Markets eye rebound, Google loses antitrust suit: Catalysts

On today's episode of Catalysts, Hosts Seana Smith and Madison Mills break down some of the trading day's biggest stories, from the global market sell-off to some of the latest earnings reports.

The major indexes (^DJI,^GSPC, ^IXIC) are bouncing back after a three-day sell-off triggered by a weaker-than-expected jobs report in July. As investors continue to be wary of a recession, Apollo Global Management chief economist Torsten Slok notes that despite the weak labor report, there's not much other evidence that points to a recession: "Daily data for how many people fly on airplanes as of last Friday is still strong. Daily data from OpenTable for how many people go to restaurants is still strong. Weekly data for retail sales from Redbook is also still strong. Hotel occupancy rates, the weekly data also still strong."

He reiterates Federal Reserve Chair Jerome Powell's emphasis on the totality of the data, and adds, "the market is overreacting to just one data point." Note: Apollo Global Management is Yahoo's parent company.

Longview Economics founder, CEO, and chief market strategist Chris Watling explains, "Sell-offs tend to happen in waves. So it's not just a straight line down, then we're done. You know, they tend to be three waves or five waves. And in the middle of that, you get these relief rallies. So it's perfectly natural that you have a very aggressive downside, a little bit of short covering, which creates a rally, which is probably what we're in now." For investors trying to navigate the pullback, he encourages them to "buy the bounce, trade them for a couple of weeks, go long if you're nimble, but really lighten up if you're if you're sort of multi-month investor. It all depends on your time frames. That's the challenge."

A federal judge found Alphabet's (GOOG, GOOGL) Google search and advertising business to be in violation of antitrust laws. Presiding over the case levied by the Department of Justice, US District Judge Amit P. Mehta wrote "Google is a monopolist, and it has acted as one to maintain its monopoly." Many experts are speculating whether this ruling over Google's search dominance could impact another tech giant: Apple (AAPL). Yahoo Finance tech editor Dan Howley explains why this antitrust case could hurt the iPhone maker who has a revenue-sharing agreement with Google to make its search engine the default on its smartphones.

Meanwhile, new earnings reports hit the market on Tuesday. Shares of Saudi Aramco (2223.SR) are trading higher after the company met second quarter net income expectations and will pay a quarterly dividend totaling $31.1 billion.

Shares of Yum! Brands (YUM) are also climbing despite reporting mixed second quarter results. While the KFC and Taco Bell parent missed revenue expectations and saw same-store sales drop in those chains, its earnings topped analyst forecasts. Yum! Brands attributed the weakness to a softening consumer spending environment and Middle East tensions.

This post was written by Melanie Riehl

Video Transcript

It's just after 10 a.m. here in New York City.

I'm Madison Mills alongside Shana Smith.

Let's dive into the catalyst moving markets today.

So moving higher with the Dow S and P 500 NASDAQ composite all in the green 30 minutes into the trading day.

Now this comes after a three day sell off causing the mag seven to shed over $650 billion in market cap on Monday alone.

We're going to talk to strategist throughout the hour.

What changes you should be making to your portfolio?

That's exactly right.

We're also going to be talking about what is next for that.

A I rally a sea of men, the magnificent seven down 20% from its July 10 P. We talk about whether the sector is a falling knife or a buying opportunity.

Plus Vice President Kamala Harris reportedly choosing Minnesota, Governor Tim Wal as her running mate ahead of the primary elections in Kansas, Michigan, Missouri and Washington.

Well, Harris will take the stage at a rally in Philadelphia tonight and we are going to be tracking the latest in the 2024 election and break down what it means for your money.

Let's kick it off with the big story today and that is the rebound that we're seeing almost across the board here.

After recession, fears plunged the markets into that three day route, weaker than expected jobs, data pointing to concerns over maybe cracks in the labor market and that was enough to send jitters throughout global markets.

So, is that an overreaction or could we see a steep economic slowdown for that?

We want to bring in Thorsten Slack.

He's chief economist at Apollo Global Management.

Thorsten, it's great to have you here.

So let me put that question right to you when you take a look at maybe the market's reaction to that weaker than expected labor uh data print that we got out on Friday morning.

Was that a bit of an overreaction?

And what are you seeing within the jobs market?

I think that's right.

Janna, if you look at, as Jay Powell said last week, the totality of the data, yes, it is correct that the unemployment rate did go up last Friday and we did see a slightly weaker headline non farm payrolls at 114,000.

But if you look at in particular, some of the high frequency data, daily data for how many people flying airplanes as of last Friday is still strong daily data from open table for how many people go to restaurants is still strong.

Weekly data for retail sales from red book is also still strong hotel occupancy rates.

The weekly data also still strong and across the board there is just not much evidence of the economy, either being in a recession or being on its road to entering a recession.

So we think that again with the PS emphasis on the totality of the data that the market is overreacting to just one data point.

Well, it's interesting because to and it's not just, of course, the labor market, there are several factors that lead to a route like this, including what we saw with the carry trade.

And of course, earnings, I want a chart out that you included in one of your recent notes.

And it's about the number of A I mentioned on earnings calls declining.

But if this market sell off that we are seeing right now is in part driven by the unwind that we are currently seen in the A I rally.

Does the fed care?

I mean, that seems like a market issue.

Absolutely.

And I do think that exactly that A I stocks are going down for two reasons, the party going down because valuations got so stretched and earnings and earnings expectations were simply inconsistent with where valuations were.

So when earnings just came in a bit weaker for a few of the Magnificent Seven, the market was reassessing that maybe expectations were too high and maybe expectations were too strong for what these companies could actually deliver.

And the second, the reason why you're seeing the A I stocks going down is because of exactly as you're highlighting the carry trade on winding, you've seen a reversal of a lot of trades where essentially investors were borrowing in yen.

Remember in yen, interest rates up until literally two weeks ago, interest rates were zero.

Now they went up to 25 basis points.

But when you borrow at zero and you invest first, this trade was going in to fixed income.

Then it broaden out to buying other asset classes including A I and stocks in particular asset classes with momentum.

Then you now of course, with a significant unraveling of the trade, simply because dollar yen has moved from 100 and 61 down to 100 and 44.

That means that if I borrowed in yen, now I need to pay back in yen.

If yen is more expensive, that means that I need to pay back.

So that's why it is not only about fundamentals that have been softening for the Magnificent Seven.

It's also about the reversal of the carry trade that a lot of investors who borrowed in yen and used that money to buy including the Magnificent Seven are now reversing those trades.

So that's why they unwind of the carry trade.

It becomes important to discuss how many days, how many weeks will it take before we get to the end of that?

Well, there brought up a great point and then my question is how ultimately should the fed then be reading into some of that volatility that we have seen when you take a look at that three day sell off.

Clearly, the markets have also started to rep price what they think the central bank should do.

And I'm taking a look at that from futures right now, 75% of traders pricing in a 50 basis point cut at the September meeting.

When you take a look at that is market simply just pricing in too many cuts at this point.

Yeah, I do think that markets are pricing in too many cuts.

It's remarkable what has happened over the last two or three days yesterday.

At one point, the market was pricing six cuts this year and now we're back to pricing four cuts this year.

So that's also telling you that when people say with high confidence, oh, they will cut rates four times this year.

This is what the market is saying.

You should take that with a grain of salt because just yesterday, the market was saying many more name six cuts.

So I do think that when you look again as Jay Powell has been talking about the totality of the data.

And also importantly, Jay Pao last week emphasized that the anecdotes that are coming in are not only negative, the anecdotes are in his words, more mixed.

You still have a number of tail winds in particular to higher income consumers where you are seeing still strong gains from stock prices going up from home prices going up.

And if you own fixed income, including private credit, the cash flows you are getting at the moment, they have been literally in decades.

So the consequence of that is that there's still a strong tail wind to the consumer outlook from still again, relatively elevated stock prices, high home prices.

And very importantly, anyone who owns bonds will know that the interest rate payments they're getting at the moment are at the highest level we have seen in decades.

So that's all support for the consumer and that's all support for exactly the view that we are not seeing the economy spiraling into a recession.

Of course, if the stock market does go for the next several weeks and several months, then of course, we will have a different discussion.

But given what trading is doing at least this morning, that's pointing to that.

Let's just wait a few more days before we again, talk about this strong likelihood that many people think that we are in a recession at the moment because I think the data is proving otherwise.

So there's still a number of data points that we were going to get on the economy, on inflation, on jobs here ahead of that September meeting.

But I'm curious, what do you think the fed should do at this point at the September meeting?

Yeah, I think that they should take a deep breath.

And so should we in markets and say, ok, we did get a data point on Friday.

That was a little bit weaker on the headline.

Remember before last Friday non farm payrolls for the previous three months was 200,000 for the previous six months was 200,000 and for the previous 12 months was 200,000.

So 114 it is a little bit weaker.

There was some analysis from the San Francisco fed suggesting that maybe the weather did lower, the number, it could have been closer to 150.

So suddenly, maybe the headline was not as bad as the market is making.

And perhaps most importantly, the unemployment rate did go up last Friday from 4.1 to 4.3 from the outside.

That does look like a serious problem.

But think about it, the unemployment rate can go up for two reasons either because people get fired and we have more layoffs.

But that's not what we are seeing.

The great Challenger Christmas survey of job cuts is still very low, very few job cuts.

The jolts data for job cuts and layoffs is also suggesting that there's not any layoffs where the whole reason why the unemployment went up is likely because of an increase in labor supply because of an increase in immigration.

And that means that again, even when it comes to the unemployment increase, that we saw probably also has to be taken with a grain of.

So that's why she answered your question.

I think that the fed will be looking at the next employment report next week.

This is a relatively light week on data.

This week here we do get jobless claims on Thursday.

But next week we get CP I and we get retail sales and that's when the fed begin to pay attention again.

Thorsten, that's exactly where I wanted to go.

Let's say you've calmed our listeners that the labor market, it's not that big of a deal.

Do we need to be worried about a resurgence in inflation?

Well, that's at least at this point.

Of course.

Now the narrative in markets has absolutely answered that with a resounding no, now the change has gone to other side of the dual mandate for the FED may be worrying more about the labor market.

But if inflation continues to come down, if the labor market is still ok. Well, that means that and with our strong view that we will get that soft landing, that means that if we get that soft landing, which has now been the path and trajectory now for several quarters, then the conclusion is the fed can then go relatively slowly with lowering interest rates.

There's no need to dramatically cut interest rates because there is no dramatic slowdown in the economy really quick tourist in final 30 seconds.

When then do you expect to declare that we have had a soft landing.

Yes.

So I would actually already say that we have had a soft landing.

But what really did throw a little bit of a wrench into the soft landing was indeed the data last Friday.

So that's why the discussion in market should be, is the data last Friday on the employment side and unemployment?

Is that the beginning of a new trend or was it really just statistical quirk?

And now we'll get data that shows like we got ISM services yesterday that things are actually not that bad.

So that's why the next several weeks it will become very important, whether we still see soft landing or whether the data confirms that narrative that the market is so worried about, namely that had landing?

All right, Thorsten Ken, thank you enough for coming on and walking our viewers through this confusing time.

We really appreciate it.

That was Thorsten Slack.

He's the chief economist at Apollo Global Management.

We should also note that Apollo is Yahoo Finance's parent company moving forward here.

Stocks looking to recover today after those losses on Thursday, Friday and Monday, that three day route.

But is it too early to declare that today is a turn around Tuesday here to talk about why he may be staying on the sidelines for now.

We've got Chris Lot LA.

He is the CEO chief Market strategist of Long View Economics.

Chris, thanks for coming in here.

So yeah, I mean, turn around Tuesdays, they can sometimes feel like we're off to a good start and then not last throughout the day.

What do you think?

It may, well, it may well last throughout the day, I think one has to remember is sell offs tend to happen in waves.

So it's not just a straight line down, then we're done, you know, they tend to be three waves or five waves and in the middle of that, you get these relief rallies.

So it's perfectly natural that you have a very aggressive downside.

A little bit of short covering which creates a rally, which is probably what we're now.

If I look at our sort of market timing, fear and greed models, the market's pretty fearful and may get a tiny bit more in the short term.

So I wouldn't be surprised, get a wave to relief earlier bounce, but don't get suckered in by.

It is the point.

I think that's the key here.

What do you think the signals then?

About more?

So, not so much over the next several trading days, but the longer term should at all.

Investors be a bit encouraged by some of the buying action that we are seeing here at the open.

Well, what do we think of?

I think, I think the most important thing that has happened in the last few months is not what's happened in the last few days.

It's what happened on July 11th when we had UCP I out and it came in softer than people expected.

And you remember the market rotated aggressively and the NASDAQ sold off hard and the Russell 2000 and cyclical stuff around the world went up.

That is a real market day because that is telling you, I think we're in a phase of global sector rotation.

So the leadership of the stock market globally is changing.

So now we're in a liquidation event, most global sector rotations turn into sell offs.

You never change global sector leadership without a big pullback.

So we're doing that.

And the trick is to use this next few weeks, a couple of months as an opportunity to get into the new sector leadership.

So I would suggest a the A I, the mag seven leadership's done finished.

I could be wrong.

It's a big call.

I accept that.

Well, you know, I, I remember coming on here, I was lost in New York in April.

And I, I came on and I remember saying at the time, every man and his dog owned NVIDIA and um there we go, we've just had the proof.

You know, the, the, the, the, the quick selling, the point is markets have fashions.

They last for a long time.

They end up with everyone owning the thing.

That's the fashion.

And so it's all priced in, it was an expensive sector over owned, et cetera, et cetera.

Now the psychology is potentially changing.

It's kind of interesting as well because if you, if you listen to people over the last month, they're sort of questioning a I, no one's saying it's not gonna be great, but it might just take longer.

It might just cost a bit more, et cetera, et cetera.

So that's kind of interesting as well.

So I kind of feel and, and on top of that, I think the important thing about July the 11th is it, it, it, it embedded in markets.

The idea that we're going to get a fed rate cutting cycle.

And this softer data last week in the US reinforces that.

So yes, we're in a liquidation event.

Uh The Japan stuff's critical, but really we're in a global sector rotation and, and over the next couple of months, that's, that's the way to play this thing.

If you're looking at a couple of years, basically, I got to do one more on the video of it all.

We just had it in video chart year to date up showing the gains over 100% even with the recent sell off that we have seen over the past couple of days, I believe it says up over 110% year to date.

So Chris, particularly as we had to video earnings in a couple of weeks here.

How big of a risk is that your call?

Well, I have no idea what their earnings are going to say.

I I'm a macro guy and a strategist.

But, um, my, my, my guess is that, um, a lot of the good news is in the price from the way the stocks trading, um, from all the psychology, from the over ownership.

And, um, yeah, I, I wouldn't, I wouldn't, I don't know, I don't know what's gonna happen on earnings.

Ok.

So then I think the question in all of our family group chats, right.

I'm sure you experienced this as well is just what do we do right now?

What do we do with this?

Pull back?

What are you telling people in your family if you, I wouldn't.

My parents are too old to trademark it.

Um I tell, I tell them to buy the bounce, trade them for a couple of weeks, go long.

Uh If you, if you're nimble, but really lighten up if you're a lot, if you're sort of multi month investor, it all depends on your time frame.

So that's the, that's the challenge.

So we, we think about markets on lots of different time frames which generally confuses everyone.

All right.

Well, great advice.

Thanks so much for helping us out here.

What is it a very confusing time for a lot of investors at home trying to figure out what moves to make in their portfolio?

Chris Watling.

Always great to have you.

Thanks.

So joining us here in studio Ceo and Chief Market Strategist at Longview Economics.

We keep right here on Yahoo Finance coming up on catalyst Lucid shares moving higher looking again of just about 3.5% after $1.5 billion cash infusion from a top shareholder.

We're gonna have those details when we come back.

Lucid shares are up just about 2.8%.

Nearly 3% move to the upside after announcing its largest shareholder, Saudi Arabia's public investment fund will give the firm an additional $1.5 billion in funding.

Now this coming as the company gets set to launch its new electric vehicle.

Lots of questions about what ultimately the future of Lucid looks like.

So again, the fact that they did get this cash infusion, obviously, this is going to extend the timeline here cities out estimating that the new $1.5 billion capital raise is expected to extend Lucid's Liquidity runway all the way to the fourth quarter of 2025.

It also went on to say it's going to help Lucid here navigate what has been uh clearly a global slowdown when it comes to ev demand.

Also the launch of its mass market SUV and remember that this funding comes on top of a billion dollar injection back in March and raises the total that the Saudi Aramco Fund has invested into approximately $8 billion.

So again, Lucid shares moving to the upside, they are off their highs of the morning.

But again, the street, obviously viewing this as a positive here for the stock.

Yeah, it's interesting because last quarter, there were concerns about liquidity with lucid and of course, today, that's not a concern given this $1.5 billion cash infusion that they are getting from the Saudis.

The big question I'm gonna have is what the executive team is going to be doing with that infusion of liquidity and whether or not they're going to be able to utilize it to continue to reach further gains, particularly with investments in the Suvev.

And what that's going to look like in terms the RO I on that moving forward.

Obviously, the street is thinking that that $1.5 billion in funding is going to be a positive catalyst for the stock moving forward.

Again, the announcement from the Public Investment Fund of Saudi Arabia is committed to providing what they say, quote is sufficient liquidity into at least the full fourth quarter of 2025.

So certainly a little bit of runway to come for that infusion of cash.

All right, let's take a look at young brands because they reported a mixed results here after earnings topped expectations.

The second quarter revenue fell short.

The company reported same store sales declines at KFC and Pizza Hut.

They also cited geopolitical challenges and a quote more cost conscious consumer.

And they also went on to say that the impacts on the Middle East conflict in addition to the more cost conscious consumer has presented those, he those headwinds to same store sales.

I do wanna call out though what seems to be helping or maybe alleviating some of that stress that we have seen on young brands has been their value meals.

They went on to say that Pizza Hut's $7 Deal lovers.

I didn't even know they had, this has been helping their sales trends, at least here in the US compared to the prior quarter.

So they are seeing a bit of a shift there in terms of a um more positive direction there.

Obviously, we know a lot of consumers are on the hunt for value, especially at a time when inflation still remains a constant issue with millions of consumers.

But Taco Bell reported same store sales growth still remains the standout here within this print matty.

I thought it was fascinating, the things that the chief executives and and the folks on the call were talking about specifically with regards to geopolitical tensions, fueling some losses immediately at the top.

They were talking about tensions in the Middle East and the impact that was having particularly on same store sales.

That was the case for Pizza Hut and KFC, as you mentioned, Shana.

But also this is just the latest example of a brand that is struggling because of consumer consciousness.

You mentioned the value meal offering that that was not enough for this quarter, at least to the not the value meal offering.

But the $7 meal that I also had, had heard of, I shouldn't brand it as the value because that's obviously a competing retailers name having said that though.

It's interesting to see these brands continuing to somewhat lose their ability to have pricing power in the face of consumers that are struggling under the weight of inflation lowering prices.

If that's not enough to get consumers in the door, then really what will be the answer to that question as consumers are trading down to groceries for their foods?

What is that gonna look like moving forward?

Particularly as we are getting an environment where the labor market is starting to have some issues.

Could that lead to further issues with consumers moving forward?

Uh That'll be a big question, of course, as we get inflation data coming in in the next couple of weeks.

All right.

Well, another big story, of course, we are watching this morning, Google facing a huge loss after a judge ruling its search and ad businesses violated antitrust law alphabet stock down a little over 1% this morning.

The big question, could this actually have a major impact on another tech giant Yahoo Finance's Dan Howley is here on set with us with the details.

So Dan, obviously the big question here, Apple, yes, yes.

So uh part of the uh this whole case uh going, going to trial and, and some of the details that came out was the internet services agreement between Google and Apple.

And essentially what that means is that Apple is able to or required to use Google as its uh default search engine in safari in Siri uh in spotlight search.

Uh And so whenever you do a search through uh any of those services, you're going to be using Google's platform.

Now, what does that mean for Google?

Well, it means that it gets a ton of traffic driven its way.

Uh According to these court documents, uh Google did internal modeling in 2020 found that without Apple, uh it would lose uh without that deal with Apple, it would lose 60% to se uh 80% of search volume on Apple's I OS devices.

So if you removed Google as a default, it's losing all of that traffic and a lot of people just pull up their phone and do spotlight search or pull up their phone uh and search in safari.

Uh And so that's where it's getting that uh that would equate to uh let's see here uh 28 to $32 billion for Google's bottom line that's 15 to 17% of the company's total revenue in 2020.

That, that, that search volume is driving now on the apple side of things.

Uh Yes, it's getting a good product, but it also gets $20 billion a year for uh using that as the default.

Now, what does that go into well, likely it goes into its services business.

Uh They don't really say where it goes.

Uh Apple is just like, oh, we got third party agreements.

That's a third party agreement.

So it's probably in its services business.

In 2022 Apple saw 78.1 billion uh in services revenue that 20 billion that equates to about 25% of services revenue for the year.

Uh It's not obviously uh a massive chunk for, for apple overall.

Uh It's 5% of the annual revenue but still uh uh a size piece uh of, of the overall pie for, for apple generally.

And so, you know, if all of this goes forward, if they manage to uh or don't manage to uh win any appeal, uh If these agreements are kind of null and void, we'll have to see where this goes.

Apple risks losing a ton of money.

Google risks losing a ton of money.

I think the, the big question is, do you wanna use bing?

Do you wanna use Yahoo?

No offense.

Uh Do you wanna use duck duck go or do you wanna stick with Google?

And I think for a lot of people they'll probably stick with, with Google at this point.

And so, you know, all of this is kind of uh an interesting discussion because uh according to the, the judge, they are in violation of antitrust laws, I I use different products all the time and I still go back to Google.

So it's, you know, it's, it's difficult because are, are they so good because of, of this or are they just good?

And so people are gonna still stick with them?

It's interesting, interesting.

And I also think, trying to figure out how big of an overhang this is ultimately going to be in the stock or when you put it in context.

Yes, it does equate to obviously billions and millions of dollars potentially of lost business or exactly what that's going to mean.

But it's almost, it seems like a drop in the bucket then just given the massive size obviously and influence that Google and both Apple have on the market.

Yeah, I mean for, for Apple, yeah, I mean, it's, you know, I think the important thing to point out is that services is its fastest growing business, right?

That services is seen as kind of the the the backstop uh that helps Apple when it comes to uh flagging iphone sales.

It for years.

That's been the narrative, right?

Was they're building out services uh as a bulwark against falling uh iphone sales.

That's why they got Apple TV, plus Apple Music, plus all these different services and oh yeah, $20 billion from Google a year, right?

So uh I, I think that's a uh uh a potential uh issue for them just because it kind of hurts that narrative to a large degree that 25% of overall services revenue uh for uh 2022.

It's a huge, a huge issue for, for Google losing all that search volume is going to be a problem from IO and it seems like it's too late now, potentially for Apple to say.

Oh, well, we'll just invest in our own search engine.

It seems like maybe the boat is passed on.

Apparently they, uh according to these court documents, they had gone into looking at that and it would just be too much money for them to do too much money even for Apple.

It's amazing folks.

All right.

Well, thank you, Dan.

Really appreciate you coming on set and bringing us that story coming up here, Cryptocurrency.

We are seeing a little bit of a reversal here, particularly in Bitcoin.

That is up 6% today.

What does it mean for your asset classes and your investment in the all asset we're going to discuss exactly that when we come back, take a look at Cryptocurrency, specifically Bitcoin, moving into the upside here up nearly 7%.

This comes after the record breaking sell off that we saw leaving Bitcoin below $50,000 on Monday for the first time since February joining us to discuss what is next for Bitcoin.

We've got our very own expert, Jared Jared, what investors need to know Bitcoin is mounting a nice comeback.

This is the best day for Bitcoin in about three weeks.

You can put a the in the same bucket there.

But that is after the worst day in several years.

That was also the case for the stock market yesterday.

So this is what we're seeing Bitcoin up about 7% over the trailing 24 hours.

So is Ethereum.

But when I put a three day view here, you can see Bitcoin down about 3% thee down 5%.

So still haven't clawed back all those losses.

Let me show you too from a three day view.

This is actually the prices just rallied into an area where is going to get shorts interested again.

So the big test here is can Bitcoin get above 60,000?

And I'm going to show you a longer term chart.

This is a five year chart.

Uh 60,000 is just this line that has been important historically.

And you can see here we are just in the midst of a little flag.

You can call that a bull flag.

But nevertheless, on a year to day chart, you can see we've been making lower highs and lower lows.

So that is the definition of a downturn.

The question is, when does it reverse?

And do you have a wash out before that happened?

And arguably we might have had the wash out already.

You look at the candlestick action that we had yesterday.

That was a big test of the 50,000 area which was strongly rejected to the upside.

So all in all I was looking at fun flows too with the New Bitcoin ETF and New Ethereum ETF S the Bitcoin ETF dip buyers were absent yesterday.

However, the Ethereum buyers, buyers, they were out in full force and so kind of a mix there.

You look at the three day price action in all of these, all of these tokens here.

You only see a few out performers.

It is interesting to me and actually important that we do see some of the French tokens like Dogecoin participate here, Doge is up 7% but even Solana up 13%.

So we'll see if anything mounts of this come back and perhaps false wash out to the false, wash out to the downside.

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

Here.

We're gonna take a look at crude and Saudi Aramco because shares are rising after its second quarter, net income met expectations.

The oil giant maintained its quarterly dividend.

We're looking at gains of just about 1.5%.

Ns Farre has been closely tracking this.

And what can you tell us?

Yeah, Shana and that quarterly dividend that has been maintained part of the reason why that stock is up right now because Sar Arano said that it will maintain its $31 billion in dividend for the second quarter.

Uh that includes about 20 billion in dividends, but also you have another 10 that is performance space with city analysts saying that the firm has enough financial flexibility to fund the payout.

And this is despite lower profits for the second quarter or profit decline for the second quarter.

That's because in part of uh production volume that's down.

And also because of the uh lower margins, refining margins that during the conference call management referred to th those weak refining margins saying that that's a short term phenomenon that they expect that in the coming decade, they'll be healthy again.

Now, when you compare Saudi Aramco to the stock performance to other oil companies, if you take a look at Exxonmobil, for example, or Chevron Exxonmobil is up around 11% year to date.

Chevron is down about 3% year to date.

Aramco is down roughly 17% year to date.

It's important to keep in mind that Saudi Arabia has undergone those voluntary output cuts.

So you're looking at about 9 million barrels per day, that's the lowest level in three years.

And sad Aramco was able to sell its oil at around $87 or 80 just below $87 per barrel last quarter.

That's compared to $78 per barrel uh in the prior year for the same quarter in the prior year.

Now, when it comes to the oil prices that we've seen recently, Aramco Ceo Amina Sarah said during the earnings call that the market is overreacting to the dip that we have seen in oil prices that it's reading too much into the short term responses of the new news coming from the US with regards to the job to the number of jobs for the month, referring to that jobs report that came out last Friday, Shana.

All right.

And thank you so much for joining us on all things.

Si Ramco earnings, really appreciate it.

Now, coming up, the big question is the A I rally really over.

We're gonna unpack what is next for the big, the big tech trade coming up next zero in on the magnificent seven because the basket of tech stocks lost $652 billion in market cap just on Monday alone.

But we are seeing a little bit of recovery here.

If you take a look at a video on your screen that is up nearly 4.5% on the day.

Microsoft shares up over 2% and meta trading to the upside as well.

The big question, what is next for the big tech names have driven the market to over 35 all time highs this year prior to the recent route?

Joining us to discuss that we've got Max well off the US equity derivative strategist at U BS Investment Bank.

Max.

Well, it's great to have you.

So in your note, you mentioned that the A I narrative and real yields remain the largest drivers of returns.

Can investors still continue to kind of rest on their laurels of the A I trade moving forward for the second half of this year.

Given what we've seen over the past few days.

Yeah, thanks for having me.

So look, what we've been telling clients is the, you know, sort of initial move uh in volatility on Friday was, was definitely warranted and it was really a story of everything everywhere, sort of all at once.

So, you know, as you allude to from a fundamental standpoint, um in addition to the A I tail and concerns that you had, you know, from a lot of this sort of major tech bellwethers through earnings, um You also had growth, slowdown, fears creeping back up when it comes to the economy.

You also had geopolitical and us election risks rising, right?

Obviously, a lot of sort of technical risks that also led to, you know, the VIC spike on Friday and yesterday.

Um but I think, you know, moving forward, we, we do want to actually have a sort of long quality bias and, you know, think this sort of low quality pockets like small caps relative to large cap growth in tech, um could actually continue to underperform in the near term max.

Well, we're trying to figure out just where we are within the midst of this self.

We are seeing some of that buying activity today.

Something stuck out to me in your note and it was the early warning signal that you had been flagging a higher probability of a more than 5% absolute move here over the next month.

I'm curious, ha have you seen an update to that following the, the, the, the last three days?

And I guess what is that then?

Signaling to you now?

Yeah.

So the, the, the great thing about this model in particular is it doesn't tell us when it's raining, it tells us it is likely going to rain.

So over the last couple of weeks, we had actually started to see that move downwards in terms of telling us our flight, talking to us that we were gonna have a, uh you know, a higher probability of a plus or minus 5% move over the next one month.

We obviously clearly got that, um, you know, over the last, you know, couple of, of trading sessions, but the biggest driver in, in that particular um output that we flagged was actually fed policy expectations, you know, post uh post fo MC in particular.

Now something to note and, and, and the real common denominator here is that when that model in particular looks back to history, typically, when you move into a fed cut cycle, it's, it's usually accompanied by a recession, um, you know, several months after, so that our work, as I noted, right, that's going to be key over the, you know, the coming weeks and months in terms of the data coming through CP I next week.

Um You know, uh Jackson Hole at the end of the month, September FO MC, obviously next month, right, that this data is going to continue to be very pertinent in terms of sort of what that model is going to tell us going forward.

So how should investors be positioning ahead of an anticipated rate cut come September?

Yeah.

So it's interesting, right?

And, and this was sort of um you know, flagged as a sort of not so ugly when we consider the good, the bad and the ugly.

Um, you know, when it came to the movies over the last couple of days, and typically, what you've seen historically is you've seen volatility or the VICS rise into fed rate cut cycles historically and we're traced thereafter unless again accompanied by, by recession.

So right here right now.

All right.

And we're already starting to see this play out.

We do think volatility ultimately fades a little bit from here unless the data really continues to sour.

That is, you know, bad is really bad and the fed is behind the curve, whatever it may be, right.

But we do think it's going to take a few weeks to do so.

Um, and our, you know, our models are suggesting that again, the data is going to be very pertinent over the next, you know, couple of weeks in terms of kind of continuing to see a retracement back to normal.

But we also don't think we're getting back to A V at 12 environment.

For example, I want to end on the VIC.

Since you bring it up, we saw it basically tripling overnight here, but we didn't see a lot of stocks hitting 52 week lows, especially as we opened up this morning.

Given that kind of divergence, what opportunity does that spell for investors in picking maybe specific stock names?

Yeah.

And, and that goes back to kind of what I alluded to before, you know, the the move yesterday was clearly dislocated from reality, right?

We do think there was a lot of technical factors um in the VICS relative to, you know, the S and P 500 next or the NASDAQ or the Russell 2000, you know, you did have investors sort of rushed to buy downside protection post, NFPS, Post Bank of Japan, um which we noted for several months that investors had not been doing.

So investors were much less defensively positioned than they had been previously.

So that's why we think you saw, you know, the largest intraday vic spike in history next to Black Monday in 1987 right?

But also the sort of largest intraday retracement in history as a lot of those sort of hedges that were put on were monetized.

Keep in mind the S and P was only down 3%.

We've obviously had larger moves, you know, in history, when you look at the analogs that, you know, 1987 down 20% you know, you know, March 2020 you had some down five down 10% days, right?

So the reactivity in the VICS relative to the S and P move or, or other major indices was clearly dislocated from reality.

And we do think there's there's room for normalization and we're obviously seeing that in the price action today with investors using this as a sort of buy the dip um uh opportunity.

All right, Maxwell Grinko, great to have you here.

Thanks so much for joining us us, equity derivative strategist at U BS Investment Bank.

Thank you.

Thanks.

Keep right here on catalyst again.

Taking a look at the major averages just about an hour and 15 minutes into the trading day.

You're looking at the dow right around the highs of the session up just about 440 basis points.

You have the S and P up about 1.5%.

The NASDAQ also reversing yesterday's downward move.

You're looking at gains just about 1.3%.

We'll be right back.

Vice President Harris has selected her running mate Minnesota.

Governor Tim Waltz.

Now the two are expected to appear together later today at a campaign rally in Philadelphia for more on this selection.

We want to bring in Yahoo Finance's Rick Newman.

Hey, Rick, hey guys, I didn't see this one coming.

I thought uh Mark Kelly, the senator from Arizona on paper seemed like the best fit.

But uh Kamala Harris decided otherwise.

Uh Tim Walls is, uh he's a, he, his career before he became a politician was a teacher.

He spent 24 years in the Army National Guard, progressives like him and independents like him too.

So he's a sort of a plainspoken, affable, friendly midwestern guy who's gonna uh complement the ticket, uh with a, with a California, uh, former senator and current vice President, Rick.

I'm curious too, moving forward here.

What you think the reaction is going to be, uh, we've already heard.

For example, JD Vance responding about the decision to not pick Shapiro.

What do you think the Trump campaign is going to do in terms of strategizing around this pick?

Well, I mean, the, the whole strategy toward, of the Trump campaign toward the Harris campaign is try to find all their vulnerabilities and hammer them home.

Um I don't think that any criticism of who, who Kamala Harris picked or did not pick is going to last for very long.

I mean, the, uh, what JD Vance is trying to say is Josh Shapiro, the governor of Pennsylvania, he's Jewish and he's staunchly pro Israel.

So the, uh, the Trump campaign is trying to say, oh, they're, they're afraid to pick some guy who is a heavy supporter of Israel in its war against Hamas and all its other enemies in the Middle East.

Therefore, I guess that Jews should vote for Trump Vance.

I just don't think that's going anywhere I mean, I think that's a today's story and it's gonna just drift away.

I mean, the veep stakes is kind of fun while it's happening.

And then when it's over, uh the vice presidential nominee just doesn't matter very much unless it's somebody who generates negative press for you the way Sarah Palin did for John mccain in 2008.

I, I clearly think that Tim Walls is not going to be that kind of guy.

You would assume they vetted him to find out if he had any childless cat lady type videos in his past.

Anything controversial.

He said that could dog him.

Uh JD Vance on the other side, he's more controversial.

So we'll see if he ends up being a ne uh ne negative for Trump.

But um just to as a way to kind of hint at how important vice presidential candidates are, just ask you guys, I'm not gonna put you guys on the spot, but I'm gonna ask you guys in the audience.

Does anybody even remember who Hillary Clinton's vice presidential pick was in 2016?

Um, you know, pause for effect.

It was Tim Kaine Senator from Virginia saw another sort of uh affable soft spoken guy and I think a lot of people probably don't even remember who he was.

So, uh so that, you know, the veep, the veep stakes is over and now we get into Harris versus Trump.

Well, Rick, you have to remember that because uh remember the guy who always buys the website URL S for every possible pre presidential candidate, he had the Clinton Kaine URL, he got to sell and make a lot of money.

He also had Harris Waltz.

So we're gonna have to check him in later Rick.

But thank you so much as always for joining us.

Really appreciate you.

Thank you.

Now, the big question following Kamala harris' VP announcement, how could the final ticket impact her support, particularly within the business community here to discuss this?

We got Leslie.

Fine Zag.

She's the founder of V CS for Kamala joining us and Leslie, thank you for making the time.

I wanna start on the reaction that you are hearing from the folks who signed this letter published uh by your organization supporting uh Vice President Kamala Harris's run for president.

What are you hearing from folks in the VC and tech community about her VP pick this morning?

Very little because I spent most of the morning putting my kids to out to have breakfast and preparing to uh speak to you guys.

But I think that over the past few days, um she had really, really good uh choices to pick from.

And uh the first tweet that I saw this morning was that we're about to get a Minnesota nice uh uh Vice President uh in uh in the administration.

So I'm really excited to learn more about uh about the future Vice President Leslie, talk to us a little bit more just about why or how critical is this election for the tech industry?

And why is Kamala a better pick for tech than former president Donald Trump?

Yeah, this is a critical election for the business community and for the country at large as well.

And I think, you know, I have been saying this a lot lately and I, I do realize that it is not the sexiest talking point, but we need stability to have prosperity.

Any business owner, anybody who has ever tried to launch a business, launch a start up knows how hard it is to launch and grow a company, how hard it is to make payroll month after month after month.

And you know, the the founders that we invest in as venture capitalists that are not only trying to start companies, they're trying to scale them to be the next public companies of tomorrow.

That is an extraordinarily hard thing to do.

Now try doing that under an erratic government with inflationary policies that's picking a trade war with China.

Uh You wake up one day, you don't know what else is going to happen.

It just makes it really, really, really hard.

So we can't have an innovation economy that is taking big steps and big risks if we have a government that we can't rely and count on.

So that is the big message uh that the business community feels.

But I think on top of that, you know, Kamala Harris has shown an openness to the business community, especially the tax sector.

She's been working across the aisle on the Chips Act.

She's been wanting to bring innovation home and this campaign is a pretty new campaign, right?

It's only a couple of weeks old, but I already it feels like her agenda is about creating growth and opportunity for the middle class.

But that is what all of us want.

Leslie.

Do you think that's a shift to them?

Because I was gonna say she hasn't necessarily gone easy on the tech industry.

When you take a look at what she's done in the past, she supported laws of digital privacy, online harassment gig, worker protections.

Are you confident?

I guess in what you heard or maybe some of the conversations that you're having with your colleagues there that Harris presidency will look a lot different maybe than some of her approaches and how she's dealt with the industry in the past.

So listen, when we are dealing with technological innovation, that is going to shift the future for every single person, not just the people running it, but every user out there, every family.

I think we do need a government that uh works collaboratively with the tech industry to create sensible legislation.

And I feel like the first thing you need to do that is to be technologically savvy.

So, but you know, I think age is a major factor here.

The fact that she is a bay area native and has deep connections to Silicon Valley.

She appears to be listening.

She is taking a better uh stance around uh m and a activity and, you know, we have her ear and we believe that this is the leader that we can collaborate with.

What do you mean by we have her ear?

Leslie.

Have you spoken with Harris yourself?

I really, really wish I had but no, I have not.

Uh But I think, you know, uh I don't know that uh ordinary people understand uh the venture capital community.

We're not necessarily known for being uh activists.

We're not really known for being like um terribly collaborative necessarily.

So the fact that you get uh 700 venture capital investors, like these are the people that are picking the titans of tomorrow to agree on one sliver of an idea.

And that is that this is the president that we want for this next election.

Now, this is not a co a political coalition, right?

Like we are a very broad variety of voices from every part of the political spectrum that have signed into uh this pledge.

And it does not represent where in the political spectrum they they are uh what it is is in this election.

We believe that this is the the future of the country that we want to see.

All right, Leslie Fai, we have to leave it there.

Thanks so much for joining us here this morning.

Uh Founder of V CS for Kamala.

Thanks Leslie.

Thank you for having me.

Let's do a final check on the markets because we're seeing a bit of a rally here just about 90 minutes into the trading day.

You're looking at gains across the board.

You've got the dow just shy of 500 points.

You've got the S and P up about 1.6% as well as the NASDAQ.

Keep right here on Yahoo Finance.

Coming up next, it's wealth dedicated to all of your personal finance needs.

Brad Smith.

He has you for the next hour.

Stay tuned.

We'll see you tomorrow.