Implications of Biden's China tariffs, meme trade: Catalysts

Catalysts Hosts Seana Smith and Madison Mills cover the latest developments in the latest meme stock trading frenzy and the Biden administration trade policies as it unveiled an array of new tariffs against China.

Kicking off the show, the resurgence of the meme stock trade is in focus. Various guests, including Newton Investment Management's Chief Investment Officer and Head of Equity John Porter, The Kobeissi Letter Editor-in-Chief Adam Kobeissi, and IG North America CEO JJ Kinahan, unpack the implications of this phenomenon for investors and the broader market dynamics.

Shifting gears, the show delves into notable announcements from industry titans: Comcast's (CMCSA) unveiling of a new streaming bundle, Alphabet's (GOOG, GOOGL) autonomous driving unit Waymo facing an investigation, and Uber's (UBER) potential $950 million acquisition of foodpanda's Taiwan segment take center stage.

The show also tackles the Biden administration's new tariffs on Chinese imports, with Yahoo Finance Senior Columnist Rick Newman providing insights into how this move may impact the upcoming election. Former Home Depot CEO Bob Nardelli also weighs in with his comments on this administration's decision.

This post was written by Angel Smith

Video transcript

10 a.m. here in New York City.

I'm John Smith alongside Madison Mills.

Welcome to Catalyst.

It's Tuesday May 14th.

Let's dive into the callous moving markets today.

Inflation data briefly pressuring markets with the higher than expected month, over month PP I number but revisions in the prior month, lessing the impact of today's upside.

Surprise stocks looking to the upside off of the news after that next report there.

And President Biden, a big announcement from the White House coming trade tariffs on China setting up his battle here with former President Trump ahead of the election.

The tariffs are going to apply to $18 billion worth of Chinese imports.

Notably, the president is also maintaining more than $300 billion in Trump era duties on China.

And the main stock rally continues but not good news for everyone.

The rally costing short sellers nearly $1.5 billion more volatility expected to come.

Well, stocks are moving to the upside here is new inflation data showing that prices are remaining stubbornly high producer prices coming in above estimates across the board.

The core number which excludes food and energy rising 510 of a percent month over month that is compared to the 0.2% rise that was expected in the prior month.

Lessening that impact of the surprise here.

So what could this mean for the Fed and for markets joining us now on this, we have John for new Investment Management chief Investment Officer and the head of Equity John.

Thanks so much for being here.

We are expecting to hear from Fed Chair Powell any second this morning.

I'm curious from your perspective.

What does he need to address from this PP I, if anything?

Well, from this print in particular, I don't think he really needs to address anything but what the markets clearly want to hear from him is that he's committed to a path where the next move in rates is down and I I don't think that we're going to hear him wavering from that narrative.

All I think that that's the primary area of focus right now is, you know, a focus on when the next cut is not.

If, if the market starts to debate the possibility of rate hikes, that becomes a much bigger challenge for the market to digest in my opinion.

Is that something that you think is on the table, John, I don't think it's on the table at this point.

I think the fed knows that underneath the covers of an economy that looks pretty strong on the surface, there are some unmistakable challenges from, from the current level of interest rates.

We've certainly seen, seen it in the turnover of exist homes.

For example, you're seeing it in some of the small business formation numbers, you're seeing it in small business confidence.

So I think underneath the surface, they know that the higher rates are really pinching some corners of the economy, but the agri economy is solid right now.

Well, I want to switch gears a little bit to talk about the earnings cycle.

Our colleague Josh Safe for has a story out on how earnings growth for the S and P would be over 8% versus the 5% move if it wasn't for Bristol Myers earnings.

How do you ride the momentum of this market as we're wrapping up the earnings season?

And as we know that one stock can put that much of a damper on any momentum from the earnings rally.

That's, that's absolutely true.

There's a, there's a handful of stocks that because of this, the, the magnitude of their earnings, they can, they can distort the, the, the, the total picture.

But I think if you step back and look at earning this earnings season, it was a very strong earnings season across the board.

On average in the S and P 500 the average company beat earnings estimates by somewhere in the neighborhood of 8 to 9% which is about double the normal beat rate.

So this has been a strong earnings season and importantly, it's you know, well, there have been a handful of very large companies that have had a big impact on that.

The breadth of the earnings improvement has is continued to improve.

And I think that's leading to a bit of a broadening out of the market so that as the earnings season does start to wane here, I know that you said that that's responsible for a lot of the momentum.

What will be the next catalyst for the market is earnings does wrap up?

I think we're back to focus on the macro as, as you mentioned earlier, Madison today, the, the, the the detailed analysis of, of PP, we're going to get CP I tomorrow, there's going to be continued focus on the macro.

It's really remarkable to me that we're sitting here in mid May with a broad market up eight or 9% so far and we've gone from an expectation of of six rate cuts at the beginning of the year to now just one or two.

The resiliency of the market in the face of of much more modest rate cut expectations is very impressive to me.

I think the the focus is going to continue to be on all the inflation headlines to assure us that the next move is down when it's going to happen is a very difficult question to answer.

But as long as the market continues to feel the next move is down, I think you've got a good support for the for the broad market here, John, when you take a look at some of the moves that we are seeing, you got to talk about or you got to take a look at least the meme rally and what we are seeing in gamestop, but we are seeing in a MC.

I'm not gonna ask you to specifically comment about that rally that we're seeing in those specific memes, but I'm curious from a macro perspective.

Should we be paying attention to this at all?

And why and why not?

I Sean, I wish I had a better answer for you.

I don't know.

I you absolutely should be paying attention to it.

The question is, what's the message?

What, why, why is this happening?

What's what's underlying this, this move in markets?

If you step back when we had a meme stock rally, you know, back in 2020 2021 when it was all the rage when you really got behind it, there was a, there was an undercurrent of liquidity there that was an important call for what was going on.

If you really understood the implications of liquidity, both in terms of, of, you know, juice for the market, but also to, to the, the the opportunity for, to create inflation challenges, it would have been a real some really important issues to understand.

And underneath the surface of that mean stock rally, is there something like that happening today?

It's, it's too early to tell we're 24 hours into this mean stock rally.

But as a fundamental long term oriented investor, I'm certainly cognizant of any short term volatility and trying to understand if there's a turning point in the market that I need to to to have a better grip on.

And John, that's what I was curious about just this exuberance and maybe the signals that is in the market clearly.

What ultimately this could essentially mean even with Powell, he has commented on the meme rally in the past going back a couple of years, but even how the fed could potentially be looking at some of this excitement, then what that ultimately means here for the broader markets and for strategists like you.

Yeah, I would, I would hope the fed like myself is paying attention to everything, but you also need to have it in, in, you know, keep things in context, I mean, the US economy is what 22 trillion or, or something of that magnitude.

So uh uh you, you mentioned off the top the the losses that shorts had in, in games, stop and, and so forth over the last 24 hours.

Those are a small drop in the bucket in this matter, ocean, ocean of our economy.

But again, the FED is not doing their job.

If not, they're not paying attention to every marginal incremental data point trying to understand it when you look across other parts of the economy.

There's plenty of evidence that there's some, some, some challenges underneath the surface in the economy that the FED needs to be mindful of and be cognizant of.

When they think about the rate policy, when you look at some of the consumer data points in, in, you know, Q one earnings, you saw some evidence that the, the pinch from inflation is, is starting to be felt by consumers.

You're seeing on the margin of some slowdown in, in, in certain cohorts of consumer behavior.

And I suspect the fed is much more worried about that than they are uh one or two stocks adding a few billion in market cap.

All right, John Porter, always great to get your insight here.

Thanks so much for hopping on and joining us here this morning, Newton Investment Management, Chief Investment Officer and head of equity.

Turning now to President Biden announcing new tariffs on $18 billion worth of Chinese goods, imports on batteries, semiconductors and other materials made in China will see levies double or triple to as high as 100%.

In the case of S President Biden also keeping in place $300 billion worth of levies from former President Trump that he to put on imports from China in 2018 and 2019.

So is Biden's decision motivated as much by the upcoming election as it is by us China relations?

Joining us.

Now we want to bring in our very own, Rick Newman and you're the perfect person to ask, what do you think two things are going on here?

So the Biden tariffs, first of all, they're pretty small, they're pretty small relative to what Trump did and analysts I've been following saying they might be so small that China does not even retaliate against these tariffs which will be good.

Um So, first of all, they do fit with what Biden has been doing his whole term, which is incentivizing the development of certain industries here in the United States or the redevelopment if you will reshoring and we know what those are, I mean it's semiconductors that that was the chips act that he signed in 2022 electric vehicle technology, green energy, the green energy transition and all the the supply chains that go in that that was part of the Inflation Production Act in 2022.

So what Biden is doing now is he's just making it more expensive to import those types of things from China.

And pretty minor, I mean electric vehicles, for example, there are practically no Chinese electric vehicles on sale in the United States at all these days.

So the 100% tariff there is meant to keep them out.

That's the first thing.

Number two definitely targeted at swing state politics because that's, you know, these are the key states, Pennsylvania, Michigan, Wisconsin, think about those states, there's a lot of manufacturing there, auto industry and other types of manufacturing.

Biden wants to be able to campaign in those states and say I'm looking out for the workers here.

So that's another thing this is about and this is kind of in line with some of the work that we saw from former President Trump to a degree.

I'm curious which strategy seems to be more effective at winning voters from those candidates.

Who knows?

I mean, I mean, we'll find out, I guess anyone knows that.

I mean, you know, for as much as we, you know, we geek out on these policies in the news industry.

I mean, there's been some really interesting research showing that people don't have any idea what Biden has actually done in office.

They are just tuned out.

Um, I mean, people are busy, you know, some people are working two jobs, they're trying to figure out how to, you know, manage the kids and you guys know, know the drill, right?

I mean, so people aren't tuned to, uh, you know, Biden's youtube channel to figure out what he's doing about Chinese tariffs.

So, you know, the real question is, will this break through enough?

And uh we're going to talk, we've talked about this already.

We'll talk about a lot more in the next six months.

But, you know, this election is going to come down to a really small group of swing voters in probably five or six swing states.

So, uh whatever, either one of these candidates can do to win an extra.

I mean, we're talking about, you know, 5000 voters potentially if you can just get a few people from this union or that union shop to show up, maybe get their spouses, family members to show up and vote for you.

That sort of stuff could swing the election.

So that's a big factor in what's going on here.

All right, Rick, thanks so much for bringing all of that down.

You are going to be joining me now and just about actually two hours from now, we've got live coverage of President Biden's speech that's coming up at 1210 pm Eastern time this afternoon.

You won't want to miss that.

All right, let's talk about another big story that we are watching today and that is the return of the meme rally, Gamestop A MC and Blackberry extending the gains that we saw yesterday and it's extending into today.

The surge initially sparked when a big name behind the 2021 meme stock rally, Keith Gil known online as roaring Kitty.

He returned to social media posted that meme that we showed you guys yesterday.

But what could the impact have on the broader markets?

We put that question to Megan Horn in last hour.

She's Vernon's Capital Advisors, Chief Investment Officer, and here's what she had to say about that.

Now, we're seeing this specula speculation trades, the fear of missing out.

This is all a bigger risk to the market.

This is why we think we can still see at least a 10% correction.

So Marie, she's saying that we could see at least a 10% correction.

She's talking about what this means in the context of the macro investor, the macro environment, how closely you should or maybe are paying attention to this.

But the moves though and what this signifies, you go back to the euphoria that's playing out in the market, you go back to maybe how closely fed Chair Powell is looking at this recent moves and what exactly this could signal.

We're still very, very far from those 2021 levels.

But we are starting to talk about what we did, what we were discussing what, three years ago, longer than that just three years ago.

Well, a lot has happened to your point but, and it was a great question that you asked our guest earlier about what it means for the Fed and what it tells us about the loosening of financial conditions because the idea should be that consumers and retail investors are not able to invest the way they were a few years ago because we've had this record breaking interest rate hike.

You should have as much liquidity on hand to be able to throw at some of the stocks that have no fundamentals back of their value at the current moment.

So it's interesting to look at it from a perspective of whether or not the fed is going to be bringing up the meme stock return of the stock rally here in the upcoming page book there, particularly given just the run up that we have seen.

We also have this A MC fundraising deal of the at the market offering, letting them create new shares opportunistically to finance their debt.

That is also leading to some of the gains were seen in A MC and really across the board for a lot of the various stock was also interesting.

Um Josh Shaver Marcus reporter sent this over has some stats from band to research.

And it's interesting here because we a lot of times when we talk about the meme R, it's associated to what happened in 2021 and just to put a little bit more context on what we are seeing right now.

GME salt net inflows of just around 15.8 million A MC attracted 37.5 million on Monday.

Now, for reference, that's a far cry from what we saw play out in 2021 those two socks in January 27 2021.

So 87.5 million of inflows and 100 and 70 million of inflows for A MC respectively.

So not exactly at the levels that we were looking at back in 2021.

And I think also the question out there for so many people is what this participation looks like from a retail trader perspective versus institutional involvement, at least coming out of uh the guys over at Vander research are saying that this doesn't mean that retail didn't have an impact this time because roughly GME registered roughly 7% here.

Sorry, let me go back to the past five trading sessions.

The average retail share of turno turnover for GME for gamestop registered roughly 7%.

It was about 10% for A MC.

So it doesn't mean that it didn't have as much of an impact or as much of influence.

But it does imply that we are seeing institutional investor participation here when you take into account, the larger numbers that also puts in perspective, some of the activity that we are seeing today and what we saw play out yesterday and likely for the remainder of the week as well are coming up a deep dive into Home Depot.

Latest results that we will break that down this week with the former Ceo Bob Nelli on the other side of the break.

Don't go anywhere, do check of the markets here sponsored by tasty trade looking, not a ton of action here actually coming off of the market highs when you look at the S and P and the NASDAQ, the S and P basically unchanged.

NASDAQ is up about 1/10 of a percent and the dow just holding on to gains.

Now, this might be coming from some commentary that we are getting in from Fed chair, Jay Powell specifically related to the producer price index from this morning.

He said it's pretty much mixed.

He said the headline numbers were higher but there were backwards revisions were of course disassembling it taking apart and markets and analysts are looking at it, but he would not call that print hot.

So that might be just enough to push this market to the upside this morning but still awaiting some more commentary from Powell and particularly when he does start to talk about rate hikes.

And it looks like right now he is saying that it's more likely that they would hold policies right where they are for a little longer.

All right, man, talk earnings because Home Depot on the move here this morning there result showing that shoppers are at least for now putting their HD TV dreams on hold.

Consumers are seeking out fewer do it yourself projects compared to what we saw during the pandemic.

And as a result of that, that pull back that we are seeing in consumer spending, same store sales, they declined 2.8% during the quarter for a deeper dive.

We wanna bring in Bob Nardelli, the former CEO of Home Depot.

Bob.

It's great to see you.

So I'd love to just get your reaction to these, these results that we got out from Home Depot this morning.

And this trend that we have seen on the weakening consumer.

What does that signal.

Yeah.

Well, first of all, thank you for having me.

II, I couldn't be prouder of what Ted Decker and the team is doing over at Home Depot.

I think they had a pretty solid quarter.

Again, given the challenges that we're facing in the economy.

I think that, uh, you know, again, his proposed acquisition of SRS for 18.9 is a knockout punch.

Uh, he'll add that to the home supply business.

He'll own the pro customers while still having over 2000 stores to serve the, the residential consumers.

So I, I think they're very well positioned, they're well run, they're organized and I think they got a terrific product offering across the board in all of the SKU that they have over there.

So I, I think what is happening is some of the discretionary projects that were done during COVID post 911 when the home became a sanctuary are now being deferred.

Why are they being deferred?

You know, we talk a lot about the consumer is strong and they're spending a lot of money or are they spending a lot of money but getting less volume?

So that's why we see credit card debt accelerating here.

So I, I think they have to be much more discerning in what they're doing.

They're being very conservative about managing their bank accounts and their credit cards.

I, I wish, I wish we were doing that at the national debt level to be honest, with you.

So, so I think Home Depot will continue to be well positioned.

It's well run.

They got over 460,000 associates uh serving, you know, basically across North America and also uh also on a global basis, Bob, what do you mean by spending more or less volume?

Is that a nod to services spending going up?

Now?

Here's what's happening.

I mean, we keep talking about on the news, You keep hearing, well, the consumer is strong.

They're still spending, well, are they spending more because of volume that they're buying or are they really spending more due to inflation?

I, I deal with businesses seven days a week and I would tell you that inflation, we'll see it tomorrow again, is alive and well, I think it's got a long tail.

I'm starting to see it more and more even the specialty materials.

You know, if you think about what we're hearing with Biden, putting tariffs on China on evs, that's not going to help the cost.

You know, most of the EV manufacturers, we heard from Ford losing $100,000 on every vehicle.

We hear Musk now recognizes he's got to put more chargers out there.

It's a charging anxiety.

Now, not the range anxiety the challenge will be, is this country really have the power to support an EV fleet when at the same time, we have a war on fossil fuels.

So the ambiguity and the missteps and the debacles of this administration astounds me.

You know, I think we're, we'll see significant cracks in the economy we have and whoever goes into that White House is going to be hit like a, like a bowling ball with some of these challenges given where, where we positioned our country and the economy and the cracks in the economy.

So Bob, before we get into the tariffs, I'm curious just to get your perspective a bit more on the consumer right now and specifically how you would advise the CEO of Home Depot to Decker, how he should be navigating this.

What is expected to be a complex couple of quarters here because we are starting to see signs of the consumer weakening.

I know you were saying that he's been doing a great job here, but just from your experience as the lead as the CEO of Home Depot, what is it?

What do you think the next couple of months, what the next couple of quarters will likely look like for this name?

Yeah.

Well, there's no doubt, uh Ted and the team do a magnificent job of marketing merchandizing and product selection.

So what we'll see probably at Home Depot we're seeing at the grocery stores, people are trading down on brands, they're going more to opening price points, they're buying less of the high end material.

You know, again, uh with the home becoming a sanctuary, I think people will continue to want all of the comforts outdoor that they have indoor, relative to kitchens, relative to furniture.

You know, when's the last time you saw an aluminum web folding chair in, uh, in the Home Depot store.

So I, I think there'll be, there'll be a, a selection process that goes on and, and they are smart enough to know how to market that, how to position that, how to provide the continuing services.

You know, you may not improve things, but you still have to repair things that are broken.

So they'll focus on how do they maintain that customer service service opportunities to provide the ultimate service to the consumers that they have out there and, and they'll do a great job.

They'll look at, you know, if you get another dollar a cart, it's billions of dollars to Home Depot.

So they'll figure out how to sell the entire project.

If you're coming in to paint something, you get your brushes, your drop cloths, your everything related to the project to save you from making another trip to pay $4 and above for a gallon of gas.

So, they've been through this before, you know, we live through it in, in, in, in the 2000 period and uh they'll come out the other side, extremely strong, very, very strong.

So I'm gonna ask you to put on another executive hat here, Bob.

I'm curious if you were to become the VP of asset protection, what would be the single biggest thing that you would do to prevent theft in stores.

Well, you know, you raise an excellent point.

Uh, you know, we had shrink when I was there in 2000 but it was legitimate shrink.

It was shrink.

That happened as a result of freight handling.

Uh, light bulbs got broken, things got damaged and we spent an inordinate amount of money to put surveillance cameras.

We had a, a, uh observation room and back then we could legally stop someone that was stealing, we could stop someone that, you know, basically it's theft, it's not, it, it's, it's a misnomer to call theft shrink.

Right.

We do it to be polite, but we, we were able to control that.

Ted and his team now are putting security people.

They're adding dogs, they're adding outdoor parking lot surveillance, all of that adds to cost.

And on top of that theft continues to add an inordinate amount of cost to operating that business.

So look, Ted's doing everything he can within the limits of, of the regulations that are out there today until we get serious about it.

I think they're going to continue to have to live with it, unfortunately.

All right, Bob Bob, we have you, let's talk about the tariffs that are, uh, that were announced here today and specifically what it means for the EV industry.

And I'm asking you this as the former CEO of Chrysler.

I'm curious just what you make of the current competition landscape right now between the US automakers exactly the threat if it's really a threat that we are seeing from Chinese ev makers.

And then also just the idea that has been floated by a couple of members of Congress, specifically as Senator Sherrod Brown, who's saying that he actually wants the Biden administration to ban a Chinese EVs outright.

Is that something that should be considered?

Well, I, I'm not, I'm not a big proponent of that.

I think I'm a big free market guy.

And if they look, they have a strategic advantage, they've got all the raw materials.

They've been at it for a long time.

They aren't burdened by all of this green movement.

They're not burdened by a number of these regulations, you know, government taxes, epa S et cetera when I was running, you know, Chrysler or GE we had to compete on a global basis.

So I never had an outsourcing strategy, but I did have a global competitiveness strategy.

So I had to compete with the likes of Seamen's A BB, just like Ford General Motors and a lot of the EV companies here are having to compete with China.

So, ok, you can stop the import of evs.

But how is that really going to grow?

You know, the, the hypocrisy here.

He wants to grow the, the installed base of evs.

So if everybody's losing money, I mean, look at these start ups, 5 $6 billion last year on ev start up because we're buying most of the raw material offshore.

And then we have this increased labor rate.

Look, I'm all for families making a fair living.

We see the UAW now going after a few more auto companies here and, and I understand the purpose of that, but that will come back to haunt us because the cost of the automobile will go up.

And here's what will happen in 2000 when we, when we had the uh an 89 with, with the Obama administration, we had the cafe standard.

What happened?

The average age of the internal combustion engine car went up significantly who benefited the auto stores?

Right?

So here we are again now trying to force EVs when we don't have enough electricity or chargers, we know that A I will dwarf the Bitcoin data centers and it's just going to suck electricity out of the grid and we don't see major investments going into grid because of this war on fossil fuel.

So I, I don't understand, I don't understand the logic, the simplicity of trying to make these ambiguous decisions in what we're trying to do to this economy.

Uh Bob in our final minute together more like 30 seconds.

Here, I am curious in terms of the impact on the market and businesses that make up the market, would legislation against companies like a she and or a team will be more effective at maintaining market momentum.

Than the legislation that we're hearing about now.

Well, she is doing a great job again.

They, they really have come up with a business model where they produce a run.

It's attractive.

It's, it's affordably priced.

They ship it in.

I'm very familiar, you know, they have, they have cargo planes going back and forth daily, they do the distribution.

So it's a pretty effective model given the economy and the situation where we are with inflation and still trying to provide consumer solution.

So II I think uh I think they've got a good business model now we can stop that.

I'm not sure the impact of what's going to happen.

Do we just get into a, a trade war?

I I it's like a price war once you start it, how the heck do you get out of it has been my experience.

All right, Bob Nardelli, we always appreciate you taking the time.

Great to get your insight here on a wide range of topics.

Bob Nardelli, former Home Depot CEO as well as the former CEO of Chrysler as well.

Thanks so much, Bob.

Thank you very much.

Let's take a look at Uber shares are off just over 1% here in early trading.

The ride sharing company acquiring delivery heroes, a food panda business in Taiwan, spend 950 million bucks on this acquisition.

Yahoo Finance senior reporter.

This has the details on that and yes, on, on the acquisition would mark one of the largest international deals for Taiwan for $950 million.

U will will will acquire delivery heroes, food panda deliver a business now.

Delivery hero operates in 70 countries but this deal is just for its Taiwanese business.

The acquisition is slated to close in the first half of next year until the closing.

Delivery hero will maintain food.

Panda's Taiwan operations post that acquisition, Uber eats will own all of food panda's local clientele, its merchants, its delivery partners and Uber still needs the regulatory approval to complete this transaction.

Bernstein analysts say that it will face anti trust scrutiny because basically food panda and Uber eats split the delivery market in Taiwan.

The analysts expect a reduction in competitive intensity and also a consolidation of fixed costs.

Uber has said major urban areas in the northern part of Taiwan would see a wider selection if this deal goes through and it does also signal Uber's confidence in the Taiwanese investment climate.

All right.

And thank you so much, really appreciate you joining us on that.

Now, shares of alphabet under pressure as Google's autonomous vehicle company Waymo is probed by us authorities, Yahoo finances pros to Romanian is here with more pros what's going on?

Hey, yeah, you know, it's not just Tesla and GM the crews are having problems with self driving or NTS are probing Google's Waymo as well.

They, they're studying 22 separate incidents where that involve collisions or, or, or instances where the cars may have violated traffic laws.

In some cases, they crash into the objects.

In other cases, the, the human driver was able to disengage the system to make sure it didn't crash into someone or a thing.

Um The probe covers 440 for vehicles that are out there that way, most test right now.

So, you know, look, companies like Tesla, like I said, G MS Crews even Ford having problem solving self driving and autonomy.

Look, it's a hard problem to solve and the stakes are pretty high from a both a technology but also a human sort of safety point of view.

So a lot going on in that space and now Google struggling with that.

What do you think this ultimately does obviously will delay the timeline of this just in terms of mainstream adoption and exactly what that looks like, but just in terms of how much more investment research is maybe necessary at this point and how much of a Capex problem this could potentially be here for some of these companies who are trying to be larger players within this space.

Yeah, if you're Tesla, you're looking at from Musk's point of view, we're gonna invest heavily in A I and, and a machine learning and go with that route, go with the vision learning a route and see how that goes.

Uh Other companies like Ford, for instance, they used to have a big uh Argo A I um A start up joint JV with VW.

They, they actually closed that down and wanted to focus more on assisted driving.

They think that's sort of the, the near term goal, full self driving autonomy to them is, seems unrealistic or is too expensive to solve.

But, but Cruz is trying to do it.

Uh Tesla's trying to do it.

The question is, how long will that take?

And I think that's, that's the problem right now.

Yes, certainly.

All right, great.

Thanks so much.

Well, there's a new streaming bundle in Town Comcast announcing it's going to offer Peacock, Netflix and Apple TV group together at a discounted rate for its subscribers.

Now, this comes after Warner Brothers, Discovery and Disney announced a streaming bundle of their own just last week and shot.

That's interesting because again, we don't have the exact price that this is going to be.

But again, this bundle of Netflix apple TV and Peacock coming after the previous announcement that we got from Hulu Max and Disney.

Now, an interesting side note here today, Nielsen launched the media distributor, gauge cross platform view of total TV consumers across broadcast cable and streaming.

So it's aggregated across all of those platforms.

Taking a look at the best performers there.

You w Disney coming in at number one, interestingly, youtube, number two in terms of viewership and then you've got NBC Universal as the third.

So to see NBC coming up as high as they did.

I don't know what youtube is going to do in terms of these potential bundles.

They're really like winning on engagement and they don't have a big price attached to them.

So it's interesting to see them coming up so high here.

But yet another company announcing a bundle when we know that this is just a return to the old when it comes to bundling a bunch of different networks together for a lump sum.

Yeah.

And I think it also highlights the issue that this industry has been facing here that we heard from a number of analysts here that closely followed the sector and even former executives here that have obviously have a lot of experience within this space.

We've been waiting for consolidation within this.

A lot of that talk has then turned to bundling and exactly what these companies can do in order to entice users to come to their platforms because as it looks like right now and you can see from these numbers, I think excluding Netflix, many of these companies have a saturation problem.

At least here in the US.

People are still many people who haven't cut the cord, they're still spending on cable, those that have cut the cord, they are starting to subscribe to more and more of these platforms.

And it simply, there's, they might even be spending more than they were when they had cable subscription.

So we're seeing a bit of a pullback here from the consumer.

Obviously, this also coming at a time of persistent high inflation, consumers are forced to make some uh cuts here in terms of their discretionary spending streaming offering could be one of those cuts that are on the table for many of consumers right now.

So the larger uh traditional players are trying to do everything they can in order to gain a bit more exposure, a bit more market share within the streaming space.

They're trying to compete with Netflix and they're also trying to do this in the balancing act while not spending too much money and turn profitable here for their streaming businesses.

So it's a tough line to walk.

And I think that is clear from the recent results that we've gone out from Warner Brothers discovery what we're hearing from Disney, even what we're hearing from Comcast.

So they're doing all they can to pull in more subscribers whether or not the bundling is the answer or we're going to essentially see more consolidation within the space.

We can take a look at the new surrounding Paramount.

I think that's a big question for investors right now too.

So good news for some of these stocks, we got Netflix up on the day as well as uh NBC and C. Good news for consumers too, might be saving a little money down the line.

I would love the number of subscriptions I have in general is horrifying.

Uh we are gonna have much more of your market action ahead right here on Yahoo Finance.

Stay tuned for more catalysts is hiring back some of its recently laid off supercharging team.

That's according to reporting from Bloomberg, this comes after the maker laid off 10% of its global workforce last month, including some of the ev charging team members break down what this means for the company.

We've got Craig or Rock Capital, senior research analyst, Craig, thanks for in studio, we appreciate it.

So I wanna just start on the U turning that we've seen here.

What do you make of this pivot back for Elon Musk?

Yeah, you know, he, he tends to make kind of absolutist uh decisions and then uh vacillate around like whoops, right?

So they have a capital program they need to execute on.

Um you know, deliveries might not be the trajectory they plan for or hope for this year.

Um But there's a lot of money that's been invested in expanding the supercharger network.

And you know, they're basically gonna be giving a big gift away to industry unless they execute on supporting customers like Wawa et cetera with, with their build out plans.

Do you think they will be able to do that?

They can definitely, they have the capital, they have the capability, um they've spent the money, you know, they need to have the staff there to support the, the completion of these, of these projects is there any headwind for Tesla though, on the likes of BP who had tried to kind of sniff around the real estate that they had potentially given up and now Tesla's back or is BP.

Just so the, the headwinds for Tesla haven't, haven't really been discussed a whole lot in the charging side.

So Tesla was denied from the direct procurement in New York State and there have been several other instances where they've had zero share in some of the navy money.

So Mr Musk has made some uh political mistakes in the way he's uh been out there fairly aggressive with rhetoric and it's come back to bite him on the capital access side or the the the support side uh for the growth of his ev charging network.

I'm sure that's driving his frustration with the business.

But, you know, Tesla is a great company.

They have the best network out there.

It's gonna stay the best if they don't invest any more dollars right now for a while.

Um But it's, it makes economic sense for them to bring people back.

Craig just more broadly speaking right now, the next couple of months for Tesla, what is that going to look like?

Because it seems like you, it's nothing new when it comes to Musk.

Obviously, he's a man of making headlines.

I think if you are invested in the stock, you're pretty used to some of the turmoil that has played out over the last several months, several quarters, early several years, but the next couple of months could potentially be critical here.

When we're talking about the fact that obviously inflation is still a real issue in the middle of a pricing war.

You have lots of questions just about sluggish demand.

So where does that then position Tesla?

So they gotta show they can, they can get growth going again, right?

When you decline 7 8% you've got to actually show that you can get to positive growth again.

You know, that's not particularly easy.

They're gonna have to cut price, they're gonna have to be aggressive.

Um And they're gonna have to lay out a path to the mini car, the cyber taxi, Robo taxi, whatever it's gonna be.

Where's the growth gonna come from?

They've, they've got a lot of work to do with investors.

How much, how much do you, you just said that they're gonna have to lower prices again by how much I wouldn't be surprised to see another cumulative 20% price cuts in the next year.

And what kind of pressure is that gonna put on margin?

Margin, margin will keep going down?

I mean, I don't think margins are going up anytime soon.

Right.

They're gonna need, they're gonna need another vehicle platform to actually start driving margins again.

They're gonna have to innovate their way out of this mess.

They have car company problems and tech company aspirations and they need to focus on being a car company and solving the car company problems.

Well, then what product do they need to come first?

What would potentially be a saving day for Tesla right now?

So the one they should have launched literally four or five years ago is the mini car, right?

If they'd have launched it, the supply chain would be in place for them to have, you know, mid to high teens margins, right?

They could have been building it in Germany or in India and they're just late and this vacillation around where and when obviously Tesla, Tesla decided that that um Texas is not the location.

That makes sense, right?

Texas is not where you want to build a small car that's really best sold in Europe.

You wanna build it in Europe or you want to build it into another market like in India that will supply in um you know, there are so many problems they have to fix at Tesla right now for them to be going through um significant 10 to 20% head pound cuts right now is is problematic.

They need their best people working hard.

Craig.

I'm curious here looking at the tariff news that we got from the Biden administration today when it comes to the tariffs that they're imposing on Chinese made EVs clearly doesn't have a huge impact here today.

But I'm curious just as we think about the broader landscape, the competition right now between us automakers and Chinese automakers.

And what exactly that could look like?

5 to 10 years from now when we're focused on those cheaper evs.

So can the US automakers compete here in the US?

We tend to be quite dismissive of Chinese evs, right.

You know, everybody's kind of pooh poohing the uh seagull from byd $12,000 for a credible low end ev you look at the high end of the market.

I drove the uh the lotus uh electra which is really a Geely ev the other day base price of $107,000.

It is superior to the Lamborghini SUV, right?

And that starts at what?

238 it's an electric car, it's gonna get more g whiz from your neighbors if you can actually buy one.

Ok, 100% tariff, that's a lot.

Puts it more in the price range, prices out of the, you know, most, most of the people in the market, but the Chinese are credible.

So it does protect the market where Biden is strategically trying to drive industry growth.

A lawyer who's trying to drive transformation probably the right thing for the economy.

Um But you know, it's noise for, for, for, for the sector right now, the Chinese are not selling it in any major way.

Tesla needs to focus on being a car company and selling great cars and diversifying their lineup.

All right, Craig Irwin, always great to have you.

Thanks.

So much have an on set with us here.

Roth Capital, senior research analyst.

Thank you.

All right.

Well, coming up more on the latest meme stock rally, we've got two experts here to break it all down on what exactly you need to know again.

Another crazy day for the meme stock trade.

You've got gamestop and A MC shears rallying.

We'll be right back.

We continue to monitor meme stocks this morning after war.

Kitty, the person who's seen as the Kickstarter of the meme stock frenzy during COVID posted online for the first time since 2021.

For more on the meme stock rally.

We have two experts joining to give us their take on Game stop A MC and others welcoming in Adam.

See the letter, letter editor in chief and JJ Khan IG North America CEO.

Thank you both so much for being here.

I want to start with you JJ because I'm curious, the legs that you see to the movement that we're seeing here.

How long do you anticipate this rally going on for?

Well, it's really interesting, Madison, you know, uh uh through our tasty trade brokerage, we didn't really see as much participation yesterday to be quite honest with you, I think people were a little bit more of, ok, can this actually last?

And so today we're seeing a lot more interest in, in both of those names.

And what's interesting is it's not just on the equity side today.

We're seeing a lot more options trading also.

So I would expect the options by them to continue to explode.

And for a couple of different reasons, number one, the amount of capital you have to put up which retail traders are always aware of.

Number two, because the stocks are hard to borrow.

Those who may not believe that this is here to stay, it's very difficult to short the stock.

So in order to do that, they're paying a little extra premium, but they, they are buying, puts in order to express that opinion, how long can this last?

Uh you know, as they say, these things can always last longer than you think they can.

There seems to be momentum behind this trade right now.

And the other thing is we're in a little bit of a slow news cycle.

We do have some earnings this week in CP I but nothing that I think is going to continue to make the market crazy.

So, uh as we head into Memorial Day, you know, weekend next week, this may last through that as people are looking for some something to trade, Adam, is this comparable to what happened in 2021?

And why or why not starting to feel like it is?

I think uh yesterday, you know, everyone, everyone was a bit skeptical if this was gonna last or not today, it's clearly lasting.

And I mean, look, it's uh it's interesting because a lot of people were saying, oh, you know, we're gonna have less rate hike, rate cuts, sorry, maybe even more rate hikes.

Uh, the, the economy is far worse now than it was a year or two ago.

But the real of it is equity prices are at all time highs.

Uh, crypto is near all time highs and now retail cap, retail investors have more capital than probably ever before.

Um, so, you know, and a lot of this money is either rotating in from the sidelines or, or moving in from other assets like crypto uh stocks and really anything that has had a hot run over the last year retail was in it.

Um And I think now that the question is, how long can this last, how long can these shorts hold on?

And I think a lot of the, the, the upside is being uh catalyzed by short covering um because we've seen over 3.5 billion in short cut short seller losses this week and they will probably continue as long as retail can hold on here.

So it's, it's definitely getting interesting.

What are the advisors to these hedge funds telling them about gamestop?

Because why did they, why did they not learn their lesson the last time?

Like just don't short Gamestop, just don't do it.

And Adam I'm sticking with you.

I don't know if I just said your name at the stop at the start of that.

I mean, look I, I think it's, it's very hard for anyone to tell you exactly what's gonna happen on a day to day or hour by hour basis with any of these stocks.

It's, it's basically a toss up and I think what, what the hedge funds are thinking is, well, if we can nail the top, uh, what we can make a lot of money.

But the, the problem is nail on the top is, is almost impossible to do with, with accuracy.

And I think that's why it's kind of the same cycle again.

But maybe the, the skepticism this time around got more, got more people into that short trade.

Now they're starting to cover, you're seeing these huge 100% plus moves.

I mean, in the pre market, you saw a gamestop go from up 50% up 100 and 30% back to up 80% in the matter of 20 minutes.

Um I think right now it's, it's from a risk perspective.

A lot of these funds are trying to say maybe we should just stay away to both directions JJ.

How closely should the average investor be watching the moves that we're seeing in meme socks?

Well, I, I think, you know, it's interesting but is it part of most people's portfolio?

Probably not.

So I think you have to be a little bit careful there.

You know, Adam talked about the free-market moves there.

One thing to keep in mind if you are trading in there.

Uh whether you trade options or not using the options market to show you what the market is expecting is really wise in my opinion.

And right now what the market is telling us through implied volatility as that in gamestop.

So you have a stock that's basically trading right around $49.

Right now.

The expected move from now until Friday is $24.

So half the stock price to move up or down between now and Friday.

And I think when people start doing any type of trading, the first thing you should say is not how much I can make, but how much can I lose?

Do you ha you know, we all have the stomach if you buy something and it goes up $24 you're happy as can be.

But do you have the stomach if it's gonna go down $24 and you can see how fast these moves are happening.

So, the biggest thing I would say is if you go in and play this stock and it's not one that you normally do, please do it in a very small manner because the movements are happening so very quickly overall.

So, uh the other thing, even with a MC, you know, trading about $9.5 right now, that move from now until Friday, you have a uh implied move of $4.5.

Again, these stocks, almost 50% of their price.

They're expected to move between now and Friday.

That alone should be a letter of caution for anybody interested in that.

Adam really quickly here, we're still seeing that a lot of the action in the trade for these names is coming from retail investors for this rally to continue throughout the course of the week.

Let's say even the month does it have to hit more of the institutional investor side?

I mean, I think right now and those are some great statistics that, that JJ just outlined.

I mean, the the implied volatility on these stocks in the hundreds of percent that the and and the options are trading.

That's just a testament to the risk appetite that's present in the market right now.

I think from both institutional and retail investors.

Um and I think that's something we're seeing throughout the entire market from, from tech stocks to the S and P to meme stocks, there's just risk appetite everywhere.

So um it's hard to say really how long this can last with these stocks.

But I do think that the impact of meme stocks isn't necessarily one that's going to drive the entire market.

I think institutional capital, it's still focusing on the bigger names.

And I think in the background, you have this kind of meme stock situation happening.

And look, I think with anything that's very volatile like this, uh you will see institutional players um making trades because volatility is opportunity for, for traders and uh there's definitely a lot of opportunity right now.

All right, Adam Kasi, you have to leave it there.

And JJ Kinahan, thanks to you both so much for hopping on and joining us here discussing what could be next with this meme stock rally.

Looks like at least for now it's just getting started.

I will keep right here on Yahoo finance.

We got much more ahead coming up next.

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