Dow crosses 40,000, cannabis stocks rise: Market Domination

On Wednesday's episode of Market Domination, Yahoo Finance Hosts Julie Hyman and Josh Lipton break down the day's biggest stories and the state of the consumer.

The Dow Jones Industrial Average (^DJI) briefly crossed 40,000 for the first time ever. However, IDX Advisors Chief Investment Officer Ben McMillan believes investors should express "cautious optimism."

The Supreme Court voted 7-2 to reject attempts to undercut Consumer Financial Protection Bureau (CFPB) funding. The ruling will allow the CFPB to maintain its current funding structure, which some payday lenders and credit access companies felt was unconstitutional.

Cannabis stocks are rising after President Joe Biden endorsed the Justice Department's move to reclassify marijuana to a Schedule III drug from a Schedule I. Poseidon Investment Management co-founder Emily Paxhia calls the move "historic" and. breaks down the government's next steps.

Shares of Walmart (WMT) are trading higher after the retail giant beat first quarter earnings expectations. Wall Street looks to Walmart as a key indicator of consumer spending, which, following earnings, signals a resilience among inflationary budget pressure. Gradient Investments Senior Portfolio Manager Jeremy Bryan and Catalyst Funds Co-Founder, Chief Investment Officer, and Senior Portfolio Manager David Miller join the show to discuss other stocks performing well in an inflationary environment.

This post was written by Melanie Riehl

Video Transcript

Hello and welcome to market domination.

I'm Julie.

He and that's Josh in live from our New York City headquarters.

We are giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.

And here's your headline blitz getting you up to speed one hour before the closing bell rings on Wall Street.

The potential upside in exigence is is reasonably limited.

Um because valuations are quite high, which is remarkable given where interest rates are, we just have to bear in mind that interest rates are not the entire discount rate.

The discount rate is the risk free rate plus risk premium.

And if the risk period is high at this minute, actually, risk premium are extremely high, you can look at credit spreads and credit spreads are actually approaching the tightest.

And that's one of the reasons why valuations are as high as they are.

We find it quite difficult to see further offside in valuation.

The consumer has been relatively consistent.

We are like everyone else is looking for.

Uh if there's something there, something that we should be more aware of, but they've been pretty consistent quarter to quarter here.

We see that wallets are still stretched, they're still looking for value.

They're still using discretion with buying those those higher income items.

The initial reaction, we all chase revenues.

We all want to look at revenues.

And so the revenue guide was very disappointing.

But if you take a step back and look at this, you can realize that Under Armour is an undervalued, under earning brand.

And if the company is finally willing to acknowledge that, if they are looking to say we really need to do better rather than do bigger, the stock is undervalued, we have got one hour to go until the market close.

So let's take a look at the major averages sponsored by Tasty Trade.

We had do 40,000 very briefly here, touched 40,000, then came back down from that level for the Dow Jones industrial average, still any higher close.

Today will be a record, not just the Dow but for the S and P and the NASA as well, but it's looking a little less certain than it did earlier in the session right now.

The Dow is up about 59 points, but the S and P 500 very little changed and sort of struggling to hold on to those gains.

And the NASDAQ is a little changed slightly to the downside here.

So we continue to watch these levels to see if we're going to get some kind of push into the close but for the moment, it doesn't look like we are seeing it here as we continue to talk about what's going on in the stock market.

We are watching bond yields very closely.

A little bit of rebound higher after yesterday's bump downward in yields, but still pretty low compared with what we've been seeing recently at 4.38%.

Now, Jared has got a deeper look at what's happening in the markets today.

Hey, Julie, I thought we'd take a look at the dow here celebrating the 40,000.

I don't know what the official rules are if you just touch it or if you have to close above.

But nevertheless, as you said, we hit it and I thought it'd be interesting just to track.

These are all the in the dow, by the way, the year to date totals.

And we've seen, you know, at the beginning of the year it was all about the mag seven and then we had this interesting rotation and now we're seeing uh financials at record highs.

Here's JP Morgan up 19% this year.

And I'll give you a year to date chart that along with Goldman Sachs has been hitting record highs and industrials too, not caterpillar in particular, but we've seen a lot of industrials, including the sector itself hit record highs.

Here is another one, Wal Mart, huge, huge story this morning.

It is up 7% today, which is a big deal for a consumer staple.

And this is a Wal Mart right here breaking out of a multi month base.

So we're just seeing strength come from all these different market, parts of the market.

Here's Microsoft Microsoft hasn't done a lot this year.

You can see it's been in a trading rage itself, but we do have high hopes perhaps that the tech sector will get another boost.

We have apple finally bouncing back from these lows.

It's come up pretty quickly.

Although you can see it's still mired in the red here on a year to date basis and I can tick through the other sectors.

But I think the bottom line is that we have a lot of strength and I wouldn't be surprised if we see Dow 50,000.

I'm not going to make a time prediction.

Could it be next year?

Maybe this year?

That's possible too, Jared.

Let's see if our next guest will make a prediction.

We'll try to stock mix today with the Dow Crossing 40,000 for the first time ever.

For more on the latest market moves and what they mean for investors.

Let's now welcome in Ben mcmillan ID X Advisors, Chief Investment Officer, Ben.

It is good to see you.

So Dow 40,000 Ben making headlines getting a lot of attention.

Let's just start there, Ben.

What do you make of this market where we are and where you think we're headed from here?

Yeah, I mean, you know, look after yesterday's inflation numbers, you know, it's, you know, the news was fairly good, the economy remains strong.

Inflation is moderating.

I do think, you know, equities are priced to perfection at this point.

So, you know, we would urge caution.

It's also important to remember that this is a momentum driven market.

Um There's not, you know, you got to be really careful to kind of pick and choose your value.

You know, we've already seen the rotation out of kind of the tech dominated mag seven at the beginning of the year, you know, fast forward to today and utilities, the XL U sector is outperforming the queues.

So I think that's in some ways very good.

We're seeing a broadening, we're seeing more breadth uh as opposed to just seven stocks carrying the industries higher.

Um I wouldn't be surprised if we see, you know, uh the industries continue to set highs throughout the end of the year.

But again, you know, urge caution here because if you drill in under the hood, you know, the consumer is driving the economy, but, you know, there's an asterisk there.

Um you know, defaults are starting to creep up, it looks like unemployment, you know, might be showing some signs of weakness.

Um And you know, if the almighty consumer falls, um you know, that's where we could start to see, you know, uh a real correction.

And so when you talk about things being priced for perfection, what kind of a scenario are stocks implying then at these levels.

Well, you know, one thing I think was interesting when you, you know, you like again, we started the beginning of the year with kind of, you know, 6 to 7 rate cuts priced.

And obviously, you know, interest rates move everything.

It's the discount rate for all risk assets including stocks, you know, after yesterday's, uh, you know, print you, we still have two rate cuts.

You know, the market is still pricing in two rate cuts, which, you know, I think it's still fairly optimistic.

I mean, you know, you've even had, uh, you know, Richard Fisher, former Dallas fed president yesterday saying he was skeptical that, you know, we did, we'd have two rate cuts this year.

And so I think that's the tail risk in this market is that, you know, the, the assumptions going into these equity valuations are still potentially a little bit too rosy.

Now, again, the flip side of that is we've got record deficit spending, you know, let's, let's look at kind of the elephant in the room, which is, you know, what's powering this economy?

Yes, it's the consumer.

But part of that is because they're coming off, you know, they've got a lot of excess savings after COVID, we have, you know, deficit spending that's greater than 6% with unemployment under 4% which I don't know that we've ever seen with the possible exception of kind of World War Two.

So that's, you know, that bill is gonna come due at some point.

And I think that's, I think we're starting to see that with stickier inflation.

I think we could see some dollar weakness in the future for sure.

And equity markets could certainly go higher, but I do think there's risk to the downside for sure.

Ben.

You know.

So, so what you're urging here is kind of cautious optimism.

Uh That's a theme if, if that's true, Ben, how do I sort of invest in that theme?

And, you know, at least in the US stock market, uh what sectors would look like would look attractive to you, Ben here.

Well, I think we're starting to see kind of a broadening, you know, one of the concerns earlier this year was that you had, or even last year frankly, is that you had, you know, a handful of stocks literally pulling the entire index higher.

And so, you know, a lot of equity strategists, a lot of investors wanted to see a broadening out of equity strength and we're seeing that, like I said, I mean, you start to see some of the more defensive sectors, utilities is a good example of value stocks, you know, consumer uh other consumer staples.

Um, you know, starting to kind of pick up where, you know, things like technology and the, you know, the the high flying tech stocks have, have uh lagged off.

So I think that's good.

You know, I candidly, I think, you know, you're starting to see a move towards active management.

You know, this is a so called stock pickers market.

I do think that that's gonna start to, to matter more.

I think, you know, the pockets of value for those that, you know, really taking a close look will, you know, they'll be able to find it, but it's, it's gonna be much less of a, you know, just kind set it and forget it.

Trade much more of a, you know, pick your spots and really try and find the value stocks.

Well, and you talked about utilities, really seeing an uptick in B we've seen that group really start to pick up some steam here underlying that is this demand for more electricity, more power in part because of data centers.

You're looking at uranium specifically here because of the nuclear play.

How do you think that is going to play out?

And how does one play that?

So that is, that's an excellent point.

And that is a big trend that we're starting to see unfold.

And you're seeing that in commodities prices.

I mean, look at copper, you know, co copper is kind of trading part and parcel with utilities and it's all part of this, as you said, kind of move towards electrification, you know, all things ev alternative energy and, you know, there, there's an embedded em play there too.

You know, if you look at countries like China coming back online or India starting to emerge as you know, big consumers, they're, they're gonna need a lot of electricity, they're going to need a lot of wiring for that electricity and everything you mentioned is, is kind of part of that.

And so I think, you know, we're very bullish on copper, we're bullish on utilities um for that exact reason because we think that's we, we're in the early innings of kind of a secular bull market for, you know, this move towards alternative energy, this move towards greater electricity, which you know, interestingly copper, this kind of boring industrial metal.

Now all of a sudden it's kind of an adjacent A I play Ben, I also wanna get your take on gold.

I'm interested in how you want to invest there.

Do you want to invest there?

And if so Ben, is it with the metal, the miners both?

So we remain bullish on both gold and the miners.

Um For the same reason that I mentioned earlier is, you know, the the US has printed a lot of money, it has uh you know, been very aggressive with its status as a reserve currency.

And if you look, you know, the the world has taken notice, you know, if you look at central bank buying in gold, we started getting a bullish on gold, you know, several months ago, mainly because you know, we were seeing central banks globally really step up their gold purchases and they're doing that by selling treasuries.

And that's, you know, that's the market saying that we're worried about the US printing money.

Let's not forget, 80% of all dollars in existence have been printed.

You know, since COVID and you know, gold is a way to play that.

And if you look at the gold miners specifically, um you know, with higher prices, there's a lot of embedded operating leverage in the miners.

It's a more volatile asset class to be sure.

But you know, it's one that we think is under valued relative to the metal.

Uh and you know, one that we're bullish on Ben.

Thanks so much.

Appreciate your time today.

We're just getting started here on market domination coming up the Biden administration taking another step to reclassify marijuana as a lower risk substance will get investor reaction later in the hour as Canada stocks are soaring today and Wal Mart shares rising after first quarter results and Wall Street, but this isn't anything new as the discount mega store has been redefining retail for more than six decades.

Yahoo Finance is going beyond the ticker to take a deeper dive into the company's biggest moments time.

Now for some of the days, trending tickers stop turning tickers on Yahoo Finance.

Wal Mart shares rising after the retailers first quarter results impressed Wall Street, the move higher, pushing the company's market value over $500 billion for the first time and Walmart CFO John David rainy appearing on the morning brief earlier today, he spoke about the quarter and what it signals about the consumer, the consumer has been relatively consistent.

We are like everyone else is looking for.

Uh, if there's something there, something that we should be more aware of, but they've been pretty consistent quarter to quarter here.

We see that wallets are still stretched.

Wallets are still stretched.

But the fact that, um, sort of upper income wallets are stretched means they are now coming to Walmart.

And that seems to be something that characterized the quarter where people sort of traded down to Walmart and that benefited it.

Yeah, it was interesting too.

Julie, I thought the focus on kind of these newer, um, higher margin revenue streams is really interesting to me.

Just kind of the focus we said, yeah, by that we mean digital advertising and marketplace and fulfillment services.

And you saw that in this print too where the company kind of called out how much growth now is coming from, sort of, I guess you call it non core retail business.

And of course, if you're a Walmart investor, you know, that kind of growth and higher margin services, you love to see and, and you're betting on that becoming just an increasingly bigger part of the overall pie.

Yeah.

And e commerce was a bigger part of the pie.

You know what number stood out to me?

For the quarter, the company uh shipped 4.4 billion units for same day or next day delivery for walmart.com.

Um That's over the past 12 months um by compa and if you look in contrast to that 4 billion I items was what Amazon reported.

So like they've come in line or even surpassed those same day or next day deliveries from Amazon.

I was pretty surprised by that figure.

And next week, by the way, target some more deck.

See any read throughs here, looking at shares of Canada Goose that stock is surgeon after delivering higher than expected South growth.

Look at that pop about 17%.

So the coat maker report sales growth better than expected.

Julie.

It sounds like we can chalk a lot of that up to China in particular as well as it looks like strength here in the US.

Revenue clocks in at 263 million.

That was higher than what the street was looking for.

Company also to offer a new outlook.

Looking for slow growth on the top line.

It looks like low single digits but higher profitability in fiscal 25.

Yeah, I didn't realize this, that 40% of the company's stores are in the Asia Pacific region and sales.

They were up 30% in the quarter.

The company is also trying to sort of get its inventory under control so they're reducing their production levels.

So they don't have to worry about a sort of inventory glut out there.

So it seems like that's something that analysts and investors liked as well on the consumer.

They actually executives, you heard talk about pressure on the consumer, they rate environment geopolitics.

But you know, with the street, like was this talk of increasing prices and margins?

That, that seemed to do the trick?

Exactly.

Well, another retailer that we are watching is under armor, that company delivering downbeat guidance for 2025 while also outlining its restructuring plans, Ceo Kevin Plank warning pressure to the Brents top and bottom line in the near term as it builds a premium positioning for under armor or tries to here to discuss Wedbush Security, senior equity research analyst analyst, Tom Nick.

It along with CFR, a research analyst, Zachary Warring.

Thank you both so much for being here.

Um Tom I'm gonna start with you, here is under armor doing what it needs to do to improve performance.

Well, I I I'd say in some ways yes and in some ways no.

Uh on the positive side, a big focus on the call today was um reducing the reliance on discounting, uh reducing the reliance on, on promotion to drive sales, um which I think is absolutely the right thing to do.

Um You know, you do not wanna be a brand that competes solely on price.

Uh that uh is just, you know, lead leads to a downward spiral of pricing and uh that's problematic.

Uh the issue is that, uh I, I don't think they've done what they need to do from a uh a product development perspective.

Uh They don't really have a lot of new exciting products um to, to, to draft consumer demand.

Um you know, I think, you know, the, the marketing has been somewhat lackluster.

Uh So I think, uh you know, some of that, you know, basic, uh uh you know, brand building blocking and tackling, I think there's a lot of work to be done.

But as far as uh you know, trying to, trying to maintain pricing integrity for the brand, I think that that's uh definitely a step in the right direction.

And Zach, let's bring you in here as well.

And I guess I question to begin with Zach kind of big picture, you know, when you heard about the strategy, the restructuring is, is it the smart right move, Zach?

Yeah, you know, been following this company for a while now.

Um And I can't tell you how many times I've heard the the word restructuring with them.

Um And I've just, I'm having a hard time.

I think investors have also lost kind of faith here too.

Um Believing management.

Um just because they've had such poor execution over the past 10 years, you know, they, they've had a really hard time outside of 2020 you know, operating margins below 5% well below peers.

Um And even now today you know, shares rebounded from this morning's low, you know, shares trade over 30 times this next 12 month earnings.

Uh, that's higher than Lulu and Nike right now.

Um, two companies that have always executed.

Well, so, you know, to me, I've been following this company for a while and at, at this point, I'm, I'm really show me, uh, and, and I'm kind of stepping away from, uh, well, maybe, you know, that this is what they say they're gonna do.

Um And, and I'm really more of a show me.

Uh I, I, I'd like to see a couple of quarters where Nike A uh under armour actually, you know, starts to improve operating margins above 5%.

Um, and kind of goes towards peer averages.

Um, but I just haven't seen that from them and, and I've heard this, uh, you know, 15 times in the last 10 years, you know, restructuring management change.

And I'm just, you know, at this point it's a show me thing.

Well, Zach is there just not room for an under armor at scale in, you know, what, what is under armor, right?

You've got your Nikes, the world, you've got your Adidas of the world where, uh in a more sort of existential way and I don't even know how you answer this question, like what, what place does under armour have, what is or potentially, what is its place exactly.

Um And you've got these new, these new brands uh that are kind of emerging here.

You've got hoka some of these other shoe brands.

I know that's only a part of their business.

But um and there's, there's also, you know, up and coming apparel brands in the US that are do a really good job of marketing through social media and targeting a specific audience.

So, you know, I think, you know, I, I do, I do like the brand and I have, you know, like the brand for years, it's just for me, it's an operating thing.

Um And until they get somebody in there in charge that, that can operate and get margins back above, um you know, well, above 5% I think, you know, 10% is kind of bottom line what they need to be at.

Uh then, you know, I just, I don't have a lot of faith in shares and, you know, and I, I have ac opinion.

So um I've had it for a while.

I, I'd like to, like I said, I'd like to see a couple of quarters where management executes an operating margin trends towards, you know, 10%.

So Tom, let's, let's bring you in here and th this is a good debate, Tom, because you have a very different view, you got an outperform rating.

So you're a believer, how come Tom make the case?

Well, II I would say my upper perform rating is not predicated on them, you know, current currently uh you know, executing well or knocking the cover off the ball or, or anything like that.

Uh uh My, my upper perform rating is a little bit more.

Uh um you know, I if you just kind of think, you know, risk reward uh basis, right?

So, you know, the shares are very, very beaten down.

Uh Sentiment is about as low on this name as you could possibly imagine.

Uh They had very, very downbeat uh guidance today.

Um And, you know, II I would venture a guess to say that, uh you know, if, when we get to the end of the year, um I, I'd say the risk that the year comes in a little bit better than their guidance is greater than the risk that the, the, the year ends up worse than their guidance.

Um You know, it is a very competitive environment but it is a very uh uh over, over a long period, it's been a uh a industry, right?

The athletic wear industry grows, you, you know, you're part of a uh a growing pie.

Generally speaking, people are dressing more casually than they ever have in the past.

So, you know, if you are able to get it right from a product and marketing perspective, you know, there is industry growth to be had and to, to, to drive the growth of your business, um they just haven't been able to capitalize on it.

So, uh you know, I'm just hoping that at some point they're able to just, you know, turn it around, find, you know, a new hot product to, to, to drive their business.

And, you know, if that is the case, then I think there's a very, very wide uh uh uh gap in, you know, if you look at the market cap of under armor versus the market cap of almost any other athletic uh company out there, there's a very, very wide gap there.

So I would think that there'd be a uh an opportunity for the shares to rate uh rerate higher.

Um Zach, I think the other question here is especially with the recent management shake up is whether Kevin Plank is still the right guy to be running this company, you know, obviously he keeps leaving and then coming back.

Um Do you have confidence that he, I mean, I know that you got a celebrating.

So maybe this is answers the question, but do you think he should be looking for another CEO?

Yes, I mean, I think he should, um I think in my opinion, uh you know, they need someone that knows operating um and has worked at, you know, one of the really good operators, whether that be Lulu Lemon or Nike, um or any of these newer brands that are doing a really good job of, you know, selling at higher prices.

Uh I think they need, you know, I think they need an operating guy or girl, uh, in charge and that's, you know, that's my opinion.

I think, you know, he's had his, you know, back and forth over the years and nothing has worked out for more than a year or two.

you know, you had 2021 but, you know, all apparel brands, uh, did really well that year.

So it's really hard to, you know, say that 2021 was a good year.

Um because, you know, they, they didn't even, they didn't even earn a dollar a share.

So um to me, it's just, yeah, I think they need some new management and I think probably uh more than just the CEO they probably need a couple of uh a different changes uh in the C suite.

So um yeah, Tom, uh final question to you, you know, th this is uh you know, it's a company that still has some real Star power attached to it, Tom, I'm just, I'm on the site, you know, you can see Steph Curry, for example, are they, you know, as smartly and effectively leveraging some of that Star Power as they could, Tom and, and, and I guess also does, does that actually matter at the end of the day to consumers, star power matters if you have a great product to go with it.

Um So, you know, when, when the Curry shoes first came out, you know, the, the first two iterations of the Curry, were you know, slam dunks for them.

No, no, no pun intended.

Um, but then, you know, as they kept putting out more and more, you know, the product wasn't exactly great.

So, you know, the fact that they had the Steph Curry Halo, you know, it could only take you so far.

Right.

Um, you know, I, I'd also say outside of basketball it's really hard to find an athlete that really, you know, generates a lot of, you know, commercial volume.

Uh as great as, you know, Justin Jefferson and Bryce Harper are at their respective sports.

You know, there aren't a lot of people who are going out, you know, buying football cleats uh just on a regular basis.

So, um I think like, you know, if you, if you've got the right product and then having great uh brand ambassadors works very well, but it, it all starts with product and that's what uh uh Un under armor has been lacking.

Tom Zach.

That was a great discussion.

Thank you both for joining the show today.

Appreciate it the time coming up.

The Biden administration take another step toward reclassify marijuana as a lower risk substance.

We dive into what this means for weed stocks on the other side.

Stay tuned.

More market domination coming up, stocks are jumping after President Biden publicly endorsed the justice department's recommendation to loosen restrictions on marijuana.

He posted a video on today.

My administration took a major step to reclassify marijuana from a schedule one drug to a schedule three drug.

It's an important move toward reversing long-standing inequities for more.

Bring in Emily Pax, a co founder of Poseidon, which invests in cannabis companies.

It's good to see Emily clear something up for me.

We learned a few weeks ago that this was likely to happen, right?

That this rescheduling was being considered.

Then we got this announcement today and that statement by the president and we got a big move upward again.

Is it just that it's confirmation?

Was there some question about whether it was gonna actually go through?

No.

So I didn't have a question of whether or not this was going to go through.

But we do know that prohibitionists who are out there like to try to poke holes in this process.

Um Today's step is another historic step moving forward.

What was really started with the president in 2022 calling for a review of scheduling.

HHS.

Then HHS put forth a very strong recommendation regarding where cannabis should live, which is not at schedule one.

And then the DEA took the step to recommend this today.

We're hearing that yes.

In fact, this is being acknowledged and that we are going to go into a 60 day comment period.

Um So to me, this is just validation that the this is working through the process that it should be working through as expected.

And I think anything around cannabis reform has been very difficult for the past 10 years.

Plus, obviously.

And so anything that's working through an ordinary process and following the steps as it should is very confirmatory and Emily.

So, so you call this a historic step.

What's the next step, Emily?

What's the timeline here?

Mhm.

So it appears we're going into a 60 day comment period which we are all anticipating that uh the fatigued and beleaguered prohibitionists who are trying to still challenge the progress of cannabis reform will come forward with fear mongering tactics and try to throw a weak data points out.

But the benefit of having cannabis reform and regulation over 10 years with adult use in the Colorado market and expanding from there is that we have many, many data points actually proving to a net positive effect of legalization and regulation of cannabis.

I in terms of the um rescheduling, does this actually move the needle for companies bottom lines at this point?

Is there a real effect on business as it's done today?

This is an important step because it does uh change the tax considerations of these businesses we do have at schedule one, we had the 280 E tax code applied to our businesses which creates an effective tax rate of north of 70%.

And when you're trying to grow businesses in a fragmented market structure like we have in the United States with pack to regulation and only intrastate commerce, uh it does become very challenging for these businesses.

And there's been a lot of analysis of what happens.

This basically set the stage alongside the commerce cause challenge, which is working through the judicial process right now to say that 280 E is not applicable to these businesses.

And that is really a in terms of, of flowing through to your point to the bottom line.

However, rescheduling alone does not change certain structural components to our market such as access to uh the exchanges, it doesn't open up yet.

Commercial banking in terms of allowing for custody of the stocks and those things do impact the way these businesses trade because they're very thin.

Now, since the DEA news, we've seen increasing volumes in the top names in the industry, including, for example, ascend Wellness holdings is seeing more volume basically in the last few days than they've seen in the prior years.

Uh So it's interesting, there's definitely attention coming to the sector, but only about 7% of our names are traded with institutional capital.

This could all change if there are some structural shifts like such as the process of moving things through the courts or also a memo from Garland that outlines and calls out specific things around commercial banking and exchanges.

And Emily, I'm ju I'm just curious what kind of response you think you could hear from the critics, you know, tho those who aren't fans of this legalization and regulation.

Uh They're very, they continue to hit the same points which are erroneous and false and I welcome it because we do have the data to contradict what they're saying.

So it usually comes in the form of a heavy fear based campaign.

We see it in every state where legalization is up on the ballot.

They try to lead with concerns about kids having access to cannabis.

Legal regulated cannabis is for 21 plus.

And we have the highest compliance rate of any industry right now in terms of validating the I Ds and the ages of people purchasing cannabis.

It also takes it out of the illicit market.

It takes the wind out of the sales and that's where the access for the youth comes into play.

So if you see us compared to alcohol verification on age or tobacco on age cannabis does not play around with this because we, we won't, we have to hold the bar very high and make sure we're protecting our industry.

And so that's why it's really important to us.

Legalization regulation is about 21 plus.

It is not about kids.

And that is a distinct difference from those other categories of consumer products.

Emily, always love having you on the show.

Thanks so much for joining us.

Thank you.

Let's look now at some calls of the Day Wolf research reiterating out perform on a NVIDIA and a MD and raising its price target on NVIDIA to $1200.

That's up from $900.

This was an interesting note.

Um Julie, so Ba I mean, listen, the team of Wolf, they still like NVIDIA for sure, but it sounds like the analysts making a tactical shift in priority adding Lisa Sue's A MD to the wolf alpha list, which from what I was reading is a group of stocks which they think listen, this is a group with the they could show big meaning flat performance over kind of a 12 month time frame.

And in part, it looks like no surprise.

This is, this is A I related, you know, like what he hears from about AM D's A I product pipeline.

Well, and a lot of this also has to do with the relative performance of these two stocks.

A MD is up about 11% this year.

NVIDIA is up 92% this year.

So the analyst is looking at these two names and saying, well, NVIDIA is great but that it's already risen a lot.

The company is out with its earnings next Wednesday after the close of trading.

And the analysts say we are not expecting an exceptional beat win NVIDIA report, but we do anticipate a much stronger second half.

So this, I think the al list also has to do with sort of, as you said, more tactical.

And so if there's more room for upside because one stock hasn't gone up as much, it kind of makes sense and a bad valuation he do about a MD.

He says, uh, we believe the premium multiple is warranted given that A MD has, he says, clearly earned a seat at the A I table.

Julie indeed a seat at the A I table.

Oh, the we all should get some seats there.

Um, let's talk about deer as well.

The shares of that company sliding after it trimmed its full year net income guidance.

And you're noting further softening and global agricultural and turf demand.

One figure that stood out to me, which is not from deer itself, but rather from the Department of Agriculture is that net farm income is forecast to fall about 26 percent this year.

That's the biggest drop we've seen in two decades now, there have been some big years.

That's why it is such a big drop.

The the last couple of years have been better.

Um, but nonetheless, you understand why they are not setting up as well.

Yeah, exactly.

I mean, I was reading these reports really kind of chalking this up to lower grain prices, which of course means growers, farmers, they've got less money to buy deer equipment.

Um I saw deer exec saying we're proactively managing our productions and inventory levels to adapt to demand changes and that's probably this is not deer specific either.

I mean, there are industry trends, we're seeing Agco CNH also rivals, they, they reduce their outlooks as well.

Yeah, and I should mention that analysts were positive that deer is taking good steps to your point to reduce inventory and make sure that they don't end up with too much product as things as demand is pulling back a little bit.

Moving on the Supreme Court, rejecting an attempt to undercut funding of the Consumer Financial Protection Bureau today.

For more on the decision we'll bring in Yahoo Finance's Alexis, Keenan Alexis.

Hi guys.

Yes.

So this is a 72 decision.

And what it did is it allowed the CFP B to really stay in force.

It's going to remain as is, and it's been a really controversial bureau from the get Go.

You can go back for years and see how partisan uh the debate is along this agency.

And one of the reasons is this, you had these payday lenders bringing this to the Supreme Court saying that the CFP VCF PBS funding is unconstitutional.

Why they said, well, it violates the appropriations clause and what that is, is a mandate that says from the constitution that says that Congress right has the power of the purse and they have to identify specific reasons for spending the public's money.

So they have to make a law to say how it's going to be spent.

Now, these lenders say that because the Bureau draws its money from the Federal Reserve and not from this direct edict from Congress that, that doesn't work but no, the Supreme Court here saying in the majority that it is ok. That, that's enough authority from Congress.

Now the CFP V to kind of go back and talk about briefly the it's trying to do what its mandate is, is to try to prevent lenders banks, credit card lenders, auto lenders from predatory unfair practices.

So they write rules, they enforce laws and that was created all the way back in 2010 in the wake of the 2008 financial crisis.

So its existence though always been a thorny issue.

Republicans.

Some not all, there's some reporting out there that says approximately 75% of Republican lawmakers do support the the agency's existence.

But others saying that look, not all fees are bad, even the government, the IRS charges fees.

So why can't the public sector do it too?

But looks like the bureau is going to be able to continue to do its job for now for now.

Not without pushback.

Of course, there will be others at this agency.

Alexis.

Thanks a lot.

Appreciate it.

Well, after a string of hot reports, April CP I print showed inflation cooled slightly.

It was a welcome sign for investors.

What does it mean for your portfolio?

We'll tell you how to play it next.

Interest in electric vehicles hitting a speed bump in 2024.

That's according to a new report from the automotive research from JD Power.

The Finances Pros Sumera joins us here with the details.

Priz Yeah, yeah, big headline here for the first time in three years, uh, ev, buying sentiment dropped and they've been doing this survey since 2021.

Uh, it's been picking up, usually they're in the very likely, or, or somewhat likely to buy a EV that went down.

So, uh, this year in the first three months here they did this polling, uh, 24% very likely to buy down from 26%.

And then of those, the broader likely to buy 58% down from 61%.

So, you know, not that much, but it's still a trend that's, that's reversing here.

Chief complaints being charging high prices range anxiety.

Where am I going to charge those things that people complain about?

Not, not surprising here, you know, the Tesla supercharging sort of issues recently not helping probably people's sort of opinions there.

But JD Power says there is an opportunity here.

40% of respondents say they don't have a solid understanding of incentives, right?

So state federal price cuts, uh new incentives where Ford says, hey, trading your Tesla will give you 1500 bucks, you know, so those things can make EVs cheaper, like significantly cheaper if there's sort of more education there, I guess.

And just quickly the irony about the range anxiety worries that yes, you do have the supercharger issue, but the overall, the charger network is a heck of a lot better than it used to be.

Right.

Yeah, and, and most people kind of overestimate how much they're gonna drive in general.

Right.

So, it's like they're disappearing the road trip where I can't find a charging thing and look, that's happened to me before where I've been sort of freaked out about where can I charge.

So, it does happen.

But most people drive something like 30 miles a day.

You don't need to worry about ranges.

I, but you're absolutely right about the fact that networks have been growing, but we don't see them as much as we see.

Let's say a gas station, you never freak freaked out about running out of gas, right?

So that's sort of where we need to be.

I think that is true.

All right, thanks.

Appreciate it.

Well, that show inflation is slightly in April with poor CP I the price index rising at the lowest annual level since 2021 the latest at a welcome read after three straight months of hotter than expected print.

So where are the opportunities for investors?

We're looking at how to navigate the big picture with the Yahoo Finance playbook.

Joining us now is Jeremy Bryant, senior portfolio manager at Gradient Investments and David Miller Catalyst Funds, co founder, chief investment officer, and senior portfolio manager guys.

Thanks so much for being here, David.

I'm gonna start with you.

You're sitting right next to me here in studio.

Um So as we look at this inflation picture, how much are you factoring that into your strategies, that inflation seems to be sticking around.

Do you think of it?

You have to hedge it or you want companies that are taking advantage, kind of, how do you work it into your investment philosophy?

Yeah.

So I guess my philosophy is the Fed saying that they have this 2% target and even with CP I coming down a bit, it still doesn't look like it's that realistic given that the federal government is running a trillion and a half dollar deficit.

And it doesn't seem to matter too much which party wins, that deficit is likely to continue.

It seems pretty clear to me, at least that more likely than not we're gonna have hire for longer.

And what that really means is higher for longer is actually very good for companies where they have very high margins.

If you're thinking about a company like a mastercard or a Visa, inflation is great for those companies because that's gonna, you know, put more through their networks and that flows right down to the bottom line.

But if you're in a company where labor costs are really significant margins are tighter, it's not negative.

So we're really focusing on those companies that are in monopolistic, oligopolistic type positions with really high margins, the mastercards, the Visas, the Microsoft Companies of that nature.

And so Jeremy, uh we'll start kinda big picture, same question to you, you know, you've seen obviously inflation cool.

But, you know, kind of stalled out here.

It's proven stickier than maybe some people imagine.

How do you think about Jeremy?

How does it play into where you do or don't want to put money to work?

Yeah, I'm gonna, uh, agree and disagree a little bit.

I'm gonna start by, uh, disagreeing.

I think actually the math that works in our favor to where the numbers are gonna come down.

Are we gonna get to 2% anytime soon?

Probably not.

But I think we're still generally trending in the correct direction.

But where I would agree with them is the names he mentioned, I thought those were phenomenal names, but those are phenomenal names even in a lower or higher inflation environment, right?

Microsoft Visa, mastercard, these just have really, really good businesses.

So I mean, they're always, they can pass pricing through when inflation is high, but they're also sticky and very high moat businesses uh even in bad times and, and in low inflation times too.

So while I disagree with where he's coming from on the inflation side, I think the companies are actually really relatively good.

We're doing the same things we're always doing.

We're trying to look for relative valuation opportunities and to be completely honest right now where we see that most is in health care, we think health care has been kind of left behind here a little bit and given, you know, if we're in an inflationary environment, my chances are I would guess that probably health care is driving some of that as well is that those prices don't tend to come down much.

So the valuations and the relative valuations to the market and some of these healthcare names, whether you're talking devices like Metronic and Avid or services like Cigna, these companies are, are at relative discount valuations and their earnings growth profiles are pretty good at mid to high single digit and sometimes even low double digit earnings growth.

Um And so David, when you, you hear what he said, I mean, would you also sort of get defensive at all in this environment as well or look for companies with more defensive characteristics?

Well, so health care is defensive and I I agree as well.

You know, we, we actually like some of the more expensive names in health care, some of the G LP one type names, you know, it seems like there's very good chance given the data coming out on G LP ones that you'll continue to see very significant revenue uh and earnings expansion at those na those names.

So, uh that, that's why I really like the sweet spot where you get the growth, but it's defensive growth and high free cash flows, high margins.

And you know, I think that those companies, whether it be like a United Health Care or the G LP one type name, uh they, they are both very good place to be and, and Jeremy back to you, you know, you mentioned health care.

I also wanna get your take uh Jeremy on the consumer.

Obviously, you know, we, we heard from Walmart, I know that was a report you were watching.

What were your takeaways there?

W from Walmart, Jeremy and kind of broadly how, how are you thinking about the consumer?

How healthy, how resilient does that consumer look?

And how do you want to play that?

Yeah.

Uh I think the uh initial sentiment now, you know, there was a lot of concern, right?

The S and P 500 mentioned lower income consumers more frequently than they had in several years.

Um So there was a lot of concern coming into that and you're starting to see that through retail sales data and all that and then Walmart kind of pushed that aside, right?

Um Their numbers were phenomenal, right?

It was really good report from a perspective of what you're seeing, I think is a transition of we're not stopping spending, we're just spending in different areas, right?

And so the the biggest concern that we had was restaurants, we were paying a lot of attention and frankly, they were very soft.

Starbucks was not a good quarter at all.

Mcdonald's was soft.

Yum was soft.

We were looking at that and saying does this mean that consumer is kind of completely pulling back?

Just because those tend to be areas where even lower income consumers kind of stick and spend um we were looking aggressively towards Walmart and seeing how they would react to that and how their numbers looked and then they came out and said, no things are going great.

So from our side, we're seeing maybe a pivot of spending rather than a pullback of spending.

And that can generally be just fine.

It's gonna hurt some companies, it's gonna help some companies.

But if consumers continue to spend because they feel like they have a job or can get one, if they need one that is excellent for our economy, that is excellent for our growth.

And I think it's excellent for our stock markets as well.

David is that kind of why you're looking, you would look at something like a Visa that is sort of where you spend agnostic and just generally that people are spending.

Yeah, when you think about it, a company, whether it be Visa or mastercard, I look at them essentially as the same business.

Uh It's incredibly hard to displace those businesses.

It's incredibly unlikely that more money won't continue to move from cash to credit cards.

It's very unlikely that we won't see inflation.

So all of those things are great to both Visa and Mastercard and they have great margins for every incremental dollar of revenue and you don't think we'll see any kind of overall weakness in consumer spending and the money that people are, are putting through those networks.

Yeah, I think as long as you see, unemployment numbers stay as low as they are.

We really should see that strength continue.

But, you know, I think there's other ways to benefit from those types of phenomenon.

Like you can look at currencies, you can borrow money at a 0% interest rate today in Japan.

Take a million bucks from Japan, lend it in the US and get 5.3.

There's a lot of ways that you can benefit from it that aren't just necessarily equities.

And Jeremy finally not, we talked Walmart but another big report this week.

I know you're watching with Cisco and obviously still seen as I, I think a bellwether for it spending.

What did you make of that report, Jeremy and did that kind of in any way impact or influence where you wanted to put money to work in the tech sector?

Yeah.

Uh I think my biggest takeaway, so I'm looking at Cisco as a bellwether for everything outside of A I, right.

Um Because that, you know, they tend to play in those spaces and what, you know, there might be some infrastructure and things that you have to spend, but really people aren't looking to Cisco as an artificial intelligence play, at least on at this point right now.

And so every dollar of Capex, if you will, that we've heard talked about amongst the large enterprise consumers and, and spenders in the space is going towards artificial intelligence.

So I wanted to see what Cisco said with regard to everything else and everything else.

It still, at this point looked a little soft to us.

I mean, they brought their numbers down or at least the guidance was a little soft expectations.

Again, it popped 4% after market, which I was a little surprised by.

But now is a much more what I would call a rational argument based upon what they said and what they announced.

So our biggest takeaway on that is if you are not in artificial intelligence or some way in that value chain at this point right now, uh your budgets are problem gonna be the same to smaller, going forward.

So you have to be careful there and you have to pick and choose your battles about who actually benefits from this type of spend because those dollars are allocating aggressively towards one thing and being taken away from other areas.

And I think frankly, Cisco is one of those areas.

It's being taken away from.

All right, Jeremy David, thank you guys both for joining us today.

Appreciate it.

Thank you.

While wrapping up today's market domination.

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