Boeing-Spirit AeroSystems deal, reaction to Biden-Trump debate: Morning Brief

First day of July, first day of the second half of 2024, and first day of the third quarter. The Morning Brief's Brad Smith and Madison Mills walk investors through this busy first day of the trading week and the top market themes Wall Street will be watching heading into the latter half of the year.

Boeing (BA) agrees to acquire aerospace manufacturer Spirit AeroSystems (SPR) in a deal valued at $4.7 billion as Boeing continues to navigate through the fallout of mid-flight blowouts on its jets at the beginning of the year. The jet line manufacturer awaits a Department of Justice ruling on whether officials will criminally charge the company for these accidents.

Boyd Group International president Mike Boyd and former Wall Street Journal aerospace reporter Andy Pasztor join the show to weigh in on Boeing's deal with Spirit AeroSystems and the company's overall leadership under CEO Dave Calhoun, who will be exiting from his position by the end of 2024.

Following last Thursday's first presidential debate between President Biden and former President Trump, Stifel chief Washington policy strategist Brian Gardner shares his thoughts on voter confidence in Biden.

Other top trending tickers on the Yahoo Finance platform include Chinese electric vehicle makers NIO (NIO), Li Auto (LI), and XPeng Motors (XPEV); Nvidia (NVDA), Chewy (CHWY), and GameStop (GME).

This post was written by Luke Carberry Mogan.

Video transcript

It's 9 a.m. here in New York City.

I'm Brad Smith alongside Madison Mills this morning.

This is your finances flagship show the Morning Brief.

That's right.

Looking at stock futures, they are moving higher as investors are looking for more cues on the timing of potential interest rates cuts to come and key labor market data.

This holiday shortened week, investors looking ahead to the second half of 2024 and what the third quarter will bring.

So let's get to it with the three things you need to.

This Monday morning, we've got Yahoo finances, Josher Jared and Josh looked in with more stock futures in the green to kick off the third quarter and second half of 2024 the S and P 500 entering 23 up 14.5% so far this year, all the tech heavy NASDAQ composite is rallied more than 18%.

The dow however, has gained a more modest 3.8% in the first six months of the year.

Midway through the year.

More than two thirds of the S and P 500 games have come from NVIDIA apple alphabet, Microsoft Amazon Meta and Broadcom in video alone has driven nearly one third of these games.

Plus Boeing has agreed to buy long time supplier Spirit A Systems in an effort to help resolve its recent safety and manufacturing concerns.

In a press release, Boeing said it will pay $4.7 billion or $37.25 per share for Spirit Arrow systems.

Part of the deal, Boeing is going to work with Spirit to ensure the continuity of operation, support of spirits customers and also the programs that it acquires.

This comes as the Department of Justice plans to criminally charge Boeing with fraud over two fatal crashes that took place more than five years ago.

The Doj asking the plane maker to plead guilty or face a trial reports say and shares of Chewy surging 11% this morning that is after famed meme investor Keith Gill known as Roaring Kitty disclosed a 6.6% stake in the pet retailer.

The disclosure with the US securities and exchange commission reveals Gill owns about 9 million shares which is worth approximately $245 million since Friday's closing price.

Happy July 1st, everyone.

Our top story today.

Stock futures rising on the first trading day of the second half of the year, the first trading day of the third quarter of this year and across Wall Street, of course, analysts are discussing the investment themes for the next six months.

We have our own three themes that we're watching for you today, starting with Big Tech and an undeniable threat has been the excitement around A I led by NVIDIA pushing the S and P 500 up 14% in the NASDAQ composite up 18% in the first half of the year.

Here in studio with more.

We've got Yahoo Finances, Josh Schafer.

Hey, Josh.

Hey, guys.

Yes, I picked Tech is sort of the one thing I'm watching going into the second half a year, really specifically kind of the fundamental story of tech and the earnings, right?

Because yes, we've talked at Nauseam about this big tech rally and how it's really been, it's been all big tech, right?

You look at the S and P 500 this year, more than two thirds of the gains coming from essentially the six companies we always talk about, I'm taking Tesla out of that mag seven group and you're talking about companies like NVIDIA, Apple, Amazon, meta, et cetera.

And really, it's been driven by earnings growth though.

And so to me, the largest story I'm watching and a lot of strategies that I've talked to are watching going in the second half of the year is just does Big Tech continue to outperform in earnings?

Because that is a reason that they have driven the rally.

It's also a reason the S and P 500 came out of an earnings slump, right?

We were in an earnings recession and essentially big tech by itself carried it out.

You look at Q two earnings coming up to kick us off to start the second half of the year revisions.

We highlighted this in our morning newsletter this morning is our chart of the day.

You can see there.

This is a chart from U BS, the top six tech plus, which is again, those companies I was just naming are what is keeping revisions from falling for the second quarter.

So still, right now, you're looking at a largely just big tech exceptionalism story.

Do the others actually catch up?

Do we get some earnings growth from the other sectors?

And the other companies I think is maybe the the largest looming fundamental story for the market rally.

Absolutely.

It's a yes and right, we need not only the A I rally to keep this market up, but we also need to see perhaps a little bit of a broadening another stat to join your slew stats there, Josh that I saw this morning, the top 10 companies are having a 35% growth on market cap only 23% growth in earnings.

And at what point does that start to be a concern that the earnings maybe aren't justifying the market caps for some of these big companies.

Another thing guys that I'm looking out for the second half of this year here is inflation and of course the rate cut cycle to come that investors are pricing and now two cuts that is despite the Federal Reserve and policy and Fed speak, indicating only one cut to come for this year.

I think about what we heard from Stewart Kaiser last week and he was on our show, just the idea that you have to really be looking at the jobs market.

And that is because we are starting to see jobless claims creeping higher just ever so slightly here.

What does that mean moving forward?

Do we start to get a feeling of increasing volatility underneath the surface of some of the data that we're seeing?

That indicates a potential for that soft landing to become a hard one or I was talking to Rick Newman this morning and he was saying inflation is at a place where if you just don't touch it, if you don't look and close your eyes in a year will be at that to handle that the Federal Reserve is looking for.

So that's what I'm going to be looking out for this year.

But the jobs data in particular to indicate where the economy is heading.

And also of course, those rate cuts to come for the fed.

Well, look no further to this week than for more of that jobs data.

Of course, you're gonna get that ad P private payrolls Wednesday.

And then of course, we're gonna be looking out to this Friday for that jobs report, the employment situation from the BLS everybody's favorite statisticians out there.

And anyway, one of the other major things that I'm keeping tabs on and that we all are in the second half of the year.

We're watching the US election here and particularly after that first debate now without kind of going into and kind of reprising exactly what we heard during the first debate because there are potentially going to be more debates in future we will see there.

I'm thinking back to what s is putting in their election watch right now and the scenarios that they're seeing playing out and they did say that the election is likely to trigger market volatility.

They think investors should manage risks accordingly, of course, here, but here's particularly what it could imply inequities.

The US consumer discretionary and renewable sectors could be vulnerable in the scenario of a Republican sweep of both the House and Congress.

Well, White House and Congress, and then at the same time, they think financial would stand to benefit in that scenario.

Now, do you think about some of the other scenarios that they're continuing to look at and where they're kind of looking at some of the hedges potentially going forward uh in their own investment portfolio?

Thesis.

One of the huge things that they continue to kind of lean on right now, they think investors should hedge risks in sensitive stocks and sectors and they think that gold can act as an effective hedge against fears of geopolitical polarization inflation or excessive deficits too.

I mean, the election brad obviously is one thing that I, it seems like a, a no known at this point, but the volatility that we just haven't had at all this year, I think is kind of the key, right?

When we split, if we're splitting this into first half, second half, the Vics basically went nowhere for six months.

So if it goes somewhere in the second half of the year, you would think at some point, maybe we're gonna get a little bit of volatility that will impact the market there.

Mattie going back to the inflation story a little bit.

It's, it's interesting to me, doesn't it feel like we came back to where we started the year where everyone or most people are just kind of comfortable now, you were referencing, like just, just don't look at it and maybe it will just go down.

I feel like we went through that hard three months and now we're entering the second half of the year back with, well, inflation is just coming down.

It would just be, I don't know how fast it's going to come down, but it's just going to come down.

And I think if that isn't the case, that's sort of an interesting risk to the rally and seeing the transition too from guests who used to really dig into which exact moment the fed was going to choose to cut those same people.

Now coming on our show and saying it doesn't really matter if it's September or December, that is a huge shift in the commentary from these same people.

Well, just the fact that they're speaking specifically about September or December, there's nothing that they're talking about with November and the election plays a role in that as well with Fed that wants to seem or come off as a political as possible here.

Historically, that has been the case.

Of course, this is a different environment as they all are for the Fed to navigate through here.

All right.

Uh Thanks so much Josh for joining us on that Chewy shares.

We're also tracking that this morning, Chewy shares surging this morning after Keith Gill known as Roaring Kitty disclosed a 6.6% stake in the stock.

This comes after Gill posted a vague picture of a dog to his ex account last week, which sent shares of Chewy to a one year high.

All right, Josh, stick around with us for this one.

Why don't you?

Because uh this has a, a lot and I mean, even the sec filing was perhaps unlike any we've ever seen before at this juncture.

Yes.

So he filed, he had an sec filing because he bought more than 5% of Chuy's outstanding shares, right?

6.6%.

And really there wasn't much in this filing, Brad, other than Keith Gill decided to add a little check box for himself to tell us if he identifies as a cat or not, for reference, you can see on your screen there, he identified himself as not a cat, a cat.

So that was sort of the highlight of how the filing works.

Obviously, this is I think broader takeaways here.

One, there was actually an sec filing this time with his name on it saying that he bought a large amount of chewy shares, that is not something you have seen with a lot of the Gamestop transactions he's been making, right?

It's sort of been vague screenshots that go up on a reddit that has been linked to him.

But there was kind of discussion when we think back to the gamestop rally over the last month and a half.

Is this really Keith Gill?

Is he the one on the roaring kitty account?

Is he the one on his Reddit account?

This is clearly Keith Gill because it's an sec filing.

He definitely bought the shares.

Why he bought the shares I think is up to anyone's guess at this point.

It is interesting to me, I think and important to point out Chuy is a much different company than gamestop.

Chuy has an actual potential re emerging growth story there.

They posted a positive profit in their most recent quarter, like it's just a different company than Gamestop.

It's not really a meme stock like yes, their founder, Ryan Cohen is of course the CEO of Gamestop and that's kind of your meme stock connection, but Ryan Cohen is not on the board.

He does not have any public facing involvement with Chewy.

So just sort of speculating on why this would be the target.

It becomes a little bit harder I think to put the pieces together, at least for me.

Well, there's an indication too that with gamestop the first time around, he did kind of suss out something that the rest of the street was missing this time around.

That's not necessarily clear.

So maybe a diversification of the assets there, John, I mean, he just likes the stock, right?

He just like Gamestop stock.

Maybe he just likes Chewy, maybe he just likes chewy.

But having said that he's also got a lot on his plate right now because Keith Gill also got hit with a class action lawsuit.

Josh, tell me what we know at this point about this lawsuit over alleged kind of pump and dumping of the GME stock.

Yes.

So it's a class action lawsuit from someone that says they were impacted by quote pump and dump of Gamestop.

And essentially it alleges things that you would think it would allege of Keith Gill over the last month and a half.

It alleges that he was involved in essentially potentially manipulating the market.

He knows that he has power over what Gamestop stock or what he can do to Gamestop stock and it goes through a long list.

It's a 40 page filing that goes through all the different times that Keith Gill has posted the market reaction and it does get again deeply into other sources, citing that he might be able to manipulate the market.

This is something that people have been speculating about since Keith Gill reemerged was that eventually a filing like this or a lawsuit could come.

So interesting to see that come, should note gamestop shares dropped about 7% in pre market trading as this sort of started circulating.

And so I think the broader question as we come out of this is for one, it's just a lawsuit filing for now, right?

We don't know much more than that.

He has not publicly responded to it.

But will it take the meme crowd either away from Keith Gill or more toward Keith Gill as real action starts to come against him?

I think is the interesting question to watch moving forward is are people gonna say, oh, whoa, I don't really know what's going on here.

I want to back away or are the toddlers really into supporting Keith Gill?

And do they sort of pile in to support him in this effort?

I think is probably the most interesting thing to watch over the next couple of days with these shares.

And if history tells us anything, it's that we are going to see more of the latter there, Josh, it sounds like thank you so much for joining us and sticking around.

We really appreciate it our very own, Josh Schafer.

Now Boeing announcing it will by Spirit Arrow Systems and a $4.7 billion deal that's in an effort to improve quality and safety according to the company.

Now, this comes as us, prosecutors are reportedly seeking a guilty plea from Boeing over allegedly misleading a federal regulator about the 737 max planes that were involved in those two fatal crashes.

According to several reports for more on this, we're joined by Mike Boyd Boyd Group, international president.

We're also joined by Andy Pastor, former aerospace reporter for the Wall Street Journal.

Thank you both so much for joining us this morning, Mike.

I want to start with you to just get some context here for our viewers.

What do we know about this agreement from Boeing to buy the fuselage maker Spirit Arrow systems here?

And what do we know about the potential impact that could have on Boeing in the stock price?

Well, I think it's a, it's a diversion.

Number one, Boeing is having a hard enough time handling their own own production.

Buying back Spirit isn't a guarantee of nothing other than Boeing be managing it.

It has to be more than that again, you know, to charge Boeing with criminal uh malfeasance by the government is sort of like a, a fire alarm company suing a building for having had a fire.

Uh We're in a situation here where Spirit is Spirit and there's no guarantee that Boeing will be able to manage it any better than they can manage their own operations.

Andy, I wanna get your read in on the situation.

I mean, especially as we're and have been tracking Spirit aero systems with direct correlation to this acquisition and what we were anticipating from Boeing and, and Airbus as well, which also announced that they were purchasing the Division of Spirit, at least that has a little bit more manufacturing for its own aircraft.

So I I think the important thing to keep in mind is, first of all, this is a, this is a reversion to some policies that Boeing had many years ago where all of this work would have been kept in house.

So they basically reversed course in that way.

But I'd like to talk a little bit about this potential criminal um plea plea agreement.

It's really a slap on the wrist for Boeing.

It's a miniscule fine of about 250 million, which of course is, is almost as a pittance for a company that has spent billions, millions and billions trying to um make changes and recoup from the, the the two crashes.

And it's important also to understand that the families and the vic, the victims of the families of the victims and their lawyers have been demanding much harsher action from the, from the justice department, larger fines, criminal proceedings against individual Boeing executives.

The reason that isn't happening and this isn't been talked about very much.

The reason that isn't happening is because of the chaos.

The chaotic days of the end of the Trump administration, the agreement that Boeing signed with the justice department in 2021 essentially poisoned the well, for any hard strong forceful action by the justice department.

In a, in a very clear break from justice department practices over the years, the justice department said it found no evidence specifically that in that senior executives were involved in any of the potential fraud related to the, to the, to the max design.

The justice department almost never does that.

They simply don't charge individuals.

They don't explicitly say that there's no evidence against anyone because someone walks in with a box of documents the day after.

Of course, the whole question becomes, um becomes much different.

So I think that this is a slap on the wrist.

It's almost a symbolic punishment.

Boeing has been immune to such symbolic punishments over the years.

But the reason I think that the justice department isn't being more forceful has a lot to do with the fact that they were locked into a certain legal position by the Trump administration years ago in 2021.

And they simply can't go back and essentially relitigate and try to create a new criminal case from, from those facts.

So Andy really quickly, what does a potential Trump re-election mean for Boeing?

Su?

I don't think it has any effect at all.

This agreement if it comes to pass will be a, a done deal in a matter of um, days or maybe a week or two.

The ju it'll have to be proved by a judge.

The families of the victims will complain vociferously.

But by um, the middle of the summer, late in the summer, this will be a moot point.

The, the Trump administration won't be able to legally uh intervene and try to change any of these issues.

The Trump administration, if there is one will be able to make major decisions about regulating the company, about overseeing its production, about what happens on the production line and so on.

But in terms of this legal settlement relating to the previous crashes, I don't think that the Trump administration will be involved whatsoever, Mike, what do you need to see from Boeing in order to believe that there's been a significant cultural shift internally at the company?

Well, I think after this deal comes down, probably Calhoun will see the front door.

He should have been kicked out the door before.

I mean, he is responsible for this.

Hopefully we will see a new improvement at the FAA.

They're responsible for the oversight and they, they failed before the max.

Now they failed since the max.

But the big thing is there'll be a symbolic uh basically kicking him through the, the goalposts of Boeing and getting rid of Calhoun who they replace him with.

I don't know, but Boeing can't sit any longer like this acting like they're doing things when they're not going forward.

I think Boeing will have to have a totally different management and I do think this legal activity will probably force the rubber snap board to do something.

I wanna stay with you here, Mike.

Uh Obviously there's been a lot of discussion about any potential new CEO to come in at Boeing.

Uh Is there a name that you have not heard, discussed that you think potentially has a chance of getting that CEO or would be open to it, given so much volatility that that executive would be inheriting.

It's a very tight, what they should hire is somebody who's very tight and knows some engineering, knows some of it, but also knows how to re re re rebuild a company.

I mean, the problem with Boeing is they, they inherited people from mcdonald Douglas who didn't know anything.

They inherited a whole bunch of people from GE which are, which were really good at tearing companies down rather than building them.

So I think it's gonna be a very hard thing to find somebody.

I think there's someone out there.

I don't have a name, but it has to be somebody who wants to go in there and not be a rubber stamp and does understand that Boeing needs a whole new product line in five years.

They're gonna be in a world of hurt because they haven't invested.

That's what we really need.

Mike Andy.

Great to see you.

Thanks so much for joining us this morning, Mike Boyd Boyd Group, international president and Andy pastor, who is the former aerospace reporter for the Wall Street Journal.

Great to see you.

Thank you.

Thanks.

We're just getting started here on the morning brief, coming up in video, getting a price target hike from one Stanley.

We've got some top trending tickers.

Next plus France is far right, leading the first round of elections.

What this means for the markets internationally.

Later on in the show, we've got all this and much more.

You're watching Yahoo Finance Morning Brief Morgan Stanley hiking its price target on NVIDIA to $144 from $116 and reaffirming their overweight rating saying it has the most compelling narrative in the A I and semiconductor space here.

There.

You're taking a look at the rating, the price target and the logo on screen.

They say they're not pounding the table at these levels given the sharp appreciation since the last earnings report.

But as they transition ultimately from H 100 to H 200 then Blackwell visit visibility and backlog will improve materially they expect.

Writing in this note.

Yeah, it's interesting because I I've been speaking with some analysts about the Blackwell chip for another piece that I'm working on and there's not transparency from NVIDIA about the cost of each individual chip on each generation.

But the estimate for a Blackwell chip is in the neighborhood of 35 to over $50,000 per individual chip.

And each customer is gonna be buying a heck of a lot more than one of those chips.

And it's all profit margins for NVIDIA.

They're looking at over 75% on the margins here for that product.

So when you think about the fundamentals like that, it's difficult to have an argument against the stock.

Having said that I watched a powerful Tik Tok this weekend that reminded me to always look at the risk for every stock story.

So I thought I needed to work that into my own coverage here at Yahoo Finance, the risks here, right?

That the A I chip purchasing could be cyclical, that this could be a one time thing and that all these companies investing in A I could decide.

Actually, we don't really know what to do with this.

So we're going to taper down our investments and just stick with the chips.

We already have, see how they work and then come back to this narrative later that could hinder videos growth moving forward.

Also big potential risk here is the geopolitical volatility that we're seeing in the South China Sea.

If we do see any type of invasion of Taiwan, that is where TS MC is located, that is the manufacturer of all of these chips that would be a huge headwind, not just for NVIDIA, but for all of the chip makers in the space and could be a huge headwind for the chip makers if that geopolitical risk which is very difficult obviously to price in did come to fruition.

So there are some risks to come despite this call on NVIDIA here.

Now, shares of Chinese EV makers are on the move this morning, we've got Neo X Pang and Lee Auto moving to the upside after the company reported better than expected delivery numbers.

The trio delivered about 100 and 96,000 vehicles in the second quarter.

That is up about 47% year over year and up from the 132,000 cars delivered in the first quarter of the year.

You can see all those names here moving to the upside.

But Brad, it's interesting when you talk about these deliveries because we're going to be getting Tesla deliveries here tomorrow.

And I've been getting a lot of notes in from analysts saying that the next six weeks to come are a huge potential catalyst for Tesla stock.

You've got uh their earnings coming out in a month here, which is crazy.

We just wrapped up earnings, we're already rearing back in and we've got those delivery numbers here uh as well.

And then of course, you've got consistent commentary from Elon Musk, which tends to move the stock.

So a lot of movement in the EV space and then you have the tariffs in the background are coming from not only the US, but also Europe, the impact that that could have on these Chinese ev makers obviously not having that big of an impact here on the day.

Given this news about the delivery numbers, Brad.

Yeah.

And for the names that are on the screen right now and Neo Xang and Lee Auto, of course, this is a read into the all important Asia Pacific market where Tesla is trying to grow its own positioning.

And so it will be easy or interesting to see where the numbers overall.

I come in for Tesla.

Of course, if we get any break out on Cyber truck, we probably won't.

But hopefully we start to at this juncture because of the way that it's been broken out before where you get the three and the Y which are really the lion's share of production and deliveries plus, then the S and the X which are, you know, at this point, um trimming continuing to, to move lower.

But then once you kind of factor in the cyber truck and the deliveries, I I've seen just a wave of ugly cyber trucks on the road.

Um whether that be in the decals that people putting on them or just in the clunkiness of them on the roads.

But all these things considered, it will be interesting to see if they do break out Cyber truck officially since recalls are really the only way that we know how many they've been able to put into the market that aside, Neo has had a stinker over a year when you look at the stock price, it's down by about 50% year to date.

So, yeah, a pop here this morning.

But ultimately, there's still a lot of road to be proven for each of these companies that you're looking at on the screen.

Don't buy Brad a Robo taxi.

That's my take away.

No, no gift of I would ride in a robo taxi.

Not first, but I would ride, I would ride in it at least once.

We see.

Let's also talk about La France, uh French markets, they're ticking higher here this after the far right, winning the first round of the country's snap elections but failing to secure an absolute majority which eased investors concerns about an outright victory to discuss.

We've got Yahoo Finance's very own, Kiko Fujita Monami.

All you again.

According to you, Brad, the cac 40 index is pushing higher, but it's paring back its gains after jumping nearly 3% in the first minutes of trade.

That initial investor relief that far right leader Marine Le Pen's national rally failed to gain an outright majority in this first round.

Now turning to caution with that second round of these parliamentary elections coming up this coming Sunday, President Emmanuel Macron called snap elections last month saying France needed in his words, a moment of political clarification after far right, candidates made huge gains across Europe in European parliamentary elections that turned out to be a huge miscalculation.

Take a look at the results coming through the far right took 33.1% of the initial vote.

The left wing new popular front captured roughly 28% leaving Macron's centrist alliance with just 20.7%.

Voter concerns in France are going to sound very familiar to Americans here.

Immigration and inflation.

The high cost of living really key concerns here.

The national rally putting a staunchly anti immigrant message front and center and that really resonated with the voters there this morning.

Both leftist and centrist parties are scrambling to prevent the far right party from gaining an outright majority in the National Assembly.

The parties have until Tuesday to pull candidates off the ballot to try and consolidate some of those votes for investors there.

Serious concerns that a government led by the far right or the left would lead to more spending in the way of fiscal policy adding to a growing budget deficit.

There's also concerns about the long term future of the euro.

Now we have seen the euro edge slightly higher although it is still weaker than where it was before the snap elections were called the best case scenario for markets.

According to most analysts right now, a hung parliament that would not necessarily lead to significant policy accomplishments, but pretty much the status quo, but of course, we still got another round to go and we'll be talking about that next Sunday guys.

All right, Akiko, thank you so much as always for joining us on that, we really appreciate it.

It's very interesting.

Given what we're seeing in this election, we're gonna talk a little bit later in our show about the likelihood of Macron dropping out in order to consolidate those votes here.

And as Akiko was mentioning, we did see some movement in the C overnight to the upside le pen, not doing as well as anticipated but cool off a little bit this morning as we head into the bell here in the States, just seconds away from the opening bell.

You still do have pretty much an action packed week even though it's holiday abbreviated uh fed chair, Jerome Powell gonna be speaking in Portugal, fed president of New York, John Williams also in Portugal.

So a little uh Euro trip for both of them here there.

You're taking a look at the NYSC and the NASDAQ.

We've got bells, folks.

All right.

Toga ringing the opening bell at the NYSC ticker symbol.

Tog A toga.

And then you've also got break through T one D looks like they're over at the NASDAQ.

Great group of folks that you see opening the uh opening the bell in midtown Manhattan.

All right.

That does it.

We're underway here as we start the third quarter of 2024 the second half of 2024 I might add as well.

Taking a look at the Dow, the S and P 500 the NASDAQ, you're seeing gains across the board to begin things.

All right, happy face on that one dow is up by about a quarter of a percent.

You're also seeing the S and P 500 up by about 2/10 of a percent.

The NASDAQ composite starting off on a positive note up by about two tens of percent as well.

It is.

And it's interesting given that I want to pour some cold water on the optimism here.

Fewer than half of the major markets rose as the share of stocks trading above their 200 a day moving average fell in the month of June.

So definitely some question marks remaining here about the consolidation that we are seeing.

Let's get to it with Yahoo Finance is very own.

Jared on what is moving markets far after that opening bell about a minute ago, Jared, what do you have for us?

Yes, we have a bullish start to the new quarter and this is as expected.

I've been running seasonality numbers over the last couple of weeks.

We've been sharing them.

I'm writing about it in tomorrow's morning, excuse me, in tomorrow's morning brief, excuse me.

In fact, we've been up nine of the last 10 weeks in stocks.

So let me just show you what Ryan Dietrich has prepared for us.

This is his own seasonality studies.

But a lot of these are basically saying the same thing S and P 500 up double digits at the mid point of the year, full year has never been lower.

And it's up 25.1%.

On average, the rest of the year up, uh average of 7.7% nearly 83% of the time.

Are they positive?

So this just goes to show you that what we're seeing right now, probably going to continue but not necessarily throughout the entire period.

I do see some weakness potentially in August, September and October.

Uh but let's get back to the markets.

Now, I did wanna check on on the sector action, excuse me, tech was an early leader, but it is in the red right now.

Utilities is leading the pack and I got to check in on crypto, excuse me guys.

Uh Bitcoin is up 2.3% and we can see there you go just about at the flat line.

All right, Jared.

Thank you so much for joining us.

We really appreciate it and interesting again to see not only the movements in Bitcoin but some of the broader market action that we are seeing as we kick off the start of this year.

As I said, we are just kicking off the first trading day of the second half of this year.

We're going to be speaking with the strategist on what you can expect for the rest of the year after this break.

But for now, we are looking at gains as Jared was mentioning across your screen and actually coming back off of the high of the day from the free market here but still up about 3, 10 of a percent attack heavy.

Now, back up about a quarter of a percent stick with us.

Markets are edging higher to kick off the second half of the year.

That is after an A I fuel rally in the first half, driving two thirds of market gains to discuss what we might see for the second half of this year.

We've got Jeffrey Klein Top is Charles Schwab's Chief Global Investment strategist and managing director, Jeffrey.

Thanks so much for being here.

Look, I feel like we've had this question mark about consolidation evaluations for quite some time now.

At what point do you see that question mark becoming a real risk to this market rally?

You know, we've been fans of, of A I and A I stocks for for quite a while now.

But we're, we're tempering that enthusiasm actually looking to leadership from sectors like financials and energy and materials in the second half of the year.

You know, a very unique thing happened in the second quarter.

That's only happened five times in the last 30 years and that's the indexes were up on average, but the average stock was down for the S and P 500 the index was up 4.3% in Q two.

But the average stock in the S and P 500 was down 2.8%.

And that was true around the world.

We could even see it in the all country world index from MS C I.

That was the, the average stock was down 1.7% in Q two.

Even though the overall benchmark itself was up 2.4.

And you're right, it's all about A I.

And so that increase in concentration of performance in Q two is something we have not seen in a long time.

So yes, A I is outperformed for a while, but it's the only thing seemingly outperforming in Q two.

And I think the risks to the market in Q three tied to that very narrow leadership suggest that investors should look for some diversification out of those handful of stocks.

When can investors know that it's the right time to begin taking profits in their A I trade?

Well, when they can see that there are opportunities elsewhere, there are a number of other parts of the market that are much more attractively valued and an increasing earnings momentum.

You know, one of the things that we've seen over the last four or five quarters is that A I stocks have driven almost all the earnings gains.

In fact, the average stock has seen earnings losses in the last four quarters on a year over year growth basis.

That changes.

Now we're actually starting to see here in the third quarter earnings even outside the US, the earnings for the Euro 600 index or the Euro stock 600 index are expected to grow faster than those in the S and P 500 this quarter.

So you're finally starting to see earnings growth that exceeds that of the US, uh exceeds that of the tech sector outside of that.

And I think that's the turning point here in terms of relative performance, Jeffrey, I also want to talk to you about what we're seeing in terms of global elections, obviously following the news of Marine Le Pen's success overnight in France.

Uh but also we are seeing this global push towards more of a populist policy regime.

To what extent could that reverse some of the inflation progress that global central banks have made?

Given some of the policies that do come with populism.

It's a great point when we talk about widespread tariffs and it's not just the US that's talking about increasing tariffs.

Europe has talked about that.

Uh Japan, many countries, Canada are focusing on that.

So when we have multiple barriers to trade and increasing tariffs around the world, well, that certainly does risk higher inflation also a slowdown in the increasing momentum in manufacturing, you know, manufacturing was in recession last year, we've finally seen a recovery there that's helped lift economies like Germany out of recession.

But the concern is that export growth then begins to weaken for manufactured firms.

So the recovery we've seen and that the uh the decline in inflation is at risk from populist policies.

We'll have to see how much to actually take root should these populists win?

Uh France will be an interesting referendum on that.

Of course, we've had elections in India and Mexico where we did see populists win and stocks sold off 6% when they reopened.

Uh It will be very interesting to see what happens on Sunday.

And then of course, on July 4th in the UK, when we've got maybe the uh the, the election going the other way towards the labor Party.

You know, Jeffrey as, as we think about the back half of this year.

I mean, it really does come back to what the pathway of inflation looks like where employment situation holds up in the dead in, in the um in the fed's dual mandate here.

All that considered it.

It's really just trying to price in when we see some interest rate cuts for the FED.

You know, how are you looking through their calculus and what they've been signaling thus far, we all year have been penciling in about two rate cuts from the FED.

So we were uh way behind when the market was thinking there was going to be six.

And now we, we're thinking that, uh you know, we're, we're big ahead of the game as the markets pondering whether there'll be any at all.

I still think we're going to see the moderation and inflation necessary to get the fed to those one or two rate cuts later this year.

Uh That should begin to weaken the dollar, which is something that should help international investors or, or us based investors investing internationally.

Finally see some of those gains translated back into dollars.

Japan's stock market's up like 18% this year, but in dollars only about 6%.

So getting that stabilization in the currency could be really important in the second half, Jeffrey Kleintop Charles Schwab, chief Global Investment strategist and managing director, Jeffrey.

Always a pleasure to grab some time with you.

Thanks for having me.

Thanks.

We've got all your markets action ahead.

Stay tuned.

You're watching morning breath oil prices are moving higher this morning.

You can see on your screen here wt I crude and Brent both moving to the upside and this comes amid a resurgence of geopolitical risks globally and increased demand driven by summer driving.

Joining us to discuss his call on the price of oil is Andy Lipo Lipo Oil Associates pre President Andy.

Thank you so much for being here this morning.

Talk to me about your call for the price of oil and what you think will get us there by the end of this year.

Well, good morning and thank you for having me.

I think the biggest fear in the market is the geopolitical tensions that we're seeing in the Middle East, especially as Israel is reducing its fighting over in the Gaza area, moving troops to the northern border with Lebanon in anticipation of more violence with Hezbollah, which ultimately could bring Iran directly into the conflict.

And that's the oil markets concern because that could spread to interrupting supplies throughout the Persian Gulf region.

So between that, as well as increasing demand from now through the end of the year, I'm expecting to see Brent crude oil prices drift up to about $90 a barrel.

Andy, you know, one of my, um, kind of sub things to watch for the rest of this year with, you know, I had to put on the back burner and say for this conversation, fortunately was what OPEC may do on the supply side towards the end of this year.

What, what are you anticipating the actions could be for how they, they might actually spur or put even more supply into the system and, and what that would mean more broadly?

Well, in early June, OPEC Plus surprised the market in the sense that not only did they extend their production cuts to the end of September, but they did decide to start reducing those production cuts beginning in October and those voluntary production cuts of course were led by Saudi Arabia and Russia.

It's easy to see that OPEC Plus is the market before they could do it once again.

If crude oil prices were to remain in the $80 per barrel range, they could extend those voluntary production cuts to the end of the year.

But the initial announcement from OPEC Plus was reacted quite bearishly with the oil market as they saw more supply coming on to the market sooner than expected.

And how does the presidential election play into your outlook here?

Because there are many who come on our show to argue that the president will do whatever he can to keep the price of oil down heading into November 5th.

Well, the Biden administration is certainly taking a number of steps to do that, whether it's releasing strategic petroleum reserve, crude oil last year or this year recently releasing gasoline in the strategic petroleum reserve in the northeast, I think post the election, it's difficult for either administration to control the world oil market.

The best they can do is through our foreign policy of exporting additional quantities of energy allows us to have more of an influence in those markets.

But one can see with the geopolitical tensions in the Middle East, the United States influence is really limited.

Well, I want to end by going global with you here.

And the I know that there is a lot of risk globally here.

You've got Ukrainian drone attacks on Russian refineries.

You've also got the potential growth story in China.

You also have the tensions in the Middle East, which of those seems to be the biggest geopolitical risk in terms of the potential impact on crude moving forward here.

I certainly think that it's in the Mideast, what we've seen from Russia and Ukraine is that over time, Russia has been able to skirt the sanctions.

And in addition, you know, the China growth story, you know, continues to enthusiasm in the oil market.

We just saw that China PM I was down to 49.5 last month, which is the lowest it had been in the last five months.

So of course, that is always dampening the enthusiasm on oil prices.

And who is the lipo oil associates?

President Andy?

Thanks so much for taking the time here this morning.

Thanks for having me, everyone.

We've got much more coming up on the morning, brief, stay tuned.

Democrats facing what could be a brewing crisis here.

The political party is torn over whether President Biden can take on former President Donald Trump in November.

The first debate of the 2024 election cycle kicked off last week.

Biden's performance left voters increasingly concerned around his age raising questions as to whether or not he should drop out of the presidential race and how Democrats might replace him for more on what this could mean for markets.

We've got Brian Gardner who is the steel Chief Washington policy policy strategist, Brian.

Great to have you here with us.

Ok.

So just the likelihood that we would see any replacement at this juncture, especially considering how much they were continuing to push out some of the campaign and, and rally in Waffle House videos over the weekend.

Yeah, so I, I it's less than 5050 that, that the president uh would drop off the ticket.

Um But it, it clearly is not zero.

I, I have it around 40%.

Um uh Clearly going through the weekend, there was pushback from the inner circle from the Biden family.

Um So the, the, the tea leaves right now suggest that he's not going to drop off at the same time.

Anybody who watched Thursday night knows that there are challenges uh for the president going forward uh and for the party uh more broadly.

So you can't dismiss the idea that there, there, there will be an effort to persuade him to drop off.

The idea that he would be pushed out is, is very, very low, uh almost zero, but that he could be persuaded uh to, to step aside, you know, it's not zero, but, you know, it's, it, it doesn't look like we're heading in that direction.

Do you think that he should, Brian?

No, I, I it's tough for me to say, um you know, without sounding partisan but look, you know, I, I think people can look at at the debate the other night, um especially people who have situations with friends and family who are older.

Um in their older years and you see how age progresses.

And so the question is not just, can the president go up against Donald Trump in the upcoming campaign?

How effectively can he serve and uh and be president in another term?

That's a very serious question right now.

Um II, I think to an objective observer who watched Thursday night, the answer is probably no.

And so I, I, you know, it's not for me to say because I'm not part of the, the Biden family, but they, they need to have a very serious conversation right now.

I also want to get your take, Brian on a new CBS news poll showing that an increasing number of voters do not think Biden should be running after that debate over 70% of them saying to your point that he does not have the cognitive health to be the next president of the United States that is up from 65% previously there.

Given that polling, I am curious from your perspective, if Biden were to drop out of this race, how does that impact, who could potentially get into the White House next year?

Right.

It looks like increasingly voters are not thrilled with the idea of Biden being in the White House.

Does that necessarily mean that they would be thrilled with whoever else goes up against Trump?

That's a great question and, and it probably gets you back to the answer of why he probably stays in because the selection process to, for Democrats to pick a replacement could be disruptive, chaotic, uh fracture the party.

Uh You know, you start with his vice president who has her own um political weaknesses, um does not poll particularly well, if you go beyond her to other Democrats uh around the country, um who may not have a strong base or a national base of support.

Um This is a very complicated process once the, if, if President Biden were to step aside.

And so, you know, I, I think there are probably people, you know, within upper echelons of the Democratic Party who may not be happy with how things went on Thursday night.

But they also know that the alternative isn't all that great.

So, yeah, I mean, there would be a conversation of the Vice president of Gavin Newsom Gretchen Whitmer, a host of other Democrats getting from where we are now to replacing Biden is uh is not an easy task.

How has the questions and commentary from your peers at stel, from your clients evolved since post debate?

I imagine the types of questions you were getting right after the debate.

How is that conversation changed through to today?

You know, I, I think they reflect what's been going on in, in, in the broader population.

Um Just a lot of surprise to a degree of shock um at, at the performance on Thursday night.

Um I, I think there's a reflection that the odds of a Trump victory uh have gone up.

We were kind of evolving slowly in that direction over several months with both with the investors becoming um more confident or believing that Trump was more likely to win.

Um that jumped up um after, after Thursday night.

Um But I, I think those conversations generally are, are one, you know, what sectors do.

Well, um how does the market react, but also just the, the general sense that reflects everything you've heard about what you guys have been talking about on your shows and what you've read in the media, is there a leading candidate you believe could replace Biden?

I think you have to start with the vice president.

Um You know, she would, she would have a big but not insurmountable advantage.

She would, she, uh she would inherit the Biden campaign, the Biden fundraising apparatus.

Um I, I think the president himself would probably lean into her candidacy a little bit uh for two reasons.

Um One to validate his selection of her back in 2022.

He's been a vice president.

I think he's very sympathetic to what Kamala Harris goes through every day.

Um It's not easy being vice president, you have the president's staff kind of carping at you all the time.

Um um So, II, I think you start there um after that.

Um Then, then I think it's an open, very open field.

All right, Brian, we're gonna have to leave it there.

Thank you so much for joining us this morning.

That was Brian Gardner.

He is Steve Fs Chief Washington Policy strategist.

Now coming up, we're gonna have some breaking manufacturing data from the ISM at the top of the 10 a.m. hour.

We're gonna dive into those fresh numbers on catalysts next.