GDP data, Amazon hits $2T, retail earnings: Morning Brief

Today's episode of the Morning Brief, co-hosted by Seana Smith and Brad Smith, offers a deep dive into key economic data, trending stocks, and retail earnings reports.

The show opens with a focus on markets as investors react to the latest initial jobless claims data alongside GDP figures. This economic backdrop is further complicated by Micron Technology's (MU) softer-than-expected guidance, which triggered a sell-off in the semiconductor sector.

The show then shifts to trending tickers, analyzing stock reactions for Walgreens (WBA) and GSK (GSK). Amazon (AMZN) is also highlighted for its milestone achievement as the fifth US company to surpass a $2 trillion market capitalization.

The show concludes with a preview of Nike's (NKE) upcoming earnings report, set for release after the closing bell on Thursday. As a retail giant, Nike's performance could offer insights into consumer spending trends and the overall health of the retail sector.

This post was written by Angel Smith

Video Transcript

It's 9 a.m. here in New York City.

I'm Sean Smith alongside Brad Smith and this is Yahoo Finance's flagship show the morning.

That's right.

Yields moving lower this morning on the back of some fresh econ data, we'll see if the moves continues throughout the day.

Let's get right to it with the three things that you need to know this Thursday morning as you prep for the trading day, Yahoo finances Josh SCF for Jared and Madison Mills have more.

Investors are digesting a fresh batch of econ data.

The US economy grew at a rate of 1.4% in line with estimates in the first quarter.

We're also looking at the labor market where 233,000 people filed for first time unemployment benefits last week.

That's down from the previous three plus shares of Myron under pressure on the back of its quarterly results.

The chip maker beating Wall Street's third quarter expectations driven by demand for its A I memory chips with the price drop comes a bit micros current quarter outlook roughly in line with analyst as to disappointing investors, the results dragging stocks like Invidia and A MD lower this morning and Amazon hit a historic milestone, the E commerce giant reaching a $2 trillion valuation for the first time ever on Wednesday.

Amazon is now the fifth US company to cross that $2 trillion market cap.

Joining other big tech titans like in video, apple alphabet and Microsoft shares of Amazon surging more than 25% year to date.

So far our top story this morning, a slew of economic data.

The US economy grew at an annualized rate of 1.4% in the first quarter.

That's in line with analysts expectations.

We're also looking at the labor market, 233,000 people filed for first time unemployment benefits last week.

That is actually down from the previous reading and below what Wall Street had predicted.

So let's get into some of the analysis with Yahoo Finance's own, Josh Schafer, a lot of data coming out here.

This here.

What do you think the markets are going to latch on to most here as we're seeing these readings come down?

Yeah, Brad II, I mean, I think the general market reaction right now, you saw futures move up a little bit, you didn't see a giant move in yields, right?

So I think generally what the market is telling us about this data is it's not overly concerning.

Remember, we're sitting near record highs so to see the market really accept this econ data well and shoot higher, you would probably be looking at something more like an inflation print, not necessarily data of first quarter G P which ended in March.

But I do think one thing to take out of that GDP print was you saw personal consumption come down again down to 1.5% on.

This is the third estimate.

The first estimate it was 2.5 then it came down to two, then it came down to 1.5%.

So we've been talking a lot about sort of a little bit of a consumer slowdown or maybe just a more cautious consumer.

And that was what some economists were saying about this print is that you're seeing maybe perhaps a little bit more of a cautious consumer within that region as far as claims goes, that's been an interesting one to watch because it's really been ticking up higher for most of June and through May.

Now that's also the time of year when you look at a longer term initial jobless claims chart, it normally takes up this time of year.

So it's not necessarily unnormal to see that the thing that that's sort of been coupled with is we know the unemployment rate has been rising, right.

The unemployment rate is now up to 4% for the first time in a little bit over two years.

And so to see claims rising with that has sort of been the little bit of uh, oh wearing to get some sort of sign of concern here.

So I think the market probably ok with the fact that claims came in lower than last week and lower than the week before.

Yes, the general trend has been higher, but we're not moving higher every single week in sort of an obvious direction here.

So perhaps there's not a clear read through from claims to this point, I guess.

How do you think the market is ultimately going to read some of these data prints because you are right.

There's not necessarily anything that's too concerning with in these prints, but it's also not painting this picture of growth and something that we had been accustomed to seeing going back over the last couple of quarters.

So here we are today and we are starting to see things slow down, I guess.

At what point do you think the market starts to maybe take issue with some of these concerning prints rather than just focusing on exactly what this means for fed cutting?

It's interesting, it gets into like the good news is good news.

Bad news is good news, et cetera, et cetera.

Right.

And I'm talking about good economic news being good for stocks or bad economic being good for stocks for the last month or so.

We've kind of been in a regime where bad economic news has been good for stocks because it sort of keeps fed rate cuts on the table because there was a concern that we were running too hot and if the economy is growing too much, then we're worried about inflation and we might cut to what extent are we going to get there?

I'm not entirely sure.

I mean, I think that's kind of the great debate right now.

I think it would have to be something in the labor market based on what people have been talking about.

That's the number one thing that I think most strategists you guys talk to every day say is it labor market is the thing to watch.

And so when we talk about the labor market, our most robust print comes next week after everyone wakes up after a retired night of fireworks on July 4th on July 5th, we're gonna get that Dream Jobs report.

And I think that's sort of perhaps, maybe the key of, ok, does the unemployment rate go up again?

And maybe that's when bad news starts to be slightly concerning if you're a truly forward looking person because we know once the unemployment rate starts ticking up and ticking up, it usually keeps moving.

And I think that's one of the key things to watch right now is just how, how does that sort of build on itself and keep ticking higher as far as the other side of eco data goes, we have the inflation print tomorrow and those are always a straight read.

You want inflation to come down.

Yeah, I mean, look, thanks for the reminder as well that right after the Fourth of July, we'll be back here starting up early.

So excited jobs report.

No, it's gonna, it's gonna be good.

I mean, while everybody else is kind of chilling, perhaps they'll wanna be able to take in exactly what the jobs market is doing.

And you got a lot of data that's coming out on the jobs market next week, whether that be private payrolls from AD P that's still gonna come out.

And then additionally, you've got Fed chair Jerome Powell, who's gonna be speaking in Portugal.

So a little bit of a rendezvous for him and an international flair uh on that testimony or that speech rather that's gonna be no holiday for us.

Brad.

No, no, but it, it, it, it is interesting when you talk about now how the focus should be or maybe more so is on the labor market because that, that's exactly what Stuart Kaiser from Citi was telling us yesterday.

He was saying, hey, the market is and so focused on these inflation prints are kind of missing the bigger story.

What he views maybe as a more important data point at this part of the economic cycle, which is some of that weakening that we're starting to see within the labor.

A lot of economists feel like the trend in inflation is there, it's gonna be slow but it's going to happen.

And so if that trend just continues slowly, you kind of know what's happening there and then, oh, maybe we should look more at the labor market because you're not exactly sure what's happening.

Exactly great point there.

All right, Josh, thanks so much.

Let's take a look at Miron because shares are in the red this morning on the back of its earnings print despite beating the street's Q three expectations driven by demand for its A I chips.

Mike's Q four guidance overshadowing those results.

The chip makers revenue guidance is in line with expectations.

Ultimately, though investors are viewing that as a huge disappointment, the stock has been on a tear though since the start of the year and taking a look at those year to day gains up nearly 67% with a deeper dive into these results.

And ultimately, what it tells us about the A I excitement we wanna bring in Angela Zino, he's Cfras, a research analyst along with Jake Silverman Bloomberg intelligence analyst, great to see you and have both of you, Angela, let me start with you in terms of the street's reaction here.

We are seeing uh pressure on Mike Ron shares is that the right read of this report because there does seem to be a lot of anecdotes and a lot of data points to be excited about in this print.

Yeah.

Now, so a as far as kind of, you know, the reaction to the stock price here, I mean, fairly muted in nature and you know, maybe rightfully so, I mean, you kind of saw, you know what they did last quarter and it was kind of a nice beaten raise on both kind of the top and the bottom line side of things.

I think going into the print here, there was an expectation out there from the street that, um, you would again see kind of a very nice beat and raise, raise type quarter.

You didn't necessarily get that specifically on the top line side of things.

But that said, you mean you did get a lot of kind of um good items and that we did see, I mean, pricing uh looked very good on both the D rent and then side of things um increasing about 20% sequentially on both side of things, margins look like that, you know, they're holding up fairly well.

Um And, you know, the improving the trajectory looks pretty good on that side of things.

But, you know, I think the other thing maybe holding up the street a little bit is also kind of the Capex guidance side of things.

Um You know, the good thing is that they kind of threw it out there now and uh we now, you know, we now have that unknown kind of thrown out there for 2025.

And, you know, you're looking at mid thirties type of Capex uh or capital intensity rate going into next year probably compares to about 32%.

Here this year.

So it's gonna grow faster than revenue next year.

But that should be expected because of the the growth opportunities there related to high bandwidth memory.

Um So overall, you know, somewhat of a mixed but you know, Mikron is kind of trending in the right direction here, Jake, I want to get your reaction as well here.

I mean, the company is talking about being able to drive robust price increases, industry supply demand conditions continue to improve, rapidly growing A I demand, enabling to grow the revenue by over 50% in this most recent quarter.

I mean, what what is the read through?

Especially if things are as mixed as investors and analysts like Angelo are saying this morning.

Yeah, so overall, I mean, we we believe that the fundamentals remain pretty positive.

We're still remaining pretty optimistic on A IA I is actually a pretty, you know, early stages for microns, specifically, they supply HBM into Nvidia's H 200 they're going to expand into other customers as well as potentially additional products within Nvidia's A I portfolio such as their Blackwell Gpus.

So, you know, overall, we don't think this is specific of read through over into A I itself as long as hyperscale Capex continues to increase quarter to quarter and there's potentially some upward bias there as well.

We remain pretty optimistic overall on A I spend and we believe that Mike run is going to be a particularly strong beneficiary of this Angela.

We also saw margins recover quicker than anticipated here in the most recent quarter.

Is this a trend that you see continuing in the quarter of the current quarter and then the quarters to come, we do.

Um, you know, again, this is, you know, they're coming out of a pretty nasty downturn in, in 2023.

We did see them finally get to profitability in that February quarter.

Um two quarters ago, it was the first time in, in, you know, at the five consecutive quarters of the year, over year declines um in terms or year over year, uh negative um earnings kind of looked at that moment and continued in the make quarter here.

But as you kind of look, we think into 2025 the there should continue to be a favorable pricing landscape.

Uh high band with memory takes up a lot more wafer supply out there.

Part of the reason that you have the need for the higher Capex numbers out there, but also, you know, that will continue to improve the the pricing landscape, the mix, overall mix for micro and thus, we do expect them to hit record um gross margins by the second half of calendar year, 2025.

So that trajectory should continue to improve.

Ultimately, we think by the time you end this cycle, they could potentially see um gross margins kind of get to 50% or even North of that.

I mean, in the meantime, Angelo, it sounds like those margins are really going to be pressed by, by capital expenditures, you know, e exactly what type of spending profile do you expect a micro to continue to exhibit?

Uh as, as they are citing demand is the reason to spend further?

Yeah, I mean, listen, I think you kind of look at 2024 here and, and that is a recovery year for the memory industry, right?

Um So you, you actually have lower Capex spend in 2024 versus um you know, or, or lower uh capacity in 2024 versus 2023.

That's gonna kind of bump back up um in 2025.

Now, um you know, again, the cap X number in 25 if you're looking at capital intensity ratio, you know, no, uh it's somewhere in the mid, mid thirties, maybe we're talking about a 13 or 14 billion or so.

Um You know, run rate for uh Capex next year.

Now that said, I mean, again, it's all based on kind of the growth opportunities tied to these A I servers high band with memory.

And um you know, we think that again is the right way to look at this.

Now, you, you kind of look going into next year.

Um I think maybe the bigger question mark out there isn't necessarily what Mike's doing, but as you kind of hit more of an ex uh expansionary year in 2025 from a recovery year this year, what are some of the competitors going to do?

Um What is Samsung gonna do in terms of some of their cap X number, which is the big fish out there?

So, um you know, that has historically kind of been the concern with these kind of memory upturns.

Um So maybe that is also kind of a little bit of a read through that you're seeing from some investors out there as we now kind of transition the story from recovery to expansionary phase.

Jake real quick.

Going back to what you were just saying a minute ago, you said that you were pretty optimistic overall in an A I spend.

Do you think mis well positioned within that space?

My question, you at least comparing that to what we're seeing from the streets reaction to these results.

I think going into this, many people were asking whether or not this report was going to show any hints of a slowdown in terms of A I demand.

My takeaway Elise looking at this report is very much supply is still trying to catch up with demand.

Is that a story that you don't really see changing anytime soon?

No, I don't think it really is going to change.

You know, I pretty much agree.

I think supply remains tight demand continues to increase and high band with memory isn't the only story they're also benefiting from other A I related products like high capacity D ram modules, solid state drives.

So, you know, ultimately, we just think that pricing will continue to improve as supply remains tight.

A I spend continues to increase.

And you know, traditional servers, smartphones, and pcs, you know, that demand recovers even at a more modest pace.

So yes, ultimately, we don't, we remain pretty favorable on, on, on Mike runs A I opportunities.

So it's both high bandwidth memory as well as other air related products, Angelo Zino CFR, a research analyst and Jake Silverman who is the Bloomberg intelligence analyst.

Great to have both of you here.

Thanks so much for discussing Mike run with us this morning, Amazon reaching a new market cap milestone, the tech giant becoming the fifth US company to surpass $2 trillion in market value on Wednesday.

Yahoo Finance's Madison Mills has the rundown, the breakdown, the run up, whatever you wanna call it call Amazon having a new record.

They do Brad.

Thanks so much.

So shares of Amazon have seen a steady uptick so far this year rising nearly 30% year to date and now sitting in the same camps as the big ways, the Microsoft's Apples and video and of course alphabet here.

But as you know, it's been a battle for the most valuable company title and videos monster rally this year briefly sending its market cap above both Apple and Microsoft last week making it the most valuable public company in the world for a short period of time.

Now, Microsoft and Apple have since taken back those top two spots as in video surge has taken a breather this week you can see on this chart behind me just the stress that in video as a company has been under over the past five days, seen its worst three day slump since December of 2022 and losing over $430 billion in its market cap.

But the real battle of course, here has been between Microsoft and Apple.

Both of those tech giants fighting overtake the other in market cap.

The current crow sitting with Microsoft the Apple is close behind here.

All right, Madison, thanks so much for breaking that down for us.

Let's take a look overseas and take a look at the currency market.

The Japanese Yen hitting its weakest level against the dollar since 1986.

We're getting some commentary out of Japan's Finance Minister saying that he they will do what it takes to help support the currency, help support the Yen Yahoo Finance's Jared licky has the breakdown there for us, Jared.

That's right.

It's all speculation about when that next intervention is going to take place and let me just show you the Japanese Yen versus the US dollar here.

And uh this is the inverse of what you were just looking at in your, on your screen where we have 100 and 60 yen to the dollar.

This shows more intuitively that a lower price means a lower yen.

And that's what we're seeing here as, uh, even the, uh wi Fi Interactive is sinking on me.

Now, here's a five year chart and we can see my goodness.

Uh, that is all the way at the bottom.

In fact, if we go to a, if we go to a max chart, you're gonna find that this goes back to the late nineties.

Uh you have to go all the way back to 1986 six to find something that low with respect to the yen.

So I did mention that it's all about Wall Street trying to figure out trying to gain when the next intervention is going to take place that is decided by the Ministry of Finance.

And all of this comes because the Japanese have been holding their interest rates so low um versus the rest of the world, you know, you look at the United States with rates north of 5% the Japanese just raised them for the first time in decades and they're at 0.1%.

So not a lot of incentive to have currency in going into the yen.

And in fact, we have something called the Kerry trade, which is when this is a very prevalent trade over the last 25 maybe longer years, whereby hedge funds will borrow in the Yen and invest that money in overseas markets with higher interest rates like the US.

All of this to say that huge trade is going to be unwound.

But we don't know exactly when in the Ministry of Finance, whenever they intervene, that could be a potential trigger.

All right, Jared.

Thanks so much to touch.

Really keeping you on your toes here this morning.

Thank you.

Well, we're just getting started here on a morning brief Walgreens shares are sinking the stock of nearly 22% in pre market after slashing its full year profit outlook, we will break down some trap top trending tickers.

Next, our loving value meals.

Who doesn't?

We're going to discuss the latest fast food change to announce its own cheaper offering plus A T for 10 a.m. hour of catalyst.

We're going to speak with the CFO of the Strauss, the company reporting sales that missed expectations.

You see that in the stock price here this morning shares are selling off.

We got all that and more.

You're watching morning.

Welcome back time for some trending tickers this morning, Walgreens shares plunging after slashing its full year profit outlook, citing a quote, continued challenging environment.

Yahoo Finance's Angeli Kem Lani has the details here, Angel Lee, this is a a massive sinking that we're seeing here pre market for shares of WB A. Yeah, Walgreens really facing some pressure from the from investors right now.

Basically on that guidance of a second decline in its outlook for the year profit outlook for the year hasn't done any sort of Reconfirmation or provided any kind of guidance on revenues for the year.

So that's also a reason why investors are really watching this one.

I was just listening to the call in which Ceo Tim went worth was talking a lot about what the plan is, what the strategy is that he is now unfolding for the company.

We know that he's new to the job and has really restructured what Walgreens is looking at pulling way from Village MD and the providing of health care services.

So pulling back on that just a little bit on the guidance that we just told you about just to give you the number specifically looking at 2.8 to 2.95 on the higher end there.

And that's a drop from $3.20 to 335 previously.

And that was narrowing last quarter.

So it's really been a lot of shifting to the downside for meanwhile, like I mentioned, the Village MD pull back, that is also that is actually helped their, their revenues for the quarter, bringing in a little bit more as they've sort of balanced out where the demand is for that.

They've also talked about the back.

And now we know that pharmacies broadly are under pressure in the country facing a lot of pressure from PB M which we know set the rates for them.

And so that is something that a big chain like Walgreens is also facing the call Ceo Tim or saying specifically that quote, we're at the point where current pharmacy model is not sustainable and the challenges in our operating environment require approaching the market differently.

And they are in active discussions with PB MS and other payers to align incentives and ensure they are paid fairly.

So the complaints we hear from independent pharmacies as well of underpaying, they've talked openly, Walgreens did openly talk about being underpaid for some brands and they've also faced struggles with more brand uh uh medicines being filled.

And then on the flip side, generic medicines not being as widely available because of production problems.

So more money out the door there as well since uh brand medications have a lower margin.

So all of this, I like there's so many minutia to why this is happening today.

But that is essentially the story is they're now in a sort of re shifting focus of strategy for the company and all of this is coming together at the same time and that's why we're seeing this problem.

What does that entail for boots right now?

This is a part of the business they were trying to sell off previously.

They are going to keep it.

It looks like that those discussions of selling it were off the table because they are looking at the profitability that it has opportunity.

It has, it has supported the revenues largely so that that's something that they're keeping their eye on right now.

And that's also in the middle of the store closures they're looking at here.

So it's all balancing out.

They said something along the lines of losing a portion of 25% of the stores that are under performing.

So lots of moves.

It's certainly lots of moves.

And we're seeing uh consumers under tremendous amount of pressure, something that they've brought up uh to this morning.

And let's also take a look at GSK because the CDC here shifting its recommendation for ours, the vaccines and we're seeing the stock under a bit of pressure.

That's right.

So the based on the data that was presented to an advisory panel this week, the CDC and the advisory panel recommended that those that are older on the older side of the age gap for seniors.

So those who are say 65 and older to 70 years old, that's going to be sort of recommended if they have other severe diseases.

But then those that are on the older side of that range will have to get just one dose.

And so that shrinks the market little bit for companies like GSK pfizer as well as Moderna.

Those are the three companies on the market.

We also saw moderna drop on its results showing much lower efficacy than the other two companies when it comes to protection over two seasons.

So all of that playing a role in sort of what was supposed to be projected as you know, this 10 billion market opportunity could be a lot less for all these companies combined.

All right, thanks so much.

I wanna turn our attention now to some of the big banks here following the latest round of stress test or results.

The fed saying all 31 banks will be able to withstand a severe recession scenario.

Goldman Sachs shares are though taking a hit after analysts saying this morning that the bank is going to have to set aside more capital based on the stress test.

And uh it's also important to point out that Goldman is not alone in this Wells Fargo is also another bank that analysts see uh likely having to set aside more capital on on a percentage on a percentage basis.

So digging into that just a little bit, Jeffries analyst, Eric Ken Austin say that most banks are going to see their stress capital buffers increase.

Goldman Sachs is gonna see a rise of 9/10 of a percent.

Wells Fargo an increase of 8/10 of a percent.

Those two leading the largest banks are also seeing some increase likely here in terms of the stress capital buffers for some of the regional banks capital, one financial 5th 3rd Bank Corp, as well as Key Corp. Yeah, some notes on exactly what this is for the viewers out there, they're trying to figure out.

All right, why do these stress tests happen.

What do they actually go through?

The, the stress test essentially shows that large banks have sufficient capital to withstand a highly stressful scenario, ie recession or even a mild depression if that were to take place.

But in this case, it was really more focused on recession and what some of the equity tiers, the common equity tiers would be relevant thresholds to remain above here.

And all 31 banks, as you mentioned, we're able to remain above that minimum, what they call ce T one here and then under this projected hypothetical losses of nearly $685 billion.

Now overall here, the scenario includes a severe global recession, 40% decline in commercial real estate prices, substantial increase in office vacancies, 36% decline in housing prices, unemployment rate rising nearly 6.5 percentage points to a peak of 10%.

So like a wild scenario.

But one that they want to ensure that the uh the the financial system more broadly, uh even if there were cracks that they would be able to try and figure out.

Ok, what do you need to have in place in order to make sure that there is still strength within the broader financial system?

Should any of these events take place or if they all happen at the same time here?

But uh a good news uh en environment or scenario here to hear that all of the banks were able to or 31 banks, um, were able to remain above some of the threshold requirements there.

Yeah, we'll be speaking with Devin Ryan next hour of J MP, uh, securities.

He's gonna weigh in on these results and also just talk about maybe we should be more focused on the end game here for basel three and exactly what that ultimately means for the banks.

Keep right here on Yahoo Finance, but we've got the opening bell.

Next, it's a live, look at the opening bell at the NYSC and at the NASDAQ at the NASDAQ.

You've got web tune ringing the opening bell there.

You got some fun.

Fetti raining down from above.

Look at that and at the NYSC, you've got grinder ringing the opening bell, ticker symbol, Grnd.

All right.

Kicking off today's trading session here.

Happy pride.

Month to everyone out there.

And, uh, you're seeing grinder open the bell here at the NYSC.

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

As we've got the Wi Fi interactive loading up.

We're standing next to it.

So, you know, it's time to do some clicking here.

Dow Jones industrial average that starting off the day flat just barely to the downside right now by about 1/10 of a percent.

Now, that composite you're seeing that flat barely to the upside that's holding on to gains of a mere 5/100 of a percent.

We'll see if we can add on to that.

And the S and P 500.

You're seeing that flat barely to the downside as well to begin the trading activity here today.

Let's take a look at some heat maps, only sea we should.

And let's take a look at the sectors here.

Kicking off, you got energy and communication services, at least leading the trade for now.

Very, very early.

You've got utilities and financials.

There are lagging in just a bit and digging into some of the movement that we're seeing across the board.

A lot of focus this morning on the chip sector following the results that we got out from Miron.

You're looking at losses of micro of just around 5%.

Some questions just about the fact that guidance didn't, didn't exceed at the streets expectations.

Some concern there.

We talked to Angela Zino earlier in the hour saying that the A I trade very much intact, the demand is there still remains more of a supply story at this point.

You've got NVIDIA off just around 1%.

Let's take it over to Jared Blicker for a closer look at some of the movement that we're seeing, Jared.

That's right.

I just want to go back to the main market, the S and P 500 its cohorts and show the year to day chart.

We are right near the top of the trading range over the last week or two, but we've had bread, the internals of the market deteriorating and So for a couple of days in a row, we've had more decliners in the S and P 500 than Gainers.

Meanwhile, the S and P 500 is going up.

So that's kind of a rare circumstance.

Sometimes that's just a yellow warning flag.

So I'll leave it there.

I do want to get into some sector action.

Yesterday was a big day for consumer discretionary and that is ticker XL Y.

It's fourth up today, up only 10 basis points.

But over the last two days, you can see up 1.5%.

And yesterday that was thanks to the standout efforts of both Tesla and Amazon.

And so let me tackle Amazon first.

I'm going to put a five year chart on here and you can see after this big cup here a little bit of a consolidation, not even much of a handle.

It is off to the races.

So this is the very beginning of a new breakout.

So a lot of times that gets momentum just throwing that out there here is Tesla in.

I want to show a shorter time frame chart here is year to date and I put some candlesticks on this and what we have here is an inverse head and shoulders, not perfect.

But if Tesla is able to uh surge above 200 that's kind of uh uh an important price level right there.

I would expect to see some more momentum off of that and we would target 250 maybe higher.

And uh you could even draw the trend line, uh inverse head and shoulders, trend line a little bit a skew like this.

And in that case, it's already broken out.

So uh depends on how you draw those trend lines, wanna check in on the semi real quick, we just went over those but wanna show a kind of a mixed board.

So not all is lost when you have one bad uh earnings report and it wasn't even that bad.

It was just uh taken by the street to be.

And then here's software.

The other side of tech, this has been outperforming recently and uh maybe it's a little sector rotation hard to say, but uh I'll send it back to you guys on that note.

All right, Jared, thanks so much for bringing down some of the movement that we are seeing.

Let's talk about some of that broader action where Jared started the hit here and you are seeing stocks fall just a bit in today's trading session.

Although now we are mixed.

You've got the S and P and NASDAQ both trading to the upside of the dow just below the flat line.

A slew of econ data prints are out before the bell.

Also, some of those earnings results that Jared was just walking us through here.

Really driving today's trading action so far this year though.

It's been the same story.

It's been all about tech that has certainly been driving this market's action here.

Our next guest though, raising some concerns about concentration saying that it actually might pose a risk here to the market in the second half of the year.

Kevin Gordon is here to discuss that.

And lots more.

Charles Schwab's director and senior investment strategist, Kevin.

It's great to see you.

So talk to me about how you're viewing concentration right now.

There is this debate about whether or not this is really a huge risk to the market.

So concentration in and of itself, if you're looking at, you know, the largest members in any index, the S and P 500 probably the most in focus, you know, the 10 largest being almost 40% of the index that often gets, you know, sort of pointed to as the thing that's wrong with the market is the thing that's bad that in and of itself is not necessarily the bad part.

The bad part is if you have, you know, a fewer number of stocks that are leading you to all time highs and then you have a breakdown in participation um in, in the, in the actual number of companies and the rest of the index that are, that are doing well.

That's something that we've started to see over the past few months.

It's become a lot more glaring recently.

So you've had this tale of two markets where, you know, at the index level for indexes, like the S and P and like the NASDAQ 100 you're consistently making all time highs this year, which is great.

But at the same time, you're not seeing enough of a pick up at the rest of the market.

So if that persists into the second half of the year, that's where we'd see more of the risk where you have maybe a risk of a catch down from the indexes as opposed to maybe more of a catch up from, from the, the rest of the index.

It's very similar to, you know, what you started to see at this point in 2021.

It's not an exact replay because we're in a different part of the economic cycle.

But in, in market terms, what you saw in 21 was consistent new highs for the market at the index level, but a breakdown in bread and of course, that led you to the bear market in, in 2022.

Well, I mean, it was interesting as well here.

I mean, as we're talking about concentration, everybody, when they think concentration, they think about the mag seven.

I thought I saw you tweeting about this this morning with, with regard to a range of other things as well as much as I'd love to talk about the foreign policy um implications of Panda's.

Uh you know, the magnificent seven is back at a new all time high cohort up by nearly 56.

Percent year over year.

What does that tell you about the concentration that investors are still willing to dive into at this juncture when you see the mag seven still leading the pack here?

Well, I think, you know, I paid more attention to the sectors that that group represents, which is really just communication, services, tech and consumer discretionary and you know, the price performance for those, those members.

I mean, if you look at the top 10 performers in the S and P 500 this year, there's only one in the mag seven group or the fab five group that makes it that list so large, doesn't necessarily mean top performer.

Um But I think within that group or within those sectors, it seems, you know that in the post pandemic world, um that for now, at least investors have been more willing to treat those areas of the market as defense, even if you look at the past few months, you know, softer patch of economic data almost across the board.

Nothing, you know, Armageddon like, but something that's a little bit softer, but you've had this sort of relentless run into those parts of the market even though valuations, whether it's for semiconductors, whether it's for parts of com services are still, you know, quite stretched.

So it just tells us that there's still a huge willingness on the part of, you know, a good chunk of investors to jump into those areas and sort of treat them as defense and not look at the traditional defensive like utilities or staples or, or even health care.

Kevin.

I wanna go back to what you just said a moment ago.

You were talking about some of that, the fact that the broader market lacks participation from many of the stocks and, and you actually tweeted a great chart.

Uh I believe it was yesterday or maybe it was this morning about the Russell two thousands performance relative to the S and P. You compared what we've seen since October 2022 lows and then going back, coming out of previous bear market territory.

I'm curious in terms of the catalyst there, in terms of what is going to turn that around?

Is it all about rate cuts?

What is it going to take in order just for some of that activity outside of just those hands, I think, to some extent?

Yes.

And what's fascinating about the chart is that in the prior three instances?

So this is really the only, you know, the bear markets that we've had in the past 20 years where you've had more than a 20% draw down.

What's interesting in the three that preceded the current one is that, um, first of all, they were associated with the recessions.

Second of all the, these came after the fed had already gone through um, relatively aggressive cutting cycles.

So we haven't really had, you know, either of those we've had some form of a rolling recession through the economy, but we certainly haven't had fed rate cuts.

So I do think that yes, rate cuts are probably a part of that formula where small caps have to do.

Well, however, there is a, you know, much like we talk about with indexes versus what the average member is doing.

That's very much the case in an index.

Even like the Russell 2000.

Yes, the index has struggled.

But if you look over the past year, the companies that are profitable versus nonprofitable, the profitable cohort is up by almost 13% the nonprofitable cohort is down by about 2%.

So you do have the split even within an index that has a good chunk of, you know, relatively low quality companies.

If you were, you know, sort of screening for quality, a small cap investor, you can still find some pretty consistent out performance.

It's just not going to show up at the index level.

I think that's the more important take away even though the index itself has underperformed the S and P 500 you know, by a significant degree.

Since, since the bull market started, we're about to begin the next earnings season in a few weeks here.

What do you think the overwhelming theme that we hear or that prevails could be here?

I think, you know, a couple one that we've talked about a lot.

I know the three of us just you know, sales versus profits.

So what's the actual demand picture look like versus how much of that profit growth is being achieved via cost cutting?

I think the other part too is sort of the price versus volume.

You know, what's the actual growth in unit sales looking like?

Because, you know, as we go through and continue the disinflation that we've seen over the past year, which is a good thing generally for the economy, it's not always the best for companies that have benefited a lot from inflation.

So you have to keep that in mind too and look what actual unit sale growth and unit sale demand looks like um on a company by company basis.

But I think the more important takeaway from the part of the market is that you're moving into, you know, sort of solidly into double digit earnings growth territory for the S and P, which is great, but also not consistent with the strongest gains when you look back in the history of the index.

So it's not consistent with, you know, an outright decline.

But as you move further into the earnings cycle where earnings growth gets better, the market has already started to price that in.

So you sort of dial back the expectations.

Kevin Gordon Charles Schwab director and senior investment strategist.

Great to have you here on this.

Great to see you.

We've got all your markets action ahead.

Stay tuned.

You're watching the morning brief shares of Levi's Strauss are sinking today after the company's sales have missed expectations in the second quarter.

The G maker also saying it plans to cut back on cost by selling more directly to consumers.

A strategy that they have now employed out for quite some time city saying though that the wholesale business continuing though to hold back the company, despite some of that brand strength that we did see in the most recent quarter when it comes to re on a regional basis here, the America is remaining strong, Europe seen as a bit more disappointing that came in below the streets consensus forecast here.

And we're gonna talk to the CFO and, and uh later on next hour here, Brad and I think that's a big focal point here for analysts, for investors.

Just some of the weakness that we are seeing, especially abroad, whether or not that is a trend that we're gonna continue to see here in the second half.

Yeah, I'm just smiling here.

When's the last time you heard of Dockers as uh innovation?

Well, you're gonna hear about that a little bit more from Harit when you do speak with them as they discussed it on the call yesterday.

Going forward leaning into innovation with an expanded head to toe collection.

They just want Levi's head to toe for you, but it's Levi's but by a different name, performance based Dockers go series, they're saying that's exceeded expectations since the launch beyond yoga too.

This is gonna be interesting to see how they lean into that up.

13% acceleration to Q one driven by Strength in wholesale and e commerce there.

Um, and of course, the, the space dye business, I'm not as privy to that one.

I don't know, maybe that's something that, uh, some of our other producers have bought into at this juncture.

But one of the huge things here is just wider leg pants and dresses, they're leaning into that.

I, I never thought that that would be another strategy that we'd see deployed here once again.

So what was, what was early two thousands is once new again?

And I'm still struggling to get on board with it.

Really skinny jeans.

I've got some, uh, we got some wild like, but I got them from mawe though.

Yeah, I had to try it out.

Had to be like the, you know, on the, on trend people out there, but I'm gonna be listening close to you guys conversation with Harit.

All right.

Well, thanks.

It's coming up on catalyst.

We're gonna be speaking with Levi CFO and Chief Growth Officer, Harmeet Singh.

That's coming up in the 10 a.m. hour.

Ryan Sazi is gonna join us for that conversation.

You won't want to miss it.

I won't, why not?

I'll be at my desk just watching.

All right, everyone.

Let's also talk Nike here on the day.

Ticker symbol.

NKE down fractionally right now.

It's expected to report fiscal fourth quarter results after the bell on Thursday, investors are focused on how consumers are holding up amid fears of a spending slowdown.

While Wall Street tries to figure out when the company's turnaround plans will fully pay off for more on what to expect.

We've got our very own, Josh Schafer.

He's watching all things, the swoosh here.

All right.

So what's going on with them?

Yeah, Brad Nike has really been a story of slowing revenue growth, a revenue growth that is still increasing but growing by less and less when you look compared to the year prior.

And so the large question here is just, when are they going to be able to return to higher sales growth?

Right.

Nike had been a company that grew at a very high sales growth rate for a long time and then it sort of slimmed.

And so they've done a good job from Wall Street's perspective of sort of protecting their margins.

In this perspective.

They're expected to have margins increase again in the fourth quarter.

That's gonna be reported after the bell today.

Eps expected to come in at 85 cents.

That's up from 66 cents last year.

So from a profitability standpoint, Wall Street isn't too disappointed.

The larger story here is again, back to sales and when they're gonna be able to improve that, I know you guys were just talking to Kevin Gordon over at Schwab.

That's a theme we're seeing across the market right now is really some companies just sort of protecting but not necessarily being able to reignite sales.

And Nike is one example of that in the stock, quite frankly has shown that you look at shares of Nike over the last year, down about 17.5%.

The S and P 500 is up 25% in that time frame.

It's been a clear under performer.

And so it seems like one of the key things people are looking for out of this is a, the guidance for 2025 because this is the end of 2024 and B within that guidance, what new products is Nike gonna come out with to sort of fight back against some of these competitors?

I think we all know the competitors and at this point, a lot of us are wearing them and how is Nike go?

I'm not currently wear, I saw, I saw Sea don't look at my shoes.

I'm not wearing Nikes and I'm not wearing Hoka, but they've had a lot of competition right from, from companies like Hoka.

And how does Nike sort of respond to that and come out with new products that are gonna be able to sort of excite people again, like Brad, he's wearing new balance today.

I got new balances today.

I got some Nikes over there.

You're a guy, you're a Nike guy.

I wore probably like four different brands over the course of the day shoe wise.

But do you feel like a lot of the Nike stuff you're buying is remakes of old shoes rather than them coming out with new products.

Uh It definitely is, but certain collaborations I would say.

So they did a collaboration with like East Side Golf for instance.

And that was one that I I bought into because, yeah, it's a great story behind some of the collaborations and, and I kind of wrote down four points on this not to cut off your hit here because it's been going amazing.

But one of the huge things that I'm thinking about going into this Ernest uh period in this call here, I wrote down four things.

China.

Number one, that's gonna be massive figuring out where they're continuing to be able to build out the business in that region.

Number two, the Olympics here, this is gonna be a massive period where Nike is gonna go full speed ahead despite the fact that you've got Ralph Lauren putting people in space like jumpsuits to try and figure out.

OK, exactly.

And some of the prep your gear too uh for the opening ceremonies and whatnot.

They've been doing that for years.

We'll see if that works for Ralph Lauren.

But for Nike, it's gonna be coming down to the performance and, and demand generation.

You can only have the Jordan application of everything for so long before that strategy starts to get old.

That's what they talked about.

Last quarter, I've bought into some of the Jordan brand golf shoes.

It's been great.

You're comfortable out there and you look like you can play basketball.

That's awesome too.

And then it's the innovation here, the collaborations, they got the Nike and Hyper Ice collaboration that was just announced too.

And so where do you see this company start to lean back into the company as a tech platform as well here as much, which is, you know, that's gonna get poked at by analysts perhaps.

Um I think for a lot of people knowing Hyper Ice and what that brings to your recovery as an athlete uh that could work as a strategy here going forward.

I think also the question though for Nike is just the brand strength right now in terms of winning back some of the customers that they have lost to some of their competitors out there.

So yes, analysts are have been along saying that the lack of innovation has been a huge issue.

There's reason though to be optimistic maybe about the products that are going to come online here as you look ahead to 2025.

But you also got a question about whether or not some of those who used to shop at Nike now are no longer going there because they've gotten used to the fact that they haven't come out with anything new, but it's, it's a retail company.

We can use a little anecdata, right?

You walk down New York City, you see more people wearing on shoes and more people wearing hookah than you see wearing Nike walking shoes or Nike running shoes.

Right.

How do you kind of get that market back?

How do you become cool in the walk around shoe?

I agree with what Brad was saying about Jordan's.

Like Jordan still have that, that cool factor to him.

Right.

And it's more of a style play.

They're to me, they're not really in that lifestyle style play where people are walking around with them and they find the comfort and the coolness within that.

I did get the Deion Sanders retros that they re-released and uh I feel faster.

I'm not faster though, but prime time, prime time baby got Josh.

Thanks so much for joining us here.

Fun to break down.

All right guys, all your markets action straight ahead.

You're watching Morning Brief, Taco Bell is rolling out a $7 value meal for a limited time.

This after a slew of other fast food chains start offering cheaper options in a bid to lure customers back to discuss how investors are feeling about the value meals.

We've got Yahoo Finance's very own Brooke Dipalma here.

Ok.

Break down the $7 value meal for us here.

What's going on at Taco Bell?

How does it compare to the rest?

Yeah.

So they're calling this the Lux meal.

And that's ultimately because the fact that consumers right now are thinking that fast food is luxury.

And so they're playing into that with this Luxe menu box.

And ultimately, the $7 price tag, the company says that that's actually a 55% discount if you got each item separately.

So you get it in this box.

And ultimately, it includes a slew of a slew of different items.

It includes a chalupa supreme, a beefy five layer burrito, a double stack taco chips and nacho cheese sauce as well as a medium drink, but largely what they're doing here and what many on the street will be watching to see if this works throughout July and not just for Taco Bell, but all of the companies that have recently introduced their take on a value menu item.

We've seen mcdonald's, we've seen Burger King, we've seen KFC, we've seen even Starbucks playing into this and many analysts on the street saying that July will be a pivotal month to see if this strategy works and there are three ways to identify who will win this price competition.

Analysts want to see an increase in foot traffic, they wanna see more customers in the store while these limited time offerings are being promoted.

They also wanna see consumers adding more beyond just the value meal.

They wanna see those premium attachments, they wanna see consumers adding more to their ticket in addition to that, they want to see a frequency in visits they wanna see consumers come back for this value menu items in addition to other things.

But they also want to see consumers come back after.

And this is largely in a bid to try to change the perception that fast food is too expensive right now.

So yes, these value menus are here for a limited time, but they want to see consumers come back after they're done as well.

You know, it's interesting.

I'm looking at some data from comparably on the Taco Bell NPS, the net promoter score, the amount of people that would be likely to recommend your brand.

Uh And they've got a negative 13 right now and it's been slipping since this point of last year here who is best positioned to win the pricing war knowing that all of them are going up against whether or not customers would recommend your value meal versus other and be likely to be repeat customers, right?

So I was at Taco about headquarters last week in, in Irvine, California and really the CMO there and other executives are really hoping to hit the nail on the head, really get consumers in by saying yes, this is $7 versus what others are doing at $5.

But we're giving an abundance of a meal.

We're giving many different items in their $7 box and they're really hoping that that lures in competition.

They also recently introduced a cheez it collaboration.

We're also hoping that lures in competition as well.

But what Wall Street is really looking for here is who does the best marketing, who does the best advertisements in order to get consumers in the door and who communicates that?

They think that their value is best first the competition.

The CMO at Taco.

Well, actually telling me that he thinks others aren't providing a hearty meal for what they're offering with these value, menu items.

All about the value wars.

Now, we'll see who comes out of the one.

All right, Brooke, thanks so much.

Keep it right here on Yahoo Finance.

Coming up breaking, pending home sales that's coming up at the top of the 10 a.m. hour.

We are going to discuss with the latest data signals about the housing sector and the broader economy.

We will also be speaking with the CFO of Levi Strauss following the company's earnings results out after the bell yesterday.

Shares selling off in early trading today.

We've got that for you now.