CPI expectations, GameStop stock, EV slowdown: Catalysts

On today's episode of Catalysts, host Seana Smith is joined by various guests to provide insightful perspectives on inflation outlooks, earnings results, and the evolving landscape of electric vehicle (EV) adoption.

Kicking off the show, Yahoo Finance's Josh Schafer joins the discussion to break down expectations for the upcoming monthly Consumer Price Index (CPI) report for April, scheduled for release on Wednesday. This report will offer a crucial glimpse into the ongoing fight against inflation.

Following the inflation outlook, the show delves into stock reactions to earnings results from prominent companies such as GameStop (GME), Kenvue (KVUE), and Intel (INTC).

As retail giants Home Depot (HD) and Walmart (WMT) gear up to release their earnings this week,HSBC US Consumer Staples Senior Analyst Daniela Bretthauer joins Catalysts to share her outlook on each company's stock and anticipated earnings performance.

Closing out the show, Blink Charging CEO and President Brendan Jones, discusses the company's impressive profit jump in the first quarter, despite an ongoing slowdown in the EV sector.

This post was written by Angel Smith

Video Transcript

I'm John Smith and you are watching Catalyst.

It's Monday May 13th.

Let's dive right into what is moving markets here this morning.

The biggest catalyst for the market this week, it's going to be on Wednesday.

We got the April CP I print that set to be released.

Investor optimism surrounding easing prices may be enough here to boost the probability of that rate cuts before the end of the year and even wars heating up with the US expected to quadruple tariffs on Chinese electric vehicles this week.

The announcement could potentially have an impact on some of the world largest auto makers plus the weakening consumer.

That could be a catalyst here for retailers and the fed.

We getting the latest insight into consumer spending with results from Walmart and Home Depot.

This week was retail sales that is going to be out on Wednesday.

Let's start with the biggest story of the week and that is the CP I print that's out on Wednesday.

The latest reading on inflation, core inflation is expected to rise 3.6% on a year over year basis.

That will be a bit of a slow down here from the hot 3.8% increase that we saw back in March.

Join me now to discuss what all this means here for the markets.

We want to bring in Joser stand in right to the right of me.

And just, just talk to me about these hot prints that we have gotten how the market has reacted and maybe what that positioning then tells us ahead of the report on the CP I print has really been one of the bigger market moving to the downside data releases we've had thus far this year, right?

So we talk a lot about how PC, the feds preferred inflation gauge, right?

But PC comes out at the end of the month.

And so in some ways, economists have been able to take all the data from the month and extrapolate that to an end of the month prediction.

And PC has been coming in hotter than expected, but also largely in some ways priced into the market.

CP I has been a little bit of the leading indicator here with inflation that's been coming in hotter than expected to start the month sort of setting off markets a little bit.

It actually didn't last month.

I was looking back on it, which is interesting but it did two months ago.

So we got into a little bit of a trend of OK, maybe the just isn't going like we hoped in last month's reading didn't fully set off stocks, but it has been probably the bigger market moving inflation release, even though it's not the fed's preferred gauge.

But it is certainly big when we talk about overall fed pricing.

Right.

If, where people are expecting rate hikes to end up and if we're going to get rate hikes, of course, it seems like we're going to need this number to start coming down a little bit more.

And I think the key with this week, Sean is, it seems like this is where people think we're going to kind of around the corner, right?

And core CP I is going to fall a little bit more than it has been.

Ok. Maybe now we're starting to see that decline that we hope would happen earlier this year.

This is sort of the start.

So then if it doesn't start, I mean, how long are we going to hold on to that narrative?

I think becomes perhaps the larger question, right?

And I think if we do see maybe a bit of easing and we do see it coming down maybe a bit more than even what the expectations are even in line with expectations.

My question because I know you've been digging through many of the strategist notes that we have been getting out in recent weeks.

What does that put on the table then potentially for the fed?

Does that then potentially make the case stronger?

That we could see multiple cuts for the end of the year?

You would think.

So, the team at Morgan Stanley Ellen Zentner says that she thinks that we'll see three cuts still.

If we, if it's in line with their base case, which is about where consensus is for this print, it would set off again.

It sort of sets off the rest of the year.

Right.

If we get CP I to start falling, then we might get there.

And I think that would be interesting.

I mean, three cuts still seems pretty optimistic.

I think at this point that is not where the market is currently pricing, but I think that's kind of the big question right now.

You're entering this report at somewhere between 1 to 2 cuts in market pricing.

Does it push over to 2 to 3?

And does that help maybe some of the interest rate sensitive sectors is probably what to watch on Wednesday?

Yes, exactly what that influence or how that could influence here.

Market leadership.

Then when you talk about maybe potentially the next leg hired and it wasn't that long ago that we were even throwing around the potential for a rate hike.

So, I mean, the narrative changes very quickly.

All right, Josh, thanks so much.

Well, stocks are climbing higher this morning continuing to recover here from what had been a downbeat, April the S and P 500 up over 3% so far this month on strong corporate earnings that has helped really drive the recent gains that we have seen that the index of 5.4% year over year for earnings growth so far this quarter, the highest growth rate that we have seen since the second quarter of 2022.

This is going to leave that out here from fact that so can this momentum continue as big buck retailers report this week?

We want to bring in Michael Ryan.

He is a senior market strategist, Michael.

It's great to have you here in studio with me.

So talk to me just about the set up here for this week because we have a couple of uh critical earnings reports that are out on deck.

When you talk about Home Depot and Walmart, you've also got uh the CP I print.

So what does this set up look like?

And some of the trading action that we did?

So, I mean, thank you very much for having me here in studio.

Yeah, and it is a pretty interesting week, right?

So we do have an options expiration week as well, right?

If you think back to where we were coming into last options exploration, we were starting to see kind of volatility start to pick up, right?

That kicked off a little bit of a deleveraging that happened kind of throughout the marketplace.

And this time around like we have positioning that's, that's, you know, more normalized and, and right, we're not really stretched in, in either direction particularly.

Uh and we have obviously, as you, as you pointed out some really key economic data, you know, both from the growth perspective and, and the inflation side of things, right?

And so looking at that inflation side, right, where the fed kind of set up uh you know, just a couple of weeks ago where they said we're really squarely in this wait and see uh you know, kind of sort of moment, right?

That does seem to, to me suggest that you have, you know, a little bit more uh asymmetric risk to the upside from a market perspective if we were to get a little bit better than affected, um you know, kind of inflation report because the, the um they, they raised the bar so high for potential rate hikes, right, as you just mentioned, right?

That's kind of come off the table now, right?

So the, you know, it does seem like we're, we're a little bit skewed to the upside and then we're watching the retail sales for the growth side of the equation.

What do you expect to see there?

Uh We're going to see in a moderate, I, I would expect to see, you know, kind of a moderation, you know, kind of on that side of things as well.

And I think mar markets and investors are, are gonna, will actually kind of applaud that, right.

We've seen in past months where when you've gotten those really hot retail sales numbers, right?

That suggests that the economy is starting to potentially re accelerate.

I think markets are, are, you know, want to see that moderation because that will, then that's kind of the precursor to seeing that this inflationary process start to play out.

Right.

And then as you start to listen to kind of those conference calls, you're gonna want to hear, you know, that, that we're not seeing necessarily a spread of, of kind of pain, um, you know, kind of across the wage scale, right?

So that it's still, you know, kind of staying in the lower income and it's not necessarily spreading higher.

And then, you know, even the retailers are going to give us some pretty good and you know, in insight into kind of the inflationary backdrop, right?

And just listening to commentary from kind of Walmart and hearing how they see, you know, kind of prices starting to, to move throughout the remainder of this year.

And they suggested in their last quarter, right, that they, they saw some disinflationary pressure.

So then if we do see maybe a little bit of weakening when it comes to consumer spending, obviously, we do hear any sort of negative or any sort of caution uh commentary out of some of the retailers that we will be hearing from.

What is that thing going to do just in terms of pressure or maybe more pressure overall that we could see here for other consumer discretionary places.

Yeah, and, and you know, like we've said, it's, it's we, we're seeing kind of this moderation, right?

And, and that's ok.

Right.

It's like it's, we, we've seen kind of a lot of spending that's kind of shifted out of goods, you know, into the, the services side of, of the equation.

And we do want to see some moderation, right.

That's really the key when you come back to this inflation conversation.

Right.

Seeing some moderation on the services side, we started to see, you know, some pressure, you know, kind of coming from the, you know, kind of the food companies and, you know, Starbucks and mcdonald's, you know, pointing to some, you know, shifting consumer behavior.

So, I mean, you know, we do want to continue to see that moderation happen.

What do you think the narrative is overall just in terms of the confidence that still seems to be within the market that we are going to achieve this soft landing?

And maybe like you were saying, just this risk here or to the upside that there is still a buying opportunity right now, especially when you take a look at some of the rotation that's happening within the leadership.

So, so when you kind of when you take a look at um you know, kind of the situation, right?

And, and in the, in the fact that um you know, we're, we're seeing, you know, um sorry, I lost my train of thought there.

Um you know, we are starting to see, right, uh a little bit of slowing on the growth side of things, right?

So that is, you know, kind of the prerequisite to seeing that disinflationary process, you know, really start to play out.

I think, you know, investors are are willing to tolerate, right, a little bit of a slower economy, a little bit of a higher interest rate environment, right?

As, as you know, as long as that higher interest rate environment is happening for the right reasons in that we have kind of a stronger economic backdrop, it's not happening because we have that inflationary kind of impulse or re acceleration, uh you know, kind of on the uh on the economic side of things, right?

And I think, you know, as, as we kind of continue to move forward forward here, the real kind of question is do we start to see volatility pick up again if we start to see that slowing?

Because you know that we're kind of starting that descent into potentially that soft landing, right?

But it it could ultimately turn into something more ominous, right?

And we wanna see how that progresses over time.

And then that volatility would come in the form of a growth scare, Michael Ryan King.

Great to have you here in studio.

Thanks so much for joining me here.

Uh This Monday morning at Nyse is a senior market strategist.

Thanks.

Thanks for having me.

All right.

Well, consumer sentiment, it tumbled on Friday as higher prices continue to weigh on shoppers.

So far.

This earnings season, we have seen rising prices force consumers to pull back on spending for fast food.

And now with the big box retailers like Home Depot and Walmart reporting this week, will we see a continuation of that trend?

That's what everyone wants to know.

We want to bring in our very own Brooke Dipalma, the best person to ask here within this newsroom.

Brooke give us a sense of what those expectations and whether or not we will likely or we are likely to see any sort of material we can.

Yeah, everyone's really wondering where exactly consumer spending power is right now and certainly what Wall Street expects is that Wal Mart has been able to hold on to that momentum that it's gained in the recent years, Home Depot.

On the other hand, we saw such a hike during the pandemic with those diy projects.

And now Wall Street is expecting that to be a bit of a pullback this quarter.

But the professional side of things at Home Depot expected to do well and taking a closer look at Wal Mart.

Wall Street does expect a 3% sales growth here in the US with gains across all income cohorts.

And that's something that Wal Mart has been strong on in recent years as both low income and high income shoppers look to Walmart for that low price every day strategy and what we've seen is that Wal Mart has introduced things like new private label brands called Better Goods.

That's a higher quality, roughly $5 price point, new private label brands in order to entice and keep those high income shoppers that they've gained, especially those who are going to Walmart for groceries.

And what we've also seen is the company do that $9 billion store make over really hoping to engage income cohorts and really get that experience that they're looking for while also shopping on a dime now Home Depot, a bit of a different story.

There are Wall Street does expect a two percent sales drop.

And that's really because we're seeing tough comparisons compared to what we saw during the pandemic when everyone was flocking to the home improvement retailer to make adjustments, make improvements, redo their house while they were at home.

Now, inflation higher interest rates as well as soft existing home sales really weighing on that customer that we saw boom during the pandemic.

But one point to make here is that Home and Depot is really relying on pro side of things to boost its upcoming quarter, Wall Street.

Really depending on that.

We did see them acquire SRS distribution during this quarter.

And that's really this, they're really leaning on this pro customer like roofers like contractors in order to offset that pull back that they're seeing in the everyday consumer.

And how does this sack up to some of the other names that space obviously the rival being lows there.

But in terms of what we could learn here from Home Depot, what that will tell us or give us a better sense of some of those results that we'll see later on this earning season.

Yeah.

Well, two others and I'm looking for is Target and lows are also expected to report later on.

I think when it comes to Lowe's Home Depot was really pointing out that tough January weather, which we heard also from fast food companies, customers really pulling back on perhaps going out and spending so eager to hear if that's out there, something else that lows will have an impact on.

And that as far as Walmart compared to target, target is to come in with a slight boost, roughly 1% sales growth this quarter.

But Target just has not been able to maximize as much as Wal Mart has on where consumers are seeking value and really taking advantage of that low price strategy that seems to be working for Walmart right now.

So it will be interesting to see if Wal Mart was able to hold on and Target was able to gain back a bit and there was a bit more on the discretionary purchases which we know have heard them in recent quarters.

All right, great stuff.

Thanks.

Keep right here on Yahoo Finance coming up, Intel reportedly in new talks of the power for a new chip plant overseas.

We will tell you why this is a big deal for the company.

You're looking at shares of nearly 4% in early trading will be right back.

Let's do a check at the market sponsored by TC trade.

You're looking at early gains here about 45 46 minutes into the trading day.

You've got the dow up just around 92 the S and P up about 1/10 of a percent.

But still adding to last week's uh, move to the upside that we saw in the NASDAQ up just around 3/10 of a percent.

When you take a look at the sector action and some of the leadership that we are seeing there, almost every single sector here in the green except for communication services, that sector off about 6/10 of a percent.

But we are seeing some leadership from consumer discretionary utilities, technology, real estate early in the trading day.

Well, let's kick it off with one of the big movers here this morning and that is gamestop shares surging over 70%.

It was then halted for volatility.

We're looking at gains of about 71% ahead of that.

Yahoo Finances.

Jared Blier has been closely tracking this action joining us now and Jared Miles and I were talking about this resurgence that we've seen in so many of these mean names.

A lot of the move that we're seeing in games up here tied to a trade out from roaring kitty who was infamous back in 2021 when we were initially talking about some of these meme trades, but again, enough for some buyers to be jumping back in.

I'll tell you what, um, I think we were kind of due here for a little bit of a bump.

I was writing about meme stocks a couple weeks ago in the morning brief and they've just come alive.

But at random times now, last year and the year before when you saw these meme stocks surging, that was a good, that was a good opportunity to short the market because they were the laggards.

But this time, it seems to be, uh, that they have a mind of their own again, not really acting on fundamentals and guess what?

That's what we're used to.

So, here's gamestop going back five years.

Here is the 2021 phenomenon that we saw that was, uh in January and early February.

Now we just got a spike here.

That is the biggest percentage wise we're up over, we were up over 100% here before the last pause.

That was the biggest jump since February of 2021.

So we're right back in the thick of it.

You notice that over time these spikes were getting smaller, smaller, smaller and now we have the first break to the upside.

So question for me is, is there more to come and just based on our history with what we know about me stocks.

That is a possibility.

I'm gonna sort by performance here and we can see it's kind of hard to read, but gamestop is up 80% cost.

Remember cost that's up about 40%.

Tupperware.

Up 20% A MC and A MC Entertainment and A MC works both up 14%.

So it reminds me of 2020.

It certainly does, especially the move, the dramatic moves that we are seeing here.

And as we have been talking gamestop here, trading has resumed and like you just said, now, up just about 79% right, a name to keep on your radar.

Let's talk about Ken view now, not as the dramatic of a move but again, a move that is worth noting here up just about a half of a percent.

Now, the company on the move after Johnson and Johnson saying that's going to sell its remaining 9.5% stake in the company just a year after Johnson and Johnson spin off and Jar, when you take a look at this move exactly what this means.

Ultimately, here in the longer run, we had the stock had been under pressure ahead of the open year, but now it looks like we are trading just slightly to the upside.

Yes, this is a stock when it split off from, from, excuse me, from Johnson and Johnson, there were high expectations, but it's pretty much sunk since that spin off.

Now, this was an expected move J and J was expected to get rid of its remaining shares about 10% of the company 182 point 3 million.

And this is done through a secondary offering.

It's important to note that this is not that the company itself can view is not going to get any money from the sale.

Now, I do have a market reaction by Bloomberg Intelligence here and you can see that's today's price action.

Let me just put a max chart so you can see what it's done since that first trade, not a lot of green there uh from inception, but I do have this from Bloomberg Intelligence.

The exit of J JJ and J is 9.5%.

Can you stake uh via a debt for equity stock that enables leverage to be reduced as initially planned, removes share overhang.

So this was something that was already planned.

Um The fact that it has been executed now just uh is kind of like a potential share overhang that is in the rearview mirror and we'll have to see what comes of it.

Uh But here's another thing that uh Bloomberg Intelligence is noting their face second quarter headwinds.

This is Ken view.

They have yet to prove execution fixes can reverse us market share losses.

And so the key to achieving growth, growth with Sanofi's consumer health spin off next quarter, fourth quarter or later, that's going to add competition as well.

So just lots of moving parts here in the, in the biotech sector.

Certainly a number of headlines that we need to keep our eye on here.

All right, let's, we'll talk about another mover here this time within the tech space.

And that is intel, the that stock on the move uh on the heels of a report that we're getting out from the Wall Street Journal.

Now, within that report, the company nearing an $11 billion deal for chip factory in Ireland with Apollo.

Now this of course, we wanna know Apollo is Yahoo Finance's parent company.

When when you take a look at shares of Intel, that's up 3.5% and Jared, this would be a move here, at least in, in terms of Intel, Intel has been looking to expand its production line up obviously.

So this would help them ultimately maybe better compete with some of their larger rivals out there.

We can take a look at Taiwan semis also Samsung electronics.

But I think the timeline of this is what is in question here and then also that price tie.

So clearly, the funding from Apollo will be welcome news here from investors.

These are just some eye watering numbers and this is just not, this is not in isolation.

There are lots of these deals going on just a quick history here because the race is on for foundries for building chips building chips domestically here in the US in Europe as opposed to China.

So Intel um announced in December, it was investing $25 billion in Israel and this is after getting 3.2 billion in incentives from the Israeli government in June, Germany investing about 30 billion that's $32 billion in semiconductor operations.

And then this Apollo deal now is tracking a previous transaction with Brookfield infrastructure partners.

That was a $15 billion deal.

So you add all these up.

We're talking about hundreds of billions of dollars, not only for intel, but other foundries around the world.

And that's because a lot of these chip companies don't make their own chips.

NVIDIA doesn't make their own chips.

And so this is about who's going to actually manufacture those semiconductors.

Certainly.

All right.

And Jared rounding it out.

Let's take a look at Chevron.

It is a trending t here on Yahoo Finance this morning, Senate majority leader Chuck Schumer.

He actually called on the FTC to stop Chevron's proposed $53 billion acquisition of Hes Schumer saying that the mega murder is going to give oil companies quote more fuel to raise gas prices.

We aren't seeing much of a movement now here in Chevron earnings but not necessarily a huge surprise when you take into account some of the rhetoric that we have heard from Jer and his colleagues here over the last several weeks.

But again, just at the, at least this time urging the FTC to stop this merger.

We'll see.

Yeah, we'll have to see.

This comes after a couple of different, a couple of big deals in the oil patch Exxon just closed its deal with pioneer.

That was a $60 billion deal.

That was its biggest acquisition in two decades.

So this one with hess that Chevron has been considering, this is a pretty big deal as well to increase some of their foothold in Guyana.

That's an up and coming field, the fields in South America by Venezuela, those dwarf what we have in Saudi Arabia, Arabia and some of the Middle East.

So there's lots to be done there and we're just in the beginning stages, but it always comes back in the oil patch to returning shareholder capital.

So gotta do buy backs, they got to invest in Capex or they gotta do some kind of M and A and that seems to be one of the later trends.

It certainly is.

All right, Jared.

Thanks so much for breaking that down for us again, a deal that we're gonna keep our eye, eye eyes on and watch it very closely here because not only the impact that will have specifically on Chevron, but also what Jared was just talking about some of the broader industry implications as well.

All right.

Well, Home Depot set to report earning this week, it's going to give investors an inside look at the health of the consumer.

Now, this report comes as higher rates have forced consumers to pull back on their spending.

There was a new report out showing that home improvement spend fell more than 1% in the first quarter from a year ago.

This is according you dad out from Harvard.

So for more on this and what we could expect later this week, we wanna bring in Danielle Brett Howard, senior analyst of us consumer staples at HS BC.

Danielle.

It's, it's great to see you here.

So I think lots, there's lots of questions from investors.

Just what exactly we're going to hear from Home Depot, whether or not the worst is behind it here, Home Depot and the rivals within the sector.

What do you think?

Hi, good morning everyone and thanks for having me.

Apologies.

I have a little bit of a cold, too much traveling.

But uh yeah, so the ability to spend is supported by a growing job market and this remains quite healthy.

Uh Inflation has not decreased as quickly as the market was expecting mainly because of elevated services prices and inflation for goods, however, has dropped nearly to zero.

So consumers remain focused on value and price and they're shifting their spending patterns uh to make ends meet.

So Home Depot sells uh higher ticket items.

Uh There was a lot of cool forward demand um during COVID and so they went through a gradual decline in some of these bigger ticket items, which they say over $1000.

And so the year on year comes, uh, is not in their favor, uh, for this upcoming quarter.

So we're looking at, um, the sales to dec decrease between two and 3% and earnings between anywhere between two and five.

And this is again because of the higher big, uh, high, big ticket purchases and then you have interest rates which remain high and for new home buyers, that's an issue as well.

In addition to all the structural headwinds, um that affects uh big ticket purchases decisions.

Yeah, Daniella, Daniella, talk to us a little bit more about the larger structural headwinds and then going off of that just how long this will likely be an issue here for Home Depot and other larger players within the space.

Yeah, so specifically for Home Depot and Lowe's which they operate in the same space and they're very big on white goods, you know, appliances and um uh flooring and remodeling.

So what has happened is people have either postponed uh or um they've taken on this complex project, the remodeling, but uh a lot um less complex and uh with the tight budget, whereas during COVID, you had the additional savings and people wanted to do these upgrades in the remodeling.

So uh like I said, there was a shift in demand and probably two years worth of demand has already been pulled forward.

So I would think uh 2023 was the first sort of down year and probably 2024.

And the fact that rates remain high still and the interest rates cut have been delayed.

Um, probably we were only going to see one cut this year.

So that doesn't bode well as well for people looking to buy new homes and or a switch, the fundamentals, they remain solid, meaning a lot of older homes that need upgrades.

Um young population that you know, the baby boomers that now have more spending power, but everything seems to be on hold for now.

Danielle, let's switch gears here and talk about Walmart because you still a consumer facing name obviously.

But I bring that up in contrast to what you were just saying because you actually have a buy rating, you maintain your buy rating on the stock $200 price target.

So even given all of those headwinds that you were just mentioning, you remain upbeat on this name.

It's actually your top pick within the US retail sector.

Talk to us a little bit about why you're seeing that investment opportunity specifically within Walmart.

So Walmart has more tail winds than headwinds compared to Home Depot.

And uh like you said, uh that's our topic in the sector.

You have the positive tail wind would be this Easter uh calendar effect.

So Easter uh fell in March this year, whereas in the year ago, fell in April.

So although the company is probably going to disclose the the fact of this year on year, calendar shift is still quite positive.

Uh It's a very positive event in, as a matter of fact, for grocery retailers, uh Costco just announced their monthly sales last week and in their case, there was a 50 bits um shift on the Easter effect and we expect similar impact for, for Walmart and just big picture.

I think the future of grocery shopping is becoming increasingly omni channel and Walmart is America's largest grocer.

Uh, they are very well positioned to serve the online.

Um, yes, you have a big player online which is Amazon, but in groceries, uh, um, Walmart has a big advantage and, um, they're also opening a lot of stores.

So the online to offline strategy works really well for Walmart.

Daniella.

Just, just my devil's advocate a little bit here.

If we were to see the fed, maybe further delay rate cuts, maybe not even cut until 2025.

How big of a risk is that to Walmart?

Yes, it might be better positioned than many of the other, uh, names within this space.

But I guess what is the impact then?

Ultimately, maybe to their bottom line, at least in the very short term.

Yeah, I, I, one of the reasons why we picked this name, um, for 2024 is also well, first valuation, but also, um, that we think it could be a defensive name in case, the economy slows further or uh the case of the interest rates cut being delayed.

So uh Walmart, because everybody needs to buy groceries so they can still do quite well.

It's just a matter of their execution.

They have the size, they have strategy, they have the talent, so and they have the price.

So right now the consumers are value and budget conscious then, you know, the everyday low price strategy works extremely well.

Um And uh and so I think that they can still do quite well and grow, have a nice growth in earnings this year.

Like I said, more pay wins than headwinds for this company.

All right, Daniella Brad Howard, thanks so much for joining us here this morning, Senior analyst of us consumer staples at HS BC.

We'll keep it right here on Yahoo Finance.

After consumer sentiment fell last week, the threat of the slowing consumer is weighing heavy on the hopes of a soft landing.

Potentially, we're gonna talk to one economist to explain exactly what that means for economic growth.

We'll be right back.

Consumer sentiment taking a hit as inflation fears remain.

Now, this month pre reading showing that sentiment actually fell to the lowest level that we've seen in six months here to break it all down.

What exactly this is telling us maybe about growing weakness within the broader economy.

If at all we want to bring in Jeffrey Roach, he LP L Financials, a chief economist Jeff, it's great to have you here.

So talk to me just about that sentiment reading, I think spooked some investors.

Maybe to some extent here is just the fact that it did fall to the lowest level that we have seen in six months.

But is there anything any takeaways that you're seeing just in terms of what that could ultimately signal about the health and the strength of the economy?

Well, good morning.

Thanks for having me and, and yes, I think it, it was interesting for investors because we got a little bit of confirmation from the conference board's release told us something about consumers pivoting away from big ticket items.

We got that confirmation in the latest survey from the University of Michigan.

And uh I think this, what this tells us really is that the slowdown is starting to happen.

Uh But I don't know if we will understand quite the magnitude quite just yet as consumers do pivot away from, from those big ticket items.

I think another thing that was a, a key driver for last week for markets was uh the latest uh estimate and, and blog post from the San Francisco fed, talking about excess savings being drawn down.

So I think, I think it's fair to expect the second half of this year is gonna be running a lot slower than what we saw throughout 2023.

And Jeffrey, when it comes to the inflation rate that we will be getting later this week.

Specifically, the CP I report, we are expecting to see maybe some easing when it comes to the uh pricing pressures that we have seen.

But how long is it going to be until we see that material improvement that the fed is looking for in order to be confident, maybe ultimately to cut rates.

Well, I think the feds looking for confirmation that the economy is slowing.

So aggregate demand slows, which means consumers just aren't splurging as much.

Hence, we'll see that pullback in pricing.

Uh It's been a tough time and I think it's been a little bit of a disappointment because as we've all had to come to this realization that the 2% target that the fed is looking for is going to take a lot more time to, to reach that target.

We're not going to get to it as quickly as we originally thought.

Yeah, I think, you know, we'll end this year uh around, you know, a 2.8% again, it's above the 2% target, but we're going in the right direction and I think that's where uh markets might respond quite favorably uh in terms of Wednesday.

So you're, you're exactly right this week, all eyes will be on uh another print from the CP I it's not the Fed's preferred metric.

The P ce deflator comes from the personal income and spending report.

That's, that's their favorite uh metric, but either way this will be closely washed.

I think one of the things you look for here is, uh, look past the headline.

It's gonna be uh supported by, you know, the rise in gas prices.

Look at vehicle insurance and look at rent.

I think we're gonna start seeing finally, uh the industry data flow through the official government stats and see uh, rent prices start to ease a bit.

Jeffrey will we see enough improvement in order to keep those rate cut hopes alive before the end of the year?

Well, probably not.

So we've, we had three consecutive disappointing reads that January was, was quite hot, February March.

So even if this comes in a little bit better than expected, I think policymakers will say, ok, look, we got to, we got to make up for, for all the disappointments the first three months of the year.

Uh But I do think one thing that we can say with a little more certainty is we can take the, the rate hikes off the table.

Remember just a couple of weeks ago, there was a little bit of, uh, uh, you know, kind of clamoring and, and, uh, talking chattering about rate hikes.

I think that's not gonna happen.

Uh, but we need to have a little more confirmation that we can get those two cuts.

My view is, uh, we will get at least two cuts, perhaps not starting until September.

Uh, but we'll start seeing, uh, the easing of inflation.

Uh In this report, we have to see some more confirmation in subsequent reports.

Jeffy.

I'm curious before we let you go.

I was talking to Mark Zandi about Moody's about this last week and he was making the case that 2% doesn't, makes sense.

Maybe any more that, that should be the Fed's target.

Maybe it should be something even higher, even floated the potential here of 3%.

I'm curious, where do you stand in that debate?

And maybe how much, whether or not there should be more of an emphasis just on the fact that maybe 2% isn't the new normal.

Well, it, it's fair to say and I, I'll echo what uh what some of my other colleagues say, you know, there's nothing magical about 2%.

But what is special is that global central bankers have agreed to that number?

So if, if, if we have to start talking about inflation running a little bit hotter, particularly as demographics change, the structure of the labor force changes, perhaps it's not 2% anymore.

But that conversation has to be a global one.

It can't be just in the confines of this country.

All right, Jeffrey Roche, we'll leave it there.

Thanks so much for having on and joining me here this morning.

LP L Financials, Chief Economist.

Appreciate it.

Thank you.

Well, coming up Bloom Energy announcing a new collaboration with the C three A I to help broaden the scope and precision here of Bloom's product monitoring, a technology.

We're gonna explain exactly what that means, why you should care.

We've got both companies CEO S joining us for it after the break, charging, getting a boost on the back of his quarterly results revenues.

So more than 70% from a year ago, the company also acknowledging the slight drop that we have seen the EV sales during the first quarter.

But despite that remaining optimistic about the growth of the company expects to see here in the coming quarters for more, we want to bring in Brendan Jones.

He's the CEO and president of Bling charging Brendan, it's great to have you here.

So talk to us just about the trends before we get into Tesla.

That's a big headline that we wanna get into.

But more specifically talk to us just about the trends that you have seen in your business the most recent quarter.

And whether or not that supports maybe this fear that we've seen about slowing adoption of evs.

So, yeah, we continue to see globally that, that EVs continue to be adopted.

So it's a little bit of a, a different theme than you might see out there.

Um In, in some of the press in general, um specifically in Europe, our numbers are increasing dramatically.

Um both in England, Ireland.

Uh we operate in the Netherlands and Belgium and moving into other countries and the utilization rate and the penetration rate is 2530 as high as 35% in Europe.

And that's the percent of car sales each month, each year of EVs representing.

So that continues to increase.

We did see a slowing down a bit in April on our sales side, but we, we haven't fully calculated that revenue yet.

Um But that is buoyed by what we saw uh in Q one which was increased uh penetration of, of uh EVs uh in terms of ev infrastructure going in the ground.

Uh We had our, you know, we beat the previous quarter, same year uh dramatically as was indicated.

So we see that in the marketplace, some consolidation, uh we definitely saw Tesla sales slow down a bit, but then we saw the other auto O Ems picking up uh simultaneously.

And then in the quarter also, we, we saw an enormous investment uh from Hyundai Group that came in with another $50 billion in an effort to secure them as the number three Automotive Group.

So you saw some, you know, stuff that said, hey, it might be slowing, but then you also saw a lot of encouraging activity.

So the space is going to continue to grow over the long term.

But and there were some uh headlines that had investors at least a little encouraged, maybe about what ultimately uh could potentially happen to your business.

Now, there has been a bit of a flip flop in terms of the headlines coming out from Tesla, Ceo Elon Musk.

So I think some of the plans here may be a limbo for the charging network, the super charging network.

But ultimately, if we do see any sort of shift from Tesla, if we do see any of your competitors fully exit that business, what ultimately does that mean for blink?

So first off, let's say what Tesla means today for blank, it's the number one vehicle that plugs into our charges today.

So uh that, that's great business for us, especially uh on the charges that we own and operate.

And if, if Tesla slows down, we've already had phone calls and inquiries uh from a number of companies say, hey, can you, can you pick up the pace, can you jump in and we're fielding those calls?

And in many cases, we can uh for blink, Tesla's been heavy in destination charger along um with hotels, uh other municipal locations where uh they provide charging services and indeed sell chargers in into.

So those opportunities are presenting themselves to us today.

Um And then I I, in terms of uh fast charging, we may see, but that's gonna be uh less of an impact than on the L two side, the level two charging Brandon before we get into some of the other details of it, would you then potentially consider hiring maybe some of these former Tesla employees who have been let go who are in this line of business.

Hey, you know, Tesla has done a great job.

Right.

Look at what they built both here and in Europe.

So, if we have opportunities and we have a need, uh, absolutely.

Uh, we want to hire the best, uh, and if there's people out there from Tesla that need a job and they're the best, we'll certainly do that.

Brendan.

And hear your dogs are even getting excited about it here in the background, talking about a little bit more about this momentum, maybe what this would ultimately mean for Blink's business very early days.

There's still a lot of details that need to be ironed out.

But you were talking about fielding some calls here just in terms of that interest.

What have you been hearing?

And I guess is there any reason to be maybe a bit cautious on the fact that if we do see a shift here from Tesla, then your side of the business won't ultimately be able to meet the demand that's there right away.

So, yeah, we have capacity here in the United States.

We have additional capacity built into our facility uh in India as well.

So we, we can uptick, we've moved our buoy Maryland facility up to 50,000 units per annum is his current capacity on that.

We have to add a second shift to do that, but that's already factored into our plans.

So if the need comes, we believe that we can pick it up but I don't think it's gonna be blank.

That picks it up.

I think we're gonna get our unfair share because that's who we are as a company, but the industry is gonna pick it up as a whole.

Uh The independence, this is what we do.

Uh You know, for Tesla Infrastructure is a cost of sale for blink Infrastructure is our business model and Brendan real quick before we let you go just about the, how much of ev adoption depends on lower rates as, as we talk about this higher for longer, high for longer environment that we're in right now, a weakening economy.

How much is that if at all going to push out maybe some of the adoption rates that we're expected to see?

Well, it depends on where you're located.

Certainly remember we operate in both Europe and in the United States.

So we're not seeing any impact in Europe.

We continue to see increase all business is good in states where they're suppressing the adoption rate.

Do you know there's some political concerns, et cetera?

We'll probably see some slowing.

But in the big states who are driving ev adoption like California who has a 2035 mandate of no internal combustion engines can be sold there.

Uh past that date, you're gonna see them continue to drive forward.

We might see a month, over month, uh slow down and we might need to get past the election.

But in the long term, we're going to see ev adoption increase as previously forecast.

And even mckenzie backed this up where they adjusted their forecast.

They now say by 2030 is 28 million chargers that are needed in the US.

Um, and that includes both L two and DC fast charges by 2030.

So we, we remain encouraged and bullish.

All right, Brendan Jones, we got to leave it there.

Thanks so much for taking the time to join us here this morning, blink charging, president and CEO.

We appreciate it.

Thank you very much.

Well, C three A I is announcing a new partnership with Bloom Energy using C three A is reliability suite to help broaden the scope and precision of Bloom's product monitoring technology.

For more on this new collaboration we wanna bring in Tom Siebel.

He's CC three A is CEO and chairman as well as Kr Sri.

He is Bloom Energy's founder, chairman and CEO.

Great to see both of you also have um Madison Mills joining the conversation as well.

Kr Let me start with you just in terms of we, we've been talking more and more where there has been more of a focus on Bloom Energy recently when we talk about this energy transition, what ultimately is needed uh as we talk about the rapid adoption of A I.

So why does this partnership make sense?

And ultimately what does it do for your business?

So three things out here, right?

The first is as our economy is growing as we are digitizing everything as transportation like in your previous segment is getting electrified.

As A I and data center growth goes up.

The grid is not able to keep up with the demand that there is.

And one of the ways to solve that problem on a quick time to power is using distributed systems like ours to bring clean reliable electricity, right where the customer needs it.

That's what bloom does.

Now, if you think about our deployed uh fleet, think about it as almost 20,000 small independent power plants operating in over 200 sites and producing enough power for a million homes.

And imagine from each of these million homes, 1000 data points coming in all that, you know, every single day.

So a billion point, you know, data points are coming in with which we can make sense and try to optimize better and make the products more efficient uh last longer for the customer and uh provide a better benefit.

Now with the A I platform, Tom and I have been talking about this for a very long time.

Finally, the time has come when we can take those billion data points from all the digital trends of things coming out of our power plants and optimize it better.

That's what we're working on and it is super important, not just for us.

Once we prove this out, the future of electricity is going to be a lot of distributor generation.

Unlike one centralized power plant, this can be a model that everybody else can use.

Well, Tom, I want you to come in here because as Kr was just mentioning, the C three can really help its customers aggregate a lot of data.

But the A I hype cycle is kind of quickly moved on from traditional use cases like aggregation of data into a desire for new products that can come from generative A I.

So I'm curious from your perspective, what is the path for C three A A I to become a generative A I play?

And how long do you anticipate that taking?

Uh Well, I think we're well beyond the hype cycle.

And now we're in the A I implementations like at massive scale.

And one of the largest applications of A I is to optimize the global grid infrastructure and the grid would be the largest most complex machine ever built.

And so we could use A I to deliver a cleaner, more reliable, safer energy into the hands of more satisfied customers at lower environmental impact.

That being said that kind of globally, the people who operate the grid are kind of failing due to policy decisions and the availability of power is becoming critical in Europe and in, in, in North America.

So where we have, you know, the kind of work that Kr is doing with these fuel cells.

Now we have, you know, tens of thousands of fuel cells are part of this great infrastructure and optimize that infrastructure.

We need to apply A I now generative A I, how big is that?

It's huge.

I mean, the, the, the, the, you know, the market for uh you know, enterprise A I applications in power and utilities in oil and gas, defense intelligence manufacturing that is probably, you know, order, you know, going to order of a trillion dollar industry, generative A I is another trillion dollar industry on top of that.

And we're applying JA I to generative A I today in Defense and Intelligence in power in power distribution utilities like uh Con Edison, New York Power Authority.

What we do is working with generative A I with Kr at bloom Energy and so generative A I changes everything and I, but I do think we're well beyond the hype cycle in, in, in A I and now we're in the large scale commercial and industrial implementation cycle really quickly.

Tom I know you've got a lot of revenue coming in from defense like you mentioned, where are you seeing more demand from commercial or from government sectors?

Commercial is by far our, our largest some commercial is uh you know, energy, oil and gas, consumer, packaged goods, travel, transportation.

Um you know, that would be a government services that's 80% of our business state and local.

But uh I would say defense and Intel might be 15 to 20% of our business.

That being said it is rapidly growing.

I believe we announced last quarter, that year, over year growth was order of 100%.

So it's one of the, you know, as we are gonna re invent, OK.

The, the, the military complex uh in space subsurface, Cyber.

OK.

Uh Contested logistics.

What have you A I is very much at the center of that and we're very active in participating with the Pentagon in helping them get these services where they want them to be.

Well, given that in our final minute, Tom, I'm curious, I know you've talked about how we're essentially at war with China here.

One minute left.

Talk to me about how worried you are about that headwind, moving forward, be afraid, uh be, be afraid.

These people are competent, they're well financed, they're well trained and they're focused and uh and they are, you know, this idea, pure evil exists, OK?

It does exist.

OK?

And, and these people, they plan on dominating us in, you know, in A I in chips in Cyber, in space in subsurface.

And uh and A I is very much the part of this plan.

And so we are in an open A I warfare with, with China today and you know, different companies are, are, are partnering with different players.

We are partnering with the United States Department of Defense and their allies and we're proud to do it and uh and hope that we win, but I would, you know, be afraid.

And this is, this is, this is a very, very important, indeed, an existential issue.

All right, Tom Sel, we wish we had more time.

Thanks so much for joining us and of course, our thanks, take care, sweetheart as well.

We look forward to hopefully having you back on Yahoo Finance in the f in the future.

Appreciate your time.

Thank you.

Let's do a final check of the markets here.

Just about 90 minutes into the trading day.

You're still at slight gains across the board.

We've got the S and P just above the flat line, the Dow adding 30 the NASDAQ up about 3/10 of a percent coming up next on wealth.

You've got Madison Mills for the next hour.

She will be dedicated to all of your personal finance and needs.

She's got more on that when we come back.