S&P 500, oil price outlook, Chegg job cuts: Catalysts

On today's episode of Catalysts, co-hosts Seana Smith and Madison Mills cover the latest S&P 500 (^GSPC) growth targets by Wall Street strategists, the top trending tickers, and crude oil (CL=F, BZ=F) price outlooks.

Markets are in focus as analysts grow increasingly bullish on the S&P 500's year-end growth prospects. With the AI boom driving much of the tech gains within the index, BlackRock Global Chief Investment Strategist Wei Li joins the show to discuss why she believes this trend is contributing to inflationary pressures.

The show then dives into the stock reactions of educational platform Chegg (CHGG), which is undergoing a global restructuring, and pharmaceutical company Merck (MRK), which received FDA approval for its pneumonia vaccine for adults.

Closing out the show, crude oil futures are reviewed as they continue to hover over $80 a barrel despite uncertainty surrounding demand dynamics. However, Citi's Global Energy Strategist Eric Lee joins to discuss why he believes oil prices could fall as low as $60 within a year.

This post was written by Angel Smith

Video transcript

10 a.m. here in New York City.

I'm Sha Smith alongside Madison Mills I into the catalyst moving markets today.

The stock market is holding on to its games here with the P now that just Hoing at their record highs following that weaker than expected retail sales data.

We're going to discuss how the latest data could impact the Federal Reserve's highly anticipated great cycle.

And we have a full fed speak on deck today including a Yahoo finance exclusive interview with Boston fed President Susan Collins.

That's a 4:30 p.m. Eastern time today.

The hawkish tone has not changed the mind of Goldman Sachs for about the possibility of two break cuts this year.

What do investors need to hear from that members now?

And Boeing Ceo Dave Calhoun set to testify before the Senate at 2 p.m. Eastern.

This coming after yet another whistleblower has come forward that whistleblower alleging the company lost track of hundreds of faulty parts that could have ended up in planes.

We're going to tell you how that news could impact Calhoun's time in Washington.

But first, let's get to today's top story, the stock market rally, the S and P 500 notching its 30th record close of the year.

And strategist will they continue to lift their S and P targets?

City is the latest boosting its year end target to 5600.

Now, that's up from 5100.

We spoke to Scott Kroner.

He is city's head of us equity strategy earlier this morning about his call.

Here's what he had to say.

We do think that this A I driver is gonna continue to spur a lot of activity um on the investment side of generative A I and that should continue to feed through to a certain degree into the mag seven.

But we think that there's a broadening effect as well, longer term.

We think there are really interesting growth opportunities unfolding courtesy of uh this generative A I angle.

He talked about that broadening effect and what exactly that is going to look like.

But again, it's all driven by A I and I thought that was so interesting there.

He's talking about that growth opportunity.

What exactly that looks like here?

So again, the lifting their year end target up from 5100, they now see the S and P ending the year at 5600.

Looking ahead though to 2025 and this is the first time we're getting a glimpse here at this, a full year 20 the mid and full year 25 projections of 57 158 100.

So not too far from where they see us ending the year.

But again, all behind or all on the heels of that growth in A I and what exactly that opportunity holds and how that is going to impact sectors beyond the big tech.

And one of those sectors that they highlighted to us was industrials being well positioned there to kind of ride the coattails and be a big beneficiary of that spend.

It's interesting and it's something that we're gonna be talking about with our next guest here.

Just the degree to which A I spending cap back is a positive versus tipping over into a little bit too much.

It's a very fine line and I think one potential example, we've been joking about it all morning.

Our favorite story about mcdonald's having a couple of issues with their A I powered drive through situation, getting bacon on the flurries.

It's kind of silly, but it's also important because it points to this idea that companies are devoting a lot of money into R and D related to A I, not only could that money not necessarily be well spent, could also be a bear signal for some stocks if it tips over to being a negative for those companies in terms of the customer experience.

That's exactly what we saw with that mcdonald's situation.

So it's interesting to see whether or not that could brought out too.

That's a great point.

Right.

Well, let's talk about the rally that we have seen some of those gains because this morning, we got the latest reading on the consumer retail sales data out showing that consumer spending is slowing more than economists had initially anticipated.

Could the economic data push up the timeline for rate cuts we wanna bring in way, Lee Blackrock, Global Chief Investment strategist.

Well, it's great to have you here.

So talk to me just about how you're comparing the run up that we've seen obviously in the market here, we are not far from those all time high numbers.

And comparing that to maybe the slowing that we've seen in the econ data.

Is that a bit concerning for current valuations?

Well, what we have seen so far is that despite the fact that markets priced out five cuts uh by the fed in 2024 compared to beginning of the year, equities are very strong.

And the reason that equities are very strong is because we have seen very strong earnings driven by A I and tech related names.

So there is a bit of a disconnect between what rate market are suggesting and what uh equity markets are actually doing.

And the reconciliatory term here is the uh the rise of A I and what that means for powering stronger and stronger earnings, which is why we are positive on broad equity market.

We prefer equities over government bonds and specifically within equities in the US.

We like tech.

Ok.

So talk to me about the sort of Capex piece of your note here, you talk about A I Capex potentially leading to an increase in overall inflation.

Can you explain that pipeline for me?

Um indeed, what is happening right now is that companies are coming out of the pandemic with quite strong balance sheets and their ability to generate free cash flow has been very, very impressive.

And that's also in part why we're positive on the US equity market more broadly.

And the ability for the companies to spend in A I infrastructure build out data center is why this is actually a very, very important theme as we think about the next leg uh to play the A I theme and the A I build out has two implications.

Number one, it actually can be inflationary, right?

And I think that was underappreciated at the beginning of the A I uh um A I boom because people are automatically thinking OK A I leads to productivity Deb boon and that could be deflationary.

But before we even entertain the possibility of productivity boom, we have to go through the Capex build out phase that in the context of supply constraints also with the low carbon transition, competing for some of the same resources can be inflationary.

But a second implication of this is that it actually spells great opportunities for infrastructure, for example, and private markets that allow us exposures to the early journey of some of these A I beneficiaries.

So we are very positive on infrastructure uh and also related sectors.

You talked about industrials earlier, but also materials and energy are likely beneficiaries of this transition and of this uh um build out that we are expecting.

So what when you talk about the fact that A I build out there could potentially be inflationary, at least in the near term.

How problematic is that for the FED A?

Can you put that?

I guess a little bit more specifically just in terms of what exactly that is going to look like the data here and the numbers, I I would say that I am more confident about the sequencing rather than the exact timing.

Uh by which I mean, I'm not sure that it is going to be inflationary in the immediate term.

What I'm saying is that before it gets to the deflationary stage through the productivity boom, we are likely going to see the inflationary effect from the Capex first, but it takes time for uh companies to build out their A I infrastructure.

So it may not be immediately showing up in the numbers.

In fact, if you think about, if we look at kind of um the, the the the unwind of pandemic, uh good service mismatch, there is room for inflation to potentially go even lower.

Supporting our conviction that this year the FED is going to start cutting um two cuts likely um especially in the context of the the inflationary environment I just talked about as well as the softer uh data from a elevated level today's retail sales number case in point.

So I want to kind of put a bow on this in terms of the impact it could have on the market moving forward.

As you're saying, a Capex could be inflationary.

I think about this mcdonald's example that we've been talking about, right, how one companies R and D spend on A I could be a bear, such a bearish signal for a firm to what extent do you see that becoming a broader story in the stock market where individual companies may be increasing A I spend but doing it in a way that's not productive.

And how much do investors need to be concerned about that as a bear signal potentially moving forward here?

I think being selective is quite key.

It has been very, very important in us navigating this A I uh boom, right?

So if you look at so far, this year, tech sector has outperformed the broader market X tech by four times uh on a year to day basis.

And if we stretch the horizon to beginning of 2023 tech has outperformed non tech by 1010 times, right?

So there is significant our performance.

It has been a very concentrated market thus far as we play the, the DDA I theme, but they have been supported by earnings.

I'm not too, I'm not too concerned about the concentrated nature of the market because if you look at NVIDIA, yes, since 2023 prices appreciated uh 500% but earnings have been upgraded by 500% as well.

So it's gone kind of up at the same time supporting the price action.

So I'm not hugely concerned about the valuation piece because earnings have been coming through and they continue to get upgraded.

There are signs of this concentration broadening out though and I'm not just talking about kind of the the price action front on earnings front.

If you look at the last earnings season, eight out of the 11 sectors actually managed to grow their margins.

And this is what we're looking for, which is why, yes, we are um, overweight us equity market.

Yes, we have the preference for tech, but we also have uh uh uh we also have preferences for other parts of the market that are likely going to be secondary and tertiary beneficiaries of this particular theme.

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

Thank you so much for joining us this morning.

We really appreciate it.

That was way Le Blackrock's Global Chief Investment strategist.

Now turning to another big story that we are watching today, Boeing, the company's outgoing Ceo Dave Calhoun set to testify before the Senate at 2 p.m. Eastern is coming after another whistleblower came forward about the firm and while the company is still on the search for a new CEO joining us to unpack all of these challenges for the company.

We've got John Grant.

John is a senior analyst for the official airline guide that is an air travel intelligence reference.

The provides aviation data.

John, thanks so much for being here.

I mean Capitol Hill was already kind of fired up about skewering Dave Calhoun today.

To what extent do you anticipate that the news of this additional whistleblower coming on the very day that Cal set to testify is going to heighten what was already going to be a pretty intense situation on Capitol Hill.

Yeah, I there's one man in the world who's wishing it's Wednesday already, I think.

Um and it's uh it's not gonna look good and of course, you know, 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.

You need 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.

So John, you say it's a long running pr disaster, the advice, what advice do you have then for Boeing or what should the priority be in, in terms of winning back the trust of shareholders, winning back the trust of customers, both those that are flying on the planes, but also obviously the airlines as well.

Yeah, I mean, you know, it's, it's multifaceted, isn't it?

You can't just pick one bit.

There is a whole lot of pr reinforcement and credibility that's going to be regained by the company.

A lot of it is around just being open and being honest, quite frankly and get into a situation where their employees trust them.

It's got an open culture they can deliver on time because airlines have absolutely no idea when they're going to get aircraft from Bowen and certainly not on, on the single ale 737 production line.

Although, you know, they're having similar issues on the triple seven X uh program as well.

So it's, it's all about rebuilding confidence and, and that's why this whole situation around finding a new CEO trying to restore, rebuild, all of those factors are so important to the company.

Yeah, John and the journal was out with a great piece on exactly where maybe those efforts stand right now talking about some of the people that have been considered.

But I guess my question to you is who is best fit from your position or from your view to step in and follow Dave Calhoun and really be able to bring some change or bring some progress here to Boeing in a very timely manner.

Well, I, you know, I think ultimately, it's not a been counter position.

Um and I think the airline industry and their customers.

Boeing's customers are looking for someone who has been ingrained and is well respected within the industry.

So someone from an engineering background with a, you know, a high degree of competency in the avionics and the production sector.

So, you know, it may be dare I say that they need to be looking at someone in Airbus um as a potential candidate for this role, even though, you know, Boeing's preference undoubtedly would be for a US national.

This is a, a company that trades on a global basis and they may have to start headhunting overseas rather than just within the US space.

Yeah, John, it's interesting.

I just don't buy this idea that we're hearing in the reporting and conversation around this, that this is a role that nobody's going to want because I could see a lot of individuals being excited about the opportunity to really turn this company around that is not really at risk of going bankrupt.

What would you describe as the value proposition for executives who are potentially on the short list for Boeing?

Next CEO you know, I can, I can see both sides of, of that argument.

Um And I think the value prop the sale is here is a once in a lifetime opportunity to transform a company and its position um beyond anything that could be done in any other role and any other job in this particular sector.

So if you, you're young, um you're very confident in what you're doing and you can get the goodwill and you can get the long-term trust of the workforce, your airline customers and the shareholders.

Then I think, you know, you've got a chance at this, but you've got to be given a clear mandate to get on with this task and bring in the people you want to bring in and not be put into a straitjacket of what you can and cannot do because this is, you know, it's a crucial role.

Um And if someone does pull this off, then I think, you know, it will be a tremendous uh line on their CV.

For sure, John Graham, great to get your insight here ahead of this testimony, senior analyst for the official airline guide.

Thanks so much.

Thank you.

Keep right here on Yahoo Finance.

We got much more of your market action ahead.

Again, we're about 45 minutes into the trading day.

You're looking at gains for all three of the major averages trading just above the flat line.

We've got much more for you ahead.

You're watching Catalysts take a look at some trending takes that we're watching this morning shares of check surging after the company announced plans to slash 23% of its global workforce in a bigger we structure move for the firm, those shares of 15% up over 19% earlier in the day.

Y finances Josh for joining us now with more Josh, this is a huge boon for this company.

I mean they say that they are looking for expense savings of up to 50 million in the next year.

Plus, what else can you tell us about it, man?

I don't want to slow your role too much, but we got to look at a max charter check.

I mean, this is why we're doing a restructuring effort, right?

This stock was over $100 at one point during the pandemic boom.

So yes, a restructuring effort.

And I think largely for investors, something that they've been waiting for, right?

We knew as the new Ceo Nathan Schultz came in, they want some sort of change here and this is the change that you're getting.

I think the large question that Wall Street analysts are asking this morning is sort of what do you do with that cost savings, right?

Is it going to be reinvested back into the company to help with the A I efforts that check has been building out or is it simply going to be a way to kind of protect margin and help earnings moving forward here?

Because we know the revenue growth has simply been slowing since the launch of CG BT.

I'm looking at research from Brent Bill over at Jeffries, friend of the program, he's pointing out that revenue fell 7% in 2023.

It's projected to fall 9% year over year in 2024.

Also looking their estimates show potentially a decline year over year in 2025.

Just simply the the growth engines of this company have not fully been clicking since the launch of C GP T and other A I solutions that students are going to to find freeways rather than paying C A to use their A I solutions.

So I think overall the looming question here is simply, is this gonna work?

And then also when does it work?

Right, at what point does this help bring you back to revenue growth?

If you do reinvest this money?

Is this gonna be a 2020 late 2024 story, more of a 25 story kind of how long can you go at this pace?

Seems to be the looming question.

And what's also interesting about che when you take a look at that longer term chart and you talk about what you have covered in the past their investments in A I and this is one of the companies where it has pretty much failed to excite investors surrounding this.

And on the flip side, it could actually be pressured because of advancements in A I.

So I also think they have a tough line to walk there just really showcasing as to why some of their investments in A I are going to pay off and why it's going to position the company in a better light than they are right now.

I I mean, zooming out the conversation a little bit when we talk about A I, it's always important to talk about who the actual consumer is of the A I, right?

You talk about NVIDIA, their consumer is large tech hyper scalers and those companies are gonna pay up, right?

You talk about the large tech hyper scalers and you think about Microsoft and Google.

Well, who pays them businesses?

Pay them right?

Businesses pay them to use that A I who pays C maybe schools but potentially studentss, right?

And if you're a college student that used to sit around and use keg with your fellow students to study and you can find a free solution online.

I think it's a tough consumer, especially with you guys have been talking this morning about a tough consumer environment.

Overall.

I think it's hard when there's free A I solutions all over the internet, it's hard to get people to come back unless your A I solution is that much better, which is what they're pitching and maybe they'll eventually get there.

But right now, I think it's just a tough match.

It's always hard to compete against anything that's free.

But I really think if you're in college and you're gearing towards students that makes it even more difficult trying to get them to pay up for some sort of PT is writing essays, guys, it's happening.

It's out there.

All right, Josh.

Great.

Thanks.

Let's take a look at Adobe another trending taker here on Yahoo Finance Us Regulators suing the company over claims that it made it more difficult to cancel subscriptions to its software programs which include Photoshop and also premiere the lawsuit alleging that Adobe quote unquote hides the terms of its annual paid monthly plan in the quote unquote fine print.

They also went on within the suit uh alleging that they make it very, very difficult here, make it onerous and complicated.

Were the two words that they used to describe the cancellation process saying that many users have to navigate through multiple web pages and m multiple pop pop ups.

They also went on to say that allegedly quote unquote ambushes customers with an early termination fee which may discourage them from canceling.

So despite all this, we are seeing Adobe actually move to the upside here today, I wanna make too much of that intraday move here related to this news.

But again, important to focus on when we talk about what ultimately this could mean here for Adobe's business down the line.

Yeah, it's fascinating, Shana, when you take a look over the past couple of days here, even the stock is up about 12% over the past five days here.

But just to give some context on the cancellation itself, Adobe according to uh the FTC here kind of users towards this annual payment which is $700 annually.

Now you have two weeks from that payment time to be able to cancel the FTC saying that the clarity of that timeline is what is what they're really calling into question here.

Users who cancel later on will get a pro rated penalty based on how long they've been utilizing the suite of services from Adobe.

Now, what I think is interesting here too is that this is part of a broader move that we've been seeing from the Biden administration from officials in Washington as of late in sort of making fees for consumers more clear.

We've seen this from Airlines from Pete Buttigieg.

We've seen this from the Biden administration with regards to credit card fees, obviously with fees related to live nation concerts and tickets.

So I think it's interesting and not too terribly surprising seeing this coming from the FTC, particularly given that the FTC sued Amazon for the very same thing with regards to prime memberships just last year.

So we could expect to see potentially more of this coming down the pipeline to.

Well, we are also watching shares of me after the FDA approved the company's new vaccine which is designed to protect adults from a bacteria that could cause pneumonia.

Yahoo finances, health care reporter has details on this actually.

That's right man.

So this vaccine got approved by the FDA.

We're still waiting on a word from the CDC on what kind of recommendation they make on who should get.

What we do know that the, that the bacteria does infect adults especially older adults and younger kids are more susceptible to the disease.

And so they have already been vaccines on the market that address this.

But me takes it a step further.

If you watch the history of the pneumococcal pneumonia vaccines, they have been chasing these strains.

There are currently the latest one was por with 20 strains and that was a couple of years ago.

So me coming out with a few more and now covering 21 strains of this is a really important for us, older adults.

Uh 65 and older, typically about 6 30% are affected by very serious disease.

One in 20 adults die from being infected.

So this is a very serious disease that uh the vaccine protects against.

And we'll wait to hear if this is going to be recommended as a mandatory or uh you know, it's kind of like the flu uh for older adults and that will help Merck's.

Of course, bottom line, we know that Merck is facing a lot of pressure, the uh patent cliff that they are facing with keytruda.

So all eyes on any new products that they launch right now, all eyes will be on that and, and you're pretty busy this morning because you're also covering another story.

We're hearing some Amazon the fact that their pharmacy unit, they are expanding their subscription plan.

What do we know there?

Yes.

So up until now it's been anyone who can pay for the subscription plan and have access.

But now they've plugged into the most lucrative uh population and that is the Medicare population.

And so now they have access to the entire Medicare covered population for drugs and those members will now have access to their Rx pass.

And that as a reminder is their monthly subscription for drugs, mostly generic.

Uh And that is just another opportunity for Amazon to sort of cement itself really in what is a growing sort of third party alternate market for getting drugs.

Thanks for bringing us your reporting.

As always, I really appreciate and you've also been helping me with my reporting behind the scenes for this week lead this way, I spoke with not an Amazon executive but an Amazon web services executive.

Doctor Angela Shippy, she's a doctor turned tech executive for Aws.

We spoke about how she's working to install a I powered tech in the hospitals across the country so you can catch that segment right here on Yahoo Finance live at 4:30 p.m. et on Thursday.

We're going to be back here with more catalysts for your market movements.

After the break, oil prices are holding near their highest level this month as traders continue to weigh demand, uncertainty, Yahoo Finance and as has been watching oil prices so far this year for us and what do you got?

Yeah, Madison and we saw crude advancing this month after a quarterly drop, taking a look back at the beginning of June, oil initially had dropped after OPEC plus that it would extend its production cuts, but the voluntary ones would start to be phased out starting in October.

Then the Oil Alliance kind of hinted.

Well, they could reverse that decision.

A part of the recent move up has to do with demand expectation since the summer.

JP Morgan recently citing a summer inventory draw which could move Brent back into the high eighties to nineties range interest rates starting to ease in other parts of the world here in the US.

One rate cut is expected this year that could be bullish for all.

And this expectation that if prices go down into the seventies and the US is going to aggressively start filling its Pr China will take the opportunity to buy more oil.

But if it gets too high, then again, I can go ahead and introduce more barrels into the market in the fourth quarter as it doesn't want to lose really any more market share to the US and others as it has.

Prices are expected though to taper off in the fourth quarter and going into 2025 analysts are expecting the balances are going to soften dramatically with Brent crude falling guys all in.

Thanks so much for bringing that down for us here now, despite oil prices and nearing their highest level this month, our next guest saying that 2025 could bring a different story let's talk about that outlook and what we could expect that price action to look like we wanna bring in Eric Lee.

He's city's global energy strategist joining us now, Eric, it's great to see you.

Thanks so much for coming in.

So let's talk about what we are seeing in the price of oil because lots of confusion, I guess lots of questions I should say uncertainty regarding supply and demand, how exactly that is going to stock up and ultimately the impact that's going to have on prices here in the long run.

How do you see that playing out?

Yeah, absolutely.

I mean, again, you know, we do think that there is a bit of a tight stretch through the summer.

So we do see prices staying in the low to mid eighties for a little longer.

But as we're looking through the second half of the year into 2025 we really see markets getting a lot weightier and a big part of that is supply and demand.

And one part of that is the recent OPEC Plus meeting.

I mean, they are guided for the prospect of adding 2.5 million barrels a day to the market over a year starting October.

Now, we actually don't think they will end up doing that because we don't think there is actually enough room for them to bring these barrels back to the market.

That's a big part of our 2025 view.

How much could the run up between now and the election in November potentially be a headwind for that view or do you think whatever happens between now and November has plenty of time to be undone heading into 2025.

Yeah, we are essentially looking for a top for this market in the middle of this year and this summer.

So there's a lot of reasons to be cautiously bullish this summer, geopolitics, weather, hurricane season, wildfires, high heat.

So there's a lot of things that are keeping the market nervous.

However, one thing that is, you know, that could offset that is we're not seeing such strong gasoline demand this summer driving season, including in the US, which is typically been one of the strongest places.

And the second one we know is that refineries are also signaling that profitability is problematic right now.

So margins aren't that strong refineries are talking about reducing how much they're running and they're the ones that use the crude oil to make into gasoline and diesel and other products.

So, Eric, when you talk about maybe that more bearish dance or bearish outlook as we look ahead to 2025.

How much pressure do you expect to see on prices when it comes to Brent and crude?

We are looking for a sixties next year.

So we haven't seen that for a while, you know, this summer still in the low eighties, but we think we're moving into the seventies for Brent for the second half of the years and sixties next year.

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

I'm curious then we have this kind of global risk on sentiment that Anne was talking about.

How do you get to 60 without the market turning that risk completely off?

Yeah, I mean, I think it is actually a disconnecting of the oil market from a lot of other risk asset sectors and even growth itself.

So we essentially think fundamentals supply and demand and global inventories ultimately will be building a lot next year.

In our base case, we have 1.4 million barrels global oil stock build next year after a roughly balanced market this year.

So I think when the market sees that that is bearish for the price and it can decouple from other sectors and particularly growth.

One very key issue for next year is that oil demand will continue.

Oil demand growth will continue to slow down.

And that's part of the electric vehicle energy transition story.

And really as we see oil demand decouple from GDP growth can continue to grow.

Oil demand can grow at a slower and slower rate relative to GDP.

And in fact, peak before the end of this decade, Eric what about the geopolitical risk side of things?

Because that really has been dismissed, dismissed by the market by investors here over the last couple of months and it's been a bit surprising just compared to how we initially viewed some of that unrest going back 789 months ago, what's changed?

And should we be, should there be more of an emphasis on that?

Yeah, I mean, there should always be an emphasis on it clearly, you've got the humanitarian angles which are crucial, but in terms of the impact on the oil demand on oil markets, they have been largely brushed off for a few reasons.

One is it takes a few links for the, in this case, let's say the Middle East conflict becomes an impact on oil production, oil exports, oil infrastructure.

So those linkages have not mostly taking place.

One place it has is the Red Sea shipping issue and attacks on ships from Yemen.

But the other part is plus.

So the market right now is artificially tight.

I mean, we're only at this level because is withholding 6 million barrels a day of oil off the market.

So that's what's holding up the price.

If they weren't doing that, prices would be a good deal lower.

So, ok, that brings me to one final question.

I know we had you on to talk about your 2025 call, but I'm so interested in the potential impact of geopolitics on the election.

I want to get your take on this.

There's this idea out there about the idea that Opec plus potentially the Saudis could play with supply and demand if they want to ensure that Trump ends up in the oval office.

Come November.

Do you buy that idea?

I have definitely heard that story.

It's really hard to confirm these kinds of things.

You can certainly say that broadly speaking, the Saudis Mohammed Bin Salman has been relatively less warm with the Biden administration and relatively warmer with Trump.

And that's the expectation.

However, even then, you know, us, Saudi relations have thawed somewhat throughout the Biden administration all in all though the Saudis are interested in supporting this 18 $90 price, we think.

However, again, we just don't see this is a sustainable thing because the only way they are doing that is by giving market share to other producers which are growing significantly around the world, not just in the US, right?

And it's hard to tie that move from them to any political motivation as well as you mentioned, but appreciate your time answering and thank you so much for coming in studio, Eric, we appreciate it.

That was Eric Lee.

He is city's global Energy strategist joining us here in studio now, coming up as NVIDIA continues to support record highs in the broader market.

Should investors be hedging against the chip giant?

We're gonna discuss that after the break, analysts continue to raise price targets on in video, the stock also keeps climbing to record highs, bringing the S and P and the broader market with it.

But should investors start worrying about hedging against any potential risks to the chip giant.

For more on this, we bring in Amy W and R BC capital markets, derivatives, strategist, Amy.

Great to speak with you and thanks so much for coming on.

So I'm curious, I mean, when 5% of companies are responsible for all of the market gains that we've seen so far this year, you gotta be a little bit nervous.

You say that the best hedge for one big tech name that we talk about all the time is another one which mag seven stock do you see as a potential stock that could benefit from any NVIDIA headwinds?

You know, it's interesting because, you know, as we know, the market really, from a market weighted basis relative to an equal weighted basis has really, really outperformed.

And what's interesting is when you think about that from just kind of headline numbers, you don't see it, but it really is, this kind of one is doing well, the other is going down.

It's like this paddling duck market, it looks calm on the surface but violent rotations underneath.

And a lot of that just speaks to positioning.

So sometimes when you look at the institutional client base, when they're selling one of the mag seven, it's usually to buy the other.

And what we've seen recently in terms of positioning is that kind of diametric opposition has really been Invidia versus Apple.

So, you know, you've seen one outperform it sort of hits the other and then when one is outperforming, you're taking profits from the other.

That's not always the case, right?

They're not always the pair that just certainly has been the pair recently.

Amy.

When you talk about maybe what this signals more longer term, some of the other rotations that you have seen.

I hear in your notes, you talk about the top sector still being energy, the 2nd and 3rd real estate and consumer discretionary.

What have you seen just in terms of investor interest there and maybe what that signals just in terms of where we are going to see some of that strength down the line.

You know, I I really feel bad at some point for these investors because I think the investors overall have really wanted to do a trade, that's essentially a bet on the broadening out of the market, you know, so they want to look at energy, they want to look at these other sectors.

But then at the same time, there's this, you know, this is a problematic benchmark FOMO and that, that's sort of what I started to call it, which is just when you have a few names doing all that, the heavy work for the indices and you're not over allocated to it, then you're dragging your benchmark.

So the issue is I think a lot of these sectors they look attractive, you know, we've done our sharp ratio studies which show how attractive they are on a risk adjusted basis.

But the issue is when you have that benchmark, FOMO, you know, you're much more concerned about dragging that benchmark and that unfortunately means all roads still lead to technology.

So we still see the f conversation and trade driving the market right now.

Amy, or are we starting to see a little bit of HED against just going all in on tech?

And if so where you see evidence of that?

Yeah, I think that's a really great question because it really speaks to a sentiment change that I don't think you could just get from looking at the top line of the market.

So I'd say, you know, for the first few months of the year, all we could see in the options market was FOMO and Momo, we saw that in historic call buying uh in the NASDAQ in the mag seven names just across the board, you know, unlike anything we've really seen in this kind of post COVID volatility regime, however, that is changing.

So you are starting to see people pick up a few hedges.

Uh You're starting to see people even talk about hedging the mag seven that, you know, it's not what I would call historic the same way we saw on the calls.

But the fact that it's part of the conversation to me does show a little bit of influence in the market and people sort of questioning how much longer this narrowness and breadth that is going to continue.

I mean, when you talk about some of those other factors outside of earning season here we are, we have earnings season essentially behind us.

What is really going to drive some of that sentiment, some of that activity that you are seeing here over the next couple of months as we do have this lead up here to the election.

Yeah, you know, when you seasonally look at how Vicks behaves, for instance, just, just volatility in the markets.

It's typically a quieter time, especially with earnings out of the way.

Obviously, in early July, you're gonna get another kick off of earning season.

But right now, I think people are focused on the US election debates.

I think they are of a lot of interest to investors and then right now kind of the political headwinds coming out of other elections, not in our own country, but out of Europe, out of, you know, the Asian countries, they, they sort of have this tail wind to them for the US because the US has sort of been a flight to safety when there is uncertainty in other markets.

All right, Amy Silverman R BC, capital markets, equity derivative strategist.

Thanks so much for joining us here this morning.

Prime video's ad supported pay structure strategy first launched back in January is having a major impact on competitors negotiations.

Amazon driving down the price of ads across all streamers and networks.

For more, we want to bring in our very own Alexandra Canal and Ali, what is, what is, I guess some of the trends that we're seeing within the ad space because of Amazon.

Well, there's a few things at play here.

One is the fact that we have those newer entrance in the ad supported space.

I think Netflix Disney Plus, remember they only launched their ad supported tiers less than two years ago.

So already we're seeing this connected TV advertising landscape automatically starting to expand.

And then in January, like you mentioned, we had Amazon roll out its prime advertising on its prime video service as the default option.

So you were automatically enrolled in those ads.

And at the time, MN and described it as quote, a 500 gorilla enters the arena.

Now six months later, we're starting to see that disruption begin to play out here.

Analyst Michael Nathanson, he previously estimated that prime video could add over 50 billion to the C TV market in 2024.

And that amount, it's not only going to dwarf some of those smaller players, it's also going to increase inventory across the board.

And as a result that drives down prices and we're already seeing that play out with companies like Netflix.

The Wall Street Journal did report that Netflix is asking some brands to pay about 29 to $35 to reach 1000 viewers.

And that's a pretty will decrease from the 39 to $45 its charge last summer to some advertisers.

And one of the reasons there is because Amazon is charging a similar amount.

But we're seeing this increase scalability across the board.

Y finding instead of a chance to speak with Disney about this.

Their global president of a read far I can, she spoke a little bit about this big tech disruption.

So I want to hear but more of what she has to say, there's no question.

It's created a excess of supply in the marketplace for a marketer.

You have to figure out where am I gonna spend my dollars?

What's the right partner to do that with?

And I think that's where the combination of creativity and technology really needs to really deliver on the outcomes.

Disney competes with Amazon Google and everybody else.

And so, you know, to me, the big, the big share is still youtube, right?

Like you, you just have to look at their earnings every quarter.

I think we, we have done an extraordinary job because we have scale and we have premium storytelling and brands that everyone recognizes.

So youtube, Amazon a lot of those big tech names that we talk about.

It's impacting some of those more traditional players there.

Now, Nathanson is forecasting that total advertising streaming will grow 33% this year.

That's a re acceleration from the 17% growth that we saw last year.

So a lot of momentum building, but the platforms that are going to fall behind are the ones have the most inventory least must have content and worst targeting capabilities.

Those are the companies that are most at risk.

When you think of a tech giant like Amazon, they have a great ability to target those consumers.

So that's very attractive to those advertisers and definitely attractive when you consider all of the content opportunities with the sports ball of it all coming as well.

The ecosystem, right?

I mean, Amazon does a great job of keeping consumers in their ecosystem.

I went to their upfront.

So it was very impressive.

They had a lot of star power.

So you know, it's a big competitor in the space.

Absolutely.

Yeah.

Well, Ellie, thank you so much as always for bringing us your reporting.

We really appreciate it.

We're gonna have all of your markets action ahead.

Stay tuned for more.

You're watching catalysts, shares of Qualcomm are trending ticker today rising.

It's currently the number one trending ticker on Yahoo finance.

You got shares of just around 3%.

The jump coming after a renowned tech analyst is saying that Qualcomm is expected to be the exclusive chip provider for Samsung's upcoming Galaxy S 25.

0, now the analyst also saying that Qualcomm will likely raise prices on the Snap Dragon eight generation four chips by 25 to 30%.

So we have that call that's adding some, I mean you to Qualcomm shares but also when you take a step back and think about the broader chip space, we were talking to an analyst here last hour from Wed Bush and he was just talking about some of that momentum within the space right now, the opportunity, the growth opportunity for so many of these larger names.

And then you also have Rosenblatt, the analyst there who covers NVIDIA outlining a very bullish narrative here for NVIDIA.

He's saying that he sees more than 50% upside here for the stock.

He's now Wall Street's new biggest bull when it comes to a video.

So I think all of this is adding to some excitement surrounding these chip names today.

Yeah, way Lee was speaking about this in the first moments of our show earlier today, this idea that a rising tide lifts all ships when it comes to the chips giants in the room.

And I think that's a great point, Shana that this price target hike from Rosenblatt on NVIDIA, the kind of big guy in the room when it comes to the chips players that does tend to lead to a broadening of upside potential for a lot of the chips names.

If you take a look at NVIDIA just today, you do see that it hit its bottom just before or after.

Rather this Rosen black price hike and that has continued to be moving to the upside following that.

So that could be part of why we're seeing this movement in the overall chip sector today.

But again, that news on call potentially being a big chips provider for Sam and moving forward.

Also leading to some upside in that stock coming up, we got wealth dedicated to all of your personal finance needs are very young.

Brad Smith is going to have you right here for the next hour.

So stay t for more.