Biden and US Steel, green investing outlook: Market Domination

Will stocks be able to turn their luck around in the second trading day of September? Market Domination anchors Julie Hyman and Josh Lipton cover leading market trends and investor narratives in the final trading hour of Wednesday, September 4.

Morningstar chief US market strategist David Sekera joins the program to elaborate on why he would be "very concerned" if the Federal Reserve were to initiate interest rate cuts by easing 50 basis points in September.

Citi US equity strategist Drew Pettit makes a case for how lower interest rates could create a more hospitable environment for expansions in clean energy infrastructure and green investing.

Later, Yahoo Finance senior retail reporter Brooke DiPalma sits down with Goldman Sachs Vice President Brooke Roach at the 31st Annual Goldman Sachs Global Retailing Conference to talk about the state of the US consumer and retail chains.

Other top trending stocks on the Yahoo Finance platform include Lyft (LYFT), Dollar Tree (DLTR), Nasdaq (NDAQ), Astera Labs (ALAB), and Verizon (VZ) and Frontier Communications Parent (FYBR).

This post was written by Luke Carberry Mogan.

Video Transcript

Hello and welcome to market domination.

I'm Julie High and that just flipped in live from our New York City headquarters.

We are giving you the ultimate investing playbook to help tune out the noise and make the right move for your money.

And here's your headline blitz getting up to speed one hour for the closing bell rings on Wall Street.

I want to see a retest specifically for NVIDIA of a break below $100 a share because the last time that happened, the stock found some support and very quickly bounced back to 130.

So it was threatening a all time high.

So I'd like to see a successful retest of those lows that were sent just a month ago.

We're looking at this as just another sign of normalization, but you sort of have to look at this critically as well that you don't want normalization to turn into deterioration where you're getting into this self propelled feedback loop where the labor market starts to just get worse and worse.

We've got plenty of other labor market data for the market to pay attention to this week.

With that jobs report on Friday and I think the market is quickly shifted from hyper focus on inflation to hyper focus on the labor market.

So that's really what's to watch for this week.

We got an hour ago until the market close.

Let's take a look at the mo move over the market today because even though right now you're not seeing that much movement, we've had a pretty decent range today.

Uh The dow earlier rising now down about 79 points about 2/10 of 1%.

And that is mirrored in the other major averages.

The S and P now down about 4/10 as is the NASDAQ couple of big things to consider today for investors on the economic front, we got the jolt status this morning, the job openings and labor turnover survey.

Um and that showing uh the lowest number of job openings since 2021.

Then we also got the Beige book and the Beige book.

Not great in terms of sentiment.

Yeah, I just wonder Julie if you know, you look at the economic data we gotten this week.

So manufacturing jolts, you mentioned the Fed's beige books, the number of districts uh reporting flat or declining activity jumped right 5 to 9.

I I do wonder whether maybe that's just weighing on growth concerns starting to bubble up again.

Obviously, you had them about a month ago, there was raw panic in the market.

Then everybody kinda took a deep breath and regrouped the market moves higher.

But I just wonder if they're starting to bubble up again and of course, all with the big jobs report on tap.

Yeah, it definitely feels that way.

Right.

Yesterday, we talked to City Chief, us, economist Andrew Hollenhorst.

He said he expects a much lower addition of jobs when we get the Friday jobs numbers for August.

And he thinks the fed is gonna have to do a half a percentage point cut when it of course, makes its decision in a couple of weeks here.

If you look at what's going on in yields, this is really the tail that's wagging the equity dog today it seems like, right, you've got this drop in yields happening after that economic data today.

A drop of about seven basis points, 3.78% just to put that in a little bit more perspective here.

You see it coming to that lower end of the range where it had been.

So that's part of the story today, the economic data and then we gotta talk about what's going on with the tech trade today as well, which earlier in the day looked like a bounce back from yesterday's selling.

Yeah, I mean, I, I, I I I'm really glued down on the video, which is interesting because we did see a reversal there.

It had calmed down and obviously dropped about 10% yesterday off those Bloomberg headlines.

I, I think investors um in part what's going on there.

Obviously, I think they're still trying to think through those headlines.

I thought it was really interesting.

We had, we had uh tech analyst Patrick Moorhead on Yahoo Finance Today kind of helping us think through.

It could mean I I thought his comments were, were really fascinated in part he was saying, listen, antitrust um allegations and actions tend to be infectious.

In his words, they tend to spread.

He was thinking, you know, you will see this spread to other jurisdictions including when he called out Europe, Taiwan and Korea.

Yeah, and spreading maybe among some of the other semiconductor companies as well.

Because after all that report said the Department of Justice is not just looking into NVIDIA, it's an NVIDIA and other companies.

One more thing I just want to point out as we look at a lot of red among the large caps here meta is not down but also look at Tesla up about 4% today.

There's not any particular catalyst or headline, but it's help better than the rest of that large cap tech after falling yesterday.

And then there is another big stock that we got to watch a developing story that we are monitoring here and that has to do with us steel.

Now, according to a report today in the Washington Post, President Biden is preparing to block Nippon Steel's takeover of us steel and you can see a big decline in the shares when those headlines coming out here.

Um Remember Nippon had agreed to, to buy us steel for $14.9 billion.

And we have various regulatory bodies examining that the committee on foreign investment in the United States.

And as Cius has been examining, it has not yet presented its findings to the administration.

But according to these reports, Biden is going to come out and say he doesn't, he, he's going to try and block this.

Yeah, we had al root from Barons on the show who's been all over this story.

And I I thought al's take was interesting politically.

He said, you know, Biden Harris Trump all opposed this for the very good reason that United Steel Workers oppose the deal.

And they would all very much like to carry the swing state of Pennsylvania in al's opinion though, you can make the case is good politics.

He came on the show and said bad business.

You know, he crunched the numbers and said, listen at the end of the day, us steel needs the money nippon would offer.

So it'll be interesting how that shakes out.

Look at that reaction.

And in fact, the CEO of us Steel telling the Wall Street Journal in an interview that the company is gonna have to close plants if the deal doesn't happen.

So will there be uh you know, I it's hard to say, would there be a greater decrease in workers if the deal happened or if the deal doesn't happen.

I guess there's no way of knowing the counterfactual but all of this at play as we talk about to watch stocks moving on lower today following that jolts data as investors ramp up rate cut bets for more on the latest market moves.

Let's welcome in David.

Sara Morningstar, chief us market strategist, David.

It is good to see.

You wanna start on a theme.

I I was just talking about with Julie there and about the economic data we're getting um David this week.

So manufacturing and jolts we get just got the the Feds Beige book, David, it showed, you know, the number of districts reporting flat or declining activity actually jumped from 5 to 9.

It does feel David like growth concerns starting to bubble up again.

I wonder if you share those concerns.

Exactly.

It does feel a lot like the beginning of August, you know, at this point in time.

Now overall, we do think the stock market here is pretty fully valued.

In fact, it's actually a couple percent above a composite of our fair values.

So not necessarily surprised to see a little bit of choppiness, a little bit of a pullback here, you know, in the short term.

And as you mentioned, I think the market right now is just trying to digest a slowing rate of economic growth.

Now, in our view, it's not necessarily surprising we've been in the soft landing camp for quite a while.

We're actually looking for GDP in the first quarter.

Uh, and I'm sorry, in this current quarter here, you know, to slow down to 1.7% we expect that to slow sequentially through the end of the year, getting all the way down to 1.2% in the fourth quarter, going to 1.1% in the first quarter and then just slowly starting to re accelerate thereafter.

So, from our point view, when I look at the macroeconomics out there, I think the tail winds right now are pretty much offsetting the headwinds.

So that's why I would still consider from a market point of view to stay at a market rate depending on your portfolio allocations.

From the tail wind point of view.

We expect inflation to continue to keep moderating from here.

We're looking for long term interest rates to be really on a multi year decline and then of course, for the FED to start easing monetary policy.

So really the only headwind is that slowing rate of economic growth um could be a big headwind though David, I guess depending on how much it's slowing, right?

So I, I did see some commentary today that the fed, even before Friday's Jobs report would have enough material.

Given some of the economic data, we've already gotten to cut rates by a half percentage point if they do that.

What do you see as the sort of equity market reaction I'd actually be very concerned if they cut by 50 basis points, you know, if they cut by 50 I think that actually could send the wrong signal to the marketplace.

You know, of course, the FED has been just laser focused on inflation for the past two years now for them to come out with a 50 basis point cut.

It's really going to tell the market that they're actually much more concerned about the potential for a recession in the near term than they are about inflation.

You know, in that case, I think, instead of, you know, the market actually viewing that positively, I think the market would look at that negatively and we could actually see and uh see stock sell off in that case.

And so David, so you wouldn't be looking for a super size 50 you'd be looking for more traditional 25.

How do you think the market would respond to 25?

And what's the pace of cuts you would expect after that?

I think at this point, the markets fully baked in the 25 basis point cut.

So I don't really think there's going to be a huge market reaction to the Federal Reserve.

We're looking at 25 basis point cuts, you know, each of the meetings, you know, thereafter.

So we're looking at, you know, by the end of next year, the fed to get down to about 3 to 3 and a quarter percent range by the end of 2025.

And even just as importantly, we are looking for a multi year period of long term interest rates coming down.

So for the 10 year, we're currently forecasting the tenure to get to 3.5% by the end of this year and then falling to 3% by the end of 2026.

So I think that will help, you know, propel the market, give the market, you know, good tailwind here over the next, you know, call it 15 months or so.

Um, and David to dig a little bit more into your strategy, which you alluded to earlier, there are two groups that you are underweight and that I wanna dig into one is technology and the other is utilities.

And I mentioned them both in the same breath because they've sort of gone hand in hand very unusually this year.

Uh But you think it's time to, to pull back on those two groups.

Exactly.

So with technology, I just think that too many of these A I stocks ran, you know, too far, too fast here in the short term, they've definitely gotten to be overextended and in many cases, you know, overvalued in our mind.

So in that sector, you know, I'd look to take profits out of there, you know, look for some of the other names that have lagged behind, but the utility sector is actually in my mind even more interesting, you know, from a negative point of view today, you know, that sector, I mean, it was just crashing last fall when interest rates were going up.

In fact, we noted that, you know, the utility sector on a valuation basis was pretty much as undervalued according to our valuations as they had been over the past decade.

But that sector is up, you know, about 22% year to date, you know, even more than that, you know, off of those lows from last October.

So at this point, I think it's time to move, you know, to an underweight there.

You know, the big story this year has been that utilities really are kind of that, you know, second derivative on A I, of course, electricity demand will be increasing as more A I comes out there because A I takes many times more power to run than traditional computing.

But I'm just thinking right now, if you're buying utilities based on that theme, we think you're 10 months too late to the trade.

So now is a good time to be making some swaps getting out of those overvalued utilities like, you know, Southern Company and Dominion Energy two stocks that we rate, you know, with two stars and look for the more undervalued ones out there like evergy, you know, that's a four star rated stock trades at an 8% discount.

Uh And nice source would be another one that's a four star rated stock trades at a 5% discount.

How about small caps, David?

They look interesting to you here.

Exactly.

You know, small caps when we look at them relative to the overall market are trading at, you know, what we think are some of the lowest valuations on a relative basis, you know, that we've seen over the past decade.

In fact, right now, the small cap category is trading at about 16% discount to a composite of our fair value use.

So I think there's a lot of opportunity, you know, in small caps plus just even away from kind of that, you know, fundamental basis, you know, small caps historically have traded, you know, very well in times when interest rates are declining and the fed is easing.

So I think we're gonna have some good positive technicals there as well.

David, thanks so much.

Good to see you.

All right.

Well, thank you.

The Philadelphia Fed starting its search to replace President Patrick Harker.

Yahoo Finance's Jennifer Schomer has the details for us.

Hi, Jess.

Good afternoon, Julie, great to see you.

That's right.

The Philadelphia Federal Reserve announcing today that is launching a search for a new president as its current chief, Patrick Harker is set to retire next summer.

Parker who's been at the helm of the Philly Fed since 2015 is slated to exit the regional Fed bank on June 30th 2020 five Central Bank rules require that regional Fed presidents retire when they hit age 65.

Now, Harker told me he expects the central bank to begin cutting rates by 25 basis points this month as the central bank begins to ease monetary policy and that he would be open to a larger cut.

If the labor market deteriorates suddenly.

If we saw a substantial change in the labor market to the downside, then I would be open to a larger cut but not right.

Now.

Parker says the labor market has often but it's still strong.

Atlanta that President Raphael Bostic shares that sentiment.

Saying earlier today, he believes the fed needs to start cutting rates before inflation hits 2% lest it disrupt the job market.

And speaking of the job market, the Fed bee book release this afternoon, a compilation of anecdotal evidence across the Federal Reserve's 12 bank districts found that during August employment levels were steady overall but that there were isolated reports that firms filled only necessary positions reduced hours and shifts or lowered overall employment levels reductions.

Still reports of layoffs remained rare.

Now, guys also of note, consumer spending fell in most districts during the month of August after holding it steady in July.

So perhaps adding to that narrative of a cooling economy back to you.

Thanks Jennifer.

Appreciate it.

We're just getting started here on market domination.

Coming up.

Shares of dollar tree sinking on the back of its latest earnings report.

We'll check in on some of the stocks as well.

As that stock, as well as other trending thinkers on the other side, they too much more market domination still to come time now for a look at some of the day trending tickers.

Verizon is where we begin reportedly in advance talks to acquire frontier communications.

That's according to the Wall Street Journal, an announcement of a deal could potentially come this week frontier worth over $7 billion in market cap and even more after this game that we're seeing today here.

Um and Verizon basically would be looking to extend its broadband um business, its broadband access here because Frontier has about three million broadband customers.

Yeah, so Bloomberg reporting this is part of that kind of that to your point.

You kind of a broader trend in the space demand for data use da data usage expected to grow.

So telecom providers looking to kind of bulk up, strengthen their broadband offerings.

Bloomberg also, which you know, we broke the story knowing that frontier has been facing pressure from activist investor, Jana partners to improve returns.

So um had an oh, sorry, sorry that that's my mistake.

The journal had this story um and matched it up, had a an internal view of its business earlier this year.

Um But you can see that's jumping Verizon or a bit of pressure.

Yeah.

Frontier, by the way, uh exited bankruptcy a couple of years ago, it filed for bankruptcy in 2020.

It came out of bankruptcy in 2021.

Um And now this latest move here, it's been one of the smaller kind of telecom companies.

Uh Let's talk about Dollar Tree as well.

Those shares are sinking sharply lowered its full year guidance, the discount retailer noting macro pressures on the purchasing behavior of Dollar Tree's middle and higher income con consumers.

And that is what is new here because, you know, the sort of weakness among lower income consumers has been well known dollar tree now highlighting that it is seeing that weakness in the middle and upper income consumers.

But you know, that's, that's different.

That's one of the things behind the cut to the forecast here and one of the reasons stock is down so much.

Yeah, there's when you talk about these names, I mean, they, they do cater to lower income folks and we know they've been under pressure, inflation and rates.

Um So there's the mac where there's also the competition.

I mean, you could think of names like Walmart um in terms of what is so, you know, obviously, which is seems to be firing on all cylinders in terms of what is ahead.

Dollar tree is reviewing strategic options for family dollar, but it didn't sound like we we had any updates on that process and just quickly here, analysts got kind of colorful on this one, Scott uh Cicarelli over at uh Truist, for example, he says investors expected a mess and that's what they got.

But at the same time, he thinks the bad news is largely priced in and he's still a buy on that name.

Interesting.

All right, move on to another name here.

Lyft is planning to further cut, cut down on its workforce as part of restructuring to cut cost.

The ride sharing company will also eliminate dock bikes and scooters.

Um So company saying Julie, this is an effort to align strategic priorities and to reduce operating costs.

Uh You know, we recently spoke with Lo David Richer, sounded very optimistic, confident from a marketplace perspective.

Remember he told, just feels super super strong his words, but uh obviously challenges stock is down nearly 25% this year.

Yeah, so trying to get smaller here.

Uh The company apparently is still gonna have E bikes.

Um but not those uh dock list bikes and scooters.

Uh So that's where it's sort of focusing on here.

Um You know, they had about 3000 employees at the end of last year.

So cutting um a a decent number 1% of them here, you know, with the small workforce, it seems bigger, I guess by comparison.

Yeah, mo most on the street are on the sidelines and you'll, you'll hear a lot of them say is, you know, surpri no surprise after a move like that, they think valuation is reasonable.

But I think, you know, you'll tell clients they still think that the kind of key for this company is, can they sustain top line growth still ramp profitability at the same time and they, they're waiting for more proof points.

Um Let's talk about Hormel also shares their sliding after trimmed its full year sales outlook.

Uh and that missed analysts expectations here.

Uh Looking into the outlook here, the company says commodity market conditions are one of the reasons that they are cutting the forecast continued softness in their contract manufacturing business within retail segment.

In other words, them making processed meat and other foods for other brands.

And then also they've had some problems at um one of their plants in Virginia um that they now have resolved, but there are some disruptions related to that.

Also per Dow Jones, the company Julia's deal with lower prices for whole bird turkeys this year.

I don't know if you realize that I did not, I did not in fact realize that among others.

And the co saying the expectation is that pressure on a whole bird prices continues the end of the year stock in the red this year and over the last 12 years, you a spam guy, not like they make.

Spam is another, that's another brand and Skippy planters, the whole thing.

Great planters.

That's the, that's the uh peanut plant in Virginia.

That is problematic.

All right, let's talk about NVIDIA as well.

NVIDIA is extending its losses after suffering the largest ever one day market capitalization drop yesterday.

Adding on to recent pressures the US Justice Department investigation into the chip giant, the DOJ reportedly sending subpoenas to NVIDIA in the escalating antitrust probe.

So is it time to change the investing mindset in tech and in chip specifically here to discuss Matt Stuckey Northwestern Mutual Wealth Management chief portfolio manager, Matt, thanks for being here.

How are you thinking about NVIDIA and that tech trade right now?

Look right now, I think we're in a period of market volatility.

I think there's a lot of monetary cross currents going on investors, questioning the overall kind of health of the economy and kind of what growth risks are building right now and, and let's face it, NVIDIA is not a defensive stock.

Um And so, you know, all those factors to me uh equate out to a picture of continued volatility around something like the video, which has a be of 1.7.

And so those those mover moves or outsized as relates to the individual name here.

So are there ways to play the A I trade map that, that you like that are less volatile?

Unfortunately, I don't think that there are ways to play it to get the specific A I representation that NVIDIA represents here.

Uh NVIDIA dominates the infrastructure layer of, of A I today and that's the action that's playing out in terms of investment so far, eventually, that should transform into platform and eventually applications that continue to fuel the investment and ecosystem surrounding A I but we're just not there yet.

So if you want exposure to um the best of the best is relates to A I equities, the video continues to dominate that trade.

Now, I think you have to have a risk appetite that equates to what the ride in the video is likely to be.

Look, we've been investors in NVIDIA since Q one of 2019 and the backs and forth in the name are very similar to other semiconductor positions that we've held in our portfolio over that period of time.

Um You have to have a risk appetite that matches um the ongoing volatility of the stocks that you own.

And NVIDIA is one of those that's a higher risk name.

Um Let's broaden it out to the rest of tech a little bit here.

Are you also sort of looking, you, you know, as you said, NVIDIA is the one that's sort of viewed as best in class in A I specifically right now?

But are you also sticking with, for those with the high risk appetite, some of the other large cap tech as well?

You know, I I think collectively, if you look at some of the largest technology names that are out there, those have really been carrying the water so far this year in the S and P 500 from a fundamental perspective and from a return perspective.

And so if you look at just what the market expects the S and P 500 to earn this year.

Uh, it's roughly been about flat throughout the year just in terms of what the earnings level should be.

But if you take out the top six names of the S and P 500 that number would be about 8% lower.

Uh, another way to put it is if you only invested in the top six names, the earnings expectations where we sit today for the county or 2024 are 30% higher.

And so there's a good fundamental story there.

Uh The problem you run in to is the ongoing kind of valuation uh concerns that are starting to bubble up are these names are simply getting too expensive relative to the rest of the market.

And I think that's where we need to have some debate around whether or not the ongoing feasibility of of the valuation support is going to continue to be there.

If the growth outlook were to roll over for the US economy, Matt, we've talked today a lot uh including with another strategist about whether growth concerns are bubbling up, man.

Given what we see in man, manufacturing activity jolts just now with the feds beige book.

Just to get your perspective on that, you know, with the, with so much talk about what the labor market is doing.

I think I would just remind your viewers that focusing on the labor market.

It's a good thing to do.

That.

But let's just not forget that that's a lagging indicator of the health of the economy and so weaknesses that are bubbling up in the, in the labor markets are probably telling us that the leading indicators of the economy are, are continuing to compress further down into contraction territory.

And if you look at the conference board leaning economic indicators as a, as a reference point for that, we're in, in a, in a drawdown territory that we've only been in four other times in us, economic history, post world war two.

So, you know, there are, there are some areas that we would say, let's be a little bit cautious here as it relates to the Ford Avo on the macro.

Uh and the labor market is, is again a lagging indicator and it's finally starting to slow down quite a bit.

Matt, great to have you on the show today.

Thanks for joining us, coming up.

Corner city, a new era of green energy is here.

We're gonna break it down with a strategist on the other side, stick around much more market domination, solar costs.

A new era of green energy is here according to city investors may find attractive opportunities for the taking amid a quote focus on cash generation and visible visible profitability here to break down the green investing landscape.

We've got city us equity strategist Drew.

Pettit Drew.

It's good to see you as always.

I guess my first question to you is why now, right, we have seen a pull back a lot of these so called green names uh over the past year or so.

Do you think now is uh is that because is that why I should say you guys are coming in and sort of taking another look at this uh area?

So looking at stocks just being down is probably not a good reason to think about reengaging them.

So it's it's all about the catalyst.

So how do we get performance to reverse?

I think we're nearing an election.

I think we're pricing out some tail risk fears there and we're nearing a fed pivot point.

So lower rates should help kind of green and clean again.

But then on top of that, so those are kind of two, let's call it short term catalysts.

But I do think longer term, we actually see a fundamental inflection in these stocks where growth should re accelerate and growth should outpace out of the broader market.

So short term catalyst to get us back in longer term catalyst for some sustainability of performance of these names.

Drew.

When you talk about green investing and green stocks, how do you define those terms?

Drew?

What are the variables?

So for us, it's not about being necessarily a disruptor or a pure play.

I don't need to be, let's call it like a solar panel company.

We are looking for companies across the value chain that helps support, let's call it cleaner use of energy, better use of resources.

So to us, we want a broader definition because we're not just gonna go from where we are today to this ultimate change in the future without some type of transition phase in between.

And I think that's where there's a lot of opportunity to invest right now.

And, and I, I think that's what a lot of people miss when they think about greed.

And so uh when you uh open that aperture, so to speak, what other types of criteria do you incorporate?

What other types of industries perhaps do you incorporate?

So I actually think industrials play a huge part of the green transition.

So when you think about all of the processes to make the things that we use every day, we need to change manufacturing processes, we need to make those processes better so we can use our resources effectively.

So industrials are a massive part of the green revolution.

It's not just tech, it's not just EVs it's not just solar, there's nuclear.

I would say there's energy efficiency and even thinking about a resource like water, which I feel like we didn't talk a lot about in the past cycle.

Drew, you mentioned politics.

I wanna just dig into that a little bit more.

How much does it matter?

Uh Who's in the White House?

Oh, next question.

No, I'm teasing.

Um Honestly, I everyone thinks a damn being in the White House is going to be really great for Green.

The problem is in, in that scenario to us, you probably don't have a democratic sweep and even if you do, I think deficit spending gets really difficult.

So to us, yeah, green might like a little bit more blue in the White House or in politics.

But honestly, on the red side of things, I think if you make deregulation pushes more aggressive, that actually does support some areas of green like nuclear.

And if you look at the Ira, for example, that's benefiting a lot of red districts.

So to us, I think some of the fears politically are overblown for Green, but in but honestly, some of the tail risks are coming out.

So again, I I think supportive after we get kind of past that hurdle in November and Drew just to be clear here when you say, and this has been widely reported that some of those aspects of the Ira have been beneficial to Red states.

Does that mean you don't think that those parts of the IRA are likely to be rolled back under any kind of election scenario?

No, we we don't think so when it comes back to at the end of the day, it it's not just the end pure play clean energy companies that benefit from this, it's the industrial complex.

So no, we don't think Ira S get rolled back.

Maybe it gets de emphasized in the media and maybe they don't talk about it as much, but uh again, not in our base case.

So I don't think things are going to be as bad as some people might think in that scenario.

Drew always good to have you join us.

Thanks so much.

Oh, thanks for having me.

All right.

Now, let's get to some calls of the day.

B of A security is giving NASDAQ a double upgrade Julie from underperformed to buy the notes, sign profit acceleration value expansion.

The much talked about but very rare, not that rare but kind of rare, double upgrade.

The target uh is 90 argument.

Basically, you're saying the stocks cheap uh with the solution segment now compromising 78% of revenues and growing.

They say some of the parts valuation case is increasingly compelling.

Also they like what they see in terms of the pipeline of IP OS.

Yeah, a different way to say this is it's still valued like an exchange, but it's mostly no longer an exchange or at least it doesn't get most of its revenues from the exchange business.

It says just 19% of this year's estimated revenue comes from trading, but it's valued like other types of exchanges.

And to your point, it gets a lot of its um revenue now from its solutions business.

And in that case, there would be things like S and P global or MS C I that are more comparable to a NASDAQ or if you look at its Fintech segment, there's other stocks that are more comparable to what it is.

So it's just a sort of a different way of thinking about NASDAQ.

And I was saying management has not, there is a long pipeline of pre IP O companies that are awaiting better macro conditions.

And once the election passes market settles, we expect that backlog to clear, we will see if that's the case.

Uh Secondly, let's look at Morgan Stanley upgrading Astera labs from equal weight to overweight.

That note highlighting the pullback in the stock creating an entry point and potential 50% growth in 2025.

Those shares are up 6% today.

Um And basically they, they say this is the highest growth company in our coverage.

And by the way, Estera loves those who are not familiar uh create sort of connectivity within um data centers kind of within the A I uh universe if you will.

And they say the growth trajectory is strong, I guess there have been some knock on effects from concerns about delays to Nvidia's Blackwell chip because Estera is involved in the implementation of connectivity of that.

Um But uh Morgan Stanley saying now that that's sort of priced in, they say some risk to consider.

They told their clients uh competition is one they expect Broadcom and Marvel among others to introduce competing solutions sustainability A I spend also needs to be considered a big thing.

We've talked about bottom line Morgan Sting fans.

All right, Goldman Sachs annual global retailing conference kicking off today.

And Yahoo finance senior reporter Brooke Dipalma is there on the ground now over to you Brooke.

Good afternoon, Josh, that's why I'm sitting here at Goldman Sachs vice president.

Also a Brook Brook Roach.

Thanks so much for joining us rather.

Thank you.

Of course.

So I want to kick off with some news today.

The Nordstrom family is looking to take the company private at $23 per share or $3.8 billion in cash.

Now, we've seen other retailers get offers like a Macy's to go private.

Would love to understand is this part of a broader deal environment that we're seeing and it, why exactly are these discussions happening right now?

It's a really good question, Brooke and one of the things that we've seen in retail, the last couple of quarters is an acceleration of the bifurcating trends in retail between market share winners such as off price and other specific brands that have newness and innovation that are comping quite positively and a tougher trend in department stores overall where they've seen negative negative comp trends.

They've seen a more cautious outlook on their consumer and they've even had to trim their back half guidance for both comp and pro for, for comps and for their opportunities to grow.

And I think that's some of the reason why we're seeing some of these trend changes today.

I do want to take a step back and think big picture.

It's so hard to describe the consumer in a few words.

But if you could, what is the state of the US consumer right now?

It's a good question.

I think what we see in the US consumer is somewhat of a choiceful consumer.

The consumer needs a reason to buy, they're looking for value, but they do have discretionary cash income growth and they do have money to spend.

It's just that retailers and brands need to give consumers a reason to open up their wallets today.

Speaking of, we spoke with am sports, particularly their brands, architects as well as Shark Ninja.

It seems like they are proving against that.

They his willingness to spend.

Not so much from Macy's.

What are we seeing in the difference between the low income consumer and the high income consumer right now?

You know what's interesting is our data within the Goldman Sachs consumer, discretionary cash flow model would suggest that the high income consumer and the low income consumer are both seeing discretionary cash flow growth.

It's the middle income consumer that's seeing a, a little bit lower growth this year in 2024 as we move into 2025 we actually think that that could get a little bit better across the board.

But I think there's a more interesting trend behind what we're seeing between some of these retailers.

You mentioned Arc Terre with Amer Sports.

You mentioned what we're seeing with Shark Ninja, the companies that are performing the best right now that are gaining market share regardless of price point or value proposition are doing it through innovation.

They're providing consumers value, not necessarily by competing on the lowest possible price point, right?

Shark Ninja doesn't compete in opening price points at all $400.

Shark Ninja Lux cafe espresso machine.

Exactly.

And as we think about some of those new innovations that have come to market, Shark Ninja has seen very strong performance of these items despite the higher price points in a choppy consumer backdrop, because they're providing a new innovation that provides value to the consumer relative to the other opportunities that they could see in the marketplace.

You also cover TJ Maxx curious why are off price retailers doing well in this sort of environment.

One of the things that we think that the off price retailers do a very good job at is providing branded branded goods at sharp value.

They have a treasure hunt offering where consumers can go into the stores and they can find the item in the category that they want because they want to consume, but they know that they don't have to overpay.

I think over the course of the last few years, we've seen off pricer develop stronger relationships with vendor partners and you have seen higher propensity of better brands in those stores that are offered at great values and the consumer is reacting with higher levels of traffic, driving higher levels of transactions and greater market share growth.

For years.

We heard all about the Lululemon Belt being such a big head and then we heard in their recent quarter, they missed on revenue.

It was the first time, more than two years that that had happened.

Have we reached a peak in Lululemon?

What do you expect moving forward for the company?

It's a really good question.

We think that Lululemon is managing through some execution issues today.

They still have a very strong brand, they have strong market share, but some of the innovations that they've offered to the consumer recently just haven't been quite as strong relative to the offers that they had previously, whether that was year to date with some color misses or not having your size in stock every time that the consumer comes to Lulu and they don't necessarily have that right color size and silhouette in style in stock at that time is an opportunity for a missed conversion or missed transaction.

And we do think that Lulu can sequentially improve their execution, but we're waiting for more signs to see how quickly that might happen before becoming more constructive on the stock.

How are you thinking about the holiday season?

What sort of challenges are consumers up against?

And do you expect more promotions?

Very good question.

Inventories have been very well controlled in retail over the course of the last couple of quarters.

And we didn't actually see that promotional of a holiday season relative to fears last year as we go through the holiday season, traffic and driving that consumer value will be very important to see how much more promotional it will be while we always expect a promotional season.

I do think that it is very notable that there are fewer shopping days between Thanksgiving and Christmas.

This year, we do have some noise with an election that is top of mind among consumers.

And so there will be some competition as retailers compete on price with opening price points, but also competition.

As we think about the value and innovation that some of these retailers will use to drive market share growth value and innovation seem like a key strategy this holiday season.

Brooke Roach Goldman Sachs Vice President.

Thanks so much for joining us.

Thank you.

Stay tuned for much more on Yahoo Finance live.

When the NFL first announced Amazon's prime video as the home of Thursday night football, it felt like a seismic shift for how fans watched games.

Three years later, there are still plenty of games available on broadcast television, but streaming does slowly keep taking bigger pieces of that pie.

Joining us.

Now, Yahoo Finance is Alexander can now with a look at the landscape as we go into football season, right?

And it was only three years ago that the NFL signed that new media rights still welcoming and Amazon Prime in for Thursday night football.

But at the same time, you have to remember that more than any other league.

The NFL also loves television and when they re signed and signed on Amazon, they also upped their agreements with some of those other traditional broadcasters like CBS, Fox, NBC ABC.

So there's this idea for the NFL that they want to make sure that they are everywhere, anything all at once.

That really seems to be the driving here.

I did just get a chance to speak with Hans Schroeder.

He's the executive VP and CEO of NFL media.

And he told me that what we're seeing with the media rights landscape is more of an evolution rather than a revolutionary concept at this point in time.

He said for the NFL, it starts with that broad reach of our games.

That's why 85% of the games they are available on free to air platforms.

But they also recognizing that people are on other forms of distribution there on other digital screens and they need to be smart in the way that they approach those different platforms as well.

And we've seen that there's been more of an embrace of one off games as well.

If you think about Netflix, they are going to be airing exclusive Christmas Day game.

Amazon Prime is a Black Friday game.

This is something that the NFL can do to increase the fees that they're receiving.

But also, again, feed into that uh concept of wherever fans are.

Now, I did ask about whether or not we'll see more one off games.

He said that's probably more of the exception rather than the rule.

They want to be careful about what they're really experimenting with at this point.

But it just feels like especially after the Olympics and how that multi platform strategy seem to work so well, they, that there's an opportunity for the NFL to really lean into that as well.

The Gamification of the games, you know, we have the toy Story game, Nickelodeon game that seems to be a play to bring in younger consumers.

So there's just a lot of experimentation going on, especially when we're in this moment of disruption within media at large.

And that just means you're gonna have to subscribe to quite a few platforms if you want to be able to watch every single game in its entirety this season.

Thank you, appreciate it.

Football is back and is expected to bring record breaking betting with it.

According to the American Gaming Association, American adults will wa a staggering $35 billion on the NFL this season.

That's more than a 30% increase over 2023 and with just a few minutes until the closing bell on Wall Street, we're now looking at how to navigate sports betting stocks with the Yahoo Finance playbook.

Joining us now is Jordan Bender Citizens.

J MP, Senior Equity Research, Alice Jordan.

Great to see you.

Good to see you as well.

All right.

So NFL is back, uh, Chiefs Ravens tomorrow night, uh maybe just set the stage with us to begin Jordan.

When you think about the NFL, this sport, this league, how important is it to the broader sports betting market?

Yeah, you know, to fall on the previous conversation of growing the game, you know, sports betting will be an integral part of actually growing the NFL itself and the sports betting companies are a way to do that as well.

You know, you throw up the A G A number there.

We had a note out this morning saying $33 billion will be wagered this season on the NFL.

And that's obviously a record over last year.

You know, the industry is still pretty young, it's growing every single year.

Um, and really what we're seeing is the evolution of a lot of these sports betting companies innovating com coming up with new products to drive new users, new customer acquisition into the space, the more eyeballs on the game, the more betting that's gonna happen along the way.

And we think this upcoming season is gonna be a record for everyone and yet we're not really seeing that payoff for the stocks, at least, not universally.

Why is that?

You know, there's a, there's a couple of factors going on out there.

Um, you know, with, there's a lot of regulation, headwinds that are kind of bubbling up on the surface as well.

But, you know, really what we did is we stepped back and we said we have 60% of the United States population that will have access to sports betting this year from 2018 to next, we got 60% but that's now starting to slow down.

So when we think about slowing legalization, um regulation starting to pop up, these operators need to find other ways to say this is how we're gonna grow the business in 2025 and 2026 as other than just getting new betters, right?

I mean, we look at the statistics now and they're very, very impressive as we sit here today.

You know, we, we talk about stocks, when we look at kind of the landscape in out years, it's how you continue to drive revenue out of that existing player out of new people.

You know, this will be the least amount of the population that will enter the NFL season in the history of sports, but it's obviously not that old.

But um you know, that's kind of in the back of investors mind of, you know, in future here is where are you, where are you finding this extra growth?

And Mr George, you know, we talk about the NFL a lot for good reason, but uh the W NBA, any line of sight there in terms of the, is there been a jump in attention?

Wagers what we've heard from the, you know, the draft kings and fan duels of the world is when you have a singular event or a player like Kaitlin Clark enter the mix, you get more eyes on the sport.

You know, the Olympics is the same way, Kaitlyn Clark and these one off kind of events that might happen and that will get more attention and get people betting.

So, you know, at the end of the day, the NFL, the NHL, the NBA, those are the major wagering events in sports for at least the US sports betting operators, you know, W NBA and some of the smaller sports, they might get a small bump along the way, you might get some headlines, but the overall, um you know, piece of the pie is pretty small still for us.

So then the question becomes the question that you asked, how do they expand their revenue, their profitability in the out years if it's not gonna be expanding, you know, you can, you only have Olympics every so often.

Um So how do they do it?

And there are there some that are better poised to do it than others.

So two companies draft Kings and fanduel make up about 80% of the sports betting revenue in this country for them.

They've just, you know, they've had the time advantage, they have the data, the people, um the knowledge on how to run this industry.

And with that comes product evolution, you know, I was seen today, Draft Kings has their offerings out for the game tomorrow saying who won't score a touchdown tomorrow and that's something new that they can offer that some of these companies might not be able to.

But as the industry moves along with draftkings and fanduel and offers, you know, these props and other ways to bet it's gonna get more people to invest and uh or, or play on these apps and generate more revenue even with slow and legalization.

I know Jordan you like Draft Kings and Flutter.

But if you, if I had to push you, if you had to choose one, is there one you'd prefer?

We like Fanduel.

That's the number one sports betting and I gaming player here in the US.

Um They're tied to the largest global gaming online, global gaming company in the world.

You know, again, we like scale, we like diversification.

Um When you have the people and the data and the knowledge, you know what you're doing, you can do it best in the US.

This is a high growth market.

They're the number one player here.

We like uh Fanduel.

So Flutter's parent or Fanduel Flutters parent company over draft Kings here into the NFL season.

And what about all the other guys the other 20% that you mentioned?

Yeah, you know, every year we, we preview the space into the NFL season and it's always what company is gonna disrupt Vand and Draft Kings and normally it's the niche small operators that might be the answer.

Nobody really that might be offering differentiated product this year.

We think it's gonna come from more of the mid end.

Uh ESPN bet we all, you know, that's a big topic of discussion in the industry.

Caesars bet MGM, all of these companies that have balance sheets, um, databases that are really gonna make investment pushes into the next six.

What about Jordan?

Some other names that maybe a bit under the radar, at least for some folks.

Um, and, but you cover right now like sport radar, uh, genius sports.

Would those be buys in your opinion?

Yeah, we like the data providers.

So we actually upgraded Sport Radar this morning to, to market out perform.

That's not a NFL play.

That's more of an NBA play here in the US.

But we think the picks and shovels the, the backbones of the industry, the, the companies that you need to operate in the sports betting industry.

Those are the attractive plays.

Um, genius sports has been one of our top picks for quite some time.

You know, we think if you want to price a bet, if you're drafting so you want a price bet.

You need genius sports during the NFL season, that revenue isn't going away.

Um, and those are long term growth stories within this industry, Jordan that was really fun.

Thanks so much for joining us in those picks.

Appreciate it while we're wrapping up today's market domination.

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