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Tesla bulls and short sellers, French stocks pull back: Morning Brief

It's Friday morning, but even the stock market can't afford to take a three-day weekend! Morning Brief Hosts Seana Smith and Brad Smith guide investors through the leading industry stories and into the day's market open.

Wall Street and tech investors are abuzz about Tesla (TSLA) and what CEO Elon Musk's pay package — valued at around $46 billion in the company's current stock price — is indicating about the future growth of the EV maker. Wedbush Securities Managing Director & Senior Equity Analyst Dan Ives details his latest forecast stipulating Tesla's market cap could be over $1 trillion in 2025. Clean Energy Transition CEO and Portfolio Manager Per Lekander later chimes in on why he believes Tesla is "the biggest stock market bubble in history" and that it could be "the next Enron."

In stock news, Apple (AAPL) continues to hold the most valuable company title at the open after it's market cap surpassed Microsoft's (MSFT). France's CAC 40 (^FCHI) exchange takes a hit, falling by well over 2% as political tensions over France's snap election create unease in the market.

This post was written by Luke Carberry Mogan.

Video Transcript

It's not a here in New York City.

ADVERTISEMENT

I'm John Smith alongside Brad Smith and this is Yahoo Finances flagship show.

The morning Brief stock futures are lowing fall lower following a record close for the S and P 500 the NASDAQ composite.

So let's get right to it with the three things that you need to know this Friday morning as you prep for the final trading day of the week.

Yahoo finance is Crossman and Jar and Madison Mills have more.

Yeah, a big win for Tesla and Musk.

Tesla shareholders voting to reapprove that the CEO S 2018 multi billion dollar pay package which was struck down by a Delaware judge earlier this year, Tesla shares slightly higher here in the pre market.

Now the vote doesn't change the judge's decision, but it may give Tesla a strong case to get that ruling overturned.

And shareholders also approved moving Tesla's legal home to Texas from Delaware which is a move bus also called for after his pay package was voided.

Musk also gave updates on Tess root taxi program, possible new vehicles and a bullish forecast for Tesla's optimist robots and stock futures.

Moving to the downside after the S and P 500 NASDAQ and NASDAQ 100 closed at record highs on Thursday session.

The tech heavy NASDAQ boosted by gains in video Apple, Microsoft and a number of semiconductor stocks equities overall rising this week on investor hopes that inflation is cooling.

But according to the CMF watch to the odds of a rate cut in September have increased by over 17% points from last week alone to around 64%.

That's after a number of economic prints this week have shown prices moderating and Apple is the most valuable US company for the first time since January.

The maker closed Thursday session with a $3.285 trillion market cap over taking Microsoft by just a hair $4 billion.

There.

Apple been in the red for a lot of this year but recently broke out after unveiling its A I strategy and its worldwide developers conference.

Our top story this morning, Elon Musk hearing a victory in his multi billion dollar pay package vote, Musk showing some love to his supporters during his speech to shareholders after the results.

Hey guys, we welcome, welcome to the Tesla shareholder meeting and I I just want to start off by saying, Hot da I love you guys.

Yeah, hot damn Tesla shares are higher pre market.

I'm here to break down the results and the details of the vote and what we learned in the shareholder meeting.

We've got Yahoo Finances, Pros, Subramania and Pros.

My goodness.

You know, it is Muska over there, right?

I mean, this really cheering day, it seemed like they actually increased the volume and the re uh announced the results of the vote for his pay or the people cheering with Los and loud and really kind of raucous.

So, yeah, you know, uh big, big win for Musk and Tesla here obviously, for him personally, he gets his pay packages.

I say he's very excited, very happy with the, with the shareholder vote.

Uh but also that Red Dometic of the, of the, of the company in Texas that also passed um Kimball Musk and James Murdoch, they also got approved there.

But I think the big picture stuff here is that this overhang of his compensation issue is now supposed uh is gone for now it's gonna be sold legally, sort of has to be worked through and what the appeals process.

But it seems like even after all this disclosure, uh after the the lawsuit, the voters were informed of what this package entailed at this point and it seems like potentially a better case for Tesla and Musk.

Yeah.

And, and this is also, I think very much of this of a similar type of playbook that we've seen from Elon before.

Right.

Yes, he does have this victory, but then he's also dangling something out in the, in the distance here when we're talking about those lofty expectations.

Now he talking about the fact that he's confident that Tesla could actually reach 25 trillion here in market cap.

I mean, putting that into context, is this something that you think all those people in the audience, they are huge elam believers?

Is that something that they actually think is realistic?

I mean, put some of his lofty expectations and his dreams and hopes that we've heard over the years and how realistic those have actually come, whether or not they've actually come to, I mean, there's been two things they talk, he talked about were Robotaxis and sort of spilled a little bit of the beans on it saying that, well, it's gonna be a complete managed by Tesla and also your cars, personal people's cars that you can rent out in an airbnb like fashion with the app.

So talking about how that's the future that's happening.

But at the same time, we're not seeing them doing these sort of tests that that Waymo is doing that Cruz was doing with, with sort of fenced actual robotaxis pickups.

We're not seeing that yet.

So that's the next step that I think the analysts want to see is are you guys gonna be testing this beyond just FSD on the streets with regular people?

Uh also optimist robots, right?

That's part of this 25 trillion or whatever plan he's talking about.

He thinks that he said last night, he thought he thinks that there'll be a robot for every person on earth.

So 10 billion robots he's envisioning, which should be trillions of dollars in market cap in business there for them.

But again, this robot, we've only seen it in very basic sort of uh uh ma uh sort of manual sort of uh descriptions here and what it's been doing.

So I haven't seen it actually in work kind of like in the factory or in someone's house.

So that's our big, big, big leap of faith that a lot of investors and, and from last night, they were very sort of uh just sort of enthusiastic about Musk and his and his remaining at Tesla Ross all the best to you as you start saving up for your Superman bot, the Tesla Bulls are charging oh, a double entendre betting big on Ceo Elon Musk are now guest says that he sees Tesla's valuation north of $1 trillion in 2025 Dan Ives Wedbush Securities and managing director and senior equity analyst joins us.

Now, uh we might have even had a typo in there.

I think you think that this could go even higher here.

So ultimately, Dan, let's break that down here.

What is your vision for how they can get to your market cap that you're anticipating by 2025?

Yeah, I mean, first off, right, this puts that Delaware twilight zone in the rearview mirror.

I mean, now with the compact which I think that was a 20 $25 overhang on the stock and now moving to Texas.

But when you look at the Tesla story, Autonomous FSD, I can argue it's one of the best A I plays in the market.

When you look at next 234 years, this is just the start of the next chapter.

The next book is as Musk calls it in the t of Grosser.

I think it is one of the best disruptive names in the world, right?

And so put some of these lofty expectations, then I think into a more realistic picture for us, you're very confident that you're going to see or that we could see maybe Tesla reach that $1 trillion in value here in 2025 talk to us about what the catalysts are for that growth, at least in the short term.

And then compare that maybe to the longer term picture and some of these uh longer term believers when it comes to Tesla.

Yeah.

So let's walk through a set up.

Well, New York City cab driver is expecting a bad June quarter.

So, so no one's expecting great things for June, right?

That's the last tough quarter, tough comp as then we turn the corner demand stabilizing in China and then August 8th, I think it's gonna be historical day Robotaxis autonomy.

That's kind of the vision.

I mean, no different than what we saw from Apple this week in terms of Cupertino and A I that would be them unveiling the broader strategy.

And then I think you start to then see the execution of the strategy one with the sub 30 K vehicle.

We think a quarter model 2.5 gets released early next year.

In our opinion, the bottom and, and Tesla bears go into hibernation mode and I think those thinking that that comp package was gonna get voted down had a little too little, too much of champagne.

Is Elon Musk?

Too optimistic with his $25 trillion target that he thinks the company can get towards.

And, and what type of company are we talking about at that point?

Is it, is it a automotive company?

Is it a technology company?

Is it an energy company?

Well, we've always talked about in the show, this is a disruptive technology company and I think that's where look, the bears will say it's a car company.

They, they've said it from what 100 million up to a trillion.

So, so the point is this is disruptive tech.

And now when you look at autonomy software FSD, that's the vision.

But also this is one, you're gonna see 34 million vehicles per year when you look at four or five years from now and again, betting against Musk, it's been the wrong move.

And I think this has clearly been a turbulent period, but I could see that Cinderella story starting again as we go into 2025.

All right, Dan, when we talk about a little bit of a longer term uh trajectory here for Tesla, we heard lots of talk about optimist, the robot and exactly what maybe Elon Musk thinks it's going to do to Tesla's valuation.

He was talking about $25 trillion here in valuation.

How, how are you looking at the robot from an analyst perspective?

And, and ultimately, what that's going to do to Tesla's bottom line?

Yeah, I view it as optionality again in terms of from a valuation perspective.

None of that's being valued into the stock.

Now.

Looking out it's really more about the A I components of it.

And we've talked about, I think 35 years from now, you will see more and more we call robotics within consumer households.

Well, it's gonna be A I driven and, and I think that's something that it all goes into this A I revolution.

It's not just about Musk and optimist, it's about the chips from the godfather of A I Jensen NVIDIA.

You're seeing 1/4 industrial revolution play out here.

Tesla is gonna be a mean player in that and I get it, investors still view it as a car company, but that is just, this is just the early stages of broader where Musk is gonna be taken, Tesla, how soon do you think Tesla needs to uncloak what a new vehicle model would look like in order to maintain some of the the demand generation uh that we're seeing, right, at least in this demand generation cycle, maintain consumer mind share.

I'd say by March or April 2025 I mean, so this is something I see coming out before the masters next year, you know, where they could ultimately come out with a strategy, lay it out for a second half delivery, sub 30 K. And I think that starts the next phase of the Tesla growth store.

And I think Tesla, you know, we look what happened with Apple this week, you know, betting against these disruptive technology companies with massive install base.

It, it's just been, I think it's, it's the wrong move in what we view as a 1995 moment.

Dan just circling back to where we started the conversation when it comes to this vote.

Some of the concerns surrounding Elon Musk over the last couple of years has been that he's been distracted.

He has too much going on when it comes to some of his other companies in Tesla really requires someone at the helm who's putting all of their focus on Tesla are at least some of those concerns valid in your view.

And, and which one?

Yeah, Musk is Tesla.

Tesla is Musk.

And obviously I'd say most fouled human on the world in many ways.

A lot of balancing act.

Now, I do think there was a phase that he went through where wasn't me being the pilot on the plane.

We talk about the adult in the room, but you're seeing old school Musk return now and I do think this has reinvigorated him in terms of the vote, the confidence and, but you're right.

I mean, Tesla is the golden child.

They need Musk, but Musk needs Tesla and I think that continues to really be the focus, especially with a I, I believe being under the hood of Tesla as the next stage is getting Musk the 25% voting, right?

All right, Dan Ives, always great to talk to you.

Thanks so much for making time to join us here this morning.

Well, Bush Securities managing director, Dan, have a great weekend.

You all right.

Let's take a look at Apple because Apple taking back the reins as the most valuable company in the US.

Now the company closing with the market cap above Microsoft for the first time since January that happened at the close yesterday.

Now, Apple adding 324 billion in market cap over the last three trading sessions according to the latest ad out from Dow Jones, a market daddy here.

When you take a look at where things stand right now, you've got Apple and the lead at 3.28 trillion.

Not far behind.

You got Microsoft there in the number two spot, NVIDIA still holding above a three trillion here.

So the race between those three but I, I think Brian, when you take a step back and take a look at the excitement surrounding Apple this week, this week and really taking a look at that five day chart if we could put it up.

Because I think that is what's so interesting about this dramatic move that we have seen higher at least since Tuesday because we got the update from Apple on Monday.

The market's reaction was pretty muted, right?

And, and then after we had about 24 hours or so to digest it, we have seen the stock really take off.

And I think that also just explains what is going on in the market here over the last several months.

If you do, if you are able to convince investors that you are a valid A I play that you are will be among the winners within the A I realm here over the next several years.

It it's giving investors a reason to buy in here.

And I think by looking at some of the gains that we've seen over the last couple of trading days, people are confident that Apple is going to be a winner in A I and, and in this market, I think you need to or, or it really helps if you are able to convince investors of that story and get them on board with maybe what the next several years are going to look like here for the company.

And a lot of those gains potentially driven by A I investments.

I mean, this was a critical WW DC for the company you'd seen year to date coming into May, the company not participating in the broader rally that we had seen in the markets.

And that really signals one thing, especially when you have a broader mindset among some of the investors out there.

And traders out there of this buy on the dip mentality for Apple to not be participating, even though there was a clear between March and May extended dip that presented opportunities for buying into Apple.

And to now just finally get year to date on a positive level as of late May, early June.

And now looking at gains really that have been amassed over an aggregate, at least for the year amassed largely during June here.

It's coming on the back of this company finally saying what it's going to do with generative A I and the optimism of investment that it could show up in some of the consumer technology devices.

And it'd be enough to actually spur a super cycle of demand because they're saying it's only going to be for specific devices that it's going to be leveraged in at least on the outset here.

And so that super cycle I think is what a lot of investors are hanging their hat on.

That's why you're seeing them finally participating in some of this year to date movement hire.

And we'll see if Apple can sustain this going forward.

But once again, now, more valuable than mostly the other players out there.

Certainly.

All right, let's talk about this rally in tech that we have seen because it's pushed the NASDAQ, it push the, pushed the S and P to record highs this week as excitement surrounding artificial intelligence really sweeps Wall Street.

Yet again, the tech sector on track for its best week in about seven months For more.

We wanna bring in John Stolas.

He is Oppenheimer's Chief Investment Strategist John.

It's great to see you again.

So talk to me just about how you're looking at this excitement that we're seeing play out in a handful of these tech.

So names again and really what this signals for the broader market moving forward.

Right.

Well, great, great to be on Yahoo Finance speaking with you and Brad today.

Uh I have to say when you look at this, what it really reminds everybody is we're all on the upgrade cycle because technology is deeply embedded in the lives of both business and consumers.

Uh It's not just about phones, if uh people who have apps for airlines, newspapers magazines have recently gotten notice on older phones when they try to upgrade, sorry, your operating system needs to be upgraded and you find out your old phone or your old computer can't take it.

It's time to get back to uh to the electronics store.

And uh probably some of the results that we saw at least from one company, I can't make mention specific names because I manage money but would indicate that electronic sales are not dead and we think they're likely to increase.

So this all looks like part and part part and parcel of the fact when the genie comes back, when the genie comes out of the bottle, it doesn't go back and folks.

And so with that in mind, John, not talking specific names, but talking perhaps themes more broadly that we've seen prevail in the markets.

How, how much more legs do you think there is to this trade, especially within generative A I, as we've seen companies who have talked about it on internet calls or announce some type of product or software update, they've seem to be the beneficiaries.

Well, we'd have to say Brad, you know, the old adage of trees don't grow to the sky.

Uh uh It definitely will step in at some point, but right now, it doesn't appear that the technology in this A I story is approaching uh uh uh a, a level where it's going to solve.

It looks like it's still morphing into other things.

Uh uh Essentially if, if you don't get on to a plateau and that's what happened in the tech bubble is, it's sort of plateaued.

People were talking about, we're gonna have a million eyeballs in so many years, but no profitability to them.

This is companies that are profitable that are growing and expanding and, and innovation is really taking hold.

That said, uh, any catalyst that the Bears can find to, uh, uh, to sell and take profits without FOMO, uh, they'll do it.

And, you know, we had that for a while ago.

If you think of that company you were just talking about, that's now the largest, uh in market capitalization, uh uh on the S and P 500.

Just a few weeks ago, there were a whole bunch of people saying it was done and it wasn't done at all.

It was just ready to morph into the next chapter.

So we remain very positive on technology, communication services.

Uh We like industrials uh but we also like financials and we think consumer discretionary is desperately oversold this year.

If you look at it from the lows of last year, it's still up very nicely uh over 20%.

So it's just uh different sectors get haircuts from time to time and pauses, but this appears to be a good time for for equity buyers.

So John given that you have your year end target for the S and P is 5500.

Here we are today just above 5400.

What I guess.

What do you need to see in order to raise your target or be convinced?

It sounds like you are convinced that maybe the market's heading even higher this year.

Yes.

Uh John, I would have to say here that, uh, you know, when we came into the year, we were one of the highest on the streets.

It's not the highest.

I think some people say we were the highest.

We weren't paying a lot of attention to.

Exactly.

Were we the highest or not?

But we came in at 5200 after, had to raise it in the first quarter, raised to 5400.

And our discipline is we don't raise our target unless it, the S and P closes at or above our price target.

So it would appear imminent that we'll have to consider whether we're going to raise our target for year end uh or not, uh probably over the course of the next few days or next few weeks depending upon how the market uh uh is treated uh by investors and traders and John as we wrap up this week, it's been heavy on the econ data from.

We also had the fed meeting this week and, and one of the top lines here, one of the questions you posed in a recent notice, the multi trillion dollar question on policymakers minds these days, it's, are we done yet or are or are we at least near done with tightening?

So, coming off of that meeting, what do you think uh the song remains the same?

Uh you know what, when Powell came out of that meeting?

Uh and, and, and the look at the dot Plots uh was still like, oh, that was affected by pre CP I numbers most likely.

Uh But we're still in that period where overall the fed is still is, is cautious before it, it determines that it will start cutting.

It is signaling, you know, it looks like one cut this year, we came into this year thinking when the fed was saying it was going to go three, we said, well, perhaps two times.

And then when everybody was saying 3 to 5 cuts and some people 5 to 7.

And even more, as I recall, we thought the economy was falling apart.

But we don't believe, uh we thought, you know, probably, uh it, it, it may not even happen.

Uh but we expected late in the second half and the November to December where everybody's looking at these days looks good to us and we think the Fed will do it, not because it feels the economy is falling into recession or it finds its in recession.

But rather the Fed feels that it's time to give a down payment to both Main street and Wall Street to say, look, we can, here's one cut for the beginning of 2025.

Relax, you know, and, and that's really it, it's, there's, there's a dialogue going on between the Fed and the markets.

The market never trusts the fed.

That's typical.

But the fed since Bernanke has been so communicative, we think it's more advisable that the market listens to the fed and realizes that the fed, the cycle appears to be our friend and the added juggling job of seeming a political as well along the way, John, uh a ton of great insights here.

Thanks so much for joining us here this morning.

Happy Friday to you, John Stultz Smith, who is the Oppenheimer Chief Investment strategist.

Good to see you.

Nice turning our attention overseas European stocks falling today.

Capping off a tough week.

The benchmark French index cap 40 is off more than 4% this week.

Heading for its biggest weekly drop since February 2022 is political tensions, sour investment and sentiment.

This comes after president, the French president Emmanuel Macron's call earlier this week for a snap election here with more.

We've got Yahoo Finance's Jared B, Bry.

My goodness, Jared Harley Francais.

Take it away.

All right, I'm gonna do this one in English if you don't mind.

Uh But we do have some international developments on this Friday morning.

Let's check out the C 40 over in Paris.

This is the overnight price action pretty ugly this week.

Um And as you said, the worst week since uh was it February 2022?

W worst month since August of 2022.

And this has to do with election year dynamics.

So let me show you the year to date where the C 40 has just now fallen back to the uh negative territory.

So all of these gains have been given back.

And I think it's just a good reminder that we do have an election year for a lot of countries, including the US.

We've already seen turmoil in Mexico and India.

And so just more of the same here also want to point out that over in Tokyo, we do have the Bank of Japan.

This is a year to day chart.

Let me show you the overnight chart.

They kept their interest rates on hold.

The important thing to take away is they offered no guidance.

So they kicked the can to July and this is causing investors to wonder.

Well, what's going to happen with the yen?

What's going to happen with their bond buying?

Are they going to pair that back?

We don't know yet, but we do see the yen weakening to the weakest levels in over 30 years.

Here is the US dollar versus a basket of different currencies.

Uh greatest versus a Mexican peso right now.

But you can see the uh Japanese Yen.

Let's see US D US D JP Y.

Well, it's in there and we did see some uh modest gains this morning with respect to the yen.

And so are we going to see more of that?

Well, we'll check out this heat map right here where we have Japanese based forex currencies.

And here indeed, you can see the yen weakening versus the US dollar by about two 10th of 1%.

Guys, Jared.

I was so looking forward to this hit this morning that I had a bacon egg and cheese on a croissant.

Lovely, so much with mayonnaise.

No.

Ok. Good man.

Good man.

Coming up on the morning brief, the Bears are trying to come for Tesla.

We'll see if they're successful.

We'll talk to one short seller who says the stock could go to $14 a share.

Plus Rh is sinking on disappointing earnings.

We've got some top trending tickets next.

It's time for some trending tickers, Adobe surging this morning.

The company is set for its biggest gain in nearly four years.

That's if these gains hold right now.

Now the company posting better than expected results raising full year guidance.

Here we have seen as that reaction play out in real time.

We've got shares of just around 15%.

When you take a look at the strong demand that the company is seeing.

Now their A I model, it's called Firefly.

They've integrated this into a number of their products including Photoshop, including illustrator company saying that renewals are for the more expensive offerings that they're seeing, including that use of the Firefly.

But management, I thought this was really key here in the call yesterday.

They were said in this release saying that they're still in the early stages of making money from A I and they're focused on converting the pipeline interest and awareness of A I into monetization.

I think that really speaks to some of that excitement that we're seeing play out in the market today.

Brad.

I mean, this is such a no brainer for Adobe to try and figure out how they can insert, prompting capacity into so much of their creative elements and the platforms that they do have.

And that demand that you're talking about with the A I solutions that they're seeing across all of their customer segments, seeing early success, monetizing some of these new A I technologies across digital media, uh digital experience businesses.

And then ultimately here, this is raising their annual di uh digital media net new uh annual recurring revenue that they're expecting to see also digital experience subscription revenue and EPS target.

So all of these things considered that's what's factoring into the stock price here today.

And I, I think going forward as you think about all of the uh the perhaps efficiencies this brings for a lot of digital marketers.

There's a lot of creative professionals out there that can essentially just make sure that they can leverage a prompt in the same platform that they've used for years now to say, all right, generate uh a picture of a corgi playing with Dogecoin hopping into a lake and boom, it's done just like that.

I, I think that's the strength of an Adobe kind of mix of products as well here.

Yeah, exactly.

And I think analysts are coming around to that and I also think that's why we're seeing a lot of the excitement and then the guidance really pointing to that increased demand even based on what they've seen this past quarter.

All right, we got the opening bell on Wall Street and in midtown Manhattan at the NASDAQ, we've got Tempus ringing the opening bell there and at the NYSC.

Oh man, looks like a great fun, like just family fun environment taking place over there at the Nyse Love to see it here.

All right.

So we're gonna be keeping a close eye on where things move throughout the rest of today's trading activity.

We got a big one here for us today, folks on this summer Friday.

If you will, uh for those of you that celebrate taking a look at the dow, the S and P 500 the NASDAQ here, you're seeing some declines across the board.

The dow down by about half a percent.

S and P 500 down by about 3/10 of a percent NASDAQ lower by about a quarter of a percent.

Right now.

We'll see whether or not the downward movement holds.

Let's kick it over to Jared Booker.

He has a closer look at some of the movement that we're seeing here at the open Jared another interesting week and we're trading in the red uh to the downside today and you can see the dow down about 235 points.

Let's check out the week, the week's price action.

You can see this is over the last two days, do the last five and you can see we are down about 1% gonna change this to a line chart and I'm gonna show you what's happening in the NASDAQ.

So from minus 1% to almost 3% NASDAQ has been holding on to some impressive gains uh throughout the week.

And let's remember, this was a huge week of news with CP I and the Fed meeting and let me just show you another chart.

Here's the S and P 500 normal weighted, that's up one and a quarter percent versus equal weighted.

That's uh up, only 13 basis points might even be in the red there.

Uh To say that it is, there is a, there is a bifurcation in the market and this is another week where we've seen a few, a few stocks in a few different industries really leading the way and that would be chip stocks.

We'll get to that in a 2nd 1st.

Here's a 10 year t note yield.

It is down another two basis points today heading towards closer to 4% than 4.5%.

Right now.

We've also seen as those rates are coming down, the increasing chances of a rate cut in the US and here's the dollar, dollar going the opposite way, a little bit up.

So, uh mixed message from the bond market and the currency market, but I did note over that uh we did have that Bank of Japan announcement overseas and also the weakness in Europe that's probably translating into some dollar strength today.

As you can see everything in the red here.

Let me show you the last five days.

That's the entire week, tech and real estate.

Those are the two outperforming sectors and I'm going to close with semiconductors.

This is what happened this week.

You take a look at a MD.

OK. That's down 6%.

But here's NVIDIA, NVIDIA down 7% Taiwan semi excuse me, seven Taiwan semi up four Broadcom up 20% and this stock is just on fire.

Let's check out the market cap of this stock and Broadcom looking like it is 785 billion.

So heading up not 33.1 trillion like NVIDIA, but uh definitely getting bigger guys.

All right, Jared.

Thanks so much, tracking all things heat maps where things are moving out of the gate here at the open.

Appreciate it.

And we're also watching shares of our age.

They are as Alicia Keys would say fallen and pretty much and now as we've begun today's trading session down by a little more than 13% the furniture retailer did not meet Wall Street's expectations.

Rh reported a wider than expected first quarter loss and forecasted second quarter sales that were below estimates here.

So you're taking a look at that decline.

I think investors are also trying to wrap their heads around the strategy position right now too.

And that repositioning that's taking place in this long term strategy.

They're trying to build the world's first are facing architecture, interior design and landscape architecture services platform inside of their galleries as well.

This also means that they're going to try and conceptualize and sell spaces.

So beyond home furnishings, they're looking at and eyeing up this $1.7 trillion North American housing market with the launch of Rh residences.

So we're looking at some of these fully furnished luxury homes, condominiums apartments with integrated services as well here.

So uh I I think investors are just trying to figure out exactly when that will start to show up in some of the margins for this business.

Yeah, I think that I also just think it's also just indicative of the broader macro environment right now.

You take a look at the housing market.

It certainly has been choppy at best.

The macro housing environment is, is reason obviously to be concerned right now and could uh hinder and weigh on uh R H's business here in the short term when you're taking a look at the at the significance of this drop here off just about 15% if that does hold is actually the biggest drop that we've seen intraday drop since 2020 here for Rh.

And because of that, we have seen a number of analysts because of what we heard on the call last night.

And these earnings at numbers Bank of America Wells Fargo among the analysts that have lowered their target on the stock.

And when it comes to the biggest issues here for Rh, it's a softening demands.

It especially in the latter part of the quarter that we are seeing here guidance really failing to impress key bank saying that they still see consensus estimates as too bullish due to the economic and competitive environment.

So given that set up, there is real reason, at least from an analyst perspective to be a bit bearish on this name right now or at least staying on the sidelines.

And again, you're looking at a drop of just around 14% today.

Well, major indices, they hit all time highs this week.

But we're seeing some of that excitement leave the market today.

We got a breakdown for what we are seeing play out in today's trading ses session and what that signals for the markets moving forward, next, stocks moving lower this morning following a record setting close for the S and P 500 also the NASDAQ, we have certainly seen this renewed excitement surrounding a handful of tech names this week which has really driven the broader markets to those all time highs.

We're seeing some of the give back here in early trading today.

So what is the signal that's ahead we want to and Joe Mazzola, he is Charles Schwab's head of trading derivatives strategist Joe, I, I, it's great to see you.

So let's talk about where things stand today.

We certainly have seen a lot of excitement surrounding A I that really drove the markets, the broader markets to record highs this week.

How are we set up?

Looking ahead to the second half of the year?

Yeah.

Well, you talked about, uh, the market bread and, and what we're seeing there.

So, you know, you guys talked about bifurcation.

I would use another word as well.

Dispersion.

Uh I, I think they're, they're similar in this context just because you have a few generals that continue to lead the charge, but uh underneath the surface, that's not always the case and, and especially right now, you know, we're seeing it with our, with our clients and, and what they're buying, uh we released our May ST report.

Well, we saw that uh even though there was a slight uptick in the net buys over sales, there was a bit of a churn underneath the service when it came to the dollar amount.

So, you know, when I see something like that, you know, that kind of stands out a little bit.

It basically says that there were more, more net buy buyers than sellers, but some of the larger accounts started to maybe trim some of those positions.

And just like you talk about uh you know, tech being the leaders, I mean, our biggest buys for that last month that may were uh NVIDIA A MD, Tesla, Amazon Microsoft.

So, you know, those those are holding strong.

Uh but when you're looking at maybe the mag seven, maybe you need to start talking about the Fab four because even within the mag seven, you're starting to see some of that dispersion.

Yeah, even if they're trimming positions in some of those outperforming names, where is the rotation seem to be into.

Yeah.

Well, you guys were just talking about our age and we've seen a decent amount of selling in uh discretionary, right?

So that's where the the selling has been discretionary, uh communications and financials.

Um When we look at the sector level, we didn't see anything that really kind of stood out at the overall level.

No, I will say this though.

This is one of those one of those months where we see a little bit of conflicting reports at the millennial level, right?

So at the overall uh client level, we didn't see a big buying in any particular sectors, but at the millennial level, that's where we did see some interest, that's where we saw some interest in it, discretionary and health care.

So we did see some money, money moving into that.

But as I mentioned, it, it tends to kind of move towards uh the the bigger market cap names.

And I think it's gonna kind of be the the story that we look at going forward until we really see that the fed is starting to ease its, uh, its interest rate policy.

You know, we got the dot plot this week that, that talked about maybe one cut this year.

That's what they're aiming at right now.

So this might be something that carries forward through the summer, Joe.

When do you expect the fed to cut?

Well, I mean, you know, if you look at what the market participants are saying right now in terms of the FED funds futures or the CME fed was tool.

Uh, they're looking at either September or December, potentially one cut.

I think we're probably in the September camp.

And if that's the case, uh, you know, politics aside, right, I think the fed is in a position now where they're starting to see some softening data.

We're starting to see, uh, you know, not, not withstanding the non-farm payrolls, which as we know is a, is, is a bit of a lagging indicator.

We're starting to see more softness and jobless claims.

We're starting to see more softness in new hires.

So, you know, that is really the second part of the fed's mandate is employment and employment is really starting to kind of, you know, rotate down a little bit.

And even some of the soft data that we've seen over the last couple of months has started to push down if you can get the inflation numbers under control, which it seems like right now, at least these last couple of data points have shown uh we're moving in the right direction.

So that's kind of pulling forward that expectation where, where do you think?

And, and especially as we're considering the timing of when those rate cuts could potentially come forward.

I mean, that puts us uh within the ballpark of when the election is taking place both on the front end and on the back end there.

So how might invest sentiment shift going into that event?

Well, if you want a good indication of that, look at the Vics futures, right?

If you look at the Vics futures right now, uh you know, we're basically around 13 on the front end where you see that, that spike a little bit is in the October future.

And that indicates uh you know, some indecision around the election results.

So, you know, I I think one thing to take into consideration when you're looking at the elections, it's not necessary.

You know what happens in the oval office.

It's really more what happens in con Congress that can kind of push uh the the markets one way or the other.

So, you know, I think we get fixated on, on, on who's going to be the president.

But I think we also need to pay attention to what's happening in the legislative branch as well.

Joe Mazzola, who is the Charles Schwab Head trading derivative strategist.

Thanks so much for taking the time this morning.

Joe, thank you all your markets action ahead.

Stay tuned.

You're watching the morning Tesla shares fractionally lower, just flat barely to the downside right now, after shareholders reapproved of Elon Musk's multi billion dollar pay package.

Now, the stock is down nearly 30% compared to last year.

You're taking a one year look here and we're taking a look at the shares over that 52 week period.

Our next guest has been shorting the stock since 2020 sees more risk to the downside for the EV maker Per Leander, who is the Clean Energy Transition, CEO and portfolio manager here with more per great to have you on the program with us first and foremost here.

How much slippage do you think we could see?

Yeah, thanks for having me.

Well, in my, in my view, Tesla is the biggest um stock market bubble in world history.

Uh And we have just seen the, the, the start of it.

Um um You know, you see that, you know, uh the models are aged um and and valuation is absolutely insane.

Earnings are falling off a cliff.

I would say they've fallen 50% this year.

Um Right, I have like 140 earnings uh for this year.

I think consensus is 265.

It was like five at the beginning of the year.

So if you think of it, uh $1.5 what, how do you value that?

Um I think given that there is no growth there at 10 times earnings is very generous.

So my price target is $15.

Um Having said that I think this in the end is going to be a doughnut because once it gets into those levels, uh, and there is so much going on here in terms of class action lawsuits boards, uh, which is, uh, paying itself enormous money and which is paying itself enormous money.

So I think this is hugely dangerous and in the end, it's going to prove to be the next en per lots of questions.

I, I guess first you're starting off with some of the concerns that you listed.

Those concerns have certainly not caught up to the stock price and even taking a look at the reaction that we saw from some of Musk's comments last night, there initially was some excitement surrounding the growth, at least that he sees for Tesla over the next several years.

I guess my first question to you is what's going to change the perception here or the minds of investors because up until this point, we haven't seen some of those concerns that you've laid out reflectively at all in the stock price.

Um, I would say yes and no.

Let's not forget, uh, that the stock is down 60% from all time high at the same time as the market has gone up, uh, 20 25% in the meantime.

So, um, uh, but it's step by step where, what I uh what will need to, to happen here is of course, that the retail crowd needs to, to give up because that is what's holding up this stock you evaluation makes absolutely no sense, you know.

Well, do you think the retail trader that will give up on this?

Iii I and I think that that's so interesting, especially surrounding Tesla and that excitement and exactly what that group of investors has been able to do around the broader story here for Tesla.

But everyone runs for the hills when it goes down.

So the, so the stock needs to go down.

Once it goes down, it's going to go down more.

And I think what drives it down is earnings.

And, uh, and I think we are very, very close to, to the turning point because so far it's been a slippery slope.

They've sold cars poorly, they or they lowered the price.

Therefore, earnings went down and, and it circulated now, they are very, very close to waste.

And here, uh, you know, this quarter, they are really introduced almost 0% interest rates, uh, on the cars.

Uh, uh, when, when Q two results come, you know, if you think Q A had terrible deliveries, but actually not that bad earnings.

Um, in, in Q two, they have done everything to get, uh, cars out of the door and it's going relatively well.

So, uh, deliveries are not going to be great but they're going to be ok.

But earnings 25th of July are going to be absolutely terrible.

There is a chance that the company will be loss making and, uh, if it's lost making one quarter and then it's lost making in Q three, I can guarantee you this is double digits and then I, I think many fan boys will run for the hills.

And then we are at my 14 uh, per earlier in the hour, we spoke to Dan Ives Wedbush, securities analyst and managing director.

Actually, uh here's what he had to say about the EV makers future and I want to get your reaction on the other side.

But also this is one you're gonna see 34 million vehicles per year when you look out four or five years from now and again, betting against Musk, it's been the wrong move and I think this has clearly been a turbulent period, but I could see that Cinderella story starting again as we go into 2025.

Now, you are clearly saying that there is a reason to bet against Musk, but it seems like there are a lot of at least shareholders right now regardless of whether or not retail is the single proponent that's holding up the stock, uh, that you believe there's reason that you should bet against Musk.

A as long as Musk is in the helm.

Does it seem like this is a company that is eventually gonna get towards what you've set forth in, in your own target.

So, so what I think uh he's missing is what's going on in the overall ev space.

Um I had to go a step back a bit.

Uh We came out of COVID.

Uh the auto industry was constrained.

There were early buyers of evs you made a killing.

Uh And Tesla was almost a monopolist and they made a killing on this And then when things are very good, uh Of course, everyone piles in.

So all the conventional auto producers are piling in and these models have started to come in 24 more of them are coming in 25 Tesla has nothing.

So I'll, I'll tell you there is a true true cycle which is playing out in Evis.

No one being battery uh producer, auto producer lithium Miner.

No one is going to make money over the next couple of years and then Tesla has gone from being the leader to be the laggard.

So, um, you know, the, yeah, you can't have a stock being at 500 billion market cap if you make no earnings and that's not been the case in the past.

So I'm I'm extremely convinced and uh you know, just listen to what GM Stati Mercedes, whatever are saying on ebay, they don't make any money and it's going to get way way worse before it gets better.

There is, there is a long story but that story is for 2728 Pearl Lekander, who's the Clean Energy Transition, CEO and portfolio manager PERL.

Thanks for sharing some of your thoughts here today.

I appreciate it.

Thank you.

We've got all your markets action straight ahead.

Stay tuned.

You're watching the morning brief the vibe on the street today.

What are the problems with the hybrid work environments?

You may ask.

Well, sometimes employees might not actually be working.

More than a dozen employees were reportedly let go at Wells Fargo for allegedly using fake keyboard movements to make it seem like they were working devices sometimes known as mouse Jiggs took off during the pandemic work from home era and people swap tips for using them on social media, Shana.

We can't do this at our job.

You gotta be on camera and in person, there's no mouse jiggle for that.

But I think uh actually there's no but about it, we have to be here but for people who are working from home and are just required to make sure that that green dot on maybe their instant messaging platform that they use internally or on their slack just makes it look like they're in front of the computer.

It sounds like uh there were more than one Wells Fargo person doing that.

Yeah, I mean, you gotta think we what four years since the pandemic started.

If you haven't really done a lot of work, I don't think it's that hard for your boss to figure out if you're just moving the keyboard.

If you're just pressing the numbers on the keyboard, if you're just trying to move your mouse around every so often throughout the day versus doing actual work.

So I think that maybe this was used in support if it was uh to let some of these uh employees go.

But I, and I think just as points to some of the difficulty that these firms are having in monitoring their workers from home.

There is this push pull with some employees.

They don't wanna go back to the office and not just within the banking sector across sectors, they don't wanna go back to the office.

They love the new flexibility that, that they have been grown accustomed to because of the pandemic.

But we have seen more and more uh managers come out and, and, and executives mandating this return to office.

And I think a lot of it, one obviously has to do with culture, but two just making sure that people are getting their work done and are making great use of their time.

So I think that's why this has been so controversial.

But again, if you're not doing your work and you're maybe potentially ordering one of those things off of Amazon, that's gonna move your mouse around every couple of minutes.

Hopefully, their bosses are figuring this out pretty quickly because it doesn't seem too difficult to me.

I mean, they're gonna very quickly figure out that this is perhaps an expendable role.

If you can have a mouse jugular, that just makes it look like you're continuing to be online without actually turning in any assignments or contributing to any projects or things of that nature.

Then that, you know, makes it look like that role is not necessarily uh necessary to the operation, certainly not those roles.

All right.

Well, coming up, we have breaking consumer sentiment data at the top of the hour, we are gonna discuss the, say the consumer, what it means for the economy, all that and more on catalyst next.