EV demand, investing in AI, jobs data: Asking for a Trend

On today's episode of Asking for a Trend, host Josh Lipton breaks down the biggest takeaways from Monday's trading session.

Car manufacturers like General Motors (GM) and Ford (F) have scaled back their electric vehicle production plans amid weaker consumer demand. Sila co-founder and CEO Gene Berdichevsky explains, "I think we're seeing a slowdown because EVs are just not meeting all of the mainstream consumer adoption expectations. So what consumers really want to see is longer range, faster recharge time. I think we've been very, very focused on cost as the primary driver."

Yahoo Finance Reporter Josh Schafer analyzes his key takeaways from the trading day. First, The Nasdaq Composite (^IXIC) hit a record high in Monday's session despite a higher move in the ten-year Treasury yield. Second, GDP forecasts keep falling, signaling slow growth as the Federal Reserve has its eyes on a soft landing. Finally, meme stocks aren't going anywhere, as "Roaring Kitty" revealed he has a 6.6% stake in the pet care retailer Chewy (CHWY).

As the AI race continues to spearhead the tech sector's growth, Tejas Dessai, Global X ETFs assistant vice president and research analyst, describes the AI trade as "a moment of mass destruction," highlighting the technology's influence and impact on the global economy. He draws parallels between AI and the development of the internet, suggesting that markets are currently in the "infrastructure buildout phase," which makes semiconductors the primary investment focus.

Six Flags Entertainment (SIX) and Cedar Fair (FUN) have successfully completed their $8 billion merger, marking a significant consolidation in the amusement park industry. The newly formed entity, named Six Flags Entertainment Corporation, is set to make its market debut on Tuesday.

To close out the show, Seana Smith breaks down the latest employment reports, exploring what they reveal about the current state of the labor market.

This post was written by Melanie Riehl

Video Transcript

Hello and welcome to ask you for a trend.

I'm Josh Lipton for the next half hour.

We're going to be breaking down the trends of today.

They don't move stocks tomorrow.

There's a lot to keep track of.

So we're focusing on what you need to know to get ahead of the curve.

Here's some of the trends we're going to be diving into the second half is underway, stocks closing out the day higher to kick off the third quarter with the tech heavy NASDAQ leading gains and closing at a new record.

We take a closer look at what's next for artificial intelligence in 2024 plus speed bumps on the path to electrification.

Us, automakers are scaling back investments in electric vehicles as demand falls behind expected levels of growth.

Drivers are concerned about cost charging and range.

We'll talk with one company helping to assuage some of those fears and investors await Friday's crucial jobs report this holiday shortened trading week after a string of encouraging inflation data.

The market is on alert for signs of weakness in the labor market in hopes of achieving a soft landing electric vehicle enthusiasm is stolen out here over the past few months, carmakers like GM and Ford have pivoted or scaled back their EV production plans as demand proves weaker than forecasted.

For more on the EV market.

We have Gene Beachy co founder and CEO of SA A battery manufacturer that aims to improve the safety charging, performance and life cycle of EV batteries gene.

It is great to have you on the show and I wanna let me start big picture Gene as we sort of hinted there, you know, you look at EV sales growth gene.

It is not what it once was.

I'm interested to get your take on why you think that is and what's gonna jump start it from here?

II I think we're seeing a slowdown because EVs are just not meeting all of the mainstream consumer um adoption uh expectations.

So what we, what consumers really want to see is longer range faster recharge time.

Um I think we've been very, very focused on cost as the primary driver and now you have evs that are, that are quite well priced, but we need to continue to improve performance as well as the charging infrastructure.

I do think that this is a temporary slowdown in adoption.

This isn't a change in direction.

All the automakers still agree that electric is the future.

The question is uh it may take a year or two longer to get there.

Gene, one skeptical take I hear and I want to get your take on this.

You'll hear people say, you know, that big bump we saw with EV growth that was first movers that was first adopters.

Now they've come and gone and growth ahead just won't look like that again.

What, what's your response to that?

I, I think that was first adopters, but those first adopters are also the leaders in a trend and uh at some point, EVs are going to hit the performance marks that consumers across the board expect.

Uh And we're going to continue to grow, think of that as the first people that bought an iphone were also early adopters.

It was expensive at the time.

You know, it, it, it was a little bit better than, than what was before.

But that began uh you know, a product evolution that consumers ultimately got behind.

And I think we're going to see the same thing here.

We're gonna have better evs coming on the market in the next few years and that'll reignite uh and re accelerate the, the growth gene.

So let's pivot, let's talk about your start up.

Sa what are you all trying to do do there?

As I understand that, you know, the mission here is to help EVs kind of drive uh farther charge faster.

That's right.

So we make a silicon material that boosts the performance of today's lithium ion batteries.

We're able to deliver about 20 to 25% more range uh in the same volume.

And weight of a battery pack.

So imagine any of the evs that you're looking at today having 20 25% more range just with a chemistry upgrade.

Uh We're also able to drive down recharge times.

Ultimately, we believe we can cut the recharge time in half.

Uh And, and that would obviously be a very big deal and longer term as we get to large scale production, we'll also drive down the cost of the battery pack, which of course still remains an important consumer consideration.

So we're really working to address all three of those things.

Uh range recharge time and cost for consumers is their gene right now.

Is there a, is there a meaningful difference in cost right now between your batteries and those traditional rechargeable batteries?

Our, our, our technology costs has a very small uh cost premium.

Today, we're, we're still at uh uh emerging company and we're still at small scale.

And so we're tending to go after higher end vehicles.

Our, our first uh announced customer was Mercedes.

Uh And their plans are to launch us in their uh electric uh G class vehicle to start.

But then we all certainly want to move uh downstream to, to, to broader markets.

And um and so we're, we're, we're working through that.

Um We, we have a, a road map uh for that, that um and, and then our second announced partner was Panasonic.

So again, we're starting at the higher end and then we'll work uh towards uh towards mass market vehicles in the coming years.

And what is broadly gene kind of that the broader market for EV batteries like right now, you know, how healthy, how resilient is it?

And I'm also interested just geopolitically gene who, who kind of, who dominates that market, who leads it?

Is it the US or is it China?

It's definitely China led right now and I think that that there's a huge concentration there.

Um And is that why is that uh low cost, low cost of production?

And also just historically, that's where a lot of batteries have been produced.

Korea and Japan also do very well and that's where really the industry was for consumer electronics, batteries.

And so the EV battery industry grew up out of that.

So the US is playing catch up because we never had a battery industry and consumer electronics and the Asian countries had a 30 year head start.

So it's not just China, it's also Korea, it's also Japan.

What the US has an opportunity to do is really lead with new technologies like SAS.

So rather than playing catch up trying to make the exact same battery that is being produced in China using new technology, next generation chemistry, next generation performance.

That's really where the US can lead gene.

Really interesting discussion.

Thank you for taking the time to hop on the show today.

I appreciate it.

Thank.

Thanks for having me on us stocks closing higher to kick off the second half of the year.

Investors beginning to count down to the key US jobs report.

Yeah, finances very own.

Josh Shaffer joins us now with more of the trading day takeaways, Josh.

Yeah, Josh, Josh, the NASDAQ composite hitting a record high today despite a higher move in the 10 year treasury yield, that's gonna be my first takeaway today that I want to take a closer look at here.

So I wanna pull up that chart of the 10 year and we saw a pretty significant move in the 10 year treasury.

So you see they're up about 14 basis points typically over the last we'll call it a year or so.

Now, if we, so at least it's been that long, if not longer as yields have gone up this much in a day.

Normally you've seen stocks go down, I'll take a look at a three month chart here for us and we can look at April if you remember April, we had that big chug higher.

That's when we had a 5% pull back in the S and P, right?

So it's interesting for me to see that move higher in the 10 year today, but not really see it in stocks.

So if we take a look, sort of what the market looked like today, I think this is kind of intuitive for what this move really means for investors, right?

As yields go higher.

You see kind of this move to quality is what strategists often call it.

Right.

Look at our top two sectors there.

Tech, consumer discretionary, right?

And so uh sorry, yeah, tech mainly is what I'm highlighting there.

And what's interesting within that is you look at what succeeded you had Microsoft close at an all time high, Amazon up 2% apple at an all time high.

So as we get closer to 4.5% on the tenure strategists basically circle a couple of big companies and say good earners are gonna be what can do well in that environment but anything other than that and you start to struggle a little bit.

And then I guess the broad takeaway being as the tenure moves higher, we might not get that broadening out that people want to see that.

And you mentioned 4.5, is that sort of the level, you know, I would say is that kind of level folks are watching.

So when you take a look at the 10 year, we're close to 4.5 right now.

4.5 is kind of when people start to really go up in quality.

This is per piper Sam where it's Michael Kantrowitz, he highlights 4.5 as kind of a key level.

And then if you get below 4 to 4.5, maybe companies that are just good earners can do well if you get below four, then you get kind of the small cap broadening rally.

So really, I think this is gonna be important to watch because we had this big move up and you have that jobs report on Friday and we know that usually moves, yields a decent amount.

So that would be for take away number two, take away, number two GDP forecasts keep falling.

And this was not the story to start the year, right?

And it was not the story of 2023.

We talked a lot about GDP forecasts, keep going higher.

The economy is doing better than expected, better than expected.

Well, let's take a look at the Atlanta Feds GDP.

Now four, this is for second quarter and this went through all out the quarter, look at where we're down here.

Now we're down below 2% for the first time for the at N FA GDP.

Now of the quarter, this takes in real time data.

And then when you look at just consensus compiled by Bloomberg, this is via U BS.

We're at 2.3%.

You can see here what I was talking about.

We kind of came all the way up, right?

This was the expectation.

Now we're starting to come down a little bit and I think that's just an interesting picture of how people are feeling about economic growth right now.

We went from, are we growing too fast to OK, maybe it's gonna be a little bit less than expected.

And so, so uh economy cooling, inflation moderating, what, what do you, I mean, some implications for the Fed do you think?

I mean, that's so funding, right?

It starts looking more reasonable.

I think that's soft funding.

And I think that's important to remember like 2.3% is still good.

That's still about on trend with where you'd want to be.

So it's not necessarily bad to see these starting to come down.

Remember when we were coming up like this and we didn't know where we were gonna stop.

We were talking about no landing.

The economy is too hot.

That's a concern for inflation.

The fed is not going to cut it all.

So I think this is part of the reason you're starting to see two cuts priced into the market and that's maybe where we land here on kind of what the takeaway is for.

Now, the concern would be, it keeps coming down, but we don't know if it's coming down too far yet.

So we're gonna take away uh meme stock the one of the day, the fun one of the day, right?

So Keith Gill uh Roar and Kitty had an sec filing out today that he now owns over 6.6% of Chuy that is the pet provider, pet care provider.

This is not gamestop.

So a little bit of a different look from him there.

And Josh, really my highlight from this one in his sec filing, you can kind of fill in a box and put in whatever you want to some extent.

He decided to put in a box here that says, check the appropriate box to designate whether you are a cat.

Keith Gill confirmed he is, are you allowed to do that?

I guess, I guess I asked, I asked our Jared Blier or Mark, what did Jared say?

Jared said there is a box within the sec filing that you can essentially enter like a text box and sort of put in whatever you want.

And it seems like Mr went for it, Mr Gill went for it.

He went, he went for it there.

I thought it was interesting overall.

In the Chewy story today, you just see shares decline throughout the day after that and it, you look at this filing closer.

He owned the shares last Monday.

Remember he tweeted on Thursday?

It doesn't seem like the internet was too happy with the fact that he already owned the shares then started tweeting.

Then it jumps.

He's facing a class action lawsuit for what happened with gamestop people starting to question whether Keith Gill might be operating some level of a pump and dump here.

Those are just accusations to this point, but it doesn't seem like the retail crowd is necessarily following him and staying like they were in some of the others.

It was, we had, we have f financial analyst who covers chu on the show today.

And it was interesting.

I mean, listen, he's studying fundamentals but it wasn't to get his take about how, you know, listen, you get a news flow like this and you get headlines like this and you get moves like it's in the stock.

Um He thinks it just be potentially a lot harder for like at least institutional investors to get comfortable with this.

In other words, a lot of them that he thinks are gonna say, you know, who needs this?

Chewy.

Chewy is a lot more of a real fundamental story than games stuff too, right?

And I think that's maybe to the detriment of the company here in some ways to get this sort of thing involved when they actually have earnings were up last quarter, they have kind of a positive fundamental story going with them gamestop.

I think maybe a little bit when you're CEO CFO, you can control a lot of things, tough to control.

Roaring kitty.

You don't, you don't know what me he's gonna put out, right?

And then all of a sudden your stock starts going wild.

Joshua.

Thank you.

Great stuff.

The first half of the year was all about A I.

So where does that tech head in the months ahead?

We're asking for a trend on the other side, the rapid rise of artificial intelligence providing a lift for chip providers according to global X.

By the end of this decade.

A compound annual growth rate of over 30% is expected for annual spending growth on A I chips.

However, semiconductor makers not the only ones standing to benefit from the A I surge.

Teos Deai Global ex assistant vice president and research analyst joins me now, TEOS, it is great to have you on the show.

Um Let me ask you when you talk about A I TEOS here, you know, it is one of, I mean, maybe the hottest trend in investment traders, investors, they wanna learn about it, study it, they wanna find ways to play it.

Do you think all this enthusiasm, Teos?

Does it make sense to you or, or do you think we've gotten a little bit ahead of ourselves here?

Absolutely.

Uh Josh, great to be here.

Then I think we look at this as a moment of mass disruption when it comes to uh sort of the impact that artificial intelligence will broadly have on the on the global economy.

In fact, uh you know, this is very much like the internet itself.

Um you know, enables new experiences and new products and services to be built here.

And currently we are in that infrastructure built out phase in that semiconductor opportunity.

And that is I think worked very well for investors across board for the last 12 months or so.

A large part of it has been driven by media and a few select stocks here and there but we expect an aggressive broadening out as that, as that investment, as the dollar into this foundational sort of infrastructure goes, uh goes about.

And I think, you know, this is really a good time to think about, you know, the gains that you've had.

For example, if you've been exposed to NVIDIA, if you've been exposed to some of these names and even the big tech universe across the board and really start to think about where else do I find this growth for the next 18 to 24 months?

And this is uh you know, large majority of the conversations that we're having with our clients as well.

Um And when you look at the universe, you know, we we generally um recommending that investors look at three specific areas, especially as they think about this next lap of growth with A I, you know, number one is obviously data centers and the entire digital infrastructure value chain, right?

It's not just about building these massive gigantic processing facilities but also really closing the loop in terms of bringing these experiences to end users as A I use cases expand.

Secondly, we encourage investors pay some attention to cloud software, cloud applications, cloud infrastructure, as well as areas such as cyber security, which appear very attractive.

And if you don't want to play this from a technology standpoint, then you should certainly be looking that energy, you know, uranium copper as well as a few other sort of areas there.

Um You know, especially as this power hungry dynamic forms for artificial intelligence across the board.

But a very investable uh the here, even in uh in the second half of uh of this year, even though we've seen a tremendous r so far this year.

So let's, um let's get some pics here, let's say data center, your clients come to you, they want to play that.

What do you tell them?

Absolutely.

Look, our approach is um you know, it's it's too early to have one or two picks to go with this particular theme.

You know, it's, it's going to be a very secular build out.

I mean, if you look at the computing infrastructure that we have currently around the world that is powering the global digital economy, we're really talking about at least a trillion dollars worth of infrastructure, right, chips networking solutions.

Um you know, a lot of memory storage that is housed in this massive gigantic hyperscale, you know, processing facilities around the world.

So our approach really is take a very passive approach.

You know, we we for example, have a data center and digital infrastructure ETF that has been picking up a lot of conversations across the board as well.

Um But what we anticipate is a secular build out that will result in cap capacity expansion and that will also likely translate in an opportunity for a lot of these, you know, data center companies as well as companies that provide the components that go into these data centers, an opportunity to really grow their earnings at a much faster rate than what the market has baked into right now.

Copper.

Now, that's interesting.

Why is copper a way to play the A I theme?

And if you're interested, how do you play that?

Do you just buy the red metal?

Absolutely.

So, um you know, copper generally is very well correlated with economic expansion.

So essentially, if you're building gigantic data center capacity, if you're building data center facilities, right, if you're also, again, we have electrification of automobiles on the horizon or generally just an infrastructure upgrade that is currently playing into the fold.

You know, we, we're investing in power grids, we're investing in transmission facilities, all of that requires copper fundamentally, which really positions that um you know, that that commodity in a way uh position here, we've seen copper prices on a secular uptake for a while now, prices have certainly pulled back.

And I think that presents an interesting dynamic for investors to consider um consider the commodity as a whole.

Um Again, we offer a copper miners ETF here uh by the ticker of Copx cop, but that has been a very popular product for us so far this year as well.

Um But generally, we're seeing um again, um alongside copper conversations pick up in U and, and some of the other commodity offerings that pr that we present here as well.

So again, right, I think this is a perfect time to sort of take a step back if you have been writing this A I momentum in the markets in the back of NVIDIA on the back of some of these big tech names, really take a step back and think, where else do I position to find this, uh find this growth opportunity?

And, and there are many um you know, undervalued areas that we, we think investors should look at Taos great chat, interesting picks and strategies.

Thanks for joining us.

Absolutely.

Thank you.

Coming up, Friday's Jobs report will deliver a crucial read on the state of the labor market or asking for a trend on the other side.

It's official Six Flags and Cedar Fair have completed an $8 billion merger after announcing plans to goodbye last year earlier today, City Leisure and Travel, Anos, James Hardiman joined wealth to discuss the merger.

This is far away, the biggest deal really the only deal of its kind uh this this century.

Um And I think it creates significant value you talked about, you know, what success looks like.

Um You know, we, we think that value is created here a because um there's a significant management upgrade, right?

The Cedar Fair management team is the steady hand that I think these six Flags assets have needed for so long.

Um And have has been missing the new company Six Flag Entertainment corporation will start trading Tuesday under Cedar Fair's ticker symbol F un.

While non farm payrolls are growing steadily, household employment is sliding.

Yahoo Finance's Shana Smith joins me now with a closer look, Shana.

Hey there, Josh.

All right.

So this is a trend that has certainly been capturing Wall Street's attention over the most recent months.

So we wanted to break down exactly what we have seen from the most recent report.

And then ultimately, what that could potentially tell us about what is happening in the US economy at this juncture.

So what you have on the screen right here, this is the trend that we've seen in non farm payrolls.

Now, they have continued to grow, remain steady, especially when you compare it to the historical average.

The numbers that we have gotten most recently really point to a jobs market here that remains strong.

I wanna compare that to the trend that we have seen in the household employment survey.

So as you can see, that's the light blue line here and that has been declining as the non farm payrolls, which is a survey here of businesses has been holding steady.

Now, it is important to point out that the household employment survey here that brighter blue line here on the screen.

It is a smaller pool in terms of what the survey is, uh who the survey is asking and they are also surveying house hold there.

So lots of questions just about what indicator is more important or maybe more reliable here in the longer term.

But I wanna talk about the gap that we are seeing here because the gap in the most recent report did widen just a bit.

And this is really what the reaction was on the street to that last print.

And what this uh what this chart really breaks down is maybe the theory behind why this is happening.

And there was a new note out from alpine research really pointing or alpine macro, excuse me, really pointing to the fact that maybe some of this has to do with immigration.

We certainly have seen a surge in immigration over the last several years.

And when you take a look at, it's estimated about 4 million undocumented immigrants right now live in the US.

So alpine macro was pointing to the fact that if just under half of the undocumented immigrants are actually working that would actually drop or account for about half of the discrepancy that we're seeing between these two charts.

And and I wanna point this out because this is also something that big banks like Morgan Stanley, when you take a look at Goldman, when you take a look at JP Morgan have been calling out just this gap that we've been seeing in the household and the non par payroll survey and exactly what this signals and why this is happening.

That key question, why?

So some of that now being pointed to maybe immigration is having an outside effect or impact on that.

And maybe that's why we're seeing these two readings remain so far apart at this point in the economic cycle.

All right, big number coming Friday morning.

Thank you, Shana.

That is a wrap on today's asking for a trend and be sure to come back tomorrow at 4:30 p.m. Eastern for all of the latest market, moving stories affecting your wallet.

Have a great night.