams while uh giving you equity exposure as well.

Todd Rosen, who was the verify head of research?

Great to see you in person.

Great to be with you.

Thanks a lot.

Well, everyone, solar panels, they're about to get more expensive when President Biden added tariffs on Chinese imports.

He also lifted a two year exemption on tariffs for solar imports from Southeast Asian countries here to break down.

Why this could impact your next solar purchase?

We've got our very own, Akiko Fujita, Ihio, what do we know about this brad, these tariffs on solar imports from Southeast Asia are set to resume tomorrow and they're expected to have a much bigger impact on prices than those tariffs on Chinese solar imports.

Largely because more than 80% of the solar panels that come into the US right now come specifically from four Southeast Asian countries.

We are talking about Cambodia, Malaysia, Thailand and Vietnam.

The region has become a hub for solar manufacturing as the results of solar tariffs, the US has had in place on Chinese imports.

Now remember those duties were first placed on imports 12 years ago during the Obama administration, they ramped up during the Trump years and since then, China has been routing its production to Southeast Asia to avoid the 25% tariff that's been in place.

President Biden, of course, has now increased that to 50%.

And the administration is these duties are necessary to prevent Chinese companies from dumping cheaper goods into the US and to protect the US solar manufacturers.

But solar developers argue that will only hike prices and limit their choice of suppliers.

Now to be clear, the oversupply coming from China has driven down solar panel prices.

They fell nearly 50% globally last year according to the IE.

But the problem is there just other places to source from because China controls more than 70% of global supply.

And this sharp points to why the US hasn't been able to make a dent in market share.

Despite having tariff protection, the US doesn't have the manufacturing capacity in place.

The big orange chunks you see there are what has been announced.

A lot of those announcements have come through since the Ira.

We're talking about roughly $100 billion in investments but many experts, I've spoken to say that build out of the domestic industry is going to take about 5 to 10 years.

The fear is that these tariffs and the higher prices that come with it will slow the transition to renewables at the very time.

The US is trying to accelerate it.

And Brad, here's a number to leave you with, this comes from the Solar Energy Industries Association.

The number of solar installations in the US expected to double by 2030 then triple by 2034.

So they're looking at a significant ramp up.

The question is gonna be where is that supply gonna come from?

And with these new tariffs set to take effect tomorrow, our price is gonna be even higher and customers maybe rethink their options.

Yeah, that could have a huge implication for the wave of targets that companies had set forth to getting through to and through this transition as well here, Akiko excellent reporting and great breakdown.

Akiko Fujita Yo Finances Zone.

Thanks so much.

Coming up, everyone.

Are you looking for some alternative ways to boost your portfolio?

Our next guest has a key insight into alternative investments that's coming up after the break, stocks are up so far this year with the S and P 500 seeing over 10% growth so far, but some investors feel uncertain about the future and therefore are now looking to some alternative investments.

And our next guest has some key insights into the world of alternative investments and is here with some tips for us.

Joining me now we've got Roosevelt Bowman, who is the Bernstein Private Wealth Management Senior Investment strategist.

Great to see you.

Thanks for hopping on with us.

All right.

So first and foremost, what are the specific alternative investments that are seeing the most inflows right now?

Yeah.

Thank you for having me, Brad.

I think when you look at where the biggest opportunity is, it really does come down to the kind of fallout from the bank stress.

So I mean by that is you look at all of what happened last year with banks coming under pressure, further concerns about increased regulatory pressures.

What do they have to do if they shore up their balance sheets?

They also probably have to offload assets that they don't want to.

That opens up a lot of opportunity for us not being a bank, being able to look at these high quality and buy them at steep discounts.

It's really a matter of understanding the dislocation that was created by the sharp rise in interest rates in 2022 and kind of finding value in that volatility.

And the result is that again, we're able to get these high quality assets at really attractive prices going forward.

And I would say mainly we're focused in the credit space, but there's certainly great opportunity in real estate equity and debt as well.

And so what type of liquidity are you seeing in those assets in some of the alternative investments?

Uh uh that you're looking across, it's certainly lower liquidity to your point.

And I think that's where that opportunity and the advantage in terms of the returns that are better than kind of liquid assets, stocks and bonds going forward, that's the payoff for accepting that lower level of liquidity.

You know, you think about real estate, it's a longer time frame, 6 to 8 years.

Private equity can be even longer when it comes to private debt, it can be a little bit shorter where you are seeing distributions a lot faster than maybe the equity investment.

So that certainly for investors, that is the trade off that you are allowing your capital to be tied up for a little bit longer in exchange for those returns that are above your normal stocks and bonds.

And so, in comparison to the normal stocks and bonds, is there kind of a rule of thumb or uh uh a good barometer to really kind of pair it up against, to know what type of return on investment you should be getting in terms of making sure that your investment in, in an alternative is outpacing what the broader market might be seeing.

Absolutely.

It's a fantastic question.

And I think there's two ways of thinking about it.

It's both the level of risk that you're accepting in the liquid investment, but also return, right?

So if you think about an equity investment, private equity, it's a similar profile in terms of what you're looking at you, you're thinking about and moving into an equity investment where you're looking for long term growth.

So you're looking for that premium over time, maybe three or 4% over the stock market.

I think when you look at debt investments where again your income levels may be similar, but your volatility is a lot lower or it's pro providing you with true diversification compared to the rest of your portfolio.

So what I mean by that is if you think about something like private credit where it's often floating rate debt, you're appreciating, you're gonna enjoy appreciation in that strategy as interest rates move higher, that's a nice offset.

So what I would say is your long duration exposure in your equity portfolio where you're likely going to have a number of growth names that have a negative correlation to higher interest rates.

They're gonna come under pressure as we saw in 2022 private credit, having that positive correlation of higher interest rates is a nice true offset provides real diversification in the polio.

So I think it's both a matter of getting returns that are above kind of stocks and bonds, but also lowering the volatility in your portfolio, creating greater efficiency for your overall asset allocation as you were mentioning reeds earlier.

Of course, I mean the the first two words that are uh that make up the acronym are really real estate and real estate comes back to location, location, location as well.

Are there hot markets right now that you're seeing reeds really pile into?

No, I don't think for the most part, I would say the cold market certainly without a doubt is understanding real estate and office space continue to come under considerable pressure, you know, for from our view that continues, but there are really good opportunities when you think about from residential standpoint, multifamily homes in areas where population growth is moving above the national average, where per capita income growth is quite strong and it's near other areas where you're seeing good money migration.

Again, I think work from home has created uh made certain cities really attractive where they weren't before.

I mean, the other part of it too, in terms of real estate, if you was logistics centers, a kind of interesting sector that would probably be called sleepy before is really interesting considering all of the, all of the ecommerce that we're now engaging in that kind of just in time delivery for a lot of what we're buying online.

These logistics centers are becoming more and more important and more valuable from a real estate perspective.

Roosevelt Bowman, who is the Bernstein Private Wealth Management, senior investment strategist.

Great to have you on here with us today.

Thanks so much.

Thanks again, Brad.

Let's turn now to the birth of a very famous duck.

Our very own Michelle Oko sat down with Dan Amos who is the chairman and CEO of insurance company Aflac to discuss the founding of the business as part of our lead this way series.

Take a look, love it or hate it.

That sound is recognized by 90% of Americans according to a Ceo Dan Amos who says he bet his life on that duck.

But why picture it two creatives from an ad agency in central park on a park.

They heard the duck quacking and they heard quack quack Afl.

And they said that sounds like they're saying the name and the other one went no.

And they came back and they said, we'll never do it.

And I said, talking about the company because we were making, not only was it humorous, but you were making fun of your name and I said, we'll absolutely do it.

The risk paid off.

The likability went through the roof afterward.

And so in a matter of three years, we doubled our sales in the United States.

The flag duck is the golden goose.

You can catch the full lead this way.

Interview with Aflac Ceo and Chairman Dan Amos right here on wealth tomorrow at 11 a.m. Eastern.

We've got more wealth on the other side of this short break.

Seems like our streaming bills are just more and more expensive.

Warner Brothers.

Discovery is the latest media company to raise the price of its ad free plans on its streaming service.

Max and consumers not thrilled.

Yahoo, finance senior reporter, Alexandra Canal has the details on this one.

Hey, Alex.

Hey, Brad.

Yes.

Unfortunately for consumers, it's getting more and more expensive to watch your favorite shows.

Max hiking its ad free offerings by $1 a month.

So that means the monthly ad free plan.

It's now going to cost 699 as opposed to the prior 1599.

And then the ultimate A free T this is A T that allows for concurrent streams and four K options that's also going to increase by $1 to 2099 a month.

The A support plan though, that's going to remain the same at 999.

And this is something we've seen across the board is more companies are trying to lure people to their new at supported offerings and a push for not only profitability but also top line growth.

Now, whats interesting about the timing of all these.

Hi is that Max is raising prices just ahead of the launch of the second season of House of The Dragon.

This is much anticipated.

A lot of consumers are frustrated about this.

But sources have told me that the timing here is very important.

They want to make sure they're raising prices at a point where they know consumers aren't going to flee and leave the platform.

We also recently saw Comcast Peacock announced price hikes.

Those price hikes are actually going to hit in July right before the Olympics.

So again, very strategic price there.

And Yahoo finance, we wanted to get a sense of how consumers were feeling about all the price hikes and all of their streaming services that they subscribe to.

So we asked them with all these recent changes.

How do you spend on streaming services today?

No surprise, the majority of them are cutting some out.

But I was interested to see that in second place, some people are just paying more and I think that speaks to the power of content and certain streamers just having that sticky content to keep consumers on the platform.

Next is opting for a tiers and then last is buying bundles and I wonder what this means for the future of some of those sports specific streaming bundles and some of those other bundled announcements that we have coming up.

Yeah, I mean, this is especially frustrating for me ahead of the Olympics where, I mean, because it's in Paris this year, perhaps a little bit easier to watch than if it was in Tokyo.

Like we had, you know, in years past, had to really figure out the time differences and changes and when I could watch basketball, so all these things considered, has the service changed so much so that it is worth the extra money.

Are there any incremental improvements that they're making to these services?

I think when it comes to how all of these services are pricing, it all comes down to content and they're going to raise prices if they're acquiring content that they think is worth it and they think consumers want.

So you have to remember that the content is constantly changing on these platforms.

So that means the price is going to change as well.

So if you have something like the Olympics, this event coverage and then on top of that, you have maybe more repeat customers coming for those shows and series that you want sticking within the ecosystem a little longer that may provide some more value add for consumers, hence the price increases.

But we do know there's a ceiling on this.

We know there's a limit where consumers just don't want to pay any longer.

And I wonder what that means when it comes to future edition and future price hikes down the line.

As long as I get the commentary from Leslie Jones on the Olympics.

I'm just fine.

That's, that's what I need.

That's what all of us need.

I think we need to see Kevin Hart and Snoop Dogg team up again once again.

Yeah, thanks so much.

Appreciate it.

Well, everyone, Boeing's starliner crew launched its first manned space mission out of Cape Canaveral Florida this morning.

Now, this launch had two train NASA astronauts aboard the rocket.

But the future many space companies are ho hoping for here is one where everyday people like you and me can buy a ticket, head off to space as a tourist.

But how much should that cost here?

With some of the info?

We've got our very own and that's free.

I say free.

And what do you say?

Oh yeah, Brad.

Well, listen, I do not doubt at all that decades to come from.

Now we are going to be seeing these flights a lot cheaper, a lot more accessible and mankind will be going to space and Mars.

But that's a different story right now.

We want to know how much does it cost?

Look virgin galactic is the one that really has the most transparency as far as what their tickets cost uh for commercial, for flights, for everyday tourists.

So we remember when they first were launching uh they had announced tickets at around $250,000 or so.

Then they announced that their prices were going up to $450,000.

They have a backlog of about 600 people at that lower price point that will be flying for 450.

But now they are aiming to do 125 flights a year to fly 750 astronauts per year.

So they recently announced a price hike to $600,000 per ticket.

That's for Virgin Galactic blue origin has not said how much their ticket cost in 2021.

They auctioned off the first ticket where they were flying with Jeff Bezos that was auctioned off for 28 million.

There are some who had reportedly paid about a million dollars.

Then you had William Shatner that went on that flight.

Look, some of these tickets also remember that they're almost for publicity as well.

So they may be free for a lot of people who are these stars that are going on these uh these spacecraft and then you have space X that had its inspiration for that was orbital and that was with four people that were on board and that was for, that was to raise money for S Jude's children's hospital.

Now, does spacex want to get into the commercial flights for everyday people?

It's we're not sure yet that that's our focal point.

They have so many other projects.

They have so many that are being funded by NASA and are doing so much with governments et cetera that, that it's unclear whether they, they'll take that route but certainly you are going to see more of this and even space hospitality.

I was just talking to somebody about that about being up in space having a cocktail.

I mean, we have sent so many people to the ISS, why not be able to send uh paying customers to a place where they can see the stars and look at the earth?

Yeah, indeed.

All right.

Well, that one of the wealthiest forms of tourism here.

Uh, Yahoo Finance's own an ass for a closing out wealth here on a strong note.

Thanks so much ans.

Appreciate it.

Thank you.

Well, that's it for wealth, everyone.

I'm Brad Smith.

Thanks so much for watching.

You can stay tuned for market domination with Julie Hyman and Josh Lipton.

That's coming up 3 p.m. eastern time.

You do not want to miss it.