Rate cuts, gold, small business: Market Domination Overtime

Inflation continues to make its way through every sector, while the Dow Jones (^DJI) ends its best week since December. Leadership from the Federal Reserve spoke this week signaling rates may continue to remain high. Utilities (XLU) performed well for the week, gaining over 4%.

Life360 (LIFX) CEO Chris Hulls stops by to discuss how the app has transformed, while government's annual review of the Medicare program has shown an improvement in the program's financial health.

For more expert insight and the latest market action, click here

Video transcript

There.

We have the closing bell on Wall Street.

Now it's market domination over time.

You're going to join us in a few minutes to talk about today's action.

But let me get you up to speed on what happened today, sponsored by Tasty Trade, the Dow making it eight sessions in a row higher here, we got the seven day chart right here showing that 4% gain that we have seen over that period of time.

But it's been quite a run for the Dow here.

The S and P 500 treading water here today ending the session a little bit higher than NASA though still in the red, but just very marginally on the day, we had a consumer confidence numbers this morning sentiment coming in in a six month low, even as expectations for inflation ticked up.

And we had a lot of fed speak a lot of fed officials today, sort of indicating that they are content to hold on rates for now.

So it's been an interesting period of time.

Let's take a look a little bit more granularly at what happened in the session.

Energy stocks and consumer discretionary.

The biggest drags in the S and P 500 staples and financials rising the most.

And with that strength in the dow, let's see what helped gain the most today going to equal weight.

So we can see here mcdonald's rising after reports that it was going to unveil a $5 value menu.

So those shares are better than 2.5% 3 M shares, Verizon and Amex rounding out some of the other top movers there.

But want to go back over and take a look at trending tickers because there's one stock I want to point out in particular, that's company called Ziker, which is a high end Chinese auto manufacturer here.

It is here having its initial public offering today.

It's owned by JJ G Holding, but it is the higher end operation within that.

This is the biggest Chinese debut in the US since 2021.

These are the American depository shares of the Chinese company and the shares um selling 21 million shares altogether opening at 26 today and then rising, rising as much as 40% at one point, but finishing the day up about 34% Josh Julie, the Dow finished off a strong week with its eighth straight day of gains and here were some of these trading takeaways.

Is Jared.

Blicker Jared.

Yes, thank you.

I thought we'd focus on the People's Index here.

Let's go to the Wi Fi Interactive where I'm gonna show a year to day chart and I'll put some candlesticks on.

So you can see the eight days here.

And that is also the number of trading days that we've had in May.

So every single day has been green for the dow.

This is a record high right there and we are now less than 1% away.

Uh, probably a cinch that will get there.

But the question is, can we get meaningfully beyond that?

Uh when we were at these lows a couple weeks ago, I said there's gonna be more seasonal weakness potentially into June, but we're due for a bounce.

We got the bounce.

So what's the next catalyst I got?

I think it's going to be CP IC P I probably makes, makes or breaks next week and probably the fate of this rally, whether it continues on or whether it reverses probably in its hands too.

And I know you're also taking a look at VX.

Yes.

The V of the VV of the VICS.

I do like to monitor a few different things here.

So we talk about the vix, which is the Fear index, but we also have the V of the vs and the point of volatility.

And I'll show you both here on the Wi Fi Interactive first here.

The VX here's year to date and you can see we're at basically the lows of the year and now here is the V of the Vicks.

We are at multi year lows.

I'll put a five year chart on here.

This is just to say that complacency is very high right now.

It doesn't mean that we're going to necessarily see a spike, which would mean that stocks are, are selling off rather aggressively.

But nevertheless, we have to be mindful.

You want to buy protection when it's cheap, which is right now, when we're at all time highs, that's the time to be thinking about protection.

Um The other point I wanted to make was about futures.

And uh if we can go to the Wi Fi, oh, we're already on the Wi Fi interactive here.

Uh This is what's happened today in futures.

I wanna check out this week.

Uh Copper has just been on fire, so has gold, so has silver and I'm actually gonna skip right to the miners here.

This is a five day price action in here.

We have individual miners.

We also have some of the underlying ETF.

So C copper is an ETF that invests in copper.

So it's kind of like USA or US O which is oil for oil.

We also have GLD.

But the miners of these things are facing a multiple.

So they are higher beta.

Here's CB X 2.8%.

That's an ETF of miners.

That's basically almost double of what the underlying copper is doing.

GDX.

I'm gonna put this chart up, that's a 5% this week, check out the year to date.

Gold has been on a nice run here and you can see over the last three months, GDX up 30%.

So these are, if you look at a long term chart of some of these miners very, very much a mean reverting asset and that's kind of because commodities are themselves.

This is not something you buy and hold for 10 years, but you can use it to trade in and out of positions and with the fed on hold here with the A I play goosing copper, I gotta think that these guys have more room to run and copper is also really interesting because often if you saw that chart a lot of times Jared, you would think.

Ok, well, that's telling me good news about economic growth for China.

Yeah, but to your point, you'll hear economists saying that actually something else is going on.

They'll call it kind of like a perfect storm of sort of tight market and these kind of uncommon unusual supply.

Yeah, I think the, the A I story is finally broadening enough that we see it.

Uh utilities is another great example.

Utilities was the best performing sector this week.

Why is that?

Because it takes electricity to run these data centers, it takes copper wiring, you know, for the wires to or for the memory chips, for the microprocessors.

So you put all this together, we're seeing basic materials.

If we can go back to the Wi Fi Interactive I'm going to show you a year to date of all the sector action.

Here, here's materials up 7.4% here's utilities up 12.5%.

Both of those are higher than tech, which is up 6.8%.

So I think that says something itself well, and what remained, what continues to blow my mind is that that's in the face of higher for longer rate perceptions which usually hurts utility.

So, speaking of rates, I wanna mention something else that I know you've been watching, which is the inflows we've been seeing into the bond market.

Yes.

Um So we've seen the greatest inflows over the last week into the bond market since 2021.

I think a lot of this has to do.

Uh Michael Hartnett from Bank of America B A was writing about this in his weekly missive flows.

That's where I got this stat from the bond market has not been loved over the last few months since it became a question of whether or not the no landing scenario might be front and center.

That is what if the fed has to raise rates again.

Well, I think this last week, the Powell press conference that we had last week or was it this week?

I had to think there was last week.

I think since that Powell press conference, the thinking is no landing is finally on the shelf.

We don't have to worry about the fed raising rates anymore.

And that's why we've seen this huge influx into bonds.

Once again, it's just safe, it's safe to be safe.

If you think about it, the volatility of volatility, it's safe to be safe.

Yes.

The interactive of the interactive, we got derivative of the derivative.

Thank you, Jared.

Appreciate it.

Stock closing the day mix as investors get set for a big week of econ data ahead that could help push the fed in their final mile back to 2% inflation.

Join us now and sue to discuss all this.

And the path ahead is Bill Zox, Brandy Wine Global Portfolio manager, Bill.

Good to have you on set.

Glad to be here.

So maybe let's just start there bill.

So economic calendar next week you got uh CP I on deck, Jared was just talking about it.

How, how important is that uh for the market bill?

And what are you expecting?

I mean, it is very important and uh uh I'm not so much focused on that particular print, but uh what I'm focused on is will the fed need tighter financial conditions to get inflation down to 2%?

They don't seem to be too concerned about loose financial conditions right now and it used to be sell in May and go away.

That's not looking so good this year.

So uh my, my big question is uh whatever the inflation print is uh next week, are they going to need tighter financial conditions to get inflation down to 2%.

Well, and I think what Jared was just bringing up about the bond market was quite interesting that this perception that maybe what, what is seen as a confirmation that there's not going to be another raise in rates.

You saw that influx into the bond market but not having another raise and having a cut.

There's like a lot of space in between those two things.

So do does what we're seeing in the bond market make sense.

I guess I would ask.

Well, I think uh for the treasury market uh that you really on the longer end of the treasury curve, you need the cuts to justify moving out of cash in other parts of the bond market, which are also seeing very strong inflows like the high yield market that I'm involved in.

It's much less sensitive to the rate cuts actually materializing you're getting substantial yield in the high yield market, for example, compared to inflation compared to cash yields.

And as long as you can avoid the defaults, that's pretty compelling right now, I'm sure.

So if I look at the yield on the 10 year here bill, we're at uh back to four or five.

What, what's your view of where that heads near intermediate term?

I mean, I think that's very dependent on rate cuts.

If, if uh we need tighter financial conditions, that might mean that those yields have to go even higher to get inflation back down to 2%.

So on the high yield front, have we seen an uptick in defaults at all or is that something that is a concern as we had throughout the year?

I mean, the, the view of the economy and therefore of earnings as well has been pretty sanguine.

But some of the more recent data really seems to be rolling over a little bit.

Yeah, the economic data has been a little bit softer of late, but earnings are really in a goldilocks scenario for high yield, not too hot, not too cold and defaults are in the 2 to 2.5% range, they've leveled out for the last six months or so.

And that's well below historic averages.

So, uh the, you know, the, the idea that that there is a lot of stress in the high yield market is just not borne out by the data.

What about bill?

Just core investment grade fixed income attractive?

Uh I think it's tough.

I think it, it, you really do need the rate cuts to materialize, to justify that.

Otherwise, why come out of cash at 5.3% to go into core fixed income where you're in the mid fours?

And if you're in the aggregate index, you're talking about a duration of six to under yield cash.

So I I think that that's still a tough spot to be from here within high yield where do you see the most opportunity right now?

Yeah, I think uh financials in the high yield market, that's um you know, not a big part of the high yield market, but it's uh very attractive facing much less competition from banks as a result of what happened in the spring of 2023.

And then cable is getting very interesting.

It's been under severe pressure in both the equity market and the high yield bond market.

But I think there's some real opportunities being created there.

Interesting.

All right, thanks, Phil.

Thanks for coming into the studio.

Good to see you coming up.

Life 360 is a location sharing app that allows its users not only to keep track of their loved ones, but also keep track of belongings and access a range of safety services.

We're going to speak to the co founder and CEO on the other side, we market domination over time.

Still to come.

Welcome back to market domination over time.

Jared Lick is here to recap the action from today's session sponsored by Tasty Trade.

Hey, Jared.

Thank you, Julie.

It was a week of green and let's check out the Wi Fi Interactive.

I'll go through each of the indices.

Uh You can see the dow up 32 basis points today, up 2.16% for the week and almost at the 40,000 level.

Not quite there.

There just yet.

Here's the S and P 500 north of 5200.

In fact, 5222 on the nose up 1.85% and the NASDAQ up about 1.14%.

Now, let's check out the sector action, which I thought was pretty interesting.

Utilities did it again up 4.2%.

And that is now the leading sector of the entire year.

Utilities followed by financials, materials, industrial staples and real estate that rounds out the top row and then you have everything green on the bottom row.

Consumer discretionary just barely positive 0.1%.

And that is a Tesla story.

If we go to the NASDAQ 100 looking at the five day trailing totals, you can see Amazon the actual biggest component of consumer discretionary in the green, but Tesla down about 7% you can see that right there.

Otherwise that let me check on the leaders, we have momentum.

That is a momentum ETF up 2.5% that's topping the board this week.

What's the uh the laggard position is ARC arc is down 5.6%.

And if we take a look inside, we can see in addition to Tesla down 7% Shopify down 20 roadblocks, down 20 coin based down 10.

So not the best week for disruption guys.

Thank you, Jared government's annual outlook for Medicare spelling.

Good news for retirees.

And here with the details is Yahoo Finance's very own senior columnist, Rick Newman, Rick.

Hey, guys, what I found interesting about this, uh which is the headline saying, uh Medicare, the what they call the so called go broke date for Medicare last year.

It was 2031 and now it's 2036.

It has been extended by five years and let's go back two years.

Uh uh Two years ago, the Medicare trustee said they thought the Maine trust fund in Medicare could run out of money as early as 2028.

If it happened in 2028 that means the next president who we're going to elect this year would be having to deal with this problem during his or her next presidential term.

And now that is not the case.

So for President Biden running for re-election, I think this means two things.

Number one, he has taken some steps to reduce health care costs.

Uh And so he can now say, hey, look, it's working.

Uh the co cost basis in Medicare has gone down and we've extended the life of that program.

That's not really why.

Uh the picture looks a little bit better for Medicare, but he can say it and he already is saying it.

And the second thing is the next president is not gonna have to deal with this problem.

The next president should deal with the problem.

We should get Medicare finances straightened out sooner rather than later, but that's not the way Washington works.

Uh So there's gonna be a lot of talk about this, but the next president actually is not going to have to do something on an urgent basis.

Um Rick, what are some of the main reasons why things aren't worse?

And are there any um levers that you know, can be pulled by the next incoming president to, to help keep that going?

Yeah, so it's two things mainly that um improve the outlook for Medicare.

Uh The first is that the economy is just doing well and Americans don't believe it.

And when we saw new confidence readings today that said Americans think the economy is in bad shape, but it's not.

And uh government tax revenues went up by more than expected because the economy grew by more than expected.

People are earning money and paying more taxes.

So that's number one, the other one people aren't going to believe either, which is that the the rate of price increases in health care have actually moderated uh relative to economist expectations from just a couple of years ago.

Um Biden didn't really accomplish either one of those things.

I mean, this is the force of the economy on its own.

There have been some government efforts going back to the Affordable Care Act in 2010 that have uh intended to lower the growth rate of health care.

And you know, for years, health care was growing at two or three rates times the rate of inflation.

And that is not the case anymore.

That doesn't mean the system is in good shape or it's working for everybody.

It's clearly not, but at least one thing is going in the right direction.

There's an important footnote here guys, which is social security, which is the other focus of this annual report that is going to start running short of money in 2033.

So nine years from now, and that is the same as last year's forecast.

So that's actually going to become a problem first based on the latest data, Rick, let me get your take on something.

I, I saw Jason Trenor, uh chairman of Strategas all around smart guy.

He posted the following on X today, Rick saying the New York Times, the Wall Street Journal and now the ft have all now written articles suggesting that people are too stupid to realize that inflation is not as bad as what they see with their own eyes.

Goes on to say as an election issue, the inflation debate is over and President Biden lost now a as a, as a columnist, Rick, you think a lot about these issues very deeply?

What, what, what's your response to Mr Turner's argument there?

I I love your curveball questions.

Josh, I gotta say um I mean, you know, I've been writing a lot about this too.

Um People think inflation is worse than the data says it is.

Um So there's a gap between perception and reality.

I don't think that means any, anybody is stupid.

Um Because as I've discovered in conversations with a lot of our audience members, every individual has his or her own personal inflation gauge.

And it's not the CP I uh it's not uh some of the data we talk about all the time.

It, it could be uh a lot of different things for a lot of people.

It's rent.

How, what's the rent?

Is it up or down?

And how much of a of a bite is it taking out of their paycheck?

Um I have talked with people who told me that uh because the price of a pound of roast beef is $3 more than it was uh in 2020.

Uh They know that inflation is high.

Somebody told me it's the cost of a loaf of pepper farm rye bread.

I mean, these are the, this is just how people measure inflation in their heads.

And of course, the big one is gasoline prices.

People relate to that because it's just the price they see all the time and everybody has in their head, an idea of what the right price for these things is and the prices now are higher than the right price that people think so.

Um I have a lot of arguments with people.

I don't, I think people are stupid and I think that the one thing we all have to keep in mind is that a lot of those prices have gone up and stayed up.

So the rate of inflation could be zero on a year over year basis, but the rate of inflation on a three year basis or a four year basis in many cases is 25% or more.

So, uh if prices were to come down, I think that would help with this perception issue.

Um but not too many prices are coming down and some prices are just going to stay, for, stay up there for, for a good long while.

Yeah, not too many prices are coming down.

I think in my brain it's eggs even though I know eggs are even more volatile than anything else.

But it's, it's, you know, it's just always the same carton to maybe I follow the price of avocados.

You know, when you can get an avocado for a buck.

50 things are good that season I get upset.

Yeah, the avocado is very seasonal.

Avocado.

Yeah, we gotta maybe we need to get to film a little thing in a grocery store together.

Rick.

Thanks so much Gina have a good happy weekend.

Well, there's a company making a splash in the fitness space.

Hydro manufactures rowing machines at a time where fitness trends have shifted from cardio to strength to some extent, it was once targeted by Peloton for an acquisition.

But now it's making a different deal to grow.

Acquiring a majority stake in speed fitness this week, the value of that deal not disclosed for more.

We're here with the founder of Hydro Bruce Smith.

Thanks for being here, Bruce.

Appreciate it.

Happy to be here.

Yes.

So am I saying Speed or do you say Speedy?

Because it has the E in the end?

Now, we had a lawyer in the deal who insisted that it was Speedy, but I think it was a little passive aggressive.

The company is called Speed.

But if you put an E on the end, when you Google it, it is, it is fine.

No, we know the tricks, we know the tricks Bruce.

So, um, you know, it's funny that this deal is happening.

Now, there was just a story in the Wall Street journal about how hit is sort of going out high intensity interval training and strength is coming in.

So, is that what you guys were looking at when you decided to, to do this deal?

So the most important thing for fitness is your cardiovascular system.

The second most important thing is strength and that's not something that's gonna change, it's permanent and we're not, you know, we don't chase fads, we chase the very best thing.

And what's really exciting about speed, exciting about speed is that they have this technology, it's variable resistance and that is uh tonal, has that too speed, has the, the next level of that variability.

And it's really, it's delivering a better workout in less time, which is the same thing.

That rowing does for you.

So for us, it's been part of the plan since the beginning.

We're a whole health company and we're so delighted to bring this uh to market with speed because they do have this really extraordinary technology.

And Bruce, I'm interested, you know, Julie kind of mentioned Peloton there, which you know, is struggle and makes headlines for all the wrong reasons.

You know, I'm not asking to comment on Peloton, but I, I am just curious more broadly, you know, Bruce, are you, are you all just pulling certain levers?

Do you think that that's helping you kind of exactly, they're kind of helping you just navigate the market maybe more effectively than the competition.

So, you know, and I love Peloton.

I really do and I wouldn't be here if it weren't for John Foley and all the craziness that he started.

Um the bottom line I think is that um the North Star is the combination of three things you need something to work out on in your home.

You need really great content, you need really great software.

And honestly, they Peloton had that vision.

We've never let go of that vision.

We're never going to, you need a footprint in the home because that convenience is what really drives market adoption.

And from our perspective, we've stuck to that North Star, there was a huge bump, you know, massive amount of disruption, but it didn't change the basic fundamentals of the business.

It's an amazing business.

It's always gonna be a great business.

We want people to go to the gym, we want people to work out at home.

Most of all, we want them to be healthy.

And this is one of the tools that will help them feel better in their life.

So I hate to keep bringing up Peloton is the, is the, but, but it's a pub, it's a publicly traded company.

So we know their numbers, we know their numbers went way up in 2020 2021 when people were home.

And since then they have decelerated in terms of their sales.

What can you tell us about what you guys have seen?

You know, so we had the same like massive ramp in the uh in the pandemic and we didn't have to spend much on advertising and, and I think everybody thought like, oh, this is the permanent new wave.

Um Of course, it wasn't, it was pandemic driven.

So we had a year of reset.

It was extremely tough on everybody in the whole industry.

We did a big riff, you know, like we, we restructured but year over year, our growth is just, uh we're, we're seeing, you know, back to what we started with, which is uh this year, up 23% year over year, unit sales are much higher than that even.

So, you know, it's just grinding away at that.

Uh Really great, great marketing story and it's a promise to consumers never breaking that promise.

And the market is, is just beginning to be tapped, you know, the the penetration overall still in the mid twenties.

And we know that that market penetration is gonna get to the forties in the United States beyond that, the world, which has just begun to wake up to this possibility, Bruce, who, I'm just, what can you tell us about who, who your customer is?

What's, what's the demo?

Is it?

You know, young old man, woman, high income.

Who is this?

So, it's people who have homes.

So they tend to be, you know, 35 and up, uh, relatively high household income.

A lot of people think that we would skew more towards female, but it's actually half men, half women.

And for us, the most important thing they've never wrote, you know, rowing is still this relatively undiscovered thing.

Boys in the boat was a great movie.

How do they, how do they learn Bruce?

Is there a tutorial?

Because there is a, there is, uh, thank you for the infomercial opportunity, but we, we teach you everything you need to know.

So I'm a national team, Bruce.

Yeah.

No, no, I appreciate it.

So, I'm a national team coach.

I coach for the United States.

I've been to the world championships 10 times.

We take that knowledge and we give it to you in your living room.

So, and it really is that what, what happens the most is that people buy them, buy the machine and they get it home and then they're so surprised at the immersive and the quality of the experience and just, just check out our Facebook groups.

It's full of rabid fans.

Um So let's get back to speed for a second because I'm curious, it, it doesn't, it's not selling the product yet to the public if I, if I've got it right.

So then why do it at that stage, why make the acquisition at that stage?

And then when is the roll out going to happen?

And how will it integrate with, with hydro?

So they have some amazing IP around a resistance mechanism that generates more force.

So there are two products that we are going to bring to market over the next several months.

Uh The first one is for consumers in their home.

And that has resistance in the 3 400 range, which is more than enough for civilians.

And then their flagship product which I tried and literally on the second repetition.

I was like, we have to work with this company.

It's uh it generates more than 2000 of resistance.

And it's like using a professional weight rack and it's, it's really amazing, it's for the commercial market.

And so it's that high, extraordinary experience in the gym and then super accessible blends right in seamlessly with the hydro experience together.

And it's putting those two experiences together because as I, as I said, at the beginning, what you really need is, you know, your heart and lungs to be healthy and you also need muscle mass.

And um I think the whole world understands those two things.

These are the two most efficient ways to accomplish that.

Bruce.

That was super interesting.

Thank you for coming in today.

My pleasure.

It was cool.

Thank you.

Here's a look at what to watch for next week.

The consumer will be in focus between earnings and economic data on the corporate front earnings season for big retailers gets underway.

Some of the key names to watch include Home Depot, Walmart, and Raw Stores, Wal Mart.

The world's largest retailer is set to report Thursday ahead of the opening Bell.

Investors will be looking for insight into consumer spending patterns and the company's spending plans.

After announcing a member to acquire visio in an effort to build up its a business and as for economic data, it's pretty busy week, the data for investors and economists will be watching most closely the consumer price index that's out ahead of the open on Wednesday.

It is the first look at inflation since the fed decision last week.

The expectation is for core CP I to rise 3/10 of a percent in April from the prior month and on a year over year prices excluding food and energy expected to rise 3.6%.

Other data includes retail sales and the producer price index.

Housing will be another focus as we get readings on home builder confidence and housing starts and building permits that will do it for today's market domination over time.

Be sure to come back Monday at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell, stay tuned, we've got more young finance on the other side.