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Investors eye Nvidia, Red Lobster bankruptcy: Catalysts

On today's episode of Catalysts, anchors Seana Smith and Madison Mills cover everything from AI to banks to Wrangler jeans.

Ahead of the highly anticipated Nvidia (NVDA) earnings, former White House CHIPS Coordinator Aaron "Ronnie" Chatterji joins the show to dissect the impact of the Biden Administration's CHIPS Act on the semiconductor giant's operations and performance.

The episode also features company updates on prominent players across various sectors. JPMorgan Chase & Co. (JPM) has raised its full-year guidance for net interest income, Micron Technology (MU) is in the spotlight after receiving an upgrade from Morgan Stanley, and Red Lobster has filed for bankruptcy.

Kontoor Brands (KTB) CEO Scott Baxter joins the program to discuss how the parent company of Wrangler is navigating the current consumer landscape amid high inflation, which is straining household wallets. Baxter explains that their success stems from the fact that "the consumer right now is gonna go ahead and buy the things that they need."

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Furthermore, Priceline CEO Brett Keller joins the show to share his insights on consumer travel spending trends as the highly anticipated summer season approaches.

This post was written by Angel Smith

Video transcript

10 a.m. here in New York City.

I'm shown alongside Madison Mills.

It's Monday May 20.

Let's dive into the catalyst moving markets today.

The big catalyst for the week and video earnings coming out on Wednesday, those shares are up over 86% year to date here.

Investors will be watching to see if the chip giant can be lost.

The expectations and video seen double digit gains after three of its last five earnings results and the commodity rally living on gold silver cover reaching new heights as demand for the metals increase.

And Iranian President Abraham Raisi, the country's foreign minister and several other officials were killed in a helicopter crash.

Could this escalate geopolitical tensions in the region we're going to discuss later in the show.

But first today's top story, investors looking to those and video results again coming out on Wednesday for what could be the next big driver of the market rally moving forward here.

Shares of video rose 20 20% after their results this time one year ago.

But the company tripling in value since then, the big question, can the chip making powerhouse deliver on lofty expectations?

Yahoo Finance posed this question to experts over the last week.

Here's what they had to say.

I think if markets wake up to say, hey, maybe we got a little bit too excited about this and maybe we pulled forward some of these earnings just a little bit and that's reflected in those valuations.

We can't rely just on NVIDIA.

Yes, we're gonna buy a ton of NVIDIA but the, the growth opportunity is so big.

We need others to help us build this as well.

It's been a a key component to the overall growth in this market.

But as Jared was talking about earlier, there are a lot of signs that show that things are doing quite well.

But oftentimes things get just a little bit ahead of themselves.

And I think we may be at that point right this minute.

While one guest saying we are a little ahead of ourselves sea, if you take a look at the options markets pricing in an 8% move off those Invidia earnings, which could move the S and P by 4/10 of a percent.

That is according to data crunched by City bank here, the street expecting huge revenue increase.

I mentioned over 240% year over year.

But the backdrop here is that we're seeing a lot of major indices over the the entire globe here hitting all time highs, 14 of the 20 major indices hitting all time highs as of Friday's close So it's possible that the market momentum is no longer relying completely on NVIDIA, even though, of course, those expectations are quite lofty.

Yeah, you've got to ask if it does miss, I think to what extent.

Right.

If it is a massive miss, you think that the street naturally would take a huge issue with that, given the pace that NVIDIA has set here for the markets.

But you're exactly right.

When we talk about the broadening that we're starting to see within market participation, we're talking about the excitement even within A I certainly trickling over to other industries.

We talked earlier on in the last program in morning brief about the number of mentions of A I this quarter and what we are starting to see in industries outside of tech and certainly it looks like we have seen a massive surge to the upside.

So A I is certainly an important part of this market story.

It has been over the last 18 months.

You can certainly see that reflected in the strength within the market, certainly those magnificent seven names.

So NVIDIA being the poster child for A I, accounting for about 5% of the S and PS market value, third largest waiting within the S and P. There clearly is a lot riding on this report whether or not though it is a make or break moment for the overall market, there certainly is a case to be made that yes, NVIDIA is very important.

But if it does come in line with expectations that might be enough for investors, at least to be able to look even beyond that and see other areas of strength within the market.

All right.

Well, major markets, they are holding just near those record highs, the dow those slipping a bit.

Investors taking a breather from that rally ahead of nvidia's earnings results out on Wednesday.

The chip giant is the largest contributor to earnings growth in the S and P 500.

Without it, the blended earnings growth rate for the index would fall from 5.7% to 3.2%.

That according to the latest ad out from facts set to discuss how investors should position their portfolios.

How of the results we want to bring in Brett Ewing.

He is first a first Franklin Financial Chief Market Strategist Brett.

I it's great to have you here.

So talk to us says, is this or is it not a make or break moment here for the market in the context of NVIDIA earnings out on Wednesday?

Well, I certainly think that's a big component and it's gonna play an important role here in the short term with the market.

But I think the A I trend is a little bit longer term and the market will likely recover.

So just from a historical perspective, let's talk about where we are in the market right here.

This is an election year.

I know, a lot of people may not know that, but we are in an election year.

If you look back, going back to 1928 it uh markets are positive in an election year, over 83% of the time versus uh 69% of the time non election years.

Another thing I, I would like to point out is that look, we are likely in a low bed cut cycle right here.

And that is absolutely goldilocks for stock markets.

If you go back and look at all the eight cycles going back to 1950 and you look at all the slow cut rate cycles, the average return from the very first cut is about 23%.

So I, I throw that out there for your viewers.

I think those are some important facts to look at right here.

Well, I'm curious about your thoughts on the conviction behind that momentum that you look at historically.

Do you think that this is a close your eyes, hold your nose and buy environment?

I never think that, but I do believe we have a lot of positive tailwinds again with the Fed.

I think over the next two years, um we're looking at areas uh in small and mid cap.

I think that that's one of the uh least talked about areas of the market.

And I think the opportunity there could be upside of over 40 to 60% over the next 18 months.

And you know, small mid cap stocks.

If you look at the Russell 2000, for example, it's been in a 24 month channel.

It's been in a box.

It's been trying to break out of that channel.

It's attempted five times the sixth attempt just recently here in March, it actually broke out of that channel.

Now, that's the fourth longest streak of being trapped in the channel in its history, right?

And the longer they stay in, the more powerful the breakout could be.

But I am curious about your take on that because small caps are the ones that are most likely to be negatively impacted by higher for longer, given the amount of debt that they have and the inability to refinance.

So how are they going to be able to withstand that headwind?

I think a lot of all that is priced in as you can see the recent move that we've had in the small cap index dating back to October of 23.

Um I believe that a lot of that's already been priced in and looking forward the market is looking at rate cuts.

And I think that's what the sentiment should be.

And I think the opportunity of getting ahead of the first rate cut is very important with the small cap index, right, within small caps.

So where are you seeing that investment opportunity?

You know, I I think that it's spread out.

So, you know, there are some small cap res we've taken a look at, um, you know, it's, if you look at the Bank of America, uh Global Fund survey, you know, it's the lowest, it's the lowest net investment into real estate that we've seen.

Going back to 2009, it's a net 28% negative.

Um, we're looking at opportunities in some small capris actually because it's baby with a bathwater syndrome and there are actually some good companies out there that we feel will prevail as rates start coming down.

Well, right, I know that you think that we could have a couple of rate cuts this year, but rate cuts aren't necessarily good for stocks.

I mean, you had Bostic saying this morning that getting down to, you know, 0% rate environment would mean that there was a serious issue within our economy.

So how do you think about three cuts and maintain the view that everything is going to be fine if we get those three cuts?

So when we talk about fed cuts in the different cycles, I like to break it down in, in a couple of different areas.

There's a cycle where the fed goes nice methodically and slowly through the rate cut cycle.

And there are some that where the fed cuts really quick.

I don't believe we're in the category where they cut quick.

The reason why they cut quick is because they've, they've made a mistake, essentially, they missed it.

And usually in that environment that would be like a 2008, 2009.

Um, the other other historical errors where there's a big crash and they're reacting to it.

That is not where in the camp that we believe we're in.

We believe we're in a slow cycle and that is the ideal environment for the stock market.

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

Thank you so much for joining us.

And that was Brett Ewing.

He is from First Franklin Financial and he is their chief market strategist there.

And Jp Morgan is kicking off its Investor day today.

The bank raising its core guidance for net interest income.

The key statistic to watch when it comes to bank earnings, they're raising that and I I number to 91 billion that is up from 90 billion.

Also teasing additional stock buyback saying their excess capital is supporting potential increased buybacks to come, but they do remain cautious.

We're getting a lot of interesting information sea and when it comes to JP Morgan on this investor day here, they're talking about A I as well saying that the company is able to utilize A I to kind of get rid of the what they're calling.

No joy.

Work for some of their younger employees I would imagine is part of what they're talking about when it comes to that.

The CFO also earlier today on that buyback statistic that I mentioned saying right now, we've got quite a bit of excess capital.

It's clear that based on the amount of excess that we have, it makes sense for us to increase buybacks relative to their recent pace of about $2 billion a quarter.

And they've already started to do that.

So buybacks, good news for stocks.

But we are seeing the stock under pressure this morning.

You know, there, there's a number of interesting that gets coming out of this Investor Day so far, even talking about return to office and I bring this up because Jp Morgan along with many of his peers, the big bags were the first to demand or um to mandate that people that some of their workers returned to the office.

They're actually saying return to office that Jp Morgan staffers want to be in the office for the quote delightful experience with their colleagues.

They don't need to be told to come in which is a bit different than maybe what we we have been reporting, what reports have said over the last several months as we do still talk about this.

Now how leaders are navigating the return to office and mandating who comes in?

Obviously, the banks have been at the front of it.

But also what you just said about A I I think is so interesting with time saving and the revenue growth and allowing the company to get rid of that.

No joy.

Work is how they put it and I think when we talk about the disruption that A I is going to have across industries and this obviously being the financial sector there, not necessarily eliminating jobs, obviously, it is going to have some, some impact and maybe eliminate some positions, but really what it means in terms of productivity, ultimately, what it means in terms of those day to day responsibilities.

So it sounds like that is starting to take shape right now.

It will take years to see the ultimate impact of this because like we have talked to analysts time and time again, we're very much in the early innings in terms of adoption.

But clearly they see this boosting productivity down the line and ultimately, then you can make the argument, boosting the bottom line as well.

Yeah, maybe the use of A I is what's making it such a delight experience for them to come into the office.

I'd love to get some fact checking done on that there.

Well, my shares are in the green today.

This comes after Morgan Stanley upgraded the semiconductor company to equal weight that is up from the previous rating of underweight.

They also increase the price target for this name to 130 bucks a share that is up from 98 firm citing the upside potential of a high bandwidth memory that is the key kind of area of growth for my moving forward.

We are also seen upgrades from some other folks on the street as well.

But specific to Morgan Stanley, predicting that micro could announce positive financial results due to the ramp up phase of what's called that HBM.

Supply, a possibility that HBM supply could become excessive eventually.

But for now, it does appear to be a positive influence on the company's outlook amid growing optimism regarding some of the memory market that we have here.

Yeah, this is a stock and you can see on the screen right now over the last six months, up 65% in the last month alone, I believe it's up just around 20%.

So even Morgan Stanley, Joe Moore calling out himself saying that we belatedly are coming around to this drive up that we're seeing a rampant growth here for the narrative surrounding Mike.

And you can see some of that excitement play out within the stock and the stock performance here over the last several months.

But I think the question going forward when it comes to memory valuation, exactly what that looks like the discount of EVs to sales, what they're seeing there.

I think obviously goes into this uh re rating that we are seeing the up that we are seeing here for Mike.

And then I think this is gonna be an active sector, right?

When we talk about the results that we have on top on Wednesday, ultimately, what this means for so many other smaller players within this space, clearly not a massive rival here to a committee up until this point.

But again, when we talk about the A I adoption story, when we talk about chip demand right now, at least when it comes to electronics, whether or not the worst is behind us at this point.

When it comes to see the street getting a bit more positive on several of these names.

We're certainly seeing that lift the broader index as well.

All right.

Well, coming up NVIDIA, the next big earnings report on the street, we will discuss how us China policy could impact the chip giant.

Next NVIDIA earnings out on Wednesday, investors are looking to the chip company as the next big test for the market rally.

When we talk about NVIDIA, lots of focus has been on strained us China relations.

Ultimately, what that means for Nvidia's business joining us now we want to bring in Ronnie Chatterjee.

He is a former White House Chips Cor and Ronnie.

I, it's great to talk to you.

Thanks.

So making the time to join us here.

So I just wanna take a step back when we talk about the chip landscape right now here in the US.

You're instrumental helping the Biden administration to implement the chips Act.

What ultimately the disruption, what do you think the chips industry is going to look like here in the US?

Not so much, a couple of months from now, but ultimately 5 to 10 years down the road Well, thank you for having me uh 5 to 10 years from now, you're gonna see mega factories producing chips across the United States.

And you've seen some announcements over the last 60 days for companies like Intel, TS MC M that was mentioned before, as well as Samsung.

We are building all across the United States, uh Texas, Arizona, upstate New York, Oregon, New Mexico, Ohio.

And I think in 5 to 10 years, you'll see the most high end chips being made in the United States as well as really important memory and mature no chips and some of the great advanced R and D that we need to bring back as well.

So that's my hope in the next 5 to 10 years based on the work we're doing with the chips program.

Well, Ronnie, I wanna talk to you about Intel specifically since you bring it up.

There's a bit of criticism around the selection of that name.

I mean, the stock is down over 30% year to date.

They may not have the capital to follow through with the promise of the Chips Act funding once that dries up.

And they also don't specialize in some of the chips that we had an issue with in the US during the shortage.

Things like autos, for example, do you think that the administration is selecting the right firms to be able to follow through on this investment moving forward?

And I think the key issue here is firms plural.

You'll see a number of firms have received awards.

You know, when governments try to help a particular sector for national security reasons, which is what's happening here with the chip industry, it could be a mistake to just focus on one firm.

But that's why you see the big announcements aren't just for Intel and the Ohio and Arizona facilities, but also for TS MC for Samsung and for micro.

And as far as those other technologies that are really important in automobiles, medical devices and the grid, you're seeing big announcements for companies like polar global boundaries, microchip.

So what you see from the Chis program is a diversified theft, the way the American taxpayer would want it rather than just betting on one firm you mentioned national security.

And I know that some studies of what the impact of the chips Act is going to be is that over half of the jobs created by the Chips Act could go unfilled because we just don't have the skilled labor here in the US.

The administration's messaging has been that the driving thesis of the chips Act is specific to jobs creation.

Should the focus be on national security instead given the headwinds with jobs.

I think national security is the key reason why we want to make the most advanced shifts here in the United States.

But you can also create really high quality jobs.

Uh take a job like semiconductor technician, you can do a program for a year or two years and get a really great job working in semiconductors.

You make a great point though.

We need to get people more aware of these jobs.

We need to set up training programs in places like Anada Community College, America Community College or among the community colleges doing this around the country and we'll trade that work force we've done in the United States before.

With so many tech industries, we gotta do it again, but it is a big kill decline and we gotta start working on it as fast as we can.

Ronnie.

I'm curious, can you give us some insight just in terms of how the Biden administration, at least your time when you were in that role, how you evaluate the steps that need to be taken versus the threat or maybe what we could see in terms of push back and backlash?

How, how is that evaluated?

And I guess how much thought has gone in to the backlash side of things just in terms of if we do implement more restrictions, ultimately, what China's response could be and the impact that that could have on so many of these larger us companies, the way we looked at it was the legacy of the pandemic showed us that supply chains that were all about just in time, sometimes needed to be more resilient for just in case.

And you saw so many things during the COVID pandemic that weren't showing up where they were supposed to and chips were part of that.

And so the Chips Act was really about building a strong industrial base in the United States for key technologies.

When you talk about the export controls, that's not a very narrowly defined set of chips.

They're mostly going into military hardware.

And so as you see in the case of NVIDIA, that's going to release earnings on Wednesday, it hasn't dented the growth of NVIDIA.

And in fact, the stock has grown, I think eight fold since those, since those announcements came about.

So I see the four controls narrowly designed around things that go into military hardware.

But the chips investments in manufacturing are creating opportunities all around the United States across different kinds of chips, logic and memory.

We looked at both of those things, national security and supply chain resilience and weigh them as we were thinking about designing the chips Act and implementing it, Ronnie.

Do you think there's more restrictions that are necessary or how do you think the Biden administration is evaluating that landscape today?

I think technology is changing so fast.

You got to have people inside government with technological expertise who understand markets and I think you do have that but they also have to keep an open channel with the government.

I mean, you can see this with NVIDIA in particular, every time the new export controls have been announced, they designed compliant chips to send to other parts of the world.

So as long as you have the interaction between the major chip designers, the companies that are manufacturing them all across the tech stack with knowledgeable people inside government.

I think you can get that balance right?

And that's what you're seeing so far.

Uh Lastly, we while we have you, Ronnie, there's this idea that looser fiscal policy is happening at the same time as stricter monetary policy and a potential criticism that something like the Chips Act is inherently inflationary.

I know that you are also a p public policy professor as well.

So give us your take, what would you say to your students who might be asking you is the Chips Act inflationary?

We're living there in interesting times, I think because the way the Chips Act money is being distributed, it won't have the effect that most of the folks are worried about.

For example, these big announcements are just preliminary memorandum of terms.

The due diligence still needs to be conducted just like it would on a private sector deal and that money is not going to start flowing until the end of the year at the earliest.

So I think it comes to the Chips Act, look for the investments that occur over the next several years.

That's not money that's being pumped into the economy right now because we're still working on the deals.

And that's why I'm less worried about that criticism than some folks out there, Ronnie Chatterjee.

It was great to get your insight.

Thanks so much for joining us here in Yahoo Finance this morning.

Former White House chips coordinator.

Thanks, Ronnie.

Well, Apple is making changes to its iphone pricing in China.

Yahoo Finance's Akiko Fujita is following that story for us and more.

Akiko.

Good morning to you.

That aggressive price cut that we saw from Apple coming through on Apple's official site on T mall which is China's largest ecommerce site.

The discounts apply largely to iphone 15 models with the steepest price cuts on the high end iphone Pro Max model.

The price of the device is being flashed by as much as 300 dollars.

That's this week alone, Apple has offered price cuts before but this is among the most aggressive and it comes amid heated competition with Huawei.

Just last month, the Chinese tech giant released its highest a high end phone.

The Pura 70.

The revival of Huawei has really ramped up pressure on Apple in its largest overseas market since Huawei's made 60 was launched last fall.

The company has chipped away at Apple's market share in China iphone sales fell 19% in Q one according to the latest data from counterpoint research with Apple capturing just 15% of the market behind Vivo and honor.

And that led Apple to lose its lead in the global smartphone market.

With iphone sales falling 10% globally according to I DC.

Estimates and we keep this, but that came at a time when global smartphone shipments increased 8% year on year.

Now there is some important context to provide here.

When you think about Apple's market share slipping specifically in China, which could have led to these steep price cuts.

You look back to 2019 before Huawei was slapped with these very strict export controls coming through from the US.

Huawei was a dominant player in China.

So in many ways, you could argue with the the emergence of Huawei, Huawei is just kind of taking back that market share that it had pre export controls now that they've got their own domestic chip operation in place.

Um Apple slipping, but in many ways, you could argue that Apple is kind of going back to where they were in 2019 where they had that competition on the high end of smartphones coming through from Huawei or right back to where we were before.

All right, Akiko, we got to leave it there.

Thank you so much as always for bringing us your great reporting.

Really appreciate it.

Turning now to the Middle East.

Iranian President, Ebrahim Raisi and the country's Foreign Minister were killed in a helicopter crash leaving the country without two of its most influential political figures.

Joining us now to discuss this, we have Alex Botana, senior fellow at the Middle East Institute.

Alex, thanks for joining us on this news here.

I just want to start on your, your take on this news.

What do you think the next 50 days look like in Iran?

Great to be with you.

I think the next 50 days would be more in terms of policies, both domestic and foreign.

One of continuity.

The fact is that Ibrahim Raisi and his Foreign Minister Hussein Amir Abdullah essentially didn't decide Iranian policies both at home and abroad.

They were implemented of the wishes of the two main centers of power in Iran.

That's the office of the supreme leader and then the generals and the Revolutionary Guards.

Obviously, those two centers of power are still very much alive and kicking and they are still the main decision makers.

And for that reason, I expect mostly to see continuity going forward certainly in the foreseeable future.

What about the wider power grab within the nation, the ramifications, the influence that this could have beyond Iran and even beyond the Middle East?

Uh How are you looking at that?

And the possibility of that here?

I mean, look, number one is to find out exactly what happened.

I mean, this is a helicopter crash.

But as you can imagine, there are all sorts of theories out there in terms of whether there was any foul play involved.

And if there was any foul play involved in the question, you also want to ask foreign adversaries were behind it or domestic rivals of race, I don't have any answers in terms of what happened to that helicopter in those mountains of northwestern Iran.

Uh But I think, um one thing is for sure, you have an Iranian supreme leader who's 85 years old.

He's been there since 1989.

So 35 years long time to be in power and he might be around for another few years, decade.

I don't know.

But the, the issue here is that the competition to replace him is already very much underway and this has resulted in intense kind of almost cutthroat competition among the hard liners.

And this is the interesting part.

This is not a fight between the so-called moderates of yesterday and hard liners.

These are hard liners fighting one another for who should replace the supreme leader when the day comes that he's gone.

Well, what's interesting too is that the Iranian people had moved to not exist in a monarchy and now there are, there's this question about whether or not the voting process is going to involve much of a choice for the Iranian people.

What do you make of that change, to be honest?

Uh You don't have to be cynical to believe what I'm about to tell you.

Iranian elections haven't mattered since day one, going back to 1979.

These are always highly regulated engineered elections.

This is a process where only candidates that have been essentially approved by the green leader uh can run for uh for the presidency for the parliament so forth.

So it's in many ways, it is a nice show that the regime puts on.

But the wishes of the Iranian people have never really been reflected in who represents them in public office since 1979.

Given this leadership transition, what does it look like for Iran's ability to navigate?

What is an extremely complex situation right now within the Middle East?

You know, again, I, I go back to a point I made earlier is one of continuing, right?

He wasn't somebody who really stood for anything in terms of big foreign policy vision.

Certainly what Iran is doing in the region.

If you take the issue of Iranian policies towards Israel, what Iran is doing in places like Lebanon, Iraq, Syria, Yemen, none of those policies or policies that Raisi came up with or implemented.

He inherited them as president in 2021 and he never said no to his superiors, essentially the office of the supreme leader and the Revolutionary Guards.

He, he never pushed back.

In fact, he, he agreed and did what he was asked to do.

He was not someone who had a political vision or a base of his own.

He was very much someone who came to power back in 1980 as a 20 year old and spent the next 45 minutes for 45 years of his life doing what he was asked to do and that's why he survived until the uh obviously the the helicopter crash, if Iran is internally focused over the course of the next 50 days, dealing, dealing with this, what opportunity does that give to Iran's adversaries?

I I mean, look again, I I would just be careful and not putting too much emphasis on the role the centrality of Ibrahim Raisi because when you hear the title of president, you assume automatically based on Western standards, that that means a lot of power.

In fact, the one issue he had most power over was economic policy.

So he had to find ways to go around the sanctions that the US has imposed on him on Iran.

Certainly since the maximum pressure campaign of President Trump starting 2018 and he failed miserably at that.

I mean, Iran is today a single customer uh economy, essentially China buys Iranian oil and that keeps the Iranian economy somewhat alive, but it's shrinking.

Daily.

Rai came in after Hassan Rouhani, he was supposed to fix things.

He couldn't.

Uh these are some serious structural problems that need to be uh uh you know, essentially addressed.

He doesn't have the political vision or the power.

And therefore, um you know, at home, he failed.

And as as I said earlier, in terms of the region, he he just implemented what he was asked to do.

Uh if you compare him to someone like Hassan Rouhani, the at least Rouhani pretended he could have his own vision.

He would push back on the supreme leader and say, maybe we should find some compromises with the United States and so forth.

Rai never did did that even because he knew he was in a position to stand up to the supreme leader who had given him the job on a silver platter.

Alex really quickly.

And our final question here, given what you're saying about the role of the president previously.

What is the single biggest potential impact of this?

I think the one thing I will be watching out for as an Iran watcher is if this was foul play or if rai's departure suddenly results in intense competition for power among the hard liners and that they get to a point where they can't control, control the infighting anymore.

We know that infighting is going on behind the scenes.

But if it spills out into the public domain, that would take us to a whole new stage in the evolution of the of this Iranian regime, Alex Betana, we really appreciate you taking the time to join us here this morning, senior fellow at the Middle East Institute.

Thanks Alex.

Thank you.

Well, coming up Condor brands, CEO talking about the state of the consumer and the spending trends that they are seeing at this point in the economic cycle.

They'll join us next.

We'll be right back.

We're getting a pulse on the consumer here, kicking off a big week of retail earnings from the likes of Macy's target, Elf Deckers outdoor and Ross stores.

We going to get clues about consumer spending as inflation still remaining sticky particularly in apparel but the rate of price increases in April remains above 1% from the prior month and year here.

With more live from the New York Stock Exchange.

We have Scott Baxter, Ceo of Contour brands, Contour Rain, the opening bell this morning to Herald in its five year anniversary.

And we also have Yahoo Finance is executive editor, Brian.

So joining us at the desk, take it away, Brian Scott.

Good to, good to see you here this morning.

I can't believe it's been five years since the company broke up from the F Corp and just in terms of demand in a moment where consumers are so focused on inflation.

What are you seeing on the top line?

Well, we're seeing, you probably saw our last quarter.

We had some inventory challenges with our biggest customers, but we hit the numbers and actually exceeded what we had committed to.

And we've kind of said that we program that we're on right now is going to be complete through the rest of the year.

So you know what we've committed to, we said we're going to hit through the remainder of the year.

And I think our feeling on the consumer right now, Brian is pretty simple that the consumer right now is going to go ahead and buy the things that they need so to be in a space like us where we're a consumer staple and you use our product for work and recreation.

It's an important space to be in.

And also we're at a great price point that's really relevant right now in this marketplace, Scott.

Are you still out there pushing through higher prices for?

Just because you see various pressures in the supply chain?

No, we're not, we're not out there doing that in any significant way.

We think that we're in a really, really good position.

You know, we like how we position our brands and where we position them and the specific channels that we're in and our consumers gotten used to our brands at the right price point in the right channels.

So we think we're in a really good position and we've been gaining share, Brian.

So that's been really important to us, you know, during a tough time gaining share.

Those are some of the things that you want to make sure are getting done in your brands, Scott.

I'm curious, what do you be that too?

And then the ability here to maintain that brand, that larger market share that you now have because the results of your more competitive pricing, how do you, how do you keep those consumers coming back once inflation isn't as big of an issue anymore?

I think for us it's been the demand creation, you know, we build great products.

So we're designed a product that people actually want to buy, they want to buy it at full price and then we back it up with some incredible demand creation.

I mean, just this, this past week alone is a great example.

You know, Laney Wilson is a spokesperson for our Western line for our female Western line.

And here she wins, you know, entertainer of the year at the American Academy Country Music Awards, you know, female vocalist of the year.

And we've got a big line coming out with her in the fall that she helped design.

So the timing of all that and just, you know, the explosion of her popularity in our line together.

It's just really perfect timing.

So it's things like that from a demand creation standpoint that keep us relevant in the forefront with our consumer.

If you're going to bring up country music and jeans, I got to bring up the new queen in the space which is Beyonce.

Are you concerned at all about a song like Levi's Jeans coming out in the popularity of that?

No, you know, because we just had a song about Wrangler jeans come out from a Miranda Lambert.

So we just had one happen.

So Miranda, no, come on.

I mean, you got to be a little bit concerned, right?

The market opportunity of a song like that is huge.

No, not for us.

We're so embedded in the country music, you know, space.

We've been, we've been the premier country Music Gene in the Western Gene since 1947.

So we're in a really good spot with our consumers from a country music and also a western standpoint Scott, a week ago, Under Armour, I think, caused a lot of folks to raise their eyebrows really natural.

Steve warning from that company.

They, they're dealing with their own issues and, and I get it, but they did call out continued pressure in the wholesale channel, uh which really, I think reminded me and a lot of investors that department stores, they're still closing doors and I know a lot of brands are going direct to consumer, they want to sell stuff online.

But these closing of the stores, I what happens over the next decade as you lose places to sell jeans, you know, Brian, that's really interesting and don't know if you know this, but we really don't have a big department store business at all.

You know, that has not been our strength and not where we've concentrated our business, you know, is, is mostly with, you know, Walmart and Boot Barn and Target and places like that.

So, from a pure department store standpoint, it hasn't been a strength of ours, so it hasn't impacted us in that respect.

But we think the consumer is going to our biggest and core customers that we talk about.

That's where they're shopping and they continue to do well, continue to get stronger and they're running really good businesses So it's a really strong partnership for us.

What I always enjoyed Scott following businesses like yours is, orders are always placed months in advance, talk to us about any signs of what you're seeing for back to school demand.

Uh, of course, a lot of consumers are going to be going back to school, buying jeans for their kids ahead of an election.

Not too far removed, lots of uncertainty on the economy.

Any indications you're seeing that this might be a good haul back to school shopping season.

Yeah, I think it's going to be fine.

But I will tell you, Brian in the last decade back to school shopping has changed most families now, just buy and purchase products throughout the year when it's needed and when it needs to be replaced, the going into the stores, you know, in July and August and bulking up on a lot of product for the upcoming school year just doesn't happen at the capacity that it used to.

So for us, we run a business that as you've seen quarter by quarter is pretty steady quarter by quarter.

Our business is extremely predictable.

All right, Scott Baxter.

Great to have you here in Yahoo Finance Ceo of Contour brand.

Thanks so much for joining us here from the New York Stock Exchange.

And of course, our thanks to our executive editor Brian Zazi as well.

Thanks guys.

Thank you a story that we're watching this morning.

Red Lobster filing.

For chapter 11 bankruptcy.

Setting higher labor costs, rising rents.

Now, lenders had in fees $20 million worth of loans in February, but we're unwilling to contribute more without support from the owners is according to the latest court filings, when you take a look at this business here and some of the struggles that we have seen play out within Red Lobster.

So they're working through this process to shrink their footprint.

They're trying to find a buyer.

The seafood chains S CEO here, blaming quote difficult macroeconomic environment, a be loaded and under performing restaurant footprint failed or ill advised strategic initiatives and also increased competition.

We know that they have had a couple of promotional events that haven't necessarily resulted in a boost to their business here.

So certainly a tough time right now for the industry at large and Red Lobster here filing for chapter 11 bankruptcy.

Given the mounting challenges that we just listed.

Yeah, and there's a concern that this potentially is coming from the unlimited shrimp deal.

This is the big talking point here, right?

Which I know it sounds funny, but it originally cost $20.

Then they went to a lower fee in May 2023.

They changed the $20 unlimited endless shrimp from a limited time offer to a permanent fixture rather that cost the company $11 million.

That is not insignificant here.

Given the amount of debt that they already had on pace in the last 12 months, the company lost 76 million.

So 11 million, a pretty decent chunk of that overall picture there.

The company overall saying that the assets and liabilities could be from a billion to 10 billion each in its bankruptcy petition filing here.

So a big question mark for the company moving forward is what they're going to be able to do because they are able to maintain operation while they figure out how to repay their creditors after the bankruptcy filing.

So what they're going to be able to do to get some of the capital needed to repay their creditors still remaining a big question.

But the unlimited shrimp is clearly not a successful strategy.

There was not a successful strategy.

Remember, Darden restaurants sold Red Lobster back in 2014, they sold it to the pe firm Golden Gate capital that for just around $2.1 billion and Golden Gate parted with his remaining stake in the chain back in 2020 they sold that to Thai Union Group.

So again, the the future here very uncertain when it comes to Red Lobster and how this is all going to play out, Shana.

Well, coming up next, how is inflation affecting American summer travel plans?

We're gonna have Priceline Ceo right here on Yahoo Finance to discuss.

Stay tuned as summer rolls around here.

A new survey shows that over 86% of Americans plan on traveling this season.

But we've got inflationary prices persisting.

So what we see a shift in how people travel, whether that's vacationing closer by opting for all inclusives or just taking short vacations overall for what we're going to bring in.

Brett Keller.

He is Priceline's Ceo Brett.

Thanks so much for being here with us.

Look, I want to jump in on the inflationary picture here because that is of course, what we are fascinated with here at Yahoo Finance.

what are you seeing?

That indicates to you where the consumer heading with regards to inflation?

Well, so far global leisure travel demand has held up very well.

In fact, it's booming in Asia, Europe's sitting nicely in the US while trailing the other two countries is still holding up.

In fact, as we look forward to Memorial Day Travel, we're expecting close to a record number of travelers hitting the roads and probably record numbers of travelers moving through the airport.

So, so far consumer demand is holding up and I think that's largely in part to airline ticket prices actually being down year over year by as much as 15%.

And that's really helping I think to spur more airline uh traffic, the airlines have opened up more capacity as a result.

Brett are travelers though, are they looking for more deals just in terms of the activity that you're seeing on your site?

And, and maybe ultimately, are they waiting to book until a little bit later in the hopes that maybe some of those prices will drop.

Well, shopping patterns are higher.

So we are seeing more people shop ahead of their actual booking to make the reservations, but we aren't seeing people wait until the last minute to make these reservations.

People are booking ahead.

In fact, the booking window is pushing out a little bit, which means people are a little more comfortable with making the reservations ahead of time and planning their trips a little more carefully.

So a lot of shopping behavior, but still planning things out.

Um Hotel prices aren't quite falling to the degree that airline ticket prices are falling.

So a little more pressure on the hotel side.

Well, that's interesting.

Talk to me about the pressure that you're seeing on the hotel side and to what extent you feel like that is potentially correlated with some of what we're seeing from airbnb in terms of users just sort of starting to be a little bit over the hidden fees and the booking experience that's offered through that platform.

Sure.

Well, 2023 was a very big travel year, you know, it was the first full year of no constraints and people had a lot of excess funds and so they really traveled hard and used a number of different booking methods to get, to get deals on, on travel as we move into this year.

We're moving more here in the US into a, in a more typical standard uh pattern of travel with peaks and Memorial Day in midsummer and then with some nice travel windows in between where you can really find some better deals uh for the consumer.

And so I think what's happened is really, people are falling into a more normal state of travel and doing a little more work to really find what fits their budget for them.

And you know, listen in the hotel industry, uh capacity continues to be added at a very slow and steady pace about, you know, 1% a quarter here.

And so there's not a lot of new opportunity for hotels.

So hotels have been able to keep their prices higher, whereas the airlines have been adding capacity to a pretty heavy rate, you know, United just announced in their first quarter results that they added 9% more capacity.

That's a lot of capacity moving into the airline space.

But when it comes to the fact that rates are still high inflationary pressures or inflation is still very sticky.

If we don't see any sort of rate cut, if we don't see any more future improvement on the inflation from between now and year end, will we then see more of a deterioration or I guess how are you looking at that aspect?

That possibility?

Well, it's obviously hard to predict what's going to happen with consumer travel.

Listen, travel has has historically been a highly prioritized part of the consumer's uh budget.

And so we continue to see that now, even though where some commodities and other hard goods people have pulled back there, travel still seems to be healthy and moving forward.

Um, I think what will happen is you'll see suppliers start to pull their prices back which will open up more travel opportunities, more deals for consumers that they'll be spending less to take the same kinds of trips.

And I think we're seeing a little bit of that today in the US and some of the shoulder periods where, you know, some of the larger hotel chains have had to discount their prices a little bit in order to spur demand, but the demand is still there and especially in the peak periods, we're seeing very robust demand.

Well, I want to switch gears a little bit.

I know that you have your own A I powered travel assistant penny, but I am curious about some competition for penny because you know, I'm already on chat GP T throughout most of my work day here is that a potential had one for you that folks are already on platform for something like chat GP T and can just ask that platform to find them a cheap travel deal and then book flights directly through airlines versus coming to you.

Well, listen, uh Chad GP D is a great place to go.

If you've got general questions about travel.

If you're looking for something very specific though, to what you're looking at, what you're booking really as you move through the transaction experience here at Priceline, you can get very direct answers that you're not going to find as you move out of our flow, we'll be able to tell you what availability looks like and what pricing looks like real time for a given hotel or flight.

Whereas the other bots and engines outside of the travel ecosystem don't have access to that information.

In fact, we have a lot of proprietary prices and inventory that can only be accessed by our unique uh travel bot penny.

All right, Brett Kellow Ceo of Priceline.

Thanks so much for taking the time to join us here this morning.

We appreciate it.

You bet.

Thank you.

You wanna stick with travel shares in Norwegian cruise lines.

They're jumping after the company lifted its guidance for the second time this month.

Continuing to see record bookings.

We've been talking about this pent up demand, the fact that consumers are still willing to spend on some of their trips, Norwegian, they're benefiting from that boost that we're seeing within its guidance.

You're looking gain gains of just about 7%.

Now it is the second profit boost like we were just talking about in a month here.

They boosted the EPS outlook.

They now see a dollar 42 the 2020 plan now includes improved margins and lower net leverage.

So the demand is still there today, Mattie, I think the question though is what that demand is going to look like kind of what we're just talking to the CEO of Priceline about there minutes ago, just if we do see any sort of waning demand because of very sticky inflation because of the fact that consumers are still under pressure later on this year into 2025 how quickly maybe that could potentially erode or really weigh on some of these larger travel names.

Yeah, it's a really good point, especially because, and we've talked about this before Sean and you've pointed out that the amount of growth that we've already seen from some of these cruise lines does put them in a position where it's a little bit hard to maintain that growth.

But interestingly, they do note that by 2026 they expect EPS to hit 245.

So there is a little bit of longevity, at least in terms of what they're seeing here.

But you mentioned the full year adjusted eps that they're anticipating currently about a dollar 42 up from the one a dollar 32 rather situation that they and currently, and again rising on those boosted year targets.

Also, we're seeing peers in the space gaining as well.

So that could be an indication that the street is seen that we're gonna have kind of gains across the board when it comes to some of these cruise lines.

Uh Viking Holdings, Royal Caribbean and Carnival, seen some green across your screen when it comes to the travel space.

Uh So uh potentially a bet that consumers are gonna continue traveling, not just overall but on cruises which fascinates me because I, I would never go on a cruise ever.

But yeah, you know, personal choice.

But I think it has been remarkable, right, this unprecedented surge that we have seen within the cruise industry because it wasn't too long ago, four years ago when people, unfortunately, because of COVID, people have been getting sick on shifts.

There's people that were stranded in, in XYZ locations.

And there was this very much this sentiment, we would talk to former passengers, we talked to some of the executives in the cruise industry and there were certainly some fears and trepidation just in terms of what that recovery was going to look like, how quickly people will willing to go back on cruises.

And then not only are you trying to get back to what your customer base was before?

But as always, you're trying to expand that customer base and the realistic ability for them to do that when you take a look at these results and it goes beyond a region like you were just saying, Royal Caribbean Carnival also reporting record booking levels.

It really is amazing and astonishing how quickly the industry has been able to recover and then further sees some of that growth here in the years ahead as as is reflected here from this outlook uh update that we're getting from the region.

So certainly we will see.

But again, a group of names to keep your eye on today in today's trading day.

Absolutely shot up.

We're going to do a final check of the markets were 90 minutes into the trading day here.

We're going to games across the screen here.

The dow holding on to that 40,000 level above that.

Actually, after closing above that 40,000 level on Friday, the S and P is up 310 of a percent check.

Heavy NASDAQ up 6/10 of a percent as we prep for those and video earnings coming up on Wednesday here.

Well, that's all from us coming up.

We have wealth dedicated to all of your personal finance needs.

Our own Brad Smith is gonna have you for the next hour.

So stay tuned.