Apple stock action, copper's trajectory, Spotify price increase: Catalysts

On Tuesday's episode of Catalysts, host Madison Mills explores the tech sector, provides stock updates, and dissects market dynamics.

Kicking off on the tech front, the show delves into Apple's (AAPL) recent WWDC event, where the company's stock price received a muted reaction. Ken Mahoney, CEO of Mahoney Asset Management, joins the show to discuss his outlook on the company's announcements and stock movements. JPMorgan Private Bank US Equity Strategist Abby Yoder then joins the conversation, explaining her bullish stance on the tech sector's performance.

The show then shifts its focus to trending tickers, covering e-commerce giant Shopify (SHOP) and music platform Spotify (SPOT).

Moving on to market dynamics, LPL Financial Chief Technical Strategist Adam Turnquist joins the show to provide an analysis of the commodity market. Nuveen Head of Municipals Dan Close joins the show to discuss the benefits of investing in municipal bonds.

This post was written by Angel Smith

Video transcript

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

I'm Madison Mills alongside Alexandra Can.

Now we're going to dive into the catalyst moving markets today.

Apple joins in on the A I hype announcing new features and a partnership with open A I that could bring generative A I directly to customers.

Is this enough to boost lagging iphone sales will discuss.

And Tesla shareholders expected to vote on CEO Elon Musk, $56 billion pay package on Thursday.

We discuss what this means for the company's future and outside of big tech market face another big test on Wednesday with CP I and the F decision in focus will track how the data move markets.

But first we have to talk about today is a big story.

Apples A I announcements, the new features called Apple Intelligence will only be available on a limited number of devices including the iphone 15 and upcoming 16.

This comes as iphone sales have been under pressure in racing quarters.

Is this enough to offer a boost?

We spoke to GD A Davidson managing director about how A I changes Apple's position among its competitors.

Here's what he had to say.

We think it took the lead because again, everybody else has to try to fit their solutions elsewhere or it really doesn't have access to the consumer and the consumer information.

Apple has our information, right?

So this speaks to the tagline that Apple used, right?

A I for the rest of us, a bit of an homage to the 19 eighties when they had the Mac book out a computer for the rest of us and really the personalization of Apple and how they have access to the customer data and they really want to double down on making sure that all these A I features are for the benefit of the consumers.

So that means if you have a meeting coming up, Apple can say, hey, you're going to late to this if you don't do XYZ.

So a little, a little creepy, but you know, they also said that they want to protect people's privacy as much as possible that is not going to train open A I models.

So we'll see once that goes into practice and this is adopted more if that becomes an issue.

Well, it's such a great point and this is the key sort of catalyst for Apple moving forward.

Are they going to be able to continue to keep consumer privacy in mind?

Which has been a key really success point for them in the past, the ability to prioritize consumer privacy.

They do say that every time you're going to be utilizing a track G BT powered function on the iphone.

You're going to get prompted with a request of whether or not that's OK, but that will inevitably send your data over to open A I.

So I think a big question moving forward will be consumer comfort with open A I versus Apple.

Those are two different functions there in the degree to which consumers even know about.

That will also be another question does look like Apple is moving to the upside here.

So interesting to see investors maybe being a little bit more positive today, coming back off of those lows yesterday and continuing this conversation around Apple, we initially saw muted response from investors.

After those announcements, we were talking about shares moving to the upside over 3% here.

Today.

We have one of those investors here with us.

We've got Apple shareholder and CEO of Mahoney Asset Management.

It's great to speak with you.

I know that you did not change your positioning after the news over the past 24 hours here from Apple.

But you know a really interesting point about the impact of the announcements that we've been hearing from Apple here.

I'm curious what was missing from the announcement that would have made you a little bit more enthusiastic because in reading your note, I feel like I can shot summarize it as just a big shrug to the news.

Well, again, I I think long term, it's great.

You have this huge buyback in place.

100 and $10 billion buy back there.

A couple of shekels here, you have a huge upgrade cycle that's gonna come out of this.

I mean, there's 270 million phones out there that are 55 years or older, that's a big opportunity.

But as far as the technology again, II I just on a lot of other technology research, you know, they thought yawn, they spend a lot of time on sur which I like Siri.

Hope sir does a little bit more like like Siri on steroids with this new uh A I model and so forth.

But I don't really see it as a, as a yawn as more just like this is Apple.

You know, they have 2.2 billion devices out there last year, they had 2 billion devices.

Tim Cook did a great job kind of pivoting our focus from hardware sales to really services.

And this is really where this it's gonna blossom.

So it's not so much a yawn as it is.

This is what's expected.

You have this many uh customers, you know, tweak here, tweak there, join the, join the party and I think they, they'll succeed.

Does it have explosive upside like NVIDIA?

No explosive upside by other areas in, in A I not necessarily, but there's a pretty good Apple put when you have 100 and $10 billion a share buyback underneath you So where, what more do you want to see when it comes to Apple?

Where do you think that upside lies?

And we should mention that the stock is now hitting an intra day high as investors are starting to digest some of those new features.

So it seems like even though it might have been a bit of a, I don't know what this means moving forward yesterday today, we're seeing that chair reaction in the positive.

So for you, what do you want more of here?

So what I would like to see more of is is better integration from the Mac to the ipad to the iphone.

You're starting to see that but to really worth that.

And really Siri being the head, you know, kind of the head person there putting all those things together, as you mentioned, scheduling appointments, reminded of appointments, there's one app on that.

So it was kind of cool like if you're supposed to pick someone up on an air plane uh at, at the airport, it tells you kind of oh the airport, you know, you should be leaving soon, you should be leaving in 10 minutes if you want to meet, meet that person.

So there's gonna be a lot of applications, I guess it's just kind of overwhelming the amount of, of applications uh A I that could go about again, the biggest thing is they have all these customers and they want Apple to take the lead.

And I'm not sure necessarily, Apple is taking a total, uh, leap of faith into this.

I think they're kinda ok. We'll do it, but we'll put it on top of a I, we'll put it on top of Surrey as opposed to kind of blazing a new trail.

Well, one question I have is who's going to foot the bill for everything that you just described.

Ken Apple saying they're not gonna pass off the cost for chat G BT to customers.

Does that mean Apple takes on those costs?

And to what extent is that a headwind for their profit margins?

Right?

But th this is a monetization area that they haven't had before.

So, you know, even it's a small piece of the pie because it's percentage breakouts with developers and so forth.

I mean, it's kind of complex how they're gonna do it, but in the end, they're in the driver's seat and that these companies have to come to Apple if they want to play.

So I think it's still gonna be a pay to play model much like that is on the App store as we see it.

So you're saying that the ability to charge customers for utilizing specific A I features is going to outpace the cost of those features for Apple.

I I believe so, I believe so, look, they have a lot of different avenues they could take this with.

Um But I, I think that's probably the best way to monetize the site to be able to have happy customers and to entice others to this upgrade cycle.

Look, we're in this mix here.

I've been telling investors we could hit a low with Apple over the summer time.

As why would you want to upgrade your, you know, your phone here?

Why not wait for the 15 or the 16 and so forth so we could hit a little low.

Um But then again, once, once you see that a cool feature and you see it on Instagram or your friends using it, you know, they're the early adapters usually to the stuff of technology and then behind are people like me say, 00, you can do this, you can do that.

And so that is where Apple is gonna be able to monetize the site more.

There's new features and new ways and new apps all around A I and Ken, we spoke with Gil Laia from D A Davidson earlier this morning.

He said that when it comes to the competitive landscape in A I that Apple is in the lead.

Do you agree with that?

Huh?

I'm not.

So I would say NVIDIA is in the lead.

I mean, this is pretty much drawn up by the CEO of NVIDIA who said by the way, when a second or third inning of this cycle, I'm not sure Apple is in lead, but they don't have to be in the lead.

You know, they're the big, they have 2.2 billion devices out there.

So it's, it's, you know, developers and all them could come to Apple, but I don't think necessarily they're taking the lead.

I would say NVIDIA um kind of in the round of that, you know, $3 trillion market cap and you know, just added on a trillion in the last six weeks.

Kind of shows that the video is probably the leader in the space, not Apple, but still Apple doesn't have to necessarily be the leader in the space because they have all these customers uh obviously, and and the ecosystem as you know, once you're in an iphone, typically you're gonna stay there.

You don't want to do your photos, don't lose your contacts.

It integrates with your Mac, integrates with your ipad.

So they create this great ecosystem and they could just add services on top of that with the base that they have.

I think it's still a win, win for shareholders.

I wanna talk about one other risk for Apple.

And that is Elon Musk.

He posted on X yesterday saying that if Apple integrates open A I at the OS level, then Apple devices would be banned at his company and he's calling it an unacceptable security violation.

How big of a risk is that for you and your asset holdings here?

Right.

So it's just still trying to figure that out.

And again, we have to take Elon Musk word, I mean, he's a very smart individual and he's always kind of looking ahead where things are.

But again, um I, I would think there's an opt in uh you opt into this uh A I platform or A I chat et whatever and it tells you here's disclaimers.

So it's really up to the consumer to decide if they want to go in.

So I don't think Apple is just gonna just take your data, data and feed it over there.

I think they're gonna have a few speed bumps that I think consumers will be happy with.

Remember, Apple has always been high integrity about, about collecting data.

They have all this data.

They're not selling to third party vendors and all stuff like that.

Facebook did some years ago.

So again, it's always good to hear different opinions.

We heard from Musk in the last 24 hours, but I do think Apple will find ways to safeguard um their users.

Ok. Well, we will see what happens there.

Ken Mahoney, Mahoney Asset Management, CEO Thank you so much for joining us.

Great.

Thank you stocks moving lower this morning as investors a way too big tests for the markets tomorrow.

CP I and the fed decision even with fears around higher for longer rates, strategist broad broadly expect big tech to lead stocks higher through year and driven by A I demand.

Our next guest is one of those strategist.

We have a JP Morgan private bank.

You Equities.

Ay.

Thank you so much for joining us in studio and you know, you have a pretty bullish outlook here, 5500 year end price target for the S and P. You see that going up to 5750 next year.

What's driving that?

So I think importantly, when we're thinking about the breakdown of returns, right?

That's earnings and multiple, when we're thinking about both the 5500 and that 5700, that's all coming from earnings growth and that's between 8 to 10% depending on what calendar year you're looking at.

And the majority of that is being driven by tax, right?

And what we saw in Q one was this really, you know, just strong across the board quarter in terms of earnings, we saw all 11 sectors beat in Q one, but a lot of that strength was driven by tech and in particular, we saw their margins expand.

And so that's very important to us when we're thinking about, you know, 60% of costs are fixed.

How do you see that incremental uptick?

In terms of earnings growth?

We're seeing that from tech in terms of their margin profile.

And then on the valuation front, like we actually have valuations contracting a little bit and that's that again is also being driven by tech.

And when you think about it from a natural standpoint, yeah, their prices are high and their valuations higher than the, the, the market at the moment, but they're going to grow into that valuation right through their earnings growth where you get.

So then you naturally see that valuation compress from, from a large cap tech perspective and that seems like a critical part of why you're able to make the tech sort of rally but also inherent concentration within tech.

Part of your book case.

When we have a lot of other guests, come on and say that the concentration of the rally in tech is a bearish signal for them.

How are you thinking about the differentiation there?

Well, so there, there are two things that I would point out one the the earning, the the concentration is being supported by the earnings, right?

So you're seeing not only the concentration from a market cap perspective, but you're seeing it from an earnings because they continue to outgrow the rest of the market.

Now, you know, coming into the year, we really were thinking that there was going to be this broadening out in terms of the equity market performance into the year end.

And we still do believe that, but what you're seeing is the, I mean, that was predicated on the growth rate differentials getting narrower, right?

And so what we've seen is we're still seeing that narrow as the rest of the, let's call it 4 93 4 94 catch up to the rest of the mag seven.

Um but you're still seeing, but what you're seeing is the tech growth rate is staying elevated, right?

So that saw a little bit of an uptick in one Q.

So it's still driving the market in mid teens eps growth through the end of the year.

But you are starting to see as other sectors come out of their rolling earnings recession, you're seeing their earnings growth also pick up.

So a little bit of a broadening out just not to the same magnitude.

When do you expect if at all, we're going to see that same magnitude of broadening out and what sectors do you think could benefit from that?

So that would be like a second half phenomenon.

And I think for us when we're thinking about it, so we're overweight for sectors were overweight, technology, consumer, discretionary, health care and industrials.

And I would say at the at the forefront of really coming out of that earnings recession is health care.

Health care saw their first negative annual earnings growth period last year.

In 2023 there was a lot of COVID digestion going on across different parts of that sector.

Um And they're about to flip from negative.

So they had a negative one Q or year over year earnings growth rate and that's going to flip positive as we go through the back half of the year.

So you pair that with really attractive valuations in the sector.

And that to us is a pretty nice set up in terms of health care.

I was talking to a source about the health care sector yesterday too who mentioned that their ability to kind of navigate the higher for longer environment is differentiating factor as well and the ability to not have as capital intensive sort of expenditures on the balance sheet.

How much of that is a line of thinking and an investment thesis that our investors listening to this should be really looking at in this hire for longer environment.

Does that apply to other sectors as well?

Yeah, I mean, for health care, yeah, they're not as dependent on the interest rate environment when you're, when you're thinking about large caps, right?

Like let's be very clear, small cap biotech is a totally different story.

It's riskier, it's much more um I would say exposed to higher interest rates and and will be challenged in that environment.

But yes, from, from an overall large cap health care perspective, I mean, it's defensive, it typically again usually has po positive earnings growth and we didn't see that last year.

So I think that's a nice differential as well.

Um industrials is something that we would think would actually benefit from a higher for longer rate environment, right?

When you think about the cyclicality of that, we're seeing PM I is what we think is bottoming and then you've got structural tail winds around things like A I.

So that's another sector that we do like, you know, interest rate agnostic as relates to, to industrial and speaking of higher, for longer, we have updated economic projections from the fed tomorrow.

If we see less cuts projected by the fed.

Is that a risk to the market?

What if the fed doesn't cut it all?

Yeah, I mean, look, I think the risk is relates to the fed is not necessarily whether or not they cut it all right.

Now, we actually only have one cut penciled in at the end of the year.

It's really like, what is the next move?

And what signal does that send to the market?

And I think if the next move were all of a sudden to become a hike, then that is a totally different story when it, when it comes to equities.

But as of right now, we are still of the base case that we are going to see inflation gradually come down, which is going to lead to that cut.

It just seems like it's going to be later than what was originally anticipated in the beginning of the year.

And I think the question is really getting at, ok. What does that mean in terms of valuations?

How can we continue to defend these valuations?

And I think it's a really and I think this is where like the in the equity risk premium conversation comes in as it relates to equity.

So how do equities look relative to bonds?

And if you look past in the past 15 years, they look really expensive on an equity risk premium standpoint.

But if you extend that out to a period before the the global fund crisis and interest rates weren't zero, the equity risk premium was more compressed similar to how it is today.

And so if you're thinking about the risk of inflation remains elevated, but the risk of recession feels relatively low.

I think in that tug of war of arguments, I think equities win in terms of in terms of relative to fixed income.

Zooming ahead to Friday, Abby when we're, you know, all heading to our Friday evening, happy hour to talk about financial markets as we do.

What will you say was the single biggest driver of the week will be the macro news CP I the fed or a lot of the tech headlines that we're getting from Apple, from Tesla and as always in video as well, I think we're in a little bit more of a macro vacuum.

Let's call it till we start earning season again back in mid July, right?

Like I think a lot of the rally that we saw when the market bottom on April 19th through, you know, um end of May and now was really earnings driven.

I think it was fundamentally driven.

I think yes, there were definitely some tail winds as it relates to a macro from a macro standpoint, from a softer inflation print that, that the market really needed.

But I think right now, it's gonna be more macro driven than, than micro at the moment.

Happy Yoder, JP Morgan Private Bank, us Equity strategist.

Thank you so much for joining us today.

Coming up, a new partnership with Apple is giving shares of a firm a boost.

We've got some top training ticket on Yahoo Finance.

Next, let's get some trending take that we are watching another day, another more expensive Spotify subscription.

The company reportedly introducing a new higher priced premium plan for its users that will charge customers at least $5 more per month for access to tools like better audio and additional tools for creating playlist.

This is all according to Bloomberg news reporting.

Of course, this is right after the company already announced new price hikes recently here, Ali I know that you covered this name consistently, but I do wanna give a shout out to our producer Cheyenne Reid who pointed out a critical question here.

Are we getting low quality audio from Spotify now?

And what tools are we missing out on?

And I know it sounds kind of silly, but it is an important thing that I think comes with these price hikes from all of these streaming platforms.

It's like, well, what is the difference factor between what we're getting now and what you're going to offer us and isn't good enough to warrant the price?

Right?

And, and I think that's an interesting point too because Spotify has said in the past that they want to introduce different types of tiers.

So perhaps a music only tier and audio books only tier.

So really allowing more optionality, more flexibility when it comes to the consumer.

It sounds like from this Bloomberg report that this is targeting users of Spotify that are consistent, that really want the premium offerings that hi fi audio, the the ability to curate playlists and and it's a specific type of customer, not every customer is going to pay up for that.

And I think that's important for all of these companies to start to understand and, and Spotify is one that uh recently has had a pretty strong turn around story.

I mean, it wasn't too long ago that the stock was really a difficult place and we've now seen it build back up price hikes, obviously a huge bullish sign from analysts, Wall Street actually thinks that these price hikes from last week that they're going to spread out some other music streamers out there.

So perhaps your Amazon, your apples of the world are going to raise prices as well.

And if you think about what it costs today, it's it's not, it's pretty cheap, all things considered, you have access to all this music access to all the songs.

There's always that big question, the ripple effect there.

Is it going to go towards artists?

Is it going to go towards the labels?

So this is a company that has multiple layers to it and I think at the end of the day, they want to offer as much choice to consumers because there are some out there that are willing to pay up.

Yeah.

And to your point, last thing on this is just an interesting story of them being defensive and offensive.

This is an offensive move to protect their balance sheet.

But they've also been having consistent layoffs over the past couple of years and I know that was a pretty a story for them, but it seems like they're really kind of putting an iron wall around their balance sheet right now, which is something investors love to hear, right?

They spent 1 billion in podcast.

So something's got to give exactly at some point there but more bullish shines here.

Now, Shopify is getting a bullish call from JP Morgan, the firm initiating coverage with an overweight rating saying the company's quote competitive moe warrants a premium evaluation you're seeing shop I shares up a little over one there.

Now J PM added the company has distinct competitive advantages that will continue to fuel industry leading growth.

The bank also sees a margin expansion opportunities as well.

If you take a look at a longer term chart, shares have been under pressure so far this year down about 17% over the past three months as well.

But J PM saying that creates an attractive entry point for investors.

So potentially more upside on the horizon.

The bank has a seven $4 price target.

So about 20% upside here based on current trading levels.

Yeah, it's interesting because this is another name that's been under a lot of pressure recently.

Even just last week, we saw Moffett Nathanson cutting Spotify to neutral.

So the kind of opposite move as what we're seeing today in terms of the market reaction there, that price target cut coming from off that Nathanson saying that they had previously, you know, had an outperform rating on this name.

The stock had risen an average of 63% in the periods rated market perform for M MA.

And but now seeing the stock falling to the downside and it points to kind of a broader question about what the long term value at is going to be for Shopify and whether or not the kind of juice has already gotten as much squeeze as possible for some of these e commerce names, particularly as we do start to see a little bit of struggle within the consumer space.

What is that going to mean for a company like Shopify?

Well, moving on a firm shares are getting a boost today after Apple announcing a firm products will be available to us Apple pay users later this year.

A firm saying it doesn't expect the partnership to have a material impact on its revenue in 2025 but it's certainly having a material impact on the stock that stock up nearly 6% it was up over 7% earlier.

And this is a big deal for a firm.

I mean, this is a company that has been seeking some of these partnerships pretty consistently and to get buy in from a name like Apple, you can't ask for anything more.

When you are a company like a firm, you can see that the stock has really been on this sort of ripple effect.

I want to take a look at what a firm has been doing year to date.

So I'm just going to pull that up here really quickly.

Well, it was the largest intraday jump since January that we saw on the heels of that news and you know, having these products available to apple pay users coming out later this year.

It's something that you think would be a catalyst for the stock moving forward, especially as you think of the growth of buy.

Now pay later, I think back to Black Friday and Cyber Monday.

There was a lot of activity around the buy now pay later space and especially as we're in this environment where as you mentioned, consumers are a little bit squeezed.

We in this higher for longer interest rate environment.

These are companies that could certainly benefit.

Absolutely.

And just to get that started, this is a name that is down 35% year to date.

I'm very curious to see how long it takes them to get to the flat line on your today after this Apple news.

Because again, that is the type of news that is exactly what a company like this is going to be looking for and what the street is gonna be looking for as well.

Really quickly want to point out another comment from a firm saying that this will enable users checking out online in app with Apple pay on the iphone and ipad to pay over time with a firm.

So that could be another leading economic indicator for us as well.

Seeing how many users are using the pay over time option.

Well, coming up prices on copper, they're moving higher this year.

We have seen a recent pull back though.

So when is the time to buy into the commodity we're gonna discuss after the break, copper having a record run this year up over 15% year to date due to A I driven demand as well as increased interest in renewable energy.

That rally is stalling over the past couple of months.

So for more on these moves and what they mean overall for the commodity, we are joined by Adam Turnquist L Financial Chief technical strategist.

Thanks so much for joining.

It's really great to speak with you.

I do want to start just by taking a big step back on copper, right?

We know that we are in this higher for longer environment.

So we are obsessively looking at every single data point to suss out where we are at in the economy overall.

What can copper prices tell us about the macro picture that the day to day economic data might be missing.

Hey, good morning.

Thanks for having me on.

I think when you look back in the longer term trend of copper, we're getting this large breakout from a bottom formation that's been forming.

And if you think about copper as a leading economic indicator, just its vast application use.

I think it's a pretty good sign overall for global growth.

Despite some of that noise that you mentioned in the economic data, of course, what's happening in China is a big contributing factor to to copper prices and overall demand as they try to revive their economy, there are signs of life emerging in the recovery there although a bit slower than I think most expected.

But I think there is when you look at the overall supply demand backdrop, it does look constructive on a longer term basis despite this latest pullback that we're seeing off over bot levels.

So when do you think we're going to see a rebound in that price action?

And what's the ceiling here for you when it comes to copper prices?

I think we're close to a potential spot where we'd have an inflection point.

The 50 day moving average has been tested.

Bulls seem to be stepping up and defending that level.

We're trading right near those levels.

Potentially, we could see a drawdown maybe to the 2023 highs, right around 4 25 4 30.

I think that would be a pretty good entry point if you're looking to get long copper, especially to play this energy transition.

You think about demand, outpacing supply longer term, it takes a long time to get copper out of the ground.

And we, you forecast some of the, the whether it's EVs or just the, the net zero emissions, there's not enough copper to meet the demand in the current state.

So I think longer term copper moves higher and could easily go back and retest these recent highs in pretty short order, speculators have been piling into this.

This looks more like profit taking off over bot levels than anything else right now.

Well, Adam, another key driver of demand is of course artificial intelligence and the impact that that has in terms of needs for data centers.

The electricity grid is also key here.

We have a lot of guests come on and talk about the importance of finding the pick and shovel investment opportunities when it comes to A I is copper as pick and shovel as you can possibly get if you're trying to play the A I trade, I think it's a pretty good one.

I don't know if it's as close as you can get with some of the other pick and shovel moves at the company level, but I think it's a pretty good play in terms of that energy transition, that's, that goes beyond just A I.

And of course A I is a, a huge tailwind for copper.

When you think about the electric and the power grid, all of those are coming under massive changes over the next several years, industrials would be another spot as an A I play.

If you think about data centers, the manufacturing, the maintenance, that's another sector that we like as well more at the equity level.

So you mentioned is that overall energy transition, what are some other catalysts behind what's fueling the demand here for copper?

Because I don't think investors realize that copper is behind a lot of different things that we use every day in our lives.

Yeah, outside of electric vehicles, which of course take way more copper.

If you just look at the construction industry, that's the biggest um in terms of demand for copper that's doing quite well as we're building out infrastructure.

Of course, that's, that's been a big key move here that, that we like as well.

When you think about just the resorting theme and utilities are another one that obviously um it would be another spot for, for the A I play in, in terms of uh the energy transition here.

I'm not going to ask you to talk about a specific company, but hypothetically, let's say you've got the world's biggest phone maker saying that they are going to utilize A I how much does a CFO of that company need to be worrying about the price of copper and the impact that could have as a potential head went on their balance sheet.

I don't think it's gonna be a major headwind when you think about the consumer, the elasticity of demand with, with smartphones right now.

Of course, it doesn't, the price points have not been a major factor.

You can see that over the years as they've continued to increase.

When you're talking about $2000 phones with demand, it, it hasn't been a big factor, but at the margin level, of course, as input prices go up, that could be a factor that could impact overall earnings.

And I want to go back to China because you did point out that the supply side there is a bit mixed.

Why is that not a concern for you in the long run?

Well, we're watching the supply side there overall because right now it's at record levels.

Typically you see copper supplies in China elevate to really the 1st, 1st quarter of a part of the year and then they start to dwindle as factory activity increases.

We're not seeing that quite yet.

But when you look at the futures curve of copper and this is why we're a little bit, um we're, we're discounting that a little bit is because we're in backwardation, meaning front month or spot prices are trading above second or third month contracts that suggests there's a tight copper market on a near term basis and supporting that I think bid into copper that we're seeing.

Yeah, Adam and closing out the China's uh impact in terms of commodities.

We are seeing muted demand coming from Chinese fabricators as well.

So along with some of that profit taking, that could be a little bit of a temporary headwind for this commodity.

Adam thanks so much for joining us.

That was Adam Turnquist.

He is LP L Financials, chief technical strategist on all things copper.

Now, looking ahead to the 2024 election, we've got a new note out of JP Morgan saying market consensus is for Trump to win the White House.

But overall investors are not that concerned about the election, at least right now, only 12% of J PM survey respondents see the upcoming election as the biggest threat to the market rally.

Let's bring in Rick Newman for more.

Rick.

I immediately sat up when I saw this news because we've all been talking about what the market is pricing in ahead of this election.

How big of a deal does this seem to you?

I think this uh market consensus is premature.

Uh This race is basically a toss up and it's very possible that what whatever is going to turn the outcome, either to Trump or Biden, assume both of them make it to the finish line.

It's possible that that thing hasn't even happened yet.

Uh I mean, I think we've got uh more uh black Swan Risk than you normally would have an election given number one the age of these two candidates.

Uh and everything that's going on with Donald Trump.

Uh We're gonna have two debates.

Uh The debates can be decisive, things can happen during those debates.

Uh And let's just, let's not forget Trump is now a convicted felon and there's gonna be a sentencing uh in July when he, he may actually get sentenced to jail time.

Um So I, I think it, it would be a big mistake to assume that Trump has this in the bag.

We still have almost five months to go until election day and there's just a ton that can happen between now and then, Rick, you mentioned that first debate coming up at the end of this month.

What do you think is going to drive the conversation points in that debate?

Is it the economy, is it geopolitical risks or is it something else?

Well, I have to, I have to believe the moderators are going to raise the issue of, uh Donald Trump's conviction in the New York Court a couple of weeks ago on 34 felony counts.

Um I don't, I don't know that Biden himself has to say too much about that.

But I think, uh I, I mean, I'd, I'd be astonished if that is not, you know, a huge focus of ads and billboards and swing state commercials, uh, you know, during the last two or three months of the election, um, I, I guess the, um, the moderators will ask about issues.

I mean, there are a lot of issues at stake here, especially for investors.

I mean, the big one is, uh, is these tax cuts, the 2017 tax cuts that expire at the end of 2025.

So the next president is going to have a major role in that.

There's talk of either raising the corporate tax rate if you're Joe Biden, if President Biden gets a second term or lowering the corporate tax rate.

If Donald Trump wins a second term, there are the tariffs on China that Trump wants to impose and a lot of other factors for investors.

Uh I, I mean, it's, I think it's just still too early for investors to be uh basically betting on the outcome of the election.

But I think that's gonna change in, uh in September and October.

I think we're gonna get a lot more intense focus on the polls in the six or seven swing states.

You might start to see the market go up or down based on what some polls show is because there are a lot of uh issues that uh the next president is going to have to determine that will affect markets.

All right, Rick a lot to keep track of.

I know you'll be watching it for all of us.

Thank you.

So much.

Bye guys.

Coming up.

The NBA finals are in full swing and so are their media rights contract negotiations.

We hear an NBA deputy Commissioner Mark Tatum has to say next inflation and a strong job market has sent jitters the markets over the past few months as investors brace for the possibility that rates could be higher for longer.

But one investment vehicle has been seeing some benefits from the high rate environment, municipal bonds and joining us now and stand close head of municipal d. Thank you so much for joining us.

Now, there is this expectation that the fed could begin to cut rates later this year.

Given that is now the appropriate time to put some money to work in Munis.

Sure.

And, and thank you so much for having me, Ali.

I do appreciate it.

Uh We certainly think so.

I mean, if you look at what's happened to Muni's so far this year, there's been two broad themes.

One is treasury rates on 10 year treasuries has gone up 50 basis points.

So that's affected everything in fixed income, including Munis and 50 basis points cheaper than we started the year.

Uh And the second thing that's really impacted Muni and why we think it's such great value right now is the supply of Muni.

We've seen supply go up of municipals through the end of May up 40%.

And with that, we've had two back to back months, the months of April and May where we saw more than 40 billion of supply.

I think what that really does is it sets us up really well for the second half of the year, the second half of the year.

I don't think we're gonna see as much issuance.

We're hearing from underwriters.

We're hearing from Issuers bankers that they're bringing deals forward that normally would happen in the fourth quarter so that they avoid the election and they avoid all the issues that happen in the 2016 election.

So I think we'll have less issuance.

And I think we're also gonna have a very, very good technical the next two months where you're gonna have $80 billion in coupons in maturing bonds in all these different proceeds that recycle back to the Muni market very quickly.

And those are both very, very good technical backstops.

And, and I think as well as we were discussing right before, you know, six and a quarter percent for a Aa intermediate Muni strategy, I think is very attractive and, and nine and a quarter percent for a high yield I think is just a number which is going to go in and draw investors off the sideline.

Yeah, I mean, those are significant yields particularly when we're used to talking about things like treasury corporate bonds.

The returns are just not as high.

I am curious in terms of risks for those returns.

How closely are you and municipal bond holders supposed to be watching the macro data and any potential softness we might be seeing in that data and what read through.

Could that have to mu needs?

Yes.

Sure.

And we have 23 credit analysts at Naveen where all they're doing is looking at the broader macro and, and I think as we, I take a step back and look at it, we don't usually see a high correlation between the economy and defaults in municipals.

Uh by that.

I mean, you know, your water and sewer bill, you're not gonna go in and fail to pay your water and sewer bill no matter the economy.

It's a really inelastic demand curve for most of what these have.

These are essential service, monopolies, somewhat recession proof, somewhat recession proof and almost everything we see, we just don't see a large correlation between defaults in Munis and where they were and where the economy is.

Yes.

And, and given that, you know, the Munis base very fragmented.

What sectors or areas are you most bullish on right now?

Yes.

So more than 50,000 different issuers in the town I live in, I'm just north of Chicago.

There's nine issuers alone in that town.

So it is a very fragmented market.

On the high grade side.

We're really looking at local general obligation bonds.

These are uh bonds that are repaid by property taxes.

We think with the housing market continuing to do.

Well, that's a very good place to be and they're offering very good yields.

On the high yield side, we're really favoring land secure deals.

These are deals that uh are financed by build outs in states like Florida for potable water, for streetscapes and that are ultimately repaid by property taxes uh and, and different assessments.

So we're very bullish on those two.

We think those are gonna do very well uh recession or now here over the next uh couple of years, I do want to bring this a little bit closer to home here in New York City because Governor Kathy Hole did move to kill congestion pricing policy.

And now some are calling on MT A Muni bond holders to fight back against that move.

I want to pull up a post from the director of a nonprofit focusing on public enterprise saying that I'm calling on anyone who purchased MT A Muni Bonds to come forward and bring the lot to bear on the state of New York.

I'm not gonna ask you about congestion pricing.

We're not gonna get into that tit for tat here.

But I am just curious generally, how much power historically do many bond holders have over public policy?

And is this a way for investors, retail investors listening to this segment now to who are invested in local politics to maybe have another avenue of influence is not the word I'm looking for but influence.

Yeah.

Well, and it's interesting to see that, that congestion pricing would have been uh we think very favorable for mini bonds.

You go in and you take a billion dollars in what we expected the revenue to be.

You could leverage it up to 15 billion by issuing debt.

That really helps out the capital structure.

You know, if you go in and you have fewer cars on the street because of the congestion pricing, then you also go in and support the, the fair backs bonds.

You know, owning mini bonds.

There's, you don't have uh unlike on the equity side where you could go in and you could vote for directors and you could vote for different uh governance issues.

We really don't have that as much as large holders uh in the MT A, we certainly do have influence but it's something traditionally asset managers, at least on the municipal bond side have really exercised to too much.

We uh we have 100 and 25 year history at Naveen of providing tax exempt income.

Part of that is also knowing that uh sometimes local matters and local affairs uh not weighing in on this much.

Well, really quickly here, I know that you had a take for us on airports and uni bonds and obviously huge travel demand coming up this summer.

What read through does that have to airport bonds?

So airport bonds have done very well this year.

Uh We've seen about 3.5 billion of issuances.

So Midway sfo had an issuance.

Um We've, we've seen issuances come through and anticipate about 20 billion or so of issuance uh for the balance of the year.

So II I think it's been interesting airport credit has done really well.

You think of airports that lost 80% of their top line revenue and yet we have more upgrades and downgrades and 25% of them are better rated than where they were before the pandemic.

So in airports, we expect uh more issuance and a lot of this issuance is not being driven by runways, it's not being driven by gates, it's being driven by the passenger experience lounges and rest restaurants and shopping.

And so it's more of an experience rather than uh that we're financing rather than the traditional brick and mortar.

So we do anticipate more airport issuance for the balance of the year, fully 20 billion for 2024 and 100 and 50 billion by the end of 27.

Really interesting, Dan, it's always great to speak with you because you have an ability to bring Muni bonds into the reality for folks.

So really appreciate it.

Thank you for coming in studio.

Thanks so much for having me.

Well, that is Dan Close.

He is Nave's head of municipals.

Now, the NBA finals are in full swing with game three between the Celtics and Mavericks kicking off tomorrow night in Dallas while the games are still taking place on the court.

A little game for the NBA executives deep in negotiations for their next media rights deal.

All I know you had the opportunity to sit down with NBA deputy Commissioner Mark Tatum yesterday.

What is sticking out to you from his comments about just the kind of back and forth of this deal?

Yeah, so he declined to comment on the specifics of the actual negotiations, but he did talk about how fragmented the sports media rights landscape is right now and how as any type of league once in this day and age, not just the NBA, but also the NFL and HLM will be, you want to be as diversified as possible with your media partner.

So we have a quick sound by that.

I want to play where he talks about that a little bit more.

So over the last 5 to 10 years, sports consumption has been defined by an increase in optionality for the fan and ultra personalization.

And so there are more ways than ever to watch sports programming NBA content.

And what we're trying to do is make sure that no matter where the fan is that we're meeting them where they are, that we're customizing what they're seeing, the teams are seeing the players are interested in based on their preferences.

And so uh there's still very much a role for traditional television.

We very much like the fact that our uh finals are on traditional network television.

Um but we also understand that a new generation of fans are consuming content through streaming platforms.

And so we wanna make sure uh that we have that availability of programming and content across all different channels.

So I, I think what you're gonna see is more of a hybrid, having our games both on traditional television and streaming in an effort to reach all of our fans.

So a hybrid approach there and if you think about the latest reporting around these media rights negotiations, that's exactly what's going to happen right now.

NBC Universal ESPN that they're in the league for linear.

But also we have ESPN plus is that over the top streaming package, Amazon also in talks for an streaming exclusive package as well and these are, this is a big amounts of money that a lot of these networks are willing to cough up.

I mean, Amazon's 1.8 billion NBC Universal reported 2.5 billion notice, noticeably missing here is Warner Brothers Discoveries, TNT which has, you know, had this the rights to this league for so long, but they're just not coughing up the cash that these leagues want.

And it seems like TNT sort of missed the boat by sloughing off the importance of this deal early on is my interpretation at least and, and, and also more about discovery is going through a transition period.

Their balance sheet is all over the place and some analysts have said, look, it might not make sense for them to pay this much for the NBA while there are others that are like, no, this is very important that they have the NBA moving forward.

So we'll see ultimately what happens.

These negotiations are still ongoing and long term, whether or not this is an overall headwind for viewership because the viewers are concerned about and questioning just where they need to.

It's complicated.

They're just gonna end up going to the local restaurant.

At least that's what they're gonna be going to the bar to watch because it's the only way they can find the true ability to guarantee they're gonna be able to watch a great interview.

Thanks so much for bringing that to us.

We're gonna have all of your markets action ahead right here.

So stay tuned for more.

You're watching Catalysts.

We've been discussing Apple's latest event all morning and the reaction seems mixed.

D A Davidson upgraded Apple and raised its price target.

On the back of the announcement, we had a chance to speak to the analyst behind that call, Gloria earlier today.

Here's what he had to say.

A lot of noise, a lot of people with different expectations coming in.

But if you look at the signal away from the noise, you realize that this is unprecedented capabilities that Apple is gonna introduce and it's going to integrate A I into everyday life.

Meanwhile, Apple shareholder Ken Mahoney was a bit more muted in his reaction and predicted we may see a slight short term downturn this summer.

Take a listen.

Look, we're in this mix here.

I've been telling investors we could hit a low with Apple over the summer time as why would you want to upgrade your, you know, your phone here?

Why not wait for the 15 or the 16 and so forth?

So we could hit a little low.

Interesting to see the varying reactions that we've had across Wall Street, across shareholders.

But if you take a look at the share price right now, we are up more than 5% surpassing an intra day high market cap at around 3.2 trillion.

So at least right now it seems like investors are digesting all of the announcements that we did get.

And with the positive where as last night, we saw the stock of around 2% and this is so important apples hitting new all time highs today.

And this is critical because this is a stock that just flipped in a positive year to date territory in a matter of the last couple of weeks.

You can see on that chart here just happening in the month of June.

Apple, finally flipping in a positive year to date territory.

That was a huge issue for one of the big tech names, not just for Apple, of course, but for the broader market to have this much pressure on a $3 trillion company as of today because of the market moves to the upside that we're seeing this stock up 9.5 percent year to date.

So really a big turnaround story that is exactly what Apple was hoping to do.

And at least when you look at the stock price, they did deliver, it's interesting to see that the market reaction was negative after getting the news from the developers conference yesterday.

So perhaps after seeing some of the consumer commentary off of that, also hearing some and seeing in some of the notes this morning that it was a little bit of a buy the rumor, sell the news.

The kind of optimism around the stock was a little bit priced in but looks like there's a lot more optimism to go for this stock.

We didn't even talk about the Gen Moji announcement, how you can generate your own emoji just but I mean the millennial in me is very excited about this.

The calculator on the ipad.

There's a lot of features outside of A I was as well.

Are you excited for the React too?

I'm such a react girl.

The fact that I can be creative with my message reacts.

I like, yeah, I wanna have some fun.

Let's let, let's let's get that.

I'm only already anticipating the Gen Moji.

My friends are going to be sending back and forth in our group chat.

So I love it all and I the key millennial sources, we will be driving the new trends and Apple replies.

Absolutely.

It comes to emojis.

All right, everyone will.

Coming up here, we're gonna have wealth.

It's dedicated to all of your personal finance needs.

Our very own Brad Smith has for the next hour.

Stay t for more.