Iran and Israel market impact: Market Domination Overtime

After markets (^DJI,^GSPC, ^IXIC) closed lower amid increased geopolitical tensions, Julie Hyman and Josh Lipton look at the top stories of the trading day and outlined what investors need to know.

Amid growing uncertainty, Horizon Investments chief investment officer Scott Ladner joins the Market Domination Overtime team to discuss the implications for US investors.

Microsoft (MSFT) stock is in focus after the tech giant unveiled a new AI update for Windows PCs that enhances the capabilities of Microsoft's Copilot.

As global gas demand is expected to grow, EQT CEO Toby Rice outlines what the rising energy demand means for the energy market.

This post was written by Naomi Buchanan.

Video Transcript

That's the closing bell on Wall Street.

And now it is market domination overtime sponsored by Tasty trade.

We're joined by Jared Blicker to get you up to speed on the action from today's session.

Let's start with where the major averages ended the day here and we see them moving back down towards the lows as we close out the session, the dow off about 100 and 73 points.

It did the best of the three major averages as we discussed earlier, there are more sort of aerospace and defense giants in here.

The catalyst today we've been discussing is increased tensions and beyond between Israel and Iran with Tehran firing a barrage of ballistic missiles towards Israel and this is after Israel's ground invasion of Lebanon.

And so all of this going on amidst the port strike as well, which began today equaling some pressure on the major averages.

The S and P 500 down about 9/10 of 1%.

The NASDAQ worst of the three off 1.5% sort of plastic risk off situation here where tech stocks do the worst as we've been discussing small caps also getting hit here down 1.5%.

And as we've been discussing, we saw investors kind of go to where they see as relatively safer areas going into us.

Treasury yields down prices up coming out of Bitcoin here.

Interestingly down about 3% gold though, catching a bid and then the other big thing to watch has been crude up 3.2% on maybe some increased concerns about what's going to be happening to supply out of Iran Jared.

Yes, thank you.

I was, I'm actually writing about crude oil and potentially higher energy prices for tomorrow's morning brief.

So make sure to catch that tomorrow.

I just want to review some of the action today.

Pretty interesting.

I would note that here's the VX.

We saw this spike up here.

These are all geopolitical concerns, but we do see a lot of vic spikes in October and November.

We call that prime time crash season.

Now it doesn't always happen that way.

And in fact, October tends to be a positive month unlike September.

But when we do have spikes in the V, you got to be careful in October because we can see we've seen a lot of market meltdowns in history, not saying that has to happen this month.

Not to get too far ahead of ourselves.

Just want to plot a 10 year T note yield that was down about six basis points today.

Just taking a look at the candlesticks chart.

We lower and then we closed higher.

So I think that's a significant reversal and we might just see higher interest rates in the days and weeks to come.

That combined with a higher dollar portends a headwind to equities prices too early to tell.

But two days there, we're just seeing the very beginning potentially of a trend and so a higher dollar could mean flight to safety in the US.

And that just doesn't do well for risk.

Looking at the sectors here, energy was up but not as much as was down tech just taking it on the chin down 2.5% XL E. That's energy that is up over 2% on the back of those higher crude prices, utilities, communication services, industrials, those round out the winners today.

And I'd also add that only tech was the underperformer.

So let's take a look inside.

We have software here, a lot of red, not at lass and that seems to be the standout but pan w down over 3% snowflake down 4% Mongo DB uh 4.7.

I'm gonna leave you with the chip stocks, nvidia down 3.6% guys.

All right, Jared.

Thank you.

Stocks closing lower across the board.

But off the worst levels of the day, rising tensions in the Middle East having investors in a risk off mood and joining us now is Scott Ladner Horizon Investments, Chief Investment Officer Scott.

Great to see you Thanks, Josh.

So le let's start there.

I mean, geopolitical risk, front and center.

Uh Iran attacking Israel.

We're waiting to see how Israel responds.

But ho how are you as a cio thinking about this guy?

What, what are you telling clients?

Look?

I mean, we clients are obviously asking questions.

Everybody's a little bit nervous because this is pretty fast moving as these things tend to be.

Right.

Um The, the, it's, it's, it's a weird one though.

It's, it's almost like the Chinese stimulus stuff that maybe we'll talk about a little bit as well.

But it's like, fool me once, fool me twice with the geopolitical things impacting markets for even medium, like medium term.

Um So, so, you know, so right now we're, we're um I wouldn't say we're skeptical but we're, we're kind of waiting and seeing a little bit oil is moving a bit and, you know, obviously kind of like, like things that are, that are tied to global growth, they sold off a little bit today.

Um But these things can turn on a dime also and, and, and you know, some of some of the rumors that we're hearing, uh you know, out of that, out of that region that, you know, maybe, maybe Netanyahu's can talk to Putin and, and, you know, that that could have some, some implications for like, maybe they're trying to calm this thing down a little bit, but until we get some like hard firm evidence of something really happening.

It's hard to move portfolios in a meaningful way until you get something like that.

Yeah, and indeed, any kind of geopolitical reaction we've seen in markets tend to fade pretty quickly.

So we'll see what happens on that front.

But let's get to the other thing you mentioned, which is China.

Um because indeed you have all the stimulus markets, there are certainly getting excited markets here are getting excited to some extent.

But to your point, we're still trying to figure out is it going to work?

How do you figure that out?

Well, just wait, you, you you you have to wait a little bit.

But we also have to recognize that the starting position with, with the, you know, with the Chinese stuff, you know, everybody again has been fooled by this over and over and over again after the zero COVID turnaround.

So everybody thought that China would turn around, then everybody thought the big stimulus Baas are coming out and they never did and they're always disappointed.

And so, you know, this, you know, the reason why this time might be different is is twofold.

One positioning in China is at the bottom, like nobody likes China, like it's the most short thing in the universe, nobody's invested in it because we've all been fooled over and over and over again for years.

So like, so that from a positioning standpoint, that is some that is definitely some some, some, some fire under the Tinder um is, but the other thing is, you know, President Xi came out and, you know, essentially gave sort of a, some encouraging words with respect to stimulus, something that they really have never done before on, on this entire thing that plus the idea that they're gonna make it easier to buy houses for speculation.

Again, something very against what he had previously said when he saw start talking about houses are for living.

And if not for speculation, you know, those, those things make us think that maybe this time is for real, but it is, it is still a tough call.

Do you think so?

I mean, I did see some strategists saying like, listen, I, I don't know whether we don't know, it's gonna have lasting impact on the economy and markets over there.

Who knows?

But their point was some of these names have been just so beaten down already.

I mean that they've certainly priced in so much news, they're attractively valued regardless.

I mean, what did you make of that argument?

I think, I think that's a fair argument.

Um, you know, they, they had been attractively valued for a couple of years now.

So, you know, so it's not, you know, valuation is never a reason to invest, but they're attractively valued for a good reason.

They have been right.

And, and, and so people have been fooled by that for a bit.

Um But but it does give you a margin of safety and it does let you know that, listen, if we do get in here.

Um, and this, and the stimulus is real.

I'm not saying by the way it can turn around the economy, they've got other big problems here.

But, but as far as, as far as a trading position or as far as kind of a medium term allocation to at least, not be short it, or at least not be underweighted.

Um You know, there could be some lugs on something like that.

Um Let's bring it back here to the US because you're looking at the US consumer, the US economy.

Um We got the jolts report today that showed there were more job openings than had been expected.

So how, how are you thinking about the, the backdrop here?

The backdrop is I would, I would characterize it as pretty good.

Um And overall as something that's normalizing.

So, you know, we are normalizing after a period of two or three years where we have not frankly been in a business cycle like we've been in a war and a war recovery and, and we're, and we're finally kind of getting over that part.

Um And we're getting back into it, but it's probably gonna be something that looks and feels and smells like a regular old business cycle that we're all used to.

Um, and, and, but, but we're starting from a place of extreme strength.

So the labor market was incredibly strong.

You know, not, you know, not all GDP was incredibly strong.

Company earnings were incredibly strong.

Everybody, they want a job, had a job, everybody's getting raises.

So things were really, really, really strong and they pulled off some.

Um, and, and that's something that Powell recognized something that, that other folks have recognized that we're coming, you know, we're basically coming off of extreme strength to something that's a little bit more quote unquote normal.

Um You know, the question is whether it stops a normal or whether it deteriorates further, that's, that's what we're what, you know, what we and everybody else was looking for.

But overall, we think this is still a pretty darn good place to be.

So I if the backdrop is sort of, you know, economy cooling, not crashing, Scott, what for equity investors listening right now, what, what's a sector that looks attractive to you?

I, I mean, you know, health care like you can't be short tech just like you can't be short China right now.

You can't really be short tech because it is still, you know, the A I boom as we think is for real and it like, it's just one of those things you need to ride.

But outside of something like that, that's, that's relative obvious, you know, he health care is pretty interesting to us right here.

Um You know, health care and biotechs are, are places where the, you know A I technology can really, really impact how some of these things are delivered, how drug development happens, how drug discovery happens, how testing happens.

Like you can see some pretty clear lines where that technology can really make, you know, make those processes much more productive and, and, and much more powerful.

Um so that, you know, so that sector is relative, relatively attractive to us.

And otherwise, you know, we do think this is the, this market is gonna broaden out like finally, um you know, like it may finally be the time for some smaller, for some smaller names, maybe finally, some time for the, for the 44, the 493.

Um And we think that that trade is probably coming to the fourth quarter.

And interestingly, you're also looking at home builders here.

Um and that seems to be a rate play, I guess.

Yeah, and look if you're looking for like the give me the most direct play on, on ras going down.

Um Home Builders is, is, is sort of the obvious play.

And so it's, you know, they've already moved some, but we do think as we, you know, we think we're gonna get a refinancing boom in 2025.

It's not 2024 story.

But if you, you know, if you have people, if you have mortgage rates down in the, in the low to mid fives, which is where we think they'll be in six months or so.

You know, that is gonna create AAA refi boom, that some and some of that refi boom can go into home builders can go into kind of re re you know, redoing your stuff.

So that's something that we think is actually pretty directly interesting.

All right, interesting stuff.

Thanks Scott.

Appreciate it.

Well, coming up Nike set to report the latest numbers.

We're gonna get you them on the other side.

Those numbers that is when market domination over time returns in 2024 global gas demand is forecast to grow by 2.5%.

According to the international Energy Agency, in even greater demand may be waiting in the wings beyond this year for natural gas.

EQT, one of the largest producers of NAT gas in the US points to A I fueling demand for the commodity.

And Toby breqt CEO is joining us now to discuss, you know, we have been talking a lot about the increased demand for electricity that's gonna be fueled by A I and by data centers.

So Toby talk to me about what that means for natural gas specifically.

Well, it's pretty remarkable after decades of stagnant power generation, we're gonna actually see low growth increase in this country for the first time in decades.

Um Thanks to this A I revolution that's taking place.

Our view is that we're going to see power generation demand needs increase over 75 gigawatts.

And according to some estimates, you know, Goldman Sachs has said that 60% of that is going to be powered with natural gas, that means potentially 6 to 13 BC fa day, more natural gas is going to be needed.

And when you compare that to the LNG story where we're gonna see an incremental 15 BC FA day of natural gas needed to feed our LNG.

And you can, and you also add in the 15 BC fa day of coal that's remaining to be replaced.

There's a tremendous amount of demand for natural gas.

The good news is we've got that resource here in the United States.

The question is, can we get it out of the ground through the pipelines to these customers that need it?

So what's the answer to that, Toby?

Well, it's, it's never been a more important time to produce energy in this country.

Um As I just mentioned, whether it's LNG to secure our allies or to feed our, our, our tech customers in the A IA I boom.

Uh Unfortunately, it's never been more difficult to produce energy in this country.

This is something we need to fix.

We built fewer miles of pipelines last year on an annual basis than we had in the prior 30 years.

The last big pipeline that got built required an Act of Congress uh to get to get constructed.

That was Mountain Valley pipeline.

And I've got news for you.

If you think building a pipeline is difficult.

Try building a transmission line.

If you think it's hard to build a five acre oil and gas location, try building a 5000 acre wind farm or solar facility.

So we need to get back to a place where we get things built in this country.

And that means that political force needs to take a backseat and let market forces come back and start driving to make sure that the cleanest, most reliable, most affordable energy makes its way to the marketplace.

Um You know, it may seem difficult but people need to understand uh permit reform is completely within our control.

We just need leaders that will prioritize, you know, affordable, clean, reliable energy Toby guess what market forces sometimes are political forces.

They come together, I mean, look at many of these large tech companies that are building these data centers.

Um They want it to be the wind farm, they want it to be in the case of Microsoft the restarting of the nuclear plant and, and to your point, yes, these are sometimes difficult to construct, but that's a market force.

These large cap, these large tech companies want renewables.

So I wonder if that is going to be a limiting factor at all for the demand for natural gas specifically to power those types of facilities.

Well, we could look at the history of power demand generation in this country.

It's come from natural gas, a very large percentage of that you know, the reason why the United States is the world leader in lowering global emissions.

It wasn't renewables, it was actually natural gas replacing coal.

So this natural gas is a really unique um story where you can both provide the energy security that you get by having affordable and reliable uh energy while also decarbonizing the world by replacing, you know, higher carbon intensity uh fuel such as coal.

So we think that regardless of your preference, this is a major league energy uh demand that's coming to this country and it is to require all of the above types of energy to meet this need.

But if we care about meeting these climate goals on the timeline that the public has, if we care about protecting the 60% of Americans that are living paycheck to paycheck that cannot withstand any more of this, this energy uh price shock, energy prices to Americans are up 35% over the last few years.

By the way, if we want to protect these people and meet these goals, staying in an all of the above situation for energy is not going to be good enough.

We need to be moving to a best of the above approach towards energy and that means the most reliable, cleanest, most affordable.

And uh as history has shown that has proven to be natural gas and the speed at which we can move is I think an and also uh pretty amazing force so that, that affordability may be great for the end consumer.

It's not as great for you Toby when it comes to profitability, right?

So I am curious what you expect on the pricing front, um How much movement you expect from the some of these new sources of demand?

Well, what's really amazing?

Uh We have a tremendous opportunity where we can lower costs for customers.

And that doesn't mean that the natural gas producer like EQT is going to be giving up uh any of that profitability because when you realize this energy ecosystem that we live in has created a ton of bottlenecks that are in between, you know, affordable energy that we're producing here in Pennsylvania and consuming uh customers across the east coast.

It's just an example of some of these bottlenecks and how extreme they've gotten because of our inability to build pipelines.

I'll be selling gas in Appalachia uh this winter for about $4 and people in Boston uh will be paying 10 to $20 for that natural gas that uh is, is purely a symptom of not having enough pipelines.

And if you get these pipelines built, we can lower costs for consumers and give us an opportunity to produce more of that energy and, and it's a great win win situation.

But um we're gonna need to have some leaders that start prioritizing uh in balancing the needs of all consumers, not just prioritizing uh the environmental benefits Well, there's a lot more to dig into there, Toby, but we have to leave it there.

Unfortunately, thank you so much for joining us.

Appreciate it.

All right, thanks guys.

Thanks.

I bring you some earnings now from Nike, the athletic brand reporting first quarter numbers here in the past few moments and earnings beating estimates, revenue beating a revenue missing estimate, I should say first quarter earnings per share at 70 cents.

That is 14 cents shy of what analysts had been anticipating revenue though coming in at four yes, 14 cents shy.

Excuse me, I'm miss speaking here, earnings, missing revenue missing Josh, you've been looking at these numbers longer than I have.

Why don't you take a Yeah, there's some bright spots too though gross margins.

It looks like Julie did clock in better than expected 45.4%.

Um The estimate is 44.4%.

So that was better.

Greater China is interesting as well.

Revenue 1.67 billion.

That does beat what the street was looking for.

A 1.62 billion.

Also seeing some other headlines here.

They they did apparently postpone their pre previously announced Investor Day.

Julie.

That'll be interesting to hear more about why that is on on the call.

Also just looking for commentary as well.

I'm looking for, I don't know if you have the release, but here it is the CFO saying Nike's first quarter results largely met our expectations.

Uh the CFO saying a comeback at the scale takes time, but we see early wins for momentum in key sports to accelerate our pace of newness and innovation.

There you go, you have it more than I do.

Sorry about 1.3% right here.

Yeah.

And the company also announcing it's a uh postponing that previously announced Investor Day, presumably that's because of the CEO transition, I would imagine.

Um And so that sort of makes sense here, but uh who knows what we'll hear on the conference call on that f you know, the stock, I mean, it had been hammered.

I mean, Henry, the print was down about 20% year to date.

You know, we've talked to any number of smart analysts about it who talked about the innovation, you know, um the significant competition at the same time, you know, you, you do have big changes in the C suite.

So it'll be interesting to see what perhaps the company says about that, what could be coming?

All right, Microsoft unveiling new PC updates to its Copilot A I platform at a press event today.

Our very own Dan Halley was at that event and he joins us now for a closer look.

Daniel.

That's right guys.

Yeah, they uh announced some new updates to their Copilot platform.

This is basically the A I platform uh that Microsoft is pushing a way to get consumers uh on to A I and there's a few things that stand out from this uh recall is a feature that they previously had announced, but then pulled back over security concerns.

They're rolling that out again.

But there's some new interesting features including the ability to use voice and for the A I platform to actually see what you're doing on your screen and allow you to answer questions there.

So I spoke with uh Microsoft's Yusuf Mehdi about these capabilities, especially when it comes to voice.

Take a listen.

Yeah, we think that copilot voice is gonna be really a big unlock in terms of how you interface with technology.

And um a part of that is for a couple of reasons.

One is we now have the most advanced A I models that are really fast.

So this is not like the old hey Siri or hello, Alexa, this is literally we can just like you and I are talking, it can interrupt it.

Second of all, it really understands you.

And so it'll match your energy, it'll even match your personality.

And so now the ability to have um copilot vision, operate your phone or your PC um to listen to act on your behalf is gonna change completely how we use our devices.

So yeah, that's obviously the the vision side of things and uh uh sorry, the voice side of things and how Microsoft kind of is discussing the future of how you use your computer and how you interact with it.

Whether that's through the mouse, keyboard or voice, but they're also rolling out this copilot vision feature.

This is gonna be limited right now to just pro subscribers.

Uh and it's only a subset of those.

And what it'll essentially do is allow copilot to see what you're doing on your screen and then you can directly interact with it.

So, uh if you see something on your screen, like, I don't know, uh uh a product that you might wanna buy it will be able to look at that and give you more information about it.

There was a, a preview that they showed us a demo where there's persons having a back and forth with their computer about what they might wanna watch, uh viewing the Rotten Tomato site.

So we have more from Yousef on, on the vision side of things too.

So imagine you're going to an airbnb uh site and it's got like 100 reviews.

It would take you a while to read those reviews.

Well, Copilot can, you know, read them all in an instant.

So you can say, hey, tell me what all the people give it a one star, like what didn't they like?

And, and then Copilot might say to you, hey, it looks like you're looking for houses near the beach.

Do you want some with beach access?

Do you want me to find the ones with beach access?

And so the ability to use both is going to be a game changer, but I still think you'll use the good old trusting keyboard and mouse.

The voice will just be a great way to optimize and enhance it.

Yes.

So those are just some of the, the updates that's gonna be coming a little bit later.

Uh The vision side of things, but the voice is available now.

So you'll be able to download that update and get it on your, your PC and start talking to your computer.

It'll be kind of weird while I have you.

Perfect timing.

Can I ask you about another tech giant?

Making sure News Bloomberg.

This is interesting.

It says Apple preparing to um to announce a new low end phone early next year.

So this sounds like it's an updated iphone se what's your, what's your response to that, Dan?

Yeah, I mean, uh about time, right?

The, the se looks pretty old uh because it is uh it's based on, I think the iphone eight design uh and we're on the 16, so just a little old at this point, but this is uh according to the report, gonna get the, the whole full glass treatment up front, uh Goodbye to the home button finally.

Uh and it'll also have the uh the cut out that uh dynamic island uh as Apple calls it capital D capital I because of course, uh and you know, I think it's something that could help goose sales for Apple a bit though.

The margins, obviously not gonna be as good as you get on the pro models that are more expensive.

But if people are looking to upgrade, maybe they don't necessarily want, want to spend that.

If they are holding on to older phones, a jump to even a low end or, you know, let's say entry level iphone is still gonna be a jump.

And uh according to this report will also run Apple Intelligence.

And if you're looking at fu future proof your phone, you don't wanna have to upgrade in 23 years, maybe.

Hold on for this.

That's, that's a good option.

All right, we'll see you, Dan.

Thank you, my friend.

Appreciate it.

Time now for to watch Wednesday, October 2nd sponsored by Tasty Trade.

It was starting on labor.

It is a big week for the job market.

The monthly ad P employment report for September is coming out in the morning.

Economists forecasting that number to hit 125,000 an increase from last month's report is coming after today's jolts.

That's the job openings and labor turnover survey came in stronger than expected.

All of that data coming ahead of Friday's full job support, which matters particularly to the fed.

Atlanta fed President Rafael Bostic telling Reuters yesterday that he's open to another large rate cut if the job market weakens.

And speaking of the Fed will be getting more fed commentary tomorrow from various officials throughout the day.

Investors will be listening closely, of course for any clues about what the fed's next move will be after it slashed interest rates by 50 basis points last month.

And on the earnings, another batch of corporate earnings coming in with Conagra Levi's and to re brands Levi's reporting third quarter earnings after the close analysts focusing on the health of the company US and European wholesale.

And finally, Tesla expected to report delivery numbers for the third quarter.

Analysts estimating deliveries will come in at about 462,000.

But some analysts are saying that number could be as high as 470,000.

That'll do it for today's market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell.

But don't go anywhere on the other side of the break.

It's asking for a trend.

Got you covered for the next half hour with the latest and greatest market moving stories to get ahead of the themes affecting your money.

Stay tuned.