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Nvidia tops Microsoft's market cap, weather risks' impact on housing: Market Domination

On today's episode of Market Domination, co-hosts Josh Lipton and Julie Hyman explore Nvidia's (NVDA) market cap dominance, trending tickers, and the impact of climate change.

Kicking off the show, the spotlight shines on Nvidia (NVDA) which surpassed Microsoft (MSFT) as the most valuable publicly traded company. To provide insights into the semiconductor giant's meteoric rise, The Futurum Group Chief Market Strategist Cory Johnson joins the discussion.

The show then shifts to stock reactions of trending tickers, including Micron (MU), Dell (DELL), Hewlett Packard Enterprise (HPE), and Super Micro Computer (SMCI).

Lastly, the show tackles the pressing issue of how extreme weather risks are contributing to the rise in housing prices and costs. Cathy Seifert, Vice President of CFRA Research, joins Market Domination to provide valuable insights into the impact of climate change on housing insurance and premiums.


This post was written by Angel Smith

Video transcript

Hello and welcome to market domination.

I'm Julie Hyman that Joli in live from our New York City headquarters.

We are giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.

And here's your headline blitz getting up to speed one hour before the closing bell rings on Wall Street, whistleblowers are going to come out on the day that he is testifying because that's when it makes more of a story and that rhetoric is playing out and will continue to play out for Boeing.

I mean, it's a, it's a, it's a long running pr disaster and you know, the show has more additions to uh to give us in the coming months.

I suspect you do have a consumer slowdown that is ongoing.

The labor market also seems to be slowing and coming into better balance, but I think you need some context.

So this morning's report for retail control, stripping out the volatile items is actually up 0.4% is a decent print.

Retail control over the past three months is actually the highest since December.

So the economy is slowing, the consumer is certainly slowing.

But at the moment, I don't think it's a worrying trend.

I think it's just getting back down to what we think is a more normal type of pace for the economy.

We are looking for our sixties next year so we haven't seen that for a while.

Um, you know, this summer still in the low eighties, but we think we're moving into the seventies, uh, for Brent for the second half of the years and sixties next year.

So significant downside versus now significant downside versus the futures curve.

We've got one hour to go until the market close.

So let's take a look at the major averages here.

We've got the dow little changed here today.

Up to about 1617 points.

The S and P 500 is on the rise, about 2/10 of 1%.

And the NASDAQ little change right now.

Remember any gain for the S and P and the NASDAQ will be another record.

Let's talk about some of the elements pushing stocks around today.

We had this morning, a retail sales report that came in below estimates barely budging last month.

A very, very slight increase.

That's one thing that we've been watching.

There was also an auction of 20 year Treasury notes, $13 billion worth it all relatively strong demand.

So that demand coming into treasury is pushing yields lower.

We've got yields down about six basis points as prices rise and then they continue to be fireworks here in large cap tech.

I know we keep talking about, oh, the rally is gonna broaden at some point.

Well, guess what large cap tech is still higher today.

But really there's one large cap stock that we're watching in particular that is NVIDIA, uh getting uh another high uh price target on the street.

In fact, the highest from Hans Moses been over at Rosenblatt $200 is the price target there.

The rest of the mega caps aren't doing as well.

Uh NVIDIA now with that 3% gain is now up 173% year to date.

But not only that, it means that the market cap of the company is now the largest in the S and P 500 at 3.34 trillion.

Uh That means it's above that of Microsoft and above that of Apple.

Now it might not last, but this is the first time that we have seen it reach that milestone, Josh.

All right, Julie.

So NVIDIA, as you mentioned, it's market cap surpassing, not only Apple but also Microsoft move bringing NVIDIA to the top spot as the most valuable public company here with more on the fight for the market cap crown.

Let's get to Corey Johnson, the Futura Group chief Market Strategist, Corey.

Always good to have you on the show, my friend.

Let, let's just go right there, Corey, I'm interested.

Um You know, you've been covering the markets for a long time.

You've been covering tech for a long time over the course of your career.


Do you say?

You know what I I would compare NVIDIA or NVIDIA reminds me of, you know, example A B or C or no, we're in truly uncharted territory.

It's different this time.

You want me to say it's different this time, you're begging me to say it's different this time.

It's time.

Yeah, but there are always hints in the past, look, look the members of bubble if you will.

But companies like Dell, companies like Cisco that had absolutely fantastic runs and relatively a lot better financials than some of the companies that are being compared to had runs like this.

And they went on for years and years and years and they had times when the valuation was stretched and they had times when the valuation, the price was high, but the historic valuation was actually better than it had been.

Um And, and this is the way that industry leaders in new industries go.

Hey, Corey, it's Julie here.

There's also sort of the speed though that we have seen NVIDIA move this time around, right.

So we were looking at the number of days, it took these various companies to get from one trillion to $2 trillion in market cap and then from 2 to 3.

And in, in Nvidia's case, it only took 262 days from 1 to 2 and 96 days from 2 to 3, which is much, much shorter than the others.

So, what is that?

I mean, what does that tell us about the sustainability perhaps of, of invidious growth here?

I think it tells us a lot about a lot, but I don't think it tells us anything about the sustainability of the growth.

I think what it tells us about is that the moment that we are in and the reaction to that moment and both of these things are happening at paces that we haven't really seen at this scale.

In the past.

We've never seen a company as big as NVIDIA was a year ago, which was very big grow at the pace that has been growing and get to the size of revenues that it has achieved.

We've never seen anything like this and certainly to do so with fantastic profitability, expanding gross margins, ridiculous operating margins and tons of free cash flow and yet their customers don't seem to balk at this whatsoever.

We also haven't seen the markets recognize such an amazing thing, but maybe it's understandable that the market is reacting to this quickly noticing what's going on in this company because it is so big coy.

Do you think it's a cause for worry for investors when everybody seems to be on the same side of the boat?

Meaning you look at NVIDIA stock is a monster, nearly 90% of analysts who cover it, say even here buy it at these levels, you know, is that, is that a reason to worry or you know what?

Sometimes the herd is, right?

Analysts always say buy it, that's what they say about everything, buy it, buy it, buy it.

They are always to be fair.

Sometimes they say hold, they do say hold, you get that.

Yeah, not much.

How much they say hold, I know that.

How much should they have said it in retrospect, right?

So I think that that's not a reason to believe that this company is good there a reason to look at this company, understand what's going down.

So great to look at the numbers and look at the growth rate and look at the free cash flow generation, which is the ultimate value or the ultimate success of a business is free cash flow um uh creation and NVIDIA is doing all of these things right now.

But again, the pace of the growth of this size and what we hear from all of their customers.

If you, we talked to all of Nvidia's editors and all of their customers and they're all trying to get more and more from NVIDIA and they all want to buy that product first and everything else.


And none of them seem to be concerned about the price of what NVIDIA is charging and recognizing that NVIDIA is raising prices, NVIDIA is taking gross margin in ways you rarely see any business do it, let alone gross margin, operating margin as well is just fantastic.

And Corey, the company seems to indicate that it sees no sign of that slowing down.

I mean, if you look at the estimates for earnings growth and revenue growth, they are expected to slow down a little bit.

I mean, we're talking about from triple digit digit to double digit.

Um and NVIDIA has pushed back a little bit on this notion that its chips will not be in as high a demand as this A I processing um revolution kind of matures.

But what do you think?

Well, so you have a couple of questions there and, and let's, let's start with the first part last, but starting with what, what their growth is and what the market is gonna look like.

I think it's reasonable to expect right now.

This market is just gonna get a lot bigger and, and selling A I for the purposes of chips that do A I for the purposes that we now think of A I as doing is a fool's errand.

You know, when we first got our iphones, we didn't imagine Uber, right?

Um A multibillion dollar businesses being created Instagram, things like that.

It it it was just sort of faster email and a and a keyboard on the screen instead of on a a blackberry, right?

It was hard to imagine what the world was going to look like.

Similarly in a I, I think we're going to see incredible new use cases that are hard to imagine right now, but five years from now will just seem like they're so obvious to us.

So it's reasonable to expect unreasonable demand coming from places we can't imagine for A I and therefore for NVIDIA.

But I think it's also really important that you brought up the point that the growth rates have been going up.

The second derivative of growth has continued to accelerate and go up.

That's probably gonna change this year.

We're probably gonna see the growth rate come down for NVIDIA.

It's still gonna be amazing.

It's still gonna reflect a tremendous growth on the biggest numbers we've ever seen from any company ever.

But it's gonna be a little bit slower and I think that that will be an inflection point for the stock market and, and Corey, you know, one hot theme that's being talked a lot about is how people look at this broad market rally and they'll say, you know, it's narrow, it's basically, it's NVIDIA and a few other big tech names, outperforming everybody else.

Uh How are you thinking about that dynamic, Corey?

Um It is inevitable, we're going to see growth and lots of, we're only seeing growth in the numbers of lots of other industries and we see it coming.

I was doing some work, work today on the LAM research and global foundries, right?

But, but related, but different businesses going in different directions.

But lamb research had putting up a fantastic year.

It's not NVIDIA, but it's on the growth of this A I stuff if you will and global global foundries massively expanding their capacity to manufacture semiconductors, all with the belief that A I is gonna spread the wealth beyond NVIDIA.

We're seeing that in the growth numbers.

Look at service.

Now look at oracle stock that I own.

Um You see growth from A I, it's not accruing only to NVIDIA.

The market is ascribing the growth mostly to NVIDIA and a few others.

But I think that we're certainly going to see the market start to recognize the other success that other companies will have and that's going to continue to move.

Um um uh you know, up the stack, if you will um when it comes to software and services over the coming years, we we've only just begun, only just begun as the song says, Corey.

Thank you so much.

Appreciate it.

Good to see you guys and you always, well, a number of Fed officials providing commentary on their perspectives on the policy rate and the economy.

Boston Fed President Susan Collins, for example, encouraging a patient approach when considering lowering rates.

Richmond Feds barkin, echoing the central bank's need for more economic data.

Before thinking of adjusting monetary policy here to discuss is James Bullard, former Saint Louis Fed president, Dean of the School of Business at Purdue University, Jim.

Thank you so much for being here.

Um We have been having this discussion a lot about where the fed is, whether they are behind the curve or ahead of the curve here.

So I'm curious first, uh what you think of that, do you think that the fed is late in beginning its cutting cycle?

Yeah, I think the, the fed's been looking for confirmation of the uh the decrease in inflation uh last year at this time, inflation was running, you know, core PC inflation on a 12 month basis was closer to 5%.

Now, it's below 3%.

So we've made a lot of progress in the last year, but they've been looking for an opportunity to make that uh rate cut and I, I haven't got it during the uh so far in, in 2024 here, but I think they'll be able to get that opportunity.

The most recent inflation report was very encouraging and uh looks like, uh you know, if we can get confirmation on that and subsequent inflation reports that the, the committee will be able to move ahead with a rate cut.

A and Jim switching gears a bit, you know, we, you get retail sales uh this morning weaker than expected for the second month in a row.

Jim, I wanna get your take on that report and just what, what do you think it tells us about the American consumer here?

Yeah, I think the headline it sounded like the core uh retail sales were actually pretty good.

So I think um uh some of this came from the more volatile elements uh that uh and especially gas uh prices that were down a little bit.

So I think that the consumer is still doing uh very well.

A rule of thumb would be if the labor market is doing well, then the then consumption is gonna do fairly well.

And that's what's going on here.

In addition, you've got the stock market and house prices at uh pretty high levels.

And because of that, the higher end of the income distribution also doing very well.

So it looks like consumption should be in good shape uh going forward even though the headline number for retail sales was a little bit uh soft today, Jim, how long do you think it will take for inflation to get back to 2%?


So the, the committee doesn't say too much about this except in the dot Plot.

Uh And usually they've got uh some sort of slow uh reversion to the 2% target.

Uh You might make some of the progress uh one year and then the rest of the progress the next year and that uh plot that you've got up now certainly shows uh something like that.

And so uh that's usually the way this is conceived and I actually think that's not too bad of a plan uh because you don't want to overshoot the target, you would like to ask him to, toward the 2% target have a nice, smooth, uh, process that goes back down to 2%.

So I think, uh, if, if I was still in the committee, that's certainly what I'd be shooting for.

Uh, I don't think you want to get back into the below target, uh, inflation that we had in the 2010 to 2019 period.

And Jim, your, your take on sort of the overall us economy interested, you know, where you think we are and where we're headed, whether Jim, you, you're in that, that soft landing camp.

Yeah, I'm absolutely in the soft landing camp.

Uh I was an advocate of aggressive action in 2022 which we got with the 75 basis 0.4 75 basis point increases in the policy rate all in a row.

Uh plus the Jackson Hole speech.

I think that did a lot to set the tone that the fed was going to uh take aggressive action to get the inflation back to target.

And then in 2023 uh inflation fell precipitously.

Uh We're not all the way back to 2%.

We still made a lot of progress uh during that time period.

So it does seem like the policy worked very well.

And uh so now it's just a matter of, of finishing the job.

Uh We didn't get much of a change in the unemployment rate during that period, we've still got a 4% unemployment rate very low for the US economy and we've had low unemployment pretty much the whole time we've been pursuing this policy.

So, looks like a soft landing to me is not quite over yet, but it's pretty much over.

Um, Jim, now that you're sort of back in academia, I'm very curious and now as, as the Dean of the Mitch Daniels School of Business there at Purdue, um obviously you're talking to students a lot.

You're probably hearing from students a lot and I'm just curious what you're learning or if uh sort of how you're thinking about the US economy has changed at all as you've been having more of these kinds of discussions.

Yeah, Purdue is one of the leading technology universities in the nation.

And a lot of the assignment for me here is to combine uh the Business School with the success of Purdue engineering number four in the nation.

And uh will turn out the most engineers, I think in the coming year uh in North America here.

So I, you know, it's all about a I it's all about technology, what's next in the world of technology and how does that impact the world of business much like your program here?

Trying to wrestle with the issues of, uh you know, tech has eaten the business world a long time ago.

And now we need to figure out uh how can we, uh, assess the technological landscape and how can we get students prepared for this, uh, uh, new reality or new, newer reality of technology and business?


Something that we grapple with all of the time as well.

Jim, thank you so much for your time today.

I appreciate it.

Sure, happy to do it and be sure to tune in later for an exclusive interview with Federal Reserve Bank of Boston President Susan Collins.

She'll be discussing her outlook on the rate cut trajectory in the four pm hour.

And on the other side of the break, Boeing Ceo Dave Calhoun testifying for a Senate panel this afternoon to break down what's ahead for Boeing and get you caught up on some of today's top trending tickers.

Stay tuned, more market domination after this outgoing Boeing Ceo Dave Calhoun testifying in front of a senate subcomittee today and addressing the safety culture at the company, much has been said about Boeing's culture.

We've heard those concerns loud and clear.

Our culture is far from perfect, but we are taking action and we are making progress.

We understand the gravity and we're committed to moving forward with transparency and accountability while elevating employee engagement every step of the way joining us now is Bill George, former Medtronic Ceo and author of True North Emerging Leader edition.

Good to see you.

So as we listen to Calhoun's words there, do you think he sort of accomplished what he set out to accomplish and what he should be accomplishing as for right now, the leader of Boeing.

Uh, honestly, I wouldn't want to be in Dave Callanan shoes today, Julie, this is a very tough situ, it's a no win situation because Boeing has so many problems that are not being addressed that, uh, there's no way he way he can win this and they haven't really gone back to their first fatal error.

Mistake was to redoing the Boeing 737 instead of launching new aircraft.

So uh he's doing the best he can.

But that's a, it's an ugly scene there.

It's probably gonna get tougher.

Well, let me ask you Bill.

Let, let's say I made you ceo and you've got the job now, Bill, right?

Ok. Congrats.

What would be your priorities?

Your strategy?

What would be the Bill George playbook for turnaround Boeing?

Well, number one, first of all, I think you have to appoint someone who has an aeronautical background and has uh has the courage to transform the company.

But number one, move the company back to Seattle.

That's its roots.

That's its culture.

And by abandoning that going to Chicago and now Arlington, Virginia, it's been a horrible mistake.

Second, they haven't had a new state, is aircraft in 60 years, don't you think that a nautical engineering has shown us new ways to design aircraft?

They have new engines, new avionics, but they need to design a whole new aircraft yes, it'll take 7 to 8 years, but they've got to do it.

And then third, I it's not just fixing the instance quality problem.

You've got to revamp the entire quality.

And so glide chain, they farmed out the fuselage manufacturing to Spirit Arrow.

That was a big mistake.

They've got to reinstate top to bottom a quality culture.

People that just try to fix individual quality problems will always have more that pop up somewhere else.

It's like whack a mole so they need to get at that whole culture.

And I think that's the, the key things they have to do.

And uh and I don't see any way around that it's gonna take time and they're gonna have to keep their customers in line until they can do it.

But uh it will not get better until they go back to the original air, which was refusing to uh design a new aircraft 20 years ago.


Um How the heck are they gonna find a new CEO?


There's now these reports in the Wall Street Journal that several, several people have said they're not interested, including reportedly Larry Culp and Dave Gitlin and there are some issues with internal candidates.

So how is it a is it a hard um post to fill given, as you say, you don't envy Dave Calhoun.

And it's a tough job.

I said on your show several months ago, Larry Cope would not be interested in the job.

He's got a great job running uh GES uh jet engine business.

No, they've got two people that could do the job today.

Pat Shanahan, who is CEO of Spirit AO, former Deputy Secretary of Defense worked with Boeing.

He's an AUC engineer and he could do the job, Steve Mollenkopf, the chair of the board.

Just step in.

He's got at least a technical background.

And so I think one of these people should do it.

I empathize with Calhoun, but it's not gonna get there and you can't have someone that doesn't understand the depths of engineering.

Uh They had the right person 20 years ago and they passed him over twice.

Alan Mulally who went to Ford and saved Ford Bill.

How, how tough do you think it's gonna be to sort it for this company really build back its reputation after the kind of missteps we've seen from Boeing.

Gosh, it's gonna be real tough.

It's a 10 year prophecy.

They've lost the trust, not just to the airline manufacture, not these airlines themselves or customers, they lost the trust of the flying public.

And so people are always asking me, am I on a Boeing plane or I'm on a uh an Airbus plane?

Well, they shouldn't be asking that question.

Boeing's gotta regain it, but look, we have no choice.

This can't be a ge we're just gonna uh Pha phase it out.

No, we have to rebuild Boeing.

It's a National Treasury.

It's a great company.

And by the way, the engineers and people there wanna do the right thing.

The real core problem Josh is that 20 years ago, they decided to focus on short term shareholder value.

Like a lot of companies have ge included and they're paying a huge price now.

They got away with it for a few years now.

The chickens have come home to roost.

They can't just focus on shareholder value.

The only way they can rebuild shareholder value is to build great aircraft.

That's what's gonna build it up again.

So they have a total revamp but you need to see you with a lot of courage who can do that.

It's not just pick this, pick that bill.

Is it possible that one of the other solutions to Boeing is to not have a single national company that we rely on in the United States to build aircraft?

Is it, is it splitting Boeing up into pieces of some kind?

I don't think so.

I, I think, you know, Boeing has problems in space business.

They have problems in military business.

No, it's aviation company.

They're very reason.

It can't be with the right leadership.

The people want to do the right thing.

They have great engineers.

That's not saying they have to get rid of the engineers.

Uh They have had some problems moving manufacturing around but uh no, I, I think they need leadership.

It's all a question of leadership that get the right leadership in there and they've had five.

The bo the board is part of the issue.

They've had five failed CEO appointments.

They should look at themselves in the mirror and say, what did they do wrong?

And how are we gonna appoint the right person uh until they do that?

And the board needs to step up and admit its own shortcomings bill.

Always great having you on the show.

Thanks for joining us, Josh, thanks for having me on and good luck to Boeing.

I hope they can cover we have to have him do it.

We'll have you back to discuss.

Thank you, Bill.

Thank you.

Let's get to some trending tickers.

First up super micro computers.

The company announcing it is adding three new manufacturing facilities in Silicon Valley and globally, the company says it is adding factories to support the growth of artificial intelligence and enterprise rack scale Liquid Cool Solutions noting a demand increase.

Obviously, you know, we talk about this name a lot.

Uh Joy, you can run on the stock talking about 225% this year.

You might think.

Well, I missed my chance.


According to the analysts who cover it, they're still very bullish.

12 buys five holes, one lonely cell out there.

And you know, as we've discussed bulls like it because their bet is the A I server market is only gonna get bigger and they believe this is a company that's very kind of competitively positioned to take advantage of it.

Yeah, I guess so.

I mean, either that or they just mentioned something A I, and they go up right.

I mean, Sprinkle little A I dust a little, a little liquid cooling.


I mean, and just for people who don't, no, when you're looking at a data center that has a bunch of these racks that have, um A I components in them, which is a combination of chips and servers, etcetera.

They get very hot, they use a lot of energy and they get very hot, you can cool them with air, you can cool them with liquid that sort of runs through tubes through the server rack.

So that is what super micro is now talking about expanding its manufacturing capacity for those liquid cooled systems.

There's something else I noticed though, which is that if you look at the correlation between Super micro and NVIDIA, it's pretty high correlation.

In other words, when NVIDIA goes up, super micro tends to go up, I was looking at the two, the correlation of got as high as something like 0.8 and 1 to 1 is the highest correlation you can have.

So they do tend to sort of move in tandem.

Even when there's not necessarily big news on super micro N via tends to be the one that kind of the tail video news today though too, which you're about to share with us.

Yes, exactly.

Well, we're talking about, well, this is more H pe news.

It's a little, it's a little bit of both.

Um, Hewlett Packard Enterprise is what we're talking about here.

The company announcing it's teaming up with NVIDIA to offer a set of integrated A I hardware and software tools for its customers.

H pe not up very much though on this.

Uh, despite trying to Sprinkle that NVIDIA Pixie dust, so to speak, I don't, you know more about this deal than I do.

Well, I, I know more but listen, it's, it's, it sounds kind of wonky.

So I did call our uh Patrick Moorhead tech guru friend of the show and, and, and I wanted Patrick's tech and basically, here's how he explained this.

If you're a company and you wanted to, you wanna create your own internal private A I system, you could now turn to H Pe and NVIDIA for help and basically go to them and say, listen, I, I need the software, the hard where the service is to do it and that's what they're gonna offer you, they're gonna offer you the full stack.

And I sort of asked Patrick, OK. Bottom like what does that actually mean for investors?

Like you're in NVIDIA?

He actually said for NVIDIA, this is pretty good news because in his opinion, he, you know, he, we should mention he's at H PE S conference in Vegas where, where this was announced as Patrick said, you know, this is, he was in the audience and he said, you know, this is a pretty, at least on paper.

This sounds like a pretty smart, simple and comprehensive way for Jensen Wong to get his tech into the enterprise.

We know he's in with those big cloud giants.

But now with this, he said, helps him may maybe give him more of a foothold in the enterprise as well.

He also did think it, it was good news for H Pe again, at least in theory, the idea of it because again, it's sort of comprehensive offering, we'll have to see what, what is the positive financial impact, you know, we we'll find out.


Well, H pe shares are up this year but not as much as NVIDIA, for example, they're up like 30% or so.

Although reporting had a nice rip off that of that report.


All right.

And make sure to tune in to market domination this Thursday when will be joined by Hewlett Packard Enterprise co Antonio Neri C Julie can ask him all those very questions.


All right.

Still to come.

Shares of Dell are soaring again today as one analyst points to future A I opportunity.

We'll talk about some of the top calls of the day.

On the other side, the 10 year treasury yield falling today and has been up and down this year with concerns surrounding rate cuts.

Our next guest says despite on ongoing volatility throughout the bond markets.

Investors should still consider moving back into fixed income for more.

Let's welcome in Steve lately, Black Rocks Global Co head of Bond ETF.


Always good to have you on the show.

Um You know, Steve actually, I haven't, we haven't had the chance to catch up in a bit, so maybe let's start with your views on the fed.

I wanna hear what, what you're thinking there, Steve, you know, obviously the fed, you know, projecting one cut this year, Steve, you know, maybe September, December.

What, what are your views?

Does that sound reasonable to you, Steve?

Yeah, Josh, thanks for having me.

It's interesting, right?

Because the market is now pricing in almost two cuts, two full cuts.

Um Whether that comes in Sep September or December, we're, we're not really sure, but the fed clearly is trying to push back on that.

Um You've had a number of speakers today, um basically advocating patients suggesting that, you know, cuts may come later in the year.

One speaker was even suggesting they may need to see quarters of uh better inflation data before they're convinced.

But look, I think um the bottom line is that, you know, we've seen yields kind of bounce around here last year.

We were, you know, heading back up towards, we, we did touch 5% dropped all the way down below four, started heading back back up to five.

Now we're around 4 24 25.

So the point is that it's going to be really tough to call the peak here.

And we think it's really time to start thinking about reallocating to fixed income.

So it's been very attractive to sit in cash at 5, 5.5.

But at some point, this market will move and we think it's time to start upping your allocation to bonds.

I mean, Steve, it's also been attracted to be in stocks, right?

I mean, so we've definitely seen people yes, allocate the cash, but yes, they wanna keep liquid so they can jump in when they see opportunities in the stock market.

And we've still got, I mean, we've been talking this week about Wall Street strategists who continue to raise their forecast for the end of the year for equities.

So when you talk about, you know, competition for, for allocation here, are you also having that conversation that equities are as much competition?

Yeah, there there's some of that, I mean, investors obviously are going to have different risk profiles.

But what we do know from from our internal data is that investors for, you know, balance portfolios are are fairly under allocated to fixed income.

And that makes sense.

If you think about the last decade of very low rates going into this tightening cycle, you saw, you know, some of the most challenging bond markets in, you know, the last 20 years.

But you know, right now, um you're, you're looking at yields that are higher than they were in 2004.

So this is a tremendous opportunity to right size your portfolio.

So yes, some investors will prefer to be, you know, risk on and, and have majority equity, but we still think there's room to balance out that allocation and right now yields are very attractive.

Uh Let me ask you this, Steve, you know, let, let's say I'm listening, I'm a viewer, I'm listening here and I, I'm really in that sort of soft landing camp.

We were just talking to Jim Bullard.

He's in that camp.

Let's say, I believe that that's my thesis.

How do I wanna be invested in fixed income?

What would my basket look like?

Yeah, we're, we're seeing investors actually allocate this way.

So we're, we're seeing flows into broad, you know, multi sector funds, think GG that's capturing a lot of it also, I USB which is adding in um high yield and em, but I think what we're also seeing is investors continue to allocate to high yield in general either through broad high yield.

Um We have a defensive product, hy DB.

So that's investors sort of hedging there in case in case the credit cycle becomes a little bit sharper than they were expecting.

But today we just launched our active uh fixed income High yield fund BRHY.

And so that provides investors the opportunity to kind of allocate between index and active to create a more resilient uh high yield exposure across both of those.

So high yield is going to be a part of that if you do believe in the, in the soft landing.

And, and I know that there has been an uptick in active ETS, were you hearing a lot of demand from your clients for that kind of a product consistently?

And, and I think, you know, this is what we view as sort of the total portfolio.

It's not necessarily that everyone's swinging back to active away from index.

It's that investors are demanding um high performing active strategies within the ETF wrapper for things like model portfolios as an example.

Um So we, we continue to hear this very loud and clear from our investors and we're responding right now in the US in active fixed income, we have 13 billion across 11 products.

We've talked about BB INC that product is now 3.2 billion and growing our Coco A fund is growing as well.

So we continue to put the pieces on the table to build out that active fixed income suite.

Again, investors can use this alongside of index building blocks to really create a much more resilient portfolio.

Steve always good to have you on the show.

Thanks for taking the time to chat.

I appreciate it.

Thanks for having me.

Now, let's get to some calls of the day here.

B of A security is coming out with a new note today on Dell maintaining its buy rating and noting sovereign A I demand as a large future opportunity.

Nice pop in Dell.

This is interesting because Dell reported and then remember this talk sank.

But now the street, we're getting this kind of consistent flow of bullish notes, obviously exciting investors delays is Bank of America.

The there is Wy Mohan is smart guy, does good work.

Um He hosted investor meetings with Ceo Michael Dell CFO uh Yvonne mcgill says we walked away confident in the multi year opportunity related to A I.

He says, talks about how A I server margins and of course, that was, that was a big sticking point when when Dell last reported investors were, were disappointed, but WSI argued that those margins have runway to grow over time.

Investors quite like the sound of that.

Yeah, and he's confident enough, he's got the price target of 180 on the shares and you talked about the stock pulling back a little bit after the earnings and then bounce again.

I mean, still just about doubled this year.

So even with that pullback post earnings, it has still seen this big increase here and just like the note we were talking about yesterday on Dell um the the uh price target increase there.

Um Again, this talks to see demand, talks about demand from cloud service providers um as well as enterprise A I kind of driving this cycle and also that margin.

Um tail wind that you talked about as well bulls coming out pat on the table.


Um let's also talk about Miron um steel raising its price target on that stock from 140 to 165 citing tail winds from A I demand for high bandwidth memory.

And that has been sort of the bull case generally for Miron, right?

We've heard a lot about what they call HBM high bandwidth memory and that that is the catalyst here.

And um the analysts are also talking about increasing in pricing um for memory and that it's gonna be driven by some of these more complicated memory chips, memory chips of all the chips.

I mean, they they're definitely commoditized.

Most of the chips are commoditized except for Nvidia's new very complex ones.

But it's interesting to see this evolution of the memory industry to these HB MS that are a little more com Yeah, the HBM I is what's got so many people excited.

Um and they remember Mike Brown reporting coming on June 26 those earnings hit and and and the analysts saying that he's increasing his estimates toward the upper end of that guidance range on this better memory pricing also raised.

Uh it looks like his Q four estimates expects favor pricing to persist in NAN as well.

So, and says by the way, he views Mike run as A I, Garp Julie, I love Garp A I garp growth at A reasonable price.

So we'll see June 26th cir calendars.

All right.

Moving on Citigroup, Ceo Jane Frazier speaking out earlier telling investors the company is no longer the financial supermarket of the past.

Here with more is Yahoo finance his own David Hoth, David.

Hey Josh.

So today was about uh Citigroup's services business, which is kind of a lesser known uh part of its business of, of the bank's massive international operations.

And the point of it is to basically help multinational companies move money across the world.

Um But Frazier also made a point of outlining how this investor day, even though it's just one part of the business was also meant to refocus on what's looking like a new city, a new version of of the bank.

Um in the context here obviously is that Ceo Jane Frazier laid out ambitious goals in 2022 to essentially uh right size.

The bank, uh Citigroup has been lagging peers for years.

Um And so a lot of the efforts over the past year has been about restructuring and reorganizing and downsizing.

Citigroup's business services is sort of a business they have not highlighted yet in some ways, it's a little bit dull to the average person, but it's actually a huge asset for Citigroup in that it has sort of scale of health of working with multinational uh companies.

Um and also the amount of countries that it operates.

And to the point where it's kind of something else that no other Wall Street Bank can really offer.

So those two things were on the table.

Um, as far as financial updates from the bank, um, they kept their targets for 2026 and for the full year for the second quarter, they are expecting slightly lower net interest income.

They're also expecting a 50% increase in investment banking fees.

Um, that's compared to last year, so a big boost in investment banking fees for the second quarter.

Um but all tying all of this together, the financial supermarket was what really originally formed city um in the 19 nineties, uh which came out of a conglomeration of businesses.

And so Frazier came out today, essentially underlining the fact that um she's dismantling that for a new vision of Citigroup.

Well, we shall see if it ends up paying off.

Uh Dave.

Thanks a lot.

Appreciate it still to come.

It's the Yahoo invest finance investor playbook.

The impact of climate change on insurance insurers exited some states and raise rates and others will get one take on how you should invest in that sector.

They t more market domination on the other side, America's homeowners facing a hefty price tag from climate costs and now the fallout from severe weather risks may be spreading in the US to finances, senior columnist, Rick Newman joins us now with more Rick.

Hey guys.

Yeah, I've been looking into what is happening with homeowners insurance.

Uh premiums.

We know people have been getting walloped with uh huge increases in auto insurance costs and something similar is happening with um home insurance premiums now.

And I think the surprise here is we expect this to happen in coastal areas and places that are exposed to extreme weather, the type that's familiar to us, but this is happening all across the country for a couple of reasons.

Number one weather is just getting more extreme and extreme weather is getting more frequent and that is happening everywhere.

So for example, in the upper Midwest, they've had a lot of hail storms in recent years that have caused a lot of damage.

So that is pushing prices up in states like Minnesota and Wisconsin.

And the second thing that's going on here is because big national insurers because they write insurance policies across a huge pool of buyers all across the country to some extent, they are offsetting super high costs in places where there are severe storms, think Florida, California wildfires, tornado alley, things like that.

Um Those are getting worse and they're getting more expensive.

So they're having to raise prices in some other areas just to offset those costs.

And if you think this is price gouging, not really because when you look at the uh the the profit ratios or loss ratios of insurance companies, uh they, they have been losing money on insurance policies in 17 different states during the last five years.

When you average it out that's paired with just seven states where they were losing money going back to the 2014 to 2018 time frame.

So, uh this is becoming a bigger problem for insurers and it doesn't matter if you believe in climate change or not, this is showing up on the bottom line of insurance companies and they are either raising rates, reducing coverage or getting out of markets altogether and that's going to affect many, many Americans indeed, and it already has in many cases as well.

Rick, thanks so much for that.

That is the perfect set up because we're going to continue talking about this and the effect on insurers around the world.

Extreme weather is intensifying a powerful heat dome is settling in over the eastern half of the country as the Gulf coast faces flood risks from possible tropical systems and wildfires threaten the west with extreme weather comes, extreme insurance premiums.

But how much of an impact will it make for investors?

We're taking a look in the Yahoo finance playbook and joining us now is Kathy Seaford CFR A research is Vice president of Equity research who's looking at this, Kathy.

It's good to see you.

This is a really interesting topic.

We just heard Rick talking about the effect that it's having so sort of big picture here.

Um Are insurance companies far and wide rethinking where they can operate and how they can operate because of changes in weather.

Yeah, I mean, that's a really good question.

And your previous guest really sort of, you know, t things up nicely and just to kind of, you know, for, by way of a little bit of background, we're now six years into a hard insurance pricing cycle and this is something that's unprecedented.

The insurance industry really has not seen this kind of pricing power in decades.

And I would argue that this pricing power that the industry currently has is likely to be a secular trend, not a cyclical trend.

This is good for insurance investors.

Um I think you have to choose carefully depending upon a particular company strategy, how well they've historically underwritten and you know, things like that.

But you know, within um the homeowners and the personal auto lines of coverage, the industry has not made a profit in quite some time from underwriting.

There are a handful of companies that do, but for the most part, um those lines of business have been unprofitable.

Um The way I think to play this is to pick names of those insurers who have pricing power, but either have a diversified book of business so that they don't have outsized exposure to one particular line of coverage or one particular area.

Um and also have lines of coverage that is not necessarily as exposed um to severe weather.

So, you know, along those along that score, I like arch capital, they're a reinsurer and a primary insurer, they don't necessarily write a lot of catastrophe insurance.

They're growing their top line mid teens, which is faster than the overall industry.

I see the broader industry growing around 6 to 7 per 7 to 10% this year.

Um We thought that things were going to soften a bit in terms of pricing the first quarter numbers from the commercial lines insurers um to showed us that premium, we're up almost 8% and a lot of that is driven by the same things that's driving the personal on space and that is commercial property that's impacted by weather and commercial um auto, which is I impacted by a lot of the same things that impact personal auto.

Um So I like, I like arch capital.

I also like a IG, they're in the throes of a restructuring and they have done and I think they've done an admirable job of um reducing the risk profile of their property casualty book of business.

While at the same time cleaving themselves into as opposed to being a multi line insurer.

They are now a IG, a property casualty insurer with Cobridge, a life and Annuity or life and retirement insurer.

And they're in the process of um de consolidating.

Actually, they just de consolidated Corbridge.

So that's a turnaround play um in the personal auto space.

I think the best underwriter is progressive.

They have best in class um underwriting analytics, the capabilities, the analytical capabilities, the ability to write, um, usage based insurance, which I think is going to be an important competitive um attribute as um, consumers look for whatever ways they can to save money on auto insurance.

You would, you, would you, I'm progressive and we just pulled up that stock chart.

It's a nice move.

I mean, more than 30% this year, Kathy, more than 60% in the past 12 months.

What would, would you, would you still wanna carve out a position in progressive now or would you wait for a pullback?

I, you know, so it's interesting, we talked about sort of severe, you know, severe weather and um this hurricane season is expected to be really active.

What typically happens to the entire space when a hurricane hits is the stock sell off because people get concerned about claims.

So I think as we head into hurricane season, investors might want to be mindful of those kind of opportunities.

I agree with you though and progressive, you know, if you follow this industry, you tend to be a value investor.

Um progressive is a growth stock and it sort of breaks the mold of the typical PC insurer.

Um And honestly, I've hesitated with this stock because it never looked cheap enough for me.

But then, and what I've seen over the last several years is progressive, kind of pulling away from the path because of their really significantly superior analytical capabilities that are going to serve them better as the, as the insurance industry continues to grapple with all of these um climate change issues and the need to um streamline underwriting and get a more cost effective underwriting model to offset the rise in claim costs and progressive is kind of already there.

Geico and Allstate are still playing catch up.

However, I I think Allstate's an interesting turnaround play.

There's some execution risk there, but, you know, I think they're attractive.

Um Yeah, Kathy, there's a I I wish we had more time, but thank you.

Listen, great strategy, great picks.

We appreciate you coming on the show.

I was great being with you.

Thank you so much, take care.

We'll wrap it up today's market domination.

Don't go anywhere.

We've got you covered with all the action following the closing bell and be sure to tune in later for an exclusive interview with Federal Reserve Bank of Boston.

President Susan Collins, that's at around 4:40 p.m. Stay tuned for market domination.

Jared Bl We will be back too right after this.