Market outlook, Despicable Me 4: Market Domination Overtime

US stocks (^DJI, ^IXIC, ^GSPC) close out Monday mixed, but it's not all bad as the S&P 500 and Nasdaq Composite post new record highs and the Dow Jones Industrial Average is just barely below its flatline. It's the end of the trading day and Julie Hyman and Josh Lipton are here to recap the day's biggest market trends as part of Market Domination Overtime.

LPL Financial chief technical strategist Adam Turnquist comes onto the program to talk why he is being careful on buying the dip, but not encouraging investors to chase the market rally. Turnquist ultimately calls the equity environment a "Field of Dreams bull market."

Yahoo Finance entertainment reporter Alexandra Canal joins Market Domination OT to discuss AMC Entertainment's (AMC) stock boost in relation to Despicable Me 4's box office performance.

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

This post was written by Luke Carberry Mogan.

Video transcript

That's the closing bell on Wall Street and now it's market domination over time.

We are joined by Jared Blare to get you up to speed on the action from today's session.

I'll start with where the major averages ended up today or down.

In the case of the dow, it was the only one of the three majors to end in the red today down about 1/10 of 1% about 31 points.

Um As we've been talking about investors waiting for a lot of big events later this week and in the meantime, not a lot of action today, but it was enough to push the S and P 500 to a new record.

It indeed closed in the green 35th record that we have seen record close that we have seen for the S and P five revenue this year.

The NASDAQ also managing a record close despite a lot of volatility in a pretty tight range today, but a lot up and down.

Um but ending the day higher by about a quarter of 1% for the NASDAQ here.

Uh Jared, what's caught your eye in today's session as we have seen these little but incrementally record gains.

Yes, a little bit incremental.

I was noting the difference as you noted between the Dow and the NASDAQ Dow slightly negative today.

But interestingly, the Russell 2000 is more positive than any of the three majors.

And that's kind of an outlier in and of itself.

What do I make of it?

Not too much, but just something to put down to see if it happens a few days in a row, then we can have a conversation, tenure t note yield just about break even there on the day, not a lot movement in the bond market.

What we're seeing is out performance in tech by a pretty wide margin here.

And it's interesting that communication services, another mega cap sector is actually the least positive.

And we can see this when we drill down into the NASDAQ 100 here.

You have NVIDIA.

It's been down recently a few days, but it is up again.

I think it's the highest level in about 10 or 11 sessions.

Apple.

This might be a high, we've seen record highs from Apple recently, but we're also seeing some and yes it is, but we're also seeing some weakness Microsoft down Amazon alphabet meta really the outlier down 2%.

That's obviously not a disaster.

So when we take a look inside tech, this is where it gets interesting.

You can see all these semiconductor stocks, some of them are even dark green ad up 4% intel up 6% contrast that with what we're seeing in software where we're seeing mostly red.

Uh Yahoo Finance's Josh S Lipton and I are gonna talk about that in 30 minutes and here he is now, Josh.

Thank you, Jared for more on the markets.

We're joined now by Adam Turnquist LP L Financial Chief, technical strategist.

Adam, it's always good to have you on the show.

Um Maybe Adam let's throw a big picture.

You look at the S and P 500.

What are the charts telling here, Adam at least in the, you know, kind of near to intermediate term.

Thanks Josh and appreciate being on.

Look when you step back and look at the market, it's hard to argue with record highs almost on a repeated basis here.

But when we view it from a technical lens, we're very overbought.

We're getting very close to retesting the upper end of this rising price channel that's been in place really going back to the lows of October 2022.

And we're also getting divergences in market bread last week.

On Friday, we only had 4% of it and P 500 stocks make new 52 week highs that number steadily declined.

You compare that to the rally to the March highs when it was advancing, you had broad participation, really not the case.

We're seeing a long list of divergences at the bread level and even at the economic level, when you look at some of the ISM services data last week, manufacturing both dipping into contractionary territory.

So what does it all mean on a shorter term basis?

We think we're probably due for a little bit of a pullback here.

Uh What does it mean on a longer term basis though, Adam, I mean, because we've seen some shorter term Pullbacks, breadth hasn't been good for a long time.

So how can that continue sort of indefinitely longer term?

We think the strategy here is to buy the dip.

We don't think you need to chase this rally right now.

Just given how overbought the market is, look at where leadership is, especially in the semiconductor space, very overbought, having a good day today.

But even if you look at the NASDAQ composite, it's a 20% premium.

It's 200 day moving average, that's over a two standard deviation move historically, when you look at that and compare it to weak breath, you typically get a pullback and that's really the playbook as we look ahead to the second half.

And Adam, you know, we talk a lot about this narrow leadership.

Do you see signs the charts of any kind of, you know, real rotation?

Not yet.

We've thought of this market is really the kind of a field of dreams bull market.

If you build it, they will come, meaning the mega caps lead some of the smaller caps and other sectors follow, but we're really not seeing that take place right now.

And I think that speaks to some of the weaker economic data that we're seeing a lot of the economic surprise index is now moving into negative territory.

That wasn't the case last year when we had most of the economy surprise of the upside given the recession call that started 2023.

Um We've also been watching, um and this is a chart that we flagged earlier that stocks are making these records at the same time that profit estimates are moving up.

Um And so does that what tends to happen?

Well, you know, I, I guess profit expectations are also at record highs according to this chart from Bloomberg.

Um but what tends to happen when you see that kind of movement, we think the bar has been raised for earnings as we look ahead and, and kick earnings off on Friday with some of the big banks looking at quarterly earnings growth around 8 to 9% on estimates.

Think back we've come out of an earnings recession over the last year.

So earnings momentum is definitely there, but it's all about reality and expectations.

And I think the expectations are now a little bit higher than they were given a couple quarters ago for the S and P 500 at least, Adam, I, I know you can't talk specific names, but I, I am interested if you pop up in the hood of the SPX are, are there sectors?

Technically speaking that you think look more attractive Adam right now, we like communication services.

We think it provides a good barbell in terms of mega cap exposure.

But you also get some of the more defensive qualities and the legacy telecom names that looks attractive.

Industrials is another theme that we like when you think about infrastructure spending also has a, a bit of an A I play with data center, not only build outs but storage and then energy is a more defensive play.

It's relatively cheap compared to the broader market.

Great free cash flows in that sector and a likely spot for rotation.

If we see some money come out of tech, what what in turn to the sticking with those technicals though Adam, what you know, looking at the sectors, which, which ones would you avoid avoid here at least near to intermediate term?

Yeah.

Right now we think health care is going to be a laggard that was a recent downgrade from our house view.

It's consistent underperformer even though it does have some defensive qualities.

Right now, we're just not seeing it on.

The technicals continues to put new lows in versus the S and P 500.

So that would be an area we devoid.

Adam.

Thanks so much.

Good to see you.

Thanks for having me.

Let's talk about another stock that we are watching today.

It was a MC finishing Monday's trading session firmly in the green up by about 8% following another strong weekend at the box office, solid sales of New Merch.

Also helping.

That's according to Ceo Adam Aaron and Young Finances, Alexander Canal joins us now with the details.

Despicable me for.

Yeah, I are your kids fans of despicable me.

They're fine with it.

They're aging up a little bit.

What about, what about you, Josh?

No, no, no, no.

I just think it's over her head.

Maybe should be a fan of 56 or seven.

I probably will be those coming considering how well this film is already doing so far, so good.

It debuted over the long fourth of July holiday.

It's gross about 230 million worldwide, which did include 122 million over the domestic holiday weekend as well.

But that's not all according to that tweet from Ceo Adam Aaron, the film Lord in 4 million guests and was the most attended Wednesday through Sunday of 2024.

The Merch also was really important with sales of that Merch, the second biggest ever for a MC.

And that's behind the Taylor Swift eras tour movie.

Remember that movie that debuted last year?

Apparently a lot of people wanna get those despicable me minions that I was gonna buy the minions.

I guess they think they're really cute.

They wanna buy that and it, and it, you know, considering the Taylor Swift movie, they probably sold a lot of T shirts, things like that, that fans were doing.

So this is a success.

Also, food and beverage was really strong as well.

And that's something that you sometimes forget about when we talk about a lot of these theater chains, that's not just about the ticket sales.

It's also everything else that comes along with it.

Of course, we talk about a MC.

It's one of those stocks that normally has some volatile swings.

It's one of the OG meme darlings and not always tied to fundamentals, but box office performance is fundamental to this company.

And when you think about the box office overall, especially as we kicked off the summer season, it was a bit of a rocky start, but we seem to be finding our footing with the box office, not just despicable me, but also inside out to performing really well.

So a lot of those animated family friendly movies uh seem to be outperforming this summer.

We'll see how that carries through to the rest of the year.

You know, it's funny, I'm looking at Cinemark, those shares were up just a half of 1% today.

Maybe you know what the difference is.

IB CEO doesn't tweet.

Yes, I was, I was just about to say that, I mean, you have the CEO basically touting how successful this was.

You have to think, oh, that must be a really great weekend for a company like a MC.

But, and normally, when we have strong box office results, overall, we'll see a trickle throughout all of the big box office change.

A MC is the largest, especially in the United States.

But, but again, it's, we're not totally out of the woods yet.

When you think about the box office at large, we probably will never be back to where we pre pandemic.

So it's, it's just a new business and because of that, you kind of have to have a new business model too.

And I think the food and beverage the merge, that's a big thing as well.

And tweeting to people who like name stocks that, I mean, that legitimately that's part of the army doesn't hurt.

All right, thanks Sally.

Appreciate it.

Coming up.

The US has a big time debt problem.

But who is footing the bill, more market domination over time coming up?

Americans have a $35 trillion question on their hands.

Who is going to pay for our nation's ballooning national debt?

Joining us now is John Finance's Rick Newman.

You know, Rick, I always assumed it was, it was me frankly and my kid, but who else?

Well, it is gonna be you and your kid and me and all of us really uh neither of the candidates this year, Joe Biden if he remains a candidate on the Democratic side and Donald Trump on the Republican side is really leveling with voters about this.

No politician really does.

And the reason is pretty obvious.

Uh There's nothing for anybody to like and how we solve the problem and there's a lot for everybody to hate.

Now, there's a new analysis out by uh a budget expert at the Manhattan Institute named Bruce Riedel.

Um He does some good work on this, on this issue and he has come up with a way to address the problem of the national debt and that doesn't mean paying the whole thing down.

That's kind of impossible.

But it means just stabilizing the debt at about 100% of GDP, which is around where it is now.

In other words, preventing it from growing much more in the future.

And here, here's some of the ways he says that things we're going to have to do in order to do that, um, they're going to have to be cuts in social security and Medicare for wealthier participants in those programs.

He would make no changes for people who are in the 40% the lowest 40% of households in terms of earnings there.

But some serious changes for wealthier seniors.

And let's keep in mind a lot, you know, a lot of, a lot of seniors don't have a mortgage anymore, they own their home outright or they have a very small mortgage payment, they don't have childcare burdens.

And there's, there are a lot of people who have, uh, you know, millions of dollars in savings and yet they generally qualify for all the Medicare and Social security benefits that are on schedule that, that's just gonna have to change.

I think that's simple math.

Uh, b uh Brian Reddell does also include, uh, some, uh, increases in individual income taxes for the wealthiest Americans.

There are some modest changes in business taxes that would take away and tax breaks and some other changes.

Um, there's nothing draconian in this plan such as, for example, a value added tax or a what, what's basically like a federal income tax, which would raise a lot of revenue all at once.

And I think that's the point of this plan, which is that if you just do a certain number of things and do them fairly soon, including things that a lot of people are not going to like, you might actually be able to address this problem without having to owe overhaul the entire tax system or have massive tax cuts or tax hikes.

I mean, or something that would cause a recession.

So this problem is solvable.

There are many other analyses that show the same thing, it's solvable.

We just need politicians who are willing to tackle it, what will be the catalyst that will tip them in the direction of doing that.

I mean, what, what would constitute a crisis that would force action?

Well, I think it is going to take a crisis.

I mean, there have been warnings about this for the last 20 years, maybe 30 years and Congress has done nothing except make the, uh you know, borrow even more money and make the debt even higher.

So the, the crisis, if it happens, if it, if it gets to that point, in other words, if Congress and the next president want after that, just don't do anything what the, the, the debt crisis is going to look like this.

Uh The US Treasury is going to be issuing so much debt that there aren't going to be enough investors out in the world willing to buy it.

Um We've seen a few wobbles in the market for treasury securities with within the last 12 months, nothing like what I just described.

But the treasury has begun to alter the way it sells securities, changing the duration of the note of the notes and bills that it's selling, for example and do some things to make sure those auctions go smoothly.

If the, if the treasury gets to the point that there just aren't enough people to buy all of that debt and that, you know, the market for debt is not bottomless in the world, we might, we might be getting close to the limit.

And the only thing that can happen then is uh interest rates go up and they might go up by a lot.

And if you try to do stuff like federal reserve money printing or other types of money printing, then you get inflation.

So if you really screw this up.

You could get soaring interest rates and runaway inflation and that would certainly make everybody discussed more disgusted than ever with all the politicians.

Uh And that might be what it take.

I mean, if you were running a business, uh you probably wouldn't want to do that.

But that is the way we run the country and Rick just uh switching gears here a bit.

You know, President Biden seems to be kind of doubling down here, Rick, pushing back on these calls.

Uh We've been seeing to get out to drop out of this race.

What are you thinking, Rick?

I just wanted to get an update on where you are right now in this, I mean, the battle is clearly on within the Democratic Party.

And, you know, I think it's fair to say that the odds of Biden dropping out.

I don't think there's a reason to think he would resign as president, but there is obviously a chance that he would withdraw as the 2024 presidential candidate.

I mean, those odds have clearly been going up, but this, all of this tension might actually be pushing us to a, to a new and a better place that we needed to get to anyway, which is that Biden is now under intense pressure to get out in public more and prove he has to prove that he is not the feeble old guy that we saw in the debate on June 27th.

So he supposedly is going to do another press conference this week.

I think that demands for this type of thing will just intensify.

He's done very, very few uh press conferences or live interviews where he's really been on the spot and he's had to be able to show that he can muster thoughts quickly and perry any kind of accusations leveled against him and that and that he's, you know, sharp enough to, to fight this kind of fight.

He needs to fight against Trump Trump.

As we learn from the June 27th debate.

One thing Trump could do is he can still attack.

He's still very agile on the attack.

So Biden needs to be agile on the defense and on the counterattack.

And you know, I think this would be a good development if we just see Biden coming out much more than he has before, not reading off the teleprompter as much talking to ordinary people at Hom and in exchanges with people.

And let's let's really test this guy and see if he's up to it.

We shall see Rick.

Thank you.

Hi guys.

Let's get back to Marcus here and talk about emerging markets in particular because they're catching the eye of investors global X for one noting a si significant pick up in interest in emerging markets as it steps out from the shadow of developed markets.

Malcolm Dorson Global X Senior portfolio manager joining us now to discuss So Malcolm start with what you're hearing from clients on emerging markets here and why you think there's been a, a pickup in interest?

Sure, Julie, thanks for having me.

Um Well, I think a few reasons, first of all, investors have been dramatically underweight emerging markets for the past decade and it's really worked.

We've seen a lot of success based off of us exceptionalism, but now emerging markets are getting to the point where valuations are just too compelling to ignore.

Uh We're now the also seeing a little bit of momentum being the second or third best performing asset class in the world year to date.

And in addition to that, people are looking for different opportunities, whether it be alpha generation portfolio diversification or just plain old US dollar hedge uh given the concentration of performance that we've seen in the US thus far this year.

So Malcolm le let's dig into some of these opportunities.

You, you kind of divide the Malcolm into different buckets here.

So in your structural opportunity bucket, for example, you like India make the case there, Malcolm, why India?

And also by the way, do you think it's, do you think it's sort of fair the way that people compare India to China or?

No?

Do you think they're just two different economically and demographically?

Yeah, no problem.

Thanks Josh.

Um you can compare it but end of the day, it's, it's an easy comparison because I think it's a better opportunity.

Um Unlike most opportunities in emerging markets right now, this is something that you buy for your grandchildren.

I mean, India is growing 6 to 7% GDP for the next five years with EPS at 15 to 20%.

And importantly, Indian companies have the opportunity to reinvest this growth in these earnings into compounding opportunities really profitable return profiles between 16 and 18% and then kind of bringing it back to that comparison versus China, India now has a larger population than China, a younger population than China.

It's benefiting from this, you know, multinationals are looking for global supply chain diver diversification outside of China.

And in addition to that, this is all being run by a democratically elected government, which I think brings a lot of assurance in terms of governance to to investors uh uh to just zero in on China for a moment.

Does China, does the China risk change under a Trump versus Biden presidency?

I don't think so at this point, I mean, it's really difficult big picture to make predictions on China right now.

I think it has been for the past four years.

But in terms of what's happening from a US domestic perspective, it seems like both candidates are are kind of competing on who can be more hawkish and who can be tougher on China.

So from that perspective, I think a lot of investors are looking for either single country opportunities just investing in India or just investing in a country like Brazil or emerging markets, Xin strategies.

And then in terms of China, where they're finding opportunity are areas that are less reliant on the rest of the world, less reliant on the West and where they find an alignment of interest with the Chinese Communist Party.

And that's mainly uh Chinese consumption a and just Malcolm just draw down on Brazil uh for a bit there because I know that's a another opportunity to see um how come Malcolm and I'm also interested how that, you know, how has that economy sort of developed and evolved Malcolm over say, you know, the next the last five or 10 years?

Sure.

Um It's a great question.

It's been moving with politics and it's been a political pendulum.

Um We've seen some great things in terms of reforms, tax reform, fiscal reforms, state owned enterprise reforms, reforms to the central bank and, and a lot of positive steps and from a big picture perspective.

Um but at the end of the day, Brazil is still a very cyclical story.

And at this point, I mean, it's been a roller coaster.

Brazil is up over 20% in the fourth quarter.

We're down almost 20% in the first half of this year.

So it's created another window of opportunity for people to step in.

But right now, I think this could be the best trade over the next 6 to 12 months.

I mean, this is based off of very discounted valuations, a very advanced monetary policy cycle.

The central banks already cut interest 325 basis points and really significant exposure to a robust commodity base.

But let me just take a quick pause there.

You guys had rick on a little earlier before this segment and he was talking about the risks of ballooning us national debt and big picture if you have any concern about national debt in the United States or the direction of the US dollar, which has been amazingly strong.

The past decade plus, Brazil is a classic hedge against that.

And historically speaking, for every 1% weaker US dollar move, Brazilian equities have popped 5%.

So I think from that perspective, it's really interesting as well.

Well, and I also wanted to ask you between about the traditional relationship between emerging markets and us interest rates, right at a time when it looks like rates are going to go lower maybe before the end of the year, right?

Is that something that tends to be a catalyst as well for emerging markets?

It does.

Uh I think it's a really good point because at the beginning of this year, we were all so enthusiastic and excited about interest rate cuts in the United States and the spill over into international and emerging markets.

We were thinking first cuts in March, we're going to get seven cuts this year.

Fantastic.

And since then all we've heard is kind of more hawkish rhetoric, kicking the can down the road higher for longer.

But despite all of that, I mean, em should be having a pretty bad year but it's the best third, it's the third best, an asset class year to date.

And gold prices are up, copper prices are up, oil prices are up, em, assets are up across the board.

And that tells me that this rally is based off of more structural factors, supply and demand Capex cycles, expansionary PM I across the board.

And if, if slash when we do get interest rate cuts, that's just going to add fuel to the fire.

So I think that we could be at the very beginning of a really interesting cyclical upswing Malcolm.

Super interesting conversation.

Thanks so much for joining the show.

Really appreciate it.

Thank you, Josh.

Thanks Julie time.

Now let's watch Tuesday, July 9.

Starting off on the Fed Fed chair Dr Powell is on Capitol Hill starting two days of congressional testimony.

Tomorrow, Powell is going to be speaking in front of the Senate banking committee in the morning.

This committee is coming after committee member Elizabeth Warren sent a letter to Powell last week criticizing him for having private meetings with top bank executives and accusing Powell of giving them too much influence over Fed policy.

Central Bank responding, saying it received a letter and plans to respond and we'll be getting some commentary from Fed Vice chair for supervision, Michael Barr and fed Governor Michelle Bowman throughout the day as well.

Bowman reiterating last week that now is not the right time to cut and saying there needs to be clearer inflation data and take a look at the economy.

The latest small business optimism index for June is coming out in the morning.

Economy is forecast that number to tick down slightly after two straight months of increases in April and May and that'll do for today's market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell.

But don't go anywhere on the other side of the break.

It's asking for a trend.

I've got you covered for the next half hour with the latest and greatest market moving stories so you can get ahead of the themes affecting your money.

Stay tuned.