Stocks mixed on inflation, election outlook: Market Domination Overtime (2024)

On today's episode of Market Domination Overtime, co-hosts Josh Lipton and Julie Hyman focus on the stock market (^DJI, ^IXIC, ^GSPC) reaction to this week's string of inflation data.

Stocks are mixed after an eventful week of economic data that pointed to month-over-month cooling of inflation, yet the Federal Reserve is holding rates steady. Carson Group Chief Market Strategist Ryan Detrick joins the show to highlight the ongoing disinflationary trend in markets.

The US economy is showing progress on the inflation front. However, with the election coming in November, Yahoo Finance's Rick Newman highlights what the state of the current economy will mean for President Biden's reelection bid.

This post was written by Angel Smith

Video transcript

There is the closing bell on Wall Street and now it is market domination over time.

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

Let us start with where the major averages ended up and we had sort of a stalling out of a moment of today.

Now, the dow has been sort of the under performing this week.

So it felt today by about 5058 point right now as we look at the five day charge here, it was also down this week by about a half of 1%.

We have been seeing better performance from the S and P 500.

Again, it sort of stalled out today, not seeing much change really at all, but on the week, still a healthy 1.5% gain help being filled by, of course, CP I on Wednesday, as well as the fed that didn't seem to really upset the Apple Cart and some strong performance from a large cap tech.

And speaking of that last, the NASDAQ after really bouncing around between negative and positive today, eking out a gain of 10th of 1% by days and, and again, closing at a record, the NASDAQ five day chart up 3%.

So it was definitely the winner on the week.

Now, let's send it over to Jared for a closer look at today's action.

Thank you Julie.

And let's go to the Wi Fi Interactive.

I'm going to check the sector action.

What you're looking at that was a NASDAQ 100.

We'll take a look at that in a second.

What I want to show you is we are just far and away.

This has been a week of tech.

Now today we got tech and communication services tied in the lead for a whopping 3% or one third of a percent.

But here's a five day action only XL K, that's the tech sector.

Only XLK has outperformed and it is outperformed by a large margin 5.6%.

Now, I'm going to switch over to the NASDAQ 100.

This is the entire week.

But you can see here, Microsoft Apple, NVIDIA, so many record highs this week among the three of them, Apple just really bouncing back here.

And that has been the story because I'll tell you what.

You take a look at the week's action in all 100 NASDAQ stocks or NASDAQ 100 stocks and we have more than half of the in the red and you take a look at the dow here, most of them in the red.

You don't even fill out the top line there.

So there's not a lot of strength under the surface here, but those mega caps really keeping things afloat.

And finally, here's our leaders index for the week New York Fang.

We know that is, that's up the most 5.3%.

But then chip stocks, then the queues, then software.

And this has been interesting because we've seen software flagging recently, not this week with the comeback of Microsoft to Fresh Records, we got oracle up almost 10% Adobe 13% and the list goes on there.

Uh You can also take a look at the semi conductors so we already saw strength in them.

That strength is continuing.

Uh looks like M DB uh excuse me, mobily mobilized down about 10%.

A MD down 5%.

Uh But other than that, a really strong showing, I'm going to leave it on the NASDAQ 100 what we saw today.

This is today only and we're seeing some strength in Adobe that's due to earnings yesterday, 14.5% and then Broadcom now record high there too.

Josh, thank you, Jared Mark.

It's finishing out the week on a mixed note here.

The NASDAQ the only index closing higher but the S and P 500 NASDAQ able to notch weekly gains, uh weak, weak reading on consumer sentiment this morning, Wang on market today.

Joining us now is Ryan Dietrich Carson Group chief Market Strategist Ryan.

Good to see you, sir.

Thank you for having me.

It's getting a little hot in your city.

I tell you a little warm walking over.

Keep it cooler in here.

It is June.

It should be, but I'm glad to be here guys.

Thank you for having me, Brian.

Let me, uh listen, it's Friday.

We're rolling into the weekend.

It feels like a good time.

Take a breath, take a pause.

We had a lot of news this week.

What we, because some of your big takeaways from this week and maybe what, what do you think?

It kind of tells you about what's on the way for this market?

I mean, we just barely missed the S and P higher today, which would in all five days of an all time high.

I know we missed it.

That's only would have happened 16 other times in history.

So it tells you right now it's pretty rare to see what we're seeing.

But listen, I'm not gonna say anything.

We probably don't already know it's all to us.

Uh Carson, it's all about the inflation, right?

We know the CP I data, we know the PP I data but also, you know, um New York fed consumer co consumer, what do they expect on inflation one year out that's back to pre pandemic levels.

Look at the ISMs ISM manufacturing and services.

Both those prices paid are back to 2018 levels.

I mean, inflation is not perfect.

Uh We're aware, but we're starting to see some big time improvements.

And that CP I, I've proved one more, one more thing on P ce.

There's over, well over 100 components.

We looked at core PC, 30% of those components.

Josh are negative year, over year.

There's some deflation taking place.

People don't realize it.

So those are some positive things this week.

Well, I think the people don't realize it is an important part of what you just said, right?

Because consumer confidence came in today.

Consumer sentiment came in below estimates, right?

And we're starting to see definitely at the very least at the low end of the consumer spectrum, the people are not spending as much or they're making different choices.

That's why prices are coming down for stuff.

So how big of an obstacle is that when it comes to market returns going forward, it it is a small obstacle also, I guess initial claims, right?

They they they've been, they've been surging, surging might be a wrong way to put it, but creeping up is a better way to put it.

So, you know, you're right now, listen though the Michigan consumer confidence, it's fairly volatile but still it's very low.

And we under this is such a unique market because overall the consumer is still spending, right?

I mean, the city is bustling.

People are still out there, but we're seeing those delinquencies creep up on credit cards and little late on car payments and things and it, it is, um, there's no easy way to put it, but I will just say this, the top 40% who truly drive the economy are still in good shape and is someone who's a steward of assets.

We continue to think the consumer is fairly healthy overall and it should still lead to a bull market, like we've been saying for a while and that's the bottom line for the market, Ryan, you still, hey, bullish, stay long equities.

We are, we've been overweight equity since December of 22 right?

And one interesting factoid people like these, maybe here's the way I say this, maybe May was a sign, right?

We had a really good May on the S and P getting over 4%.

We took a look that's not usually May is not that great.

So let's be very clear when you have a good May like that.

The rest of the year is up over 10% on average, double your at any time returns.

It's just one stat I understand.

But when you start laying these on top of each other, uh we continue to think this is a bull market.

I get it.

We can get into, you know, participation only only five stocks, seven stocks you want to say.

Um And that's true.

But overall, we still think, you know, stocks are gonna be higher from here to the end of the year.

Honestly, small mid caps might kind of take the baton.

I know it's kind of a dirty word.

A lot of places, but we, we think it could happen.

All right.

So let's get into participation a little bit more because I know you saw our chart of the day today courtesy of Josh Schafer where he said, you know, a lot of the Wall Street banks are coming out with their mid year outlooks and a lot of them are calling for a broadening in earnings.

Now, this is not the first time we've heard this right.

And we did see a little bit of broadening earlier in the year in, in return stock returns and then it went right back to the magnificent however many.

So is it gonna happen?

We think so and again, your your chart there, what it showed was kind of, I think it was the top seven, right?

The mag seven versus the 493 and the 493 are coming back.

But also if you look at the S and P 600 there is explosive growth expected to come from the S and P 602nd half of this year and early into next year.

And our base case again, like we kind of hinted that here, if the economy stay strong, like we think it will, we've got strong productivity, still a consumer with some cracks but not major cracks.

In our opinion.

You know, we're creating as many autos as as we were pre pandemic.

I mean, there are some real positive things taking place.

Oh, by the way, earnings, like we just talked about earnings keep coming in better than expected.

So, yeah, we think uh some broadening out, uh makes sense.

And again, what if you think about a investor listening?

Well, mar market is pricey.

I mean, large caps are pricey.

Tech is pricey.

I mean, you shouldn't own it because they, they're doing very well.

But at the same time, small caps relative to large are the cheapest.

They've been since 1999.

There's a 13 year period of outperform.

Listen, it's Lucy and the football people.

Small caps for a while myself included, we've abolished but we said small caps maybe.

Um but still before the end of the year, we think there's a good chance it could happen probably because we're gonna see better inflation coming real soon.

And that opens the door.

We, we're in the camp of two cuts.

We've always been in the camp of two cuts, September, November.

We think it's possible or likely I should say so, right.

So you the overall market.

Ok.

It's looking kind of pricey but are there sectors you think in the SPX that look more attractive and value to you?

Great point.

I mean, yes, so small and mid cap specifically, but then getting to the sector level, uh we like to look at um you know, 20 years out past 20 years, looking at two standard deviation.

What's pricey?

What's not?

Um, financials are fairly cheap.

I know they've kind of struggled.

Regional banks have kind of struggled, but that's one area we do like industrials.

They're kind of right in line with where they've been over the past 20 years from a, from a price point of view.

But financials and industrials are two that are not pricey.

Let's just put it that way that we think of the economy can do well.

Like we think it can, uh, they should continue to do pretty well here.

And that's interesting because we can't, we've been, the conversation's been coming up a little bit lately about the fact.

You again, right.

So, and I there's a lot of debate over what value means and what the value industries look like, et cetera, but it sounds like that that is an area that you think is worth win.

Yeah, that's a great point because I mean, obviously utilities have done very, very well this year right now, staples not as much.

And the only sector down on the year, I believe at least as of lunch time um was um real estate, right?

So that's kind of, that's in there as well.

But we like the cyclical value areas to be specific, um, your, your financials and industrials and maybe a little bit of energy in there as well pulled back, obviously, but you talk about earnings growth and there's potentially a lot of earnings growth coming from energy as well.

Going forward here, Ryan.

Good to see you.

Thanks for coming in.

Thank you, enjoying your city.

Thanks for having me.

Excellent.

I hope it's not too hot.

You know, maybe I'm taking this off.

Like I was gonna say, go buy a New York City T shirt.

There you go.

All right.

Still to come.

Inflation beginning to make its way back to normal levels.

What's that mean for President Biden's election odds we'll discuss in the latest edition of Bidens.

When market domination overtime returns, inflation began to make its way back to normal levels.

A step in the right direction for President Biden's re election odds.

But there's still some concerns lurking in the shadows.

Yahoo Finance's senior columnist, Rick Newman joins us now with more Rick, hey guys, I feel like I could just pick up where Ryan left off.

I mean, he was talking about uh jobless claims, for example, people filing for unemployment insurance.

Uh there was jump in that number this week that definitely got economists attention.

I mean, the old saying is uh one number doesn't make a trend but compare that with some other things.

We know we've seen a big uh decline in the number of job openings still higher than before COVID.

But that's been coming down a lot and uh anecdotally you're hearing a lot of the retail chain Walmart target Walgreens say uh they're, they're lowering prices which is a good thing, but the reason they're doing it is that people are just not spending money anymore.

At the same time, we know the so called excess savings that people put in the bank during COVID that is basically all gone.

So, uh, I mean, this is, you know, one of those sort of softening scenarios.

I, I'm not ringing recession bells here but I'm watching a lot of economists who say this bears watching.

This could be the labor market slowdown that many have and anticipating for some time.

And what does that mean for President Biden?

I mean, inflation is finally going his way.

Uh It could be more or less back to normal levels, at least with regard to goods by the fall.

But what if we uh suddenly start to have softness in the labor market and people start to get worried about job security.

Uh and uh they start to even possibly see layoffs happening around them.

I mean, in a way it almost seems like Biden can't win on the economy.

So we're not there yet.

Bears watching.

Well, Rick and let's talk a little bit more about how the White House is framing this right now that we have these latest inflation numbers.

I'm curious, you know, this has been the, the problem along from the perspective of the White House, I guess is that people are not really accepting that the economy is doing ok. Now, if it's gonna be doing a little bit worse.

That makes their job even harder.

Exactly.

Right.

Uh, and I guess the way I would phrase it, Julie is there aren't enough people, not enough Americans think the economy is doing ok.

I mean, there certainly are plenty of people who are doing ok.

I mean, anybody with a stock market portfolio which according to Gallup is like 60% of Americans, you know, they're watching their nest egg, uh go up in value.

If you, if you're lucky enough to own a home for the last few years, you probably refinanced your mortgage at around 3%.

So a lot of those people are doing ok, it's just, it's just not enough for Biden.

Um and that's why he consistently lags Trump when it comes to approval on the economy and why his overall approval is just so weak.

So, you know, Biden basically has the same line when he talks about the economy, he brags about everything that's going right, record number of jobs created under his presidency.

That is accurate.

But then he says we have more work to do on inflation.

We have to keep working to get inflation down.

And um voters, you know, either they're not buying it really or they're just not even listening to Biden because uh there's no evidence that he's getting more credit for the economy even as prices have come down and gas prices by the way have been coming down.

So Biden just needs all those trends to continue and hope he can just persuade enough people in the fall that things are ok.

I mean, this is going to be a very narrow margin of victory no matter who wins.

So that's what Biden's hoping for.

Rick.

Just quickly.

I'm curious, we talked yesterday, I believe about former President Trump meeting with a bunch of CEO S and sort of making his pitch on taxes.

We did hear some news on Biden's tax plans this week.

Do we know though?

What kind of meetings he's having with CEO S?

And if he's trying to make his pitch directly to them, I think what Biden is trying to do is basically be presidential.

I mean, this is what an incumbent president is supposed to do to get re-elected.

So, uh it could have been a, been a uh a coincidence of the schedule, but Biden this week was over in Europe talking with other leaders of the so-called G7 countries, you know, mingling among the most powerful people in the world.

So, uh I guess he's sort of trying to communicate his position um by the bully pulpit he has as being a world leader, uh you know, participating in some of the most important uh decisions in the world, but we're going to hear more about all of this directly from Biden.

Don't forget the debate is coming up on June 27 that is must watch TV.

And if it's too late for uh anybody out there.

I will be watching it and detailing everything that is when Biden is really gonna be able to make his pitch and then we'll have another uh debate in the fall.

Um I think those are gonna be uh pretty important this year and for anybody who hasn't made up their mind yet and there are some of those people that will get to hear what these two guys have to say and that could help them make up their minds.

We shall see Rick.

Thank you.

Uh Thanks, thanks in advance for watching the debate and keeping track of it too.

Have a great weekend anytime.

See you.

Well, Elon Musk's famous optimism is just one of the reasons that Tesla shareholders voted to approve a pay package for the CEO that could be worth as much as $56 billion.

I think just based on vehicle autonomy, we can, we can 10 x 1, 10 x the value of the company.

Um I believe that's what will happen.

He believes that's what will happen.

Will it?

Who knows where is Musk and the Ev Maker?

Where do they go from here?

Joining us now is Gotham Mukunda Fletcher School of Law and Diplomacy lecturer and author of picking presidents.

It's good to see you again.

Gotham.

So uh you recently wrote about that, you did not necessarily think that Musk is the right leader for Tesla right now.

Shareholders seem to disagree and they're willing to pay him for the privilege of having him continue to run Tesla for now.

Um, what do do you think that he now even has more of, sort of carte blanche to run Tesla as he would, like, um, he won and it wasn't a close call, right.

He won by a lot.

And so there's no way he doesn't interpret this as a, he doesn't interpret this as something of a of a free hand.

And he should, I mean, like shareholders who supported him even after a more than 50% drop in the valuation of the company over the last few years.

That's a pretty remarkable to be a statement of confidence on their part.

And I just, I just sort of what I said was, it does not take anything away from the enormous scale of his achievements in building Tesla and not just Tesla, right?

Tesla is not his most impressive company.

I would say that spacex.

So either one of these companies would be remarkable both on is even more.

So it doesn't take anything away from the scale of those achievements to say that the challenges that Tesla is facing now are not the same as the challenge that as the as the challenges that he triumphed over earlier and it might take a very different skill set for those.

And so both are, are you are, are you implying then you know that that maybe they should some, somebody on the bench at Tesla should be being groomed here to take, take, uh his role at some point.

So, so Tesla is unique, right?

Because you cannot imagine Tesla without Elon Musk.

I mean, like you could say, you couldn't imagine for of that Henry Ford, but eventually that problem had to be faced in Tesla's case.

Well, I don't know, I don't know what Tesla's valuation would be without Elon, but it would be a lot lower.

My suggestion would actually be a little different from that.

It's that the board should take a much more independent and active role in the company.

What I would say is that there is no genius, no such thing as a genius, so brilliant that all of their ideas are good ones or even their good ideas can't be improved by pressure from other smart capable people.

I think the board has given him sort of total freedom to do whatever he wants in ways that, you know, the last three few years of Tesla's performance just that they're not working as well as they used to and it's time for them to step in that or for things like, you know, the cyber truck, for example, maybe when that was decided to devote huge fraction of the resources of the company to that the board should have stepped in and said, you know, does this really make sense?

Can you really make a case as to why do this.

What's the analysis of why this is a good idea and it would have turned out and maybe the decisions would have turned out a little bit different.

It doesn't seem like there's any chance of that, that imminently certainly that that's gonna be happening.

Um, and in the meantime, you know, he had made this threat against the company that he was going to take his attentions elsewhere if this pay package didn't pass.

And now that seems to have dissipated.

But just as a reminder, he runs a lot of companies, right, Tesla is not his only company.

He runs a, of course, there's spacex, there's Xa I, um, and so going forward, um, you know, does, does this sort of draw him back to Tesla to some extent because he did get this victory?

I mean, it's hard to know, remember that before this pay pack, this whole debate over this current pay package, he had actually said that his expectation would be that there would be another even larger one that would be granted to him after this one came through.

So, I mean, he has sort of already said that this is not enough.

Now that being once he said it, like it's easy to say that.

Well, you mean it was just a bargaining thing, but it's kind of a striking thing for him to say that having that 25% of the company is not enough.

Um I'll also say I it's a little hard to see how that threat is.

Plausible.

Tesla is by far his largest source of liquid wealth and, you know, for him to monetize his assets and spacex, for example, would be pretty complicated.

Um And so I'm not sure he has the ability to walk away, but he's Elon Musk, he does lots of things that no one else would do.

I would never say anything is impossible.

Um I would be concerned if I was the board and I would look very closely at again the spacex model, right?

So Elon does not run SpaceX on a day to day basis.

That's when shot.

Well, and she's done an extraordinary job.

She, by most measures, I think has a really good our company, the greatest aviation executive of the last 50 years, maybe more than that.

Um It might be time for the board to say, hey, if you want to spend your time on other things, let's find a win shot.

Well, for Tesla, who can be your partner, not your replacement got, you know, switching gears just a bit here as we talk about these pay packages and compensation.

They're just, they're, they're amazing both.

I mean, we, we can talk about, you know, Elon Musk and that pay package, you know, Larry Ellison who is friends with Elon Musk Forbes saying his net worth jumped 15 billion, his net worth it just jumped 15 billion is oracle, of course, hit an all time high this week.

It's just, I'm just jaw dropping numbers go with them.

Have we ever seen a moment in time like this before?

With this kind of, with these kind of numbers?

Probably the uh so this kind of numbers.

No, because you have to correct for inflation, right?

But correcting for inflation, the parallel would be the gilded age.

I'll just know for example that when standard oil was at its peak, if you correct for inflation, John D Rockefeller had an income, not a wealth and income, well in excess of $20 billion a year, right?

Sort of even Elon Musk would go wow, that is a lot of fun.

It's good to be the king.

Yeah, it's good to be the king.

Yeah, especially one.

So we have seen eras like this but right, what's worth noting is when we see eras like this, there is always a correction, right?

The gilded age was followed by an age of the progressive era, ages of reform when you are in the United States where median income has basically stagnated for about 45 years.

I think people are gonna push back and say, does it make a lot of sense for however valuable?

You might think a CEO is, they're probably up to, you know, let's put this in context.

Um I think the top five hedge fund managers got paid more than every public school teacher in the United States combined OK, so you can believe that hedge funds are amazing.

You can believe they're valuable.

You can believe that these are the five greatest investors who've ever lived.

And I would still say that the value they created for the economy is not as much as the entire American public school system put together.

That is not a plausible word.

And so it would not be surprising for society to push on that and say it is time for there to be a reform movement to get this under, to get this rebalance in a way that's healthier for the rest of us.

And the council I give to all of the, all of these people is like if you push the system too far, it will break in ways that you do not like, right?

You are better off leading by pushing reform and saying, let's make life better for everybody than you are pushing the system to its limits.

So Gotham um is this the top, was this Elon pay package the top or the one that he's about to get?

Maybe if he asks for even a bigger one, is that the tipping point?

Well, presumably if he asks for a bigger one, he's gonna have to like generate the same kind of returns that he has that he did before.

Given Tesla's current market cap right in the in almost half a trillion dollars, doing another 10 X gets you into a set of a set of calculations about where its valuation comes from.

But that's a stretch.

Right.

That's gonna be hard to do.

It's gonna be even, even for Elon Musk, that's a big one.

What I would say is, I don't know where the breaking point will come because it'll be too like, it will take us all by surprise, but you can tell that it is coming.

Right.

The United States is currently consumed by a gigantic populist revolt.

Some parts of that are clearly about income inequality, even if it has manifested in the role of a political candidate who's, you know, I just got away from promising CEO S that he was going to cut their taxes just a couple of days ago.

Um There are gonna be responses to this and we should really be thinking about how to channel that in a way that's productive and not unproductive for society.

Um If I were Elon Musk, I would sort of be saying like I have done the impossible, right?

Which there's, you know, like give him credit.

He has done the impossible with his company.

But my, when we look at again, think back to John D Rockefeller, he was the most hated man in America when he was a twealth, right?

What he did to rebuild his reputation was to create the Rockefeller Foundation and sort of distribute that wealth to the people in ways that were, that left completely transformed his legacy.

Um I think Well, I personally am a huge fan of the space business.

I think that Elon's goal of like building out the space industry is laudable.

I suspect that's not going to be enough given his other behaviors and the way, the way in which he's alienating.

A lot of people.

Gotham.

Thank you so much for your perspective.

As always, we really love talking to you about this stuff.

Thank you.

Great to be with you.

Thanks.

Have a good weekend.

Well, that'll do it for today's market domination over time.

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

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

It's asking for a trend.

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

Stay tuned.