Stocks edge higher to start Q4 as the 10-year yield hits a 2002 high, Nike misses estimates

[music] Hello and welcome to market domination. I'm Josh Lipton [music] live from our New York headquarters. There is just now to go now for closing balance. Stocks are [music] higher here to kick off the first trend of Q4 G finances in Fay [music] has the very latest in >> yeah Josh and if we take a look right now we have seen a [snorts] little bit of choppiness with the market today. We are seeing the Dow that's little changed. It had been uh in the red earlier just hugging the flatline right now. The NASDAQ composite up three ten of a percent and also the S&P 500 also up about 310 of a percent as well. Just taking a look at where we're at with the sectors, we are seeing that technology has been the leader uh throughout the day. If we look at the uh MAG 7 at the NASDAQ 100 tech stocks, we are seeing also energy stocks as well up as well. Uh but if you just take a look at the left hand side of the chart, you'll see a little bit of a mixed picture with Nvidia that's higher. Alphabet and Google are lower for the session. But you are seeing Micron which had been down earlier in the session now flipping into green territory. And I should mention that we are also watching oil prices because those have been climbing higher. And of course, we've been watching the 10-year yield, which today had climbed to its highest level since 2002. I should note that seasonally, now that we're through with September, when it comes to seasonality, October does have a pretty solid batting average, even though it tends to be a volatile month because 19 out of the past 30 years, you saw positive returns on the S&P 500 during the month of October. Josh. >> All right, thank you, Nez. >> Thank you. Well, four Federal Reserve officials are warning that inflation is still too high here, signaling more interest rate cuts may be necessary. Their comments coming ahead of Friday's September jobs report, which the central bank will closely weigh during their upcoming FOMC meeting. Joining me now on this for a closer look is YAF's Jennifer Shawnberger. Jen, >> hey there, Josh. Yep, that's right. Right. The Federal Reserve's vice chairman, Philip Jefferson, speaking earlier this afternoon in Charlottesville, saying that inflation has remained too high for too long. And that while the bond market has been sending up long-term bond yields, pricing in further rate increases, the Federal Reserve may need more time to assess whether inflation is coming back down to its 2% target in a timely manner, or to use his language, sufficient speed. Jefferson seems to want to take more time to look at the underlying trends, get more data, and sus out what that trend is. His comments seem to suggest that he would favor holding rates steady at the Fed's next policy meeting in October. And that dubtales with what New York Fed President John Williams said earlier this week, that there's no urgency after the Fed raised rates in September, that there's time to collect more data. And this is important because both of these gentlemen are very close to Federal Reserve Chairman Kevin Worsh. They serve as three members of the so-called Troa, the leadership of the central bank. So, I took this as a major signal. Now, meanwhile, elsewhere today, we heard that inflation remains too high. That was the popular refrain from three other Fed officials, including Boston Fed President Susan Collins, Richmond Fed President Tom Barkin, and Kansas City Fed President Jeff Schmid. Collins more concerned about inflation than the jobs side of the Fed's dual mandate, saying that the Fed can really use monetary policy right now to focus on getting inflation back down to the Fed's 2% target in a timely manner. Schmid similarly quoting Chairman Worsh saying, "We've got more work to do." And all three members also weighing in on AI and its contribution to inflation in the economy. And Tom Barkin had an interesting comment there. He says he views AI as a demand shock, not a supply shock. And he says that's what our interest rate policy works best against. Interesting comments there, Josh. >> Uh Jeb, before I let you go, what can we expect to see from uh Friday's September jobs report? What are you waiting for? What are you listening for? >> Yeah, that's right. So economists expect that 88,000 jobs will have been created for the month of September with the unemployment rate holding steady at 4.1%. That would still be a solid performance though down from the blistering pace of 162,000 on payrolls that we saw was better expected in August. Uh, I think it's important to note here that payrolls can be volatile from monthtomonth and so the Fed is more focused on the average monthly jobs growth as well as the unemployment rate. So if we were to get the data to come in as expected, then I think that holds the case that we've seen for the Fed, which is that the labor market is not a source of inflationary pressure, that they are still focused on the inflation side of their mandate. So, I don't think that this would really change the course for them. And I do want to add that Jefferson made an interesting point, which is that if he thinks if AI ends up boosting the economy more than expected, that could actually tighten the job market, which is particularly interesting because we have zero immigration right now. >> All right, Jen, great stuff. Thank you. >> US Treasury yields hit their highest level in over 20 years. The global bond selloff intensifies. Join me now. We got Larry Holtzenthaler, Catalyst Funds, senior portfolio manager for fixed income. All right, Larry. So, the bond market is still where all the focus is, right? So, you are just the man to talk to. 10-year Treasury. Let's start there, Larry. Um, we're sitting here at 524. Big picture, Larry. First, just walk me through what you think explains that sell-off. >> Thanks, Josh. Uh, happy to be here. Um, I think a few things. One is, you know, we've just been talking about here. Um you inflation remains you know something that has the market you know clearly thinking that you know rates need need to head higher. Um you have obviously um you know uh government deficits around the world continue to pressure kind of longer ends of the yield curve. Um energy prices remain a concern. Um, you have AI spend which is clearly competing for investment dollars which is again just another driver of of of yields higher. And Fed expectations have changed. You know, recently as a few months ago, the market was anticipating, you know, the Fed cutting rates and now the market is anticipating, you know, several interest rate hikes. So all those things go into, you know, a higher, you know, rate within that kind of 5 to 10 year plus part of the curve. >> So when you look at that 10-year layer, do you look at where we're at now and say, okay, you know, maybe that is, you know, our new normal, this level, >> we really think so. You know, we we really think that it's very hard to be precise in terms of what's the terminal Fed funds rate going to look like what's the 10-year yield going to be a year from now, 3 years from now. Uh but I think a strong argument could be made that the assumption should be that rates across the curve are likely to remain elevated versus what we've seen. So across the funds here at Catalyst, you know, we continue to position against that just broadly higher rate dynamic. >> So let's say Larry, you know, this weekend, you know, you're at a barbecue friend or family, you know, you come up to you, they say, "Uh, I don't know, Larry. I'm I'm looking at this 10-year. Should I be, you know, should I be buying here? Five's looking pretty good." What do you tell them, Larry? Or does it does it still depend as always on cash, courage, time horizon? So certainly it depends on what you're trying to achieve with that allocation within a portfolio. you know, on a standalone basis, quite frankly, if I look at what I'll call traditional fixed income, you know, a type assets, and I look at how they've performed even since the Fed began cutting rates two years ago, the total returns over the last two years of again what I'll just, you know, call traditional fixed income are are barely positive on a gross basis. So then I pay a financial adviser, I pay a management fee on the funds I'm using. You know, you're you're left with something that looks awfully like a zero return asset. So if I'm not assuming rate cuts, I'm actually assuming rate increases. We just think that the total return proposition for these traditional fixed income assets over the next several years, if I assume a stable to even moderately increasing rate environment, the standalone returns of those on an absolute basis are, you know, we think roughly zero. So, we just still don't think that the total return of fixed income is compensating for invest is compensating investors for the risk they're taking because you obviously have an enormous amount of volatility attached to these assets along the way. >> Uh let me ask you about corporate debt. You say here, Larry, in your notes, corporate loans and high yield bonds, they've outperformed. Why, Larry? Why? Why have those held up relatively better? It really all comes down to duration and the risk that these funds are taking. So these these two asset classes, senior loans, leverage loans, um these are corporate senior secured loans. Um and high yield corporate bonds are both credit sensitive assets. And so if you look at loans as an example, the the coupon on those loans is floating rate. So instead of being a fixed seven or eight percent, it consists of a base rate which is the secured overnight funding rate which pretty closely tracks the Fed funds rate plus a spread. So as the Fed raises interest rate, the coupon on those loans adjusts higher. So the duration of those corporate loans is dimminimous. It's maybe 3 months the reset on the coupon. And in the case of high yield, you're talking about a fixed rate coupon, but it's a much higher spread and it's a much shorterd dated asset. So the duration of as an example high yield bonds is going to be significantly lower than as an example investment grade corporate bonds. So a higher yield a higher spread and a lower duration can result in uh you know a pretty attractive total return even in a modestly increasing rate environment. >> You also flag here Larry how newly issued debt you say has fallen sharply after investors bought it. Can you give us a an example of that Larry? >> Sure. So there was, you know, a large investment grade deal for a large media company that floated yesterday that is already trading at a steep discount. This was a a large kind of crossmarket transaction where they were issuing investment grade bonds, high yield bonds, and the lower rated portions of that of that um uh syndication have traded, you know, sharply below new issue levels. And I'd make the same argument for uh several folks involved in data centers. You know, this was a market that was very hot. Demand was extremely strong as recently as a few weeks, certainly a few months ago. And you're starting to see signs of market fatigue. And so that really causes lenders to be um a little bit more cautious. you know, if I'm piling into these new issues and the assumption is everything's going to remain stable or go up, um I I might be much more inclined to buy them than if there's a material risk that these bonds could be down, you know, 5 to 10 points within a few weeks time. >> Bottom line, Larry, let's get you out of here on this. You know, I'm a viewer. I'm watching this right now. I'm looking for income. Where would you put fresh money to work, Larry? And and also, you know, flip side of the coin, what would you avoid? >> So, I'll go back to credit in terms of what I'd be looking at. you know, I think, you know, below investment grade credit sounds um scary to some people because obviously it's it's there I'm taking more credit risk. I'm I'm investing in in you know, generally below investment grade rated companies in the case of our fund, you know, high yield bond issuers. But actually, if I look at the volatility of high yield corporate bonds versus, as an example, investment grade corporate bonds, most people would assume high yield bonds are going to be more volatile than investment grade bonds. It's actually the opposite. And the reason is because the investment grade bonds have a longer duration. So they tend to move around a lot more with the Treasury curve. And floating rate loans are an obvious place to look if I'm thinking about how can I generate good spread and and good yield and I'm not taking uh you much of a duration bet at all. And in terms of things that we would be avoiding, um, again, certainly bonds can be helpful in terms of a ballast in a portfolio, but if I'm trying to generate total returns, positive over time. We think that the traditional high-grade bonds, you're just looking at a lot of duration risk and a lot of volatility for the potential total return that those assets could generate. So, as an example, we think, you know, high yield corporate bonds could be a good proxy for an income driver relative to those more traditional, you know, high-grade corporate bonds. >> Larry, great to have you on the show today. Thanks for your time and that guidance. Appreciate it. >> Thanks for having me. >> Coming up, we look ahead to Friday's jobs report. That's next on [music] Market Domination. [music] Heat. Heat. [music] [music] [music] >> [music] [music] [music] [music] >> Heat. Heat. [music] [music] [music] [music] Heat. Heat. [music] [music] >> [music] >> Heat. Heat. >> [music] >> Down. [music] [music] Take a look. Heat. Heat. [music] [music] [music] [music] >> [music] >> Heat. Heat. >> [music] >> Hey, [music] hey, hey. >> [music] [music] >> Investors are bracing for a big jobs report on Friday. Economists are forecasting unemployment to hold steady, but LinkedIn's data has shown hiring is still running below last year's levels, even as demand for AI skills continues to surge. Now, we have Cory Pena, LinkedIn's head of economics for the Americas. Corey, it is great to see. Let's start with that big jobs report. Corey, economists, they're looking for about 88,000 jobs added. They think unemployment holds steady. Um, does that broadly, Corey, sort of dovetail with what you're seeing on LinkedIn? Our estimate for Friday's jobs report is below the consensus. It's closer to about 40,000. >> 40. >> We haven't really seen much momentum in hiring on LinkedIn this summer. And we've seen these big jobs reports, but they're based around oddities like seasonal adjustment, public education. We got some payback from leisure and hospitality, jobs all summer, jobs added. So once you wash out all of this noise, >> we're not expecting there to be a blockbuster jobs report. I think if it was up around 90k that would still be reasonable, but we're currently looking expecting something below consensus in part because a lot of the jobs report momentum is built on healthcare. >> And we're seeing healthcare slowing year-over-year. >> And why is healthcare slowing year over year? >> Healthcare had a lot of momentum. Yeah. >> And it was expected to slow this year in part not growing as aggressively. So there's there's the labor demand piece that healthcare isn't growing as aggressively as it had been. So, not as much demand for workers, but then you also have the supply issue. There probably some supply constraints on the healthcare side as well. And a lot of the times healthcare can't necessarily pay more to recruit more workers. So, they end up with shortages because they can't just adjust wages off the top in order to attract more workers. And that slows them down as well in terms of their ability to grow. >> Here's a couple stats that were interesting. Core, you say hiring is still about 7% below a year ago. Roughly 20% you say below pandem pandemic era levels. um one, what explains that? What's driving that? And then Corey, how do I sort of how do I reconcile that with an unemployment rate that's still historically speaking pretty low? >> One thing to remember about the unemployment rate is that we were looking at 3 and a.5% unemployment a few years ago. So the unemployment rate has certainly gone up as the labor market has slowed, but we have this slowdown of supply and demand happening at the same time. We're not getting major a major surge in labor force participation. It's relatively flat. There are concerns that the labor force might actually be shrinking today. So, it's really been this slowdown in supply, slowdown in demand that's keeping unemployment balanced. And on the demand side, we do see that things are slower. They've been slowing for 3, four years now. They started slowing as soon as rates went up. >> Interest rates going up is what caused that initial slowdown. It persisted. It's been ongoing. We haven't seen rates come back down to what they were, and they will not come back down to what they were prior to the pandemic. So I think that change in policy, the uncertainty, the concern around inflation, >> that made employers skittish and they've been navigating uncertainty ever since. Whether it's on the monetary policy side, fiscal policy, trade policy, or even AI in terms of what they think they're going to need in the future because maybe AI can do some of the work they it's not doing the work today, but maybe it can. So I don't need to be as aggressive in my hiring plans. So we've really just seen this snowball of uncertainty that has held back employers and that's really why we haven't seen much of a hiring rebound. It's stabilized even in technology which is a big area where there are concerns around AI. We've seen hiring there pretty consistent since about late 2023. >> In terms of some relative bright spots all right let's talk about those. It sounds like Cory you would flag construction um you would highlight manufacturing that hiring is is up in both position posting is sharply higher. What is that is that the great AI buildout is that driving that is that explain that >> construction has a couple of things going for it. One is on the residential housing side there isn't as much momentum today but there was certainly some momentum that drove construction forward. There's also a construction had a bad couple of years, a bad 2022 when every other industry was really booming and acquiring labor. So, some of that's payback as well. There's also the AI buildout happening and there's been more momentum in commercial real estate which is something that was really lagging a few years ago. So, there's a lot of momentum on the side of construction. They're adding jobs and they have momentum going forward. We're seeing hiring going up there. Manufacturing, it's stabilizing. Hiring is slow there overall. Of course, you would expect manufacturing to be running slow in a high interest rate environment, >> but they have stabilized as well. And that's one of the areas that you would expect to keep slowing as interest rates or as interest rates are tightening because when we did see inflation coming down, that's still tightened. Things were still tightening for them. Even though it was the case that >> we weren't really seeing rates go up nominally, just that that tightness was coming from inflation coming down and rate and that gap being getting larger. >> What about the flip side of the coin query? Where are the sectors where you see hey I I see clear signs of weakening here. >> There are certainly particular jobs where we see outsized weakness >> like what Corey >> technical writers >> copywriters we've seen a relentless slowdown for those roles. >> Is that AI? >> It's likely having something to do with AI. If it's not AI itself doing taking on a lot of that work, it's the anticipation that it will. So those are certainly areas where we see some really outsized weakness and of course that's going to be concentrated in tech for technical writing and and media as well. Media is one of those areas of sector where we've really seen a lot of weakness overall. >> Cory, good to see you as always, especially on set. Thank you, sir. >> Yeah, thank you. >> Coming up, Synopsis announced a few [music] major AI deals today. We hear from the company's CEO. That's next on Market Domination. Heat. Heat. [music] [music] [music] >> [music] [music] [music] [music] [music] [music] >> Heat. [music] [music] Heat. [music] >> [music] [music] [music] [music] [music] >> Down. Down. >> [music] [music] >> Down. [music] Down. Heat. Heat. >> [music] [music] [music] [music] [music] [music] >> Got >> [music] [music] >> Mortgage rates ticked slightly lower today. The 30-year fix rate now 754% though. That's according to data from Mortgage News Daily. Still, they are near the highest level since late 2023. This comes as fears over inflation. High government debt continue to drive up bond yields potentially leaving prospective buyers priced out of the market. Join me now on this. Got Yahoo Fin Claire Boston. All right, Claire. 7.54%. What do you make of that level? >> Yeah, Josh. I mean, we'll take what we can get in terms of drops. It was 7.6% yesterday. Uh, but 7.54% is still very, very high. I feel like just a few weeks ago, we were talking about rates that were like 6.8%. And as soon as you get above 7%, that just kind of starts to scare away buyers a little bit. And so, certainly, I think we are starting to see that in the market now, especially because it's fall. It's a seasonally slow time of year and these kinds of mortgage rates are certainly not encouraging anyone to get off the sidelines and into this market. >> You know, Craig, you're talking to smart housing analysts and economists all day long. When you ask them, all right, what do you forecast? What what do you think's coming ahead near to intermediate term for that 30-year fix? What do you hear? >> Yeah. So, I will say the economists hate to put an actual number on it because they say no one knows the future. You know, that being said, mortgage rates are really directly tied to Treasury yields at this time and everyone sees that continuing. So, if this bond sell-off continues, there is definitely a path for rates to go higher from here. However, you know, if we get a little bit of relief like we did today, perhaps rates will go a little bit lower. But I do know a lot of people are rewriting their endofear forecast to move it higher. You know, certainly thinking that we'll stay above 7% for the rest of this year. How big of an impact, CLA, does this have, do you think, on on housing inventory? I mean, you're locked in at three or four. Why are you selling? >> You know, I have to say many people who were locked in at three or four didn't want to sell at six, so I think they definitely don't want to sell at 7 and 1/2. Um, you know, that being said, this is the kind of move that it might even make more people wait for longer. the when I talk to realtors, they say that the only people who are looking to move right now absolutely have to. You know, maybe they got a new job or they just don't have enough bedrooms in their home and they need to get another bedroom for a growing family, but there are very, very few people just casually shopping thinking about an upgrade right now. >> Claire, great to have you as always. Thank you. >> Thanks. >> Synopsis is positioning itself as a central player in the AI boom, dropping mega partnership headlines at its annual investor day. The chip design leader is teaming up with open AI to develop specialized AI models for silicon while also looking in a blockbuster deal with Amazon worth over 1 billion. Yahoo finances Julie Heman sat down with Synopsis CEO and president Sassin Gazi to break down what that means for the company's growth. >> Let's talk about the OpenAI one first. Okay. Um, I am obviously not a chip engineer, but for people out there who want to try and understand what this means, >> the OpenAI partnership, what would a chip engineer be able to do or clients be able to do under this partnership next year, say 12 months from now, that they can't do today? >> Yeah, when you think about a frontier model, what it brings is a frontier intelligence and reasoning. What we bring in is a domainspecific tools, knowledge, skills, context. So the partnership was built on how do we make AI plus the skills that we have and the products that we have more accessible to provide the best outcome. So if I'm a chip designer, it takes a lot of effort to optimize, explore the space to get to the best outcome. With the frontier intelligence and reasoning and synopsis generating, validating outcomes, we can provide the best results, the results as measured by performance of the chip, the power of the chip, the reliability of the chip uh in the fastest uh most intelligent way possible. And I think there were some concerns [clears throat] especially over the summer that um and this sort of reflects the concerns we've seen in other realms in software for example that at some point a chip engineer could just sort of vibe coat it without that sort of expertise layer that you guys bring. Does this sort of put that to bed do you think or you know is this an answer to that in some ways? >> Yes. It was such an oversimplistic extrapolation that if an AI model can write code, therefore it can replace all software. But the software we build is based on physics. When TSMC is manufacturing a chip, they have an actual physics requirement to to bring the silicon together, the chip together in order for it to function in a real physical uh uh world. >> That's where we come in. How to translate physics requirement from manufacturing into design. What AI is great at is reasoning, exploring, recommending. What our tools do we generate an actual outcome and we validate, we have this signoff checks from design to manufacturing. So it's such a complimentary relationship actually where the reasoning meets the physics in order to deliver these products. Um as you know there has been a debate raising raging about security of AI right now. So when you bring these tools together sort of where will they live because if you think about the chip makers and their designs the designs are the crown jewels like that's that's what it is right and they don't want um access to that to somehow end up out in the world. So how do you think about those issues? >> Yeah it's very important. So today the way customers we work with them a lot of the data is either on prem or when they work with the cloud or a CSP uh it's available in a secure environment secure network. So today think of that relationship between synopsis and open AI where the customers still have the choice where is the data resigning uh residing. So it's it's not really a concern. We already have couple customers in early engagement in that model and uh the data protection is same as what they have been doing all along. So it's not changing where does the data reside where where does it go. Uh now as far as the debate around AI security >> it's the right debate to have because when you race ahead to just drive the best model possible you have to validate. Same as when we write software, we don't ship the software without verifying the software. So, it's the right debate to have, but it's less about the customer data concern in here. >> It's more about what can AI do in terms of um uh guard rails >> and how do you make sure it's within the guard rails? >> So, I I'm I'm glad you brought that up because I'm I'm just curious what you think about that debate, which side of it you come out on. Do you think that the government should be determining the guardrails to some extent or do you think the industry should? >> It's always the company's responsibility to when you develop a product that you validate the product. We're in the software business. When we design a product, we make sure that we validate and invest significant amount in not only the development, the development and the validation of the product. Now with AI it's happening at a pace that engineers never seen before. It >> the race to get to the best and next model is natural but at the same time the investment needs to happen on validating that model. >> Um let's also talk about the the Amazon deal. Um you know and kind of how that fits into the rest of of what we're talking about. >> Yes. The one trend that is happening in the industry is the increased uh need for custom chips, >> right? >> You know, and you see many companies that are delivering ASIC or uh any of the system companies, they're building their own chips. And the reason they build their own chips, you can get the best performance and cost effectiveness for the workload you're running. So if you are Amazon, Google, Microsoft, Meta, they're all building their own chips. When you build your own chips, you need synopsis software to build them. And most importantly, you need those chips to be interoperable with the other chips you're buying from the ecosystem. That's our IP portfolio. It's an interface IP connecting a chip to chip or the chip to the system. Same as customers looking for customized silicon, they're looking for customized IP. So we introduced a new category of business which is application optimized IP specifically to serve that market. I cannot be more excited when you have Amazon committing a billion dollar >> for the next generation chips to use synopsis application optimized IP in order for them to differentiate their next AI chip their next CPU is where that commitment came about. So that's sort of the the anchor customer if you will the first customer with this this emerging business. I assume you expect there will be more big customers because there as you say there are a lot of companies making custom chips right now. >> Yes. So what we announced yesterday actually we only named Amazon as the lead customer but we signed number of other contracts as well and uh it's not only one. >> Gotcha. >> Amazon as the lead and number of others signed up as well. >> Um you raised your growth forecast yesterday as part of all of this. um talking about an an acceleration of growth. Um as we were talking about before we came on air to do this interview, the stock is down this year. We've had there has been this debate about as we talked about whether there would be an intermediation or disturbance um in your business. Um when do you think that the stock sort of catch catches up with this growth outlook and this new you know these new areas that you're expanding into? We did get stuck as synopsis as a company that provides software to customer therefore therefore software is going to be dead uh because AI is going to be able to vibe code the software we provide. Over the last couple quarters it's becoming more understood that not all software are equal. What we provide is much more than the actual code we're writing is the connection to physics. Um yesterday as we provided our outlook, it was very clear to our investors >> that we have a generational opportunity with AI. Custom silicon is everywhere and we serve that market. We're so essential to building that custom silicon and that's going to boom for the next number of years. The AI infrastructure buildout will continue in digital AI or physical AI and we're so essential for it. And in physical AI was another area we described yesterday. As you envision the future of robotics, drones, cars, etc. Having a model of the world environment in which these products are going to operate, >> that's where we come in in validating that these products are going to be safe, secure, functioning as uh expected during the design phase, >> right? In the real world. in the real world. >> And finally, I'm also curious to ask you, you know, we just heard from Micron, we got its numbers as well and really sort of reassured investors about the a little bit more of the runway, right? That there's visibility into 2027, even into 2028 in terms of pricing and demand. Now, your customers are all these guys, right? So, what are you seeing in terms of that visibility going a couple of years out? >> Yeah. So, we see it the same way. Actually yesterday we pro we we projected through 2030 >> because we have early early visibility when our customers are planning the next investment that will not you you will not see the product until 28 or 29. We are in these early stages of the requirement definition of the product design definition and we see significant momentum with our customers. That's why our confidence through 2030 >> uh and that's what we forecasted. So I agree with Sanjay and Micron uh assessment now with Micron they focused on the data center buildout >> right >> which is a visibility over the next couple years and what they're seeing we see it even further because it's not only about the data center intelligence will be at the edge and that's where physical AI comes in and there is absolutely a um >> um demand and need to move that intelligence into products outside the data center. Gotcha. So, great to see you. Thank you so much for coming in. >> Great to see you as well. >> Appreciate it. >> Coming up, retirees are having trouble spending the money they save. [music] We dive into that next on Market Domination. [music] [music] >> [music] [music] [music] [music] [music] [music] >> Heat. [music] Heat. [music] >> [music] >> Heat. Heat. >> [music] >> Down. [music] Down. >> [music] [music] [music] >> Down. [music] [music] >> [music] [music] [music] >> Hey, [music] hey, hey. [music] >> [music] [music] >> October is National Retirement Security Month and in honor of that, Credential has released its 2026 retirement pulse survey. company found that even with the funds to spend, retirees are struggling to tap into their savings. Here to break it all down, we got Phil Waldec, Credential Financials head of US businesses. Phil, it is good to see you. Let's dig right into this survey, my friend. Here's a number that jumps right out, Phil. Right. Nearly half nearly half feel guilty over something as simple, Phil, as dining out. Um, I guess just stop there, Phil. Like, what what is driving that fear, that anxiety? like is it is it inflation Phil is it health care costs what do we know >> so Joshu thank you this is a really important uh issue for our times it's uh retirement security is one of the defining issues uh and uh it's not just the math of having the successful account balance that's built up it is the confidence on then what to do with it as you approach retirement and the examples that you gave social security inflation healthcare long-term care those are all concerns that um retirees and pre-retirees have. But part of the challenge is they've spent decades building a balance and then what to do with it when you have the fear of running out and that can cause people to be uh cautious uh and afraid of enjoying the retirement they've been planning decades to have. I guess my question, Phil, this concern people are expressing to you in this survey, this anxiety, like is it is it rooted, Phil, in real economic pressure, or do you think it's more headline driven? It's more emotional, or maybe it's both. What do you think? >> Both. Uh I think there is the substance of a variety of forces that are challenging for people to manage throughout their lives. Uh but then there also is the psychology of uh doing the right thing. And I think to be able to take action, there's a gap between what they would like to do, have steady income, have a plan to do this, uh, and the reality of taking action so that they have that stability, uh, throughout their life. But, you know, the longevity is a really complicated dynamic that's very difficult for any one individual to tackle and they fear, gee, I might live to 95, 100, so I better be really cautious with it. but they're component parts that could help them get to a confident place to build a plan, take action uh and enjoy the retirement that they uh had been planning for. >> Who who's expressing this concern, Phil? Can we get a little bit more granular? Like is it did you find it more prevalent the anxiety we're talking about low income, middle income, high income? How did it break down? It actually was a common um uh attribute across uh income or account balance levels. So savers that have been successful, it is surprising that as the uh assets are larger, there's 3,000 uh plus Americans that were surveyed age 50 and older. Uh and uh this was a consistent uh concern that folks had. And um you know it's the the balance of uh the fear of running out versus the fear of missing out and uh how to then take action on something that's complicated which is how do I withdraw the right level so that I still am protected against these other forces like living longer than expected and that's where components like social security like a pension plan uh and like uh protected income for life um an annuity uh could be a part of this strategy, but you know they need um advice that is objective. They need a plan uh and then the ability to implement that plan so that their basics are covered. >> Phil, I thought this yeah that sort of planning disconnect in the survey I also thought was interesting. You found just just 23% of pre-retirees have a clear retirement plan. you found only 16% have an actual withdrawal strategy. What what did you make of that? Did that did that surprise you? >> Uh it was consistent with what I was concerned about, but it was probably a little worse than I would have projected. Um so the absence of a plan, uh the absence of a withdrawal strategy on something they've spent so many decades building, but this is a complex issue. Uh, a stat that I would add to what you've just said, Josh, is, you know, Credential found that 58% would be more comfortable if they knew their basics were covered uh, with protected income for life. So, they have appetite for the right solution, but there is a gap between what they would want as an outcome and what they actually do. Nearly 60% uh say knowing their basics are covered with guaranteed income for for life would give them confidence to spend. I I'm curious, Phil, um has that meant an uptick in demand for products like annuities? Are you seeing that? >> Uh there is an uptick in demand for annuities, but I think that is a relatively small base compared to the size of the need. uh when you look at sort of the good news here, the good news is uh a whole significant cohort of Americans have built up substantial retirement savings. So that's great, but you got to get the last mile uh to make this work. And that means people are going to need objective advice. They're going to need a plan. They're going to need protected lifetime income. And uh ideally, they would have this both on an individual basis, but also through their employer's workplace clients. From a more macro perspective, Phil, I'm curious. If you've got millions of retirees and they're sitting on a lot of money, but they're anxious about spending it, what is pull on that for me. What does that potentially mean for the economy for GDP growth? >> Uh, great points, Josh. This is um suboptimal from an individual perspective. It's suboptimal uh from the economy's perspective uh because that is consumption that could be emerging. When you think about the large baby boom cohort, 11,000 people a day are turning age 65 and the assets they've accumulated. Um there's a demographic pyramid in America that has changed very much. You know, very few uh subsequent generations are uh you know there's much smaller in size. So this is uh something that not only is important for the efficiency and the outcomes for individuals, it's for our economy as a whole and our society because there is a level of anxiety around this that's not uh healthy either. >> Final question, Phil. You know, maybe there's viewers watching this right now. They've built up a nest egg, right? But they're anxious as we've been talking about about tapping into it. What are the steps they can take, Phil, in your opinion? Like just basic steps they can take to unlock some some more confidence in their retirement plan. So I think uh the actions they could take are to uh get advice, find an objective source of advice. Financial adviserss are uh uh one way to make that happen. Uh work with that adviser to build a plan. Uh and part of that plan should be what are the basics you need covered? Uh what are your objectives? And then uh income strategies can be a part of that such as annuities. Uh but I think uh this is the last mile they need to get started on. uh and advice and annuities can be a part of that picture and credential is very focused on understanding the psychology of it not just uh the mathematics of it. >> Phil, great to have you on the show. Thanks for your time. >> Thank you, Josh. >> Coming up, we got cover through the closing bell on Wall Street. [music] Don't go anywhere. [music] Heat. [music] [music] [music] Heat. [music] Heat. Heat. [music] [music] [music] Heat. Heat. [music] [music] Heat. [music] [music] Heat. [music] >> [music] [music] [music] >> Heat. Heat. [music] [music] >> [music] [music] [music] [music] [music] [music] [music] >> Hey, hey, hey. [music] [music] [music] [music] >> [music] [music] >> Stocks in the day are higher as treasury yields edge lower. Yahoo! Finances Frey has the latest. >> Yeah, Josh. And just take a look at the Wi-Fi interactive chart. So you can see the choppiness in the session that we saw, but we did see the major averages being able to recover from the lows of the session earlier today when we saw the major averages that were in red territory at one point. You're looking at the Dow that's ending relatively flat, just above the flatline. The NASDAQ composite also just above the flatline and the S&P 500 up 2/10en of a percent. As you just mentioned, the 10-year Treasury longdated bonds easing a bit after they touched record or highs that haven't been seen since 2002 for the 10-year Treasury. Taking a look at where we're at with the sector action, we did see today that technology was outperforming and energy stocks were also outperforming. Part of that had to do with the fact that you saw oil prices climbing higher today. Industrials also in green territory over on the NASDAQ 100. Nvidia up for the session, but the rest of the MAG 7 in red territory. And also looking at the other semiconductors as Micron up more than 3% a turnaround for Micron because earlier this morning that stock had been up down in red territory uh despite strong results but nevertheless turning around applied materials also higher for the session. And then just mentioning what's been happening with oil prices because we have seen those climbing higher today. So we saw a climb in oil prices today. Part of the reason also why you may have been seeing those yields going higher this morning on the Treasury yields. You're looking at WTI of more than 3%. Brand crude also higher Josh. >> All right. Thank you and appreciate it. For a deeper dive now into today's latest market action, we got Adam Johnson, Bullseye American Ingenuity Fund portfolio manager. Adam, great to see you as always on set. Let's start with the bond market. All right, that's the area of focus 10 year, my friend. We're sitting here at 523. Let's start here. Why are we at 523? >> Well, we have too much debt. >> We the US government uh we the uh international community, I mean this is not just a US problem. It's uh all across Europe. It's Asia. Japanese, you name it. Uh the Chinese are struggling. And not only do we have too much debt um and governments have to keep issuing debt to keep up with that, but now all a sudden we have all this new debt that's coming on to support the data centers, which by the way I'm okay with. You know, Microsoft competition. >> Yeah. But it's comp, you know, Microsoft can afford to take out all the uh the loans in effect uh via bonds that it's issuing to pay for all the data centers. No problem from the hyperscalers. But yeah, as you point out, it's competition. In other words, there are bond investors out there who are saying, "hm, I could buy US treasuries or I could buy something from Microsoft." Well, guess what? Microsoft is rated higher than the US government. So, chances are you're going to buy the Microsoft bonds, which means the treasuries have to um move down uh in price or up in yield to incent you to buy treasuries. So, that's in part what's going on here. How do how much do you think is also that this economy remains resilient? I you know, last time I saw Atlanta Fed GDP, it had like a five handle on it, right? How much of that is 5.4%. >> Well, this economy is very strong. It's why we are fully invested. Earnings are incredibly strong because the economy is strong. I also, by the way, think that the reason we're seeing record uh profitability in the S&P 500, 13.6 profit margins. We've never seen that before. I think it's an early return on AI. So for all the naysayers who say, "Oh, companies are spending way too much." Actually, it's worth it and they can afford it. Especially the big ones like Microsoft, Amazon, Google, Apple, you know, the usual suspects. Um, >> they can afford it. The cash flow is there. uh the return on equity is there and I'm very comfortable uh being fully invested given the backdrop of again a as you point out 5% GDP growth um and b somewhere between 35 and 50% >> uh profit growth at US corporations >> when you look at that tenure though Adam >> is that a risk for the market is it a risk for for for risk assets >> well actually I would say no and I'll tell you why Josh if you go back to uh from 1975 to 2000 25 year span rates never the tenure never went below 5% for 25 years in fact the average was 8.5%. That's a lot higher than where we are now right we're what 5 and a quart >> so for 25 years the average yield on the 10ear was 8 12% >> and stocks the S&P 500 on average went up 16% per year. >> Mhm. So, we've already proven to ourselves uh over a 25 year period, that's real, that um that that 5% is not a big deal. In fact, 8 and a half% is not a big deal. >> And if the reason we're saying part of this is that the economy is so resilient, isn't that good for equities? Isn't that good for corporate profits? >> Of course it is. And by the way, it's also good for debt because if the economy is growing, then companies are paying more in taxes. More taxes for the government means more revenue. In theory, they can pay down the debt. Now, unfortunately, uh, no one likes to pay down the debt. They just say, "Oh, we we have more tax revenues. Let's go spend it." In fact, let's spend even more than we're getting. Um, so I'm not entirely hopeful. And and by the way, Republicans are just as guilty of this as Democrats. It used to be that Democrats would spend and Republicans wouldn't. Well, now because of co >> both parties have learned that the more you spend, the more people like you and the more likely you are to get elected. So unfortunately um spending is an issue across both sides of the aisle. >> So corporate profits look good, earnings growth looks good. How would you broadly characterize valuations here? >> I'm comfortable with it because of the growth. So the S&P 500, I think we will see earnings of $400 in aggregate, right? If you add up the earnings of all 500 companies, I think over the next four quarters, that number will be $400. and you say to yourself, well, um, what sort of PE multiple could we put on that? And I should note that typically in a bull market, you have a PE multiple of anywhere from, uh, 18 times to 24 times. >> So, let's put the higher end. Let's put a 22 PE multiple on $400 of earnings. That gets you to 8,800 on the S&P 500. Well, right now, we're at 7,700. So, by my way of looking at the world, I think there's another 15% upside from here. And again, it's because of the earnings growth. >> Let me ask you about another big theme I want your take on. Uh oil. We did have a pretty big headline drop from the Journal today. They're reporting the US sending a third aircraft carrier up to 10,000 more troops to the Middle East. Oil higher here. I'm looking at uh see WTI's at 93. Adam, can can the economy and the market can it handle 90 $90 oil? >> Yes. And you know, I mentioned the historical context with bonds. Well, uh I can do the same for oil. >> Mhm. uh slightly different numbers, but uh hear me out. From um 2010 until 2015, oil averaged 85 bucks. As you just pointed out, it's 93 today on this headline. So, >> a little bit higher than that. But again, for 5 years, average uh oil averaged $85. Well, inflation at that time, for those five years, was only 1.7%. The economy grew 2.4% and the average return for the S&P 500 uh was 13%. Mhm. >> So, just as we've proven to ourselves historically that we can live with u bond rates above 5%. Um we have proven to oursel that we can live with oil uh for 5 years at 85 bucks. Uh the rest of the economy can continue to grow. Inflation um can be held at bay and stocks can go up. Um, so honestly, even though we talk a lot about >> bonds and oil and oh my gosh, isn't it horrible and what a terrible headwind, >> the, you know, stock market's at all time highs. So the stock market's telling you, you know, yeah, you people on TV can talk about it all you want, but you know, >> yeah, maybe the market also just, uh, sniffed out, you know, this economy of ours is more energy independent and more energy efficient than it used to be is a big is a big reason. So you remain broadly bullish. You're broadly constructive, Adam. Um, what worries you though? What's on what's on the radar of risks when you talk to clients? What do you tell them? >> Well, I think one of the clear risks for the market right now is what's going to happen and uh what's the countdown? U 34 days to midterms. Um >> conventional wisdom is that the Republicans will hold the Senate but lose the House. That's >> I don't care what your party affiliation, but generally that kind of balance or gridlock if you want to be uh less optimistic about, but that kind of balance is a good thing. Markets love gridlock because nothing extreme happens. >> If however uh you have a blue wave and >> they take both chambers >> and the Democrats take both chambers, all of a sudden that brings up all sorts of questions. Um, what does it do to the whole Trump uh White House push to limit regulation uh to increase uh drilling, to streamline approval processes? Um uh might it once again, and I hate to even utter the words, but you know, might it once again um cause Democrats to say, "Well, here's our chance. Let's impeach him." In other words, the whole growth force that has been the White House of the past uh initiative uh of the past two years would come to a grinding halt. >> And I don't think the market would like that. I think the market would would much rather see the gridlock of a Republican Senate and a Democrat House. So, I think that's admittedly a legit risk and for someone who's fully invested, >> yeah, that's on my mind. Um, let me get your take on another headline thought of you as you were coming to Bloomberg headline. You saw this Anthropic said to target mega IPO Adam before the Thanksgiving holiday. Anthropic goes goes public. You want to commit capital there. I mean, you saw Reuters got its hand on that perspectus. Revenue growing like a weed. >> Yeah, I know. Well, the funny thing about um both Open AI and Anthropic is that every 6 or 7 months when they do another funding round, you know, as a private company, suddenly it's worth 40, 50, 60% more. >> I mean, Open AI was supposedly worth 850 billion and now we find it's worth 1.4 billion over just a six-month time span. And so there's this sort of competition uh between Anthropic and and Open AAI. OpenAI, of course, owns Chat GBT, as you know. Um and so who's going to come to market first? And because of the whole AI is going to wipe out humanity scale, which is absurd by the way. Um that whole notion over the past call it month or so that has really royd all the AI stocks. Uh many are down 34%. Um that caused uh Open AI to delay its its IPO, but again because of this competition between Open AI and Anthropic, Anthropic said, "Oh, fine, no problem. We'll jump into the fray." So, yep, they're going to IPO. Uh, will I buy it? It's a question of valuation. I mean, I'll buy anything if it's I haven't touched SpaceX because I think the valuation's crazy. Um, if SpaceX were to break a 100red and start trading at a more reasonable price to sales multiple in theory, right now it's somewhere between 80 and 100 times price to sales. I can't justify owning SpaceX. I mean, the NASDAQ trades at six times sales. Okay. Um, and SpaceX doesn't even make money. So, anthropic, will I buy it? I don't know. Tell me the price to sales multiple. They don't yet generate a profit. Which is why we can't talk about a PE ratio. We could talk about an enterprise value to EBIT DA or the bonds plus the market cap minus the cash and compare that to a cash flow. That's another way that analysts like me will look at a company EV to EBIDA. Um, if you can tell me what that multiple is, um, yeah, I might buy it, but it it's purely a function of where they price it. >> Let's end on on some names I know you do like. All right. Explain to the audience, my friend, why coherent is a buy. >> Oh, did you notice it was up a lot today? >> So, they have announced um and again I I say that as someone who is long and thrilled. Um so, Coherent is the number one integrated maker of lasers that um are able to beam data over fiber optic cable. >> Uh the cable, by the way, is made by Corning. That stock too has been doing well. So, um, uh, Coherent actually grows their own crystals in labs, and then they shape them into, um, the focus of the laser, run light through it, and all of a sudden you're you're transporting data at the speed of light. A lot faster than copper >> doesn't generate the heat that copper generates either. And, uh, most notably, they have just signed a, uh, a new partnership with Nvidia. So all of a sudden now you have Nvidia chips paired with Micron chips paired with coherent lasers. I call that the dream team. It's exciting. Uh the stock like so many of the AI stocks um fell 3540%. It's starting to come back. Um and um I I think you need to own it. I think it's at least a double from here. >> Uh final one. What about TTM Technologies? Explain that one. >> Oh yeah. Um brand new one. So um you know Mike Row, right? Dirty Jobs, right? I mean, he built a whole career, television career around talking about the jobs that nobody wants to do, but they kind of hold the world together. Well, uh, TTM technologies, same sort of thing. Um, no one talks about, uh, printed circuit boards, you know, the green, the bright green boards inside a phone, computers, everything bright green, they've got the little silver dots, the copper dots, transistors on them. That's a printed circuit board. It's um, it's like the skeleton inside um, a piece of hardware. again your phone, your computer etc. um number one in printed circuit boards and because of the demand for well really coming from data centers for equipment uh the market for printer boards has just done this all right and so uh they are growing gang busters trading very cheap trading about 18 times earnings with uh 40 to 50% growth historically it's traded at more like 30 to 32 times earnings so again it's trading at 18 usually trades at 32 stock came way down it's growth going much faster than the market. That's a buy. >> Adam, we've been talking for years on this show. Nobody, and I mean this, nobody has gotten it more right than you. I mean, absolutely. >> You had some smart people. >> Yeah, I have. But you have nailed it, my friend. Thank you. Thank you. Thank you. >> Okay. Appreciate it. >> Coming up, we get Meta's former chief technology officer's take on the company's new news AI agent. That's next on Market Domination. [music] >> [music] [music] >> Heat. Heat. [music] Heat. [music] [music] [music] Hey, Heat. >> [music] [music] [music] [music] [music] >> DA Finance Executive Editor Brian Sazi spoke to Mike Schroer, Gigascale Capital founding partner and former MetaCto about the state of the tech industry. Take a >> So, we haven't talked since Muse came out. Like, how big is this going to be for for Meta? >> I mean, while I was waiting for you, I was interacting with my Muse. It's adorable and useful. What What else do you want in life? >> What how are you using it? >> I mean, all the time. I'm planning a trip right now, asking it to help me uh with some timing on that for iterary. I took some stuff, had it turned into a calendar. I had it help me uh find a car I was looking for. Calling around a bunch of dealers. it it just like on a daily basis being useful. >> What impact do you think it's going to have on the enterprise space? >> I mean, as soon as you use Muse, you're like, I want this for my enterprise because it is always on 24/7, proactive. Um, it is just a better way to interact with these AI systems. So, I I think as useful it is for consumers, you're going to see massive enterprise adoption of of things like this. Where what is next you think on on the Muse front? Like where where where can they take something like this? >> Well, the amazing thing about it is it's it's not integrated with anything yet. Like it's it's just browsing the web um and doing it for you. And if you saw Connect, they announced connectors for a whole variety of different applications. So, you know, direct connections, if you can imagine, into your Slack, into your payment system, into your calendar, into your ERP, like once it has a good API connection into everything, it's going to be so much more useful. And it's incredible how useful it is now, just like popping up a web browser and connecting to these things. So, um I think once you see things like Muse connected and everything, it's it's going to become even more useful than it is today. >> What's more important to to Meta's future in your estimation? Is it some of the the hardware that we saw Mark drop about a week and a half ago or is it something like Muse? >> I think you should think about it a little bit differently. I mean I I said this before, you know, when I saw you blast and that Mark's in founder mode and he's investing in the long run. You only all the hardware he dropped. It's not like you can start that stuff 6 months ago. They've been working on hardware for, you know, 15 plus years. Um they've been working on AI since, you know, 2013 when I first hired the the AI team. So um I think it's more just if it's technology particularly uh AI and if it's hardware Mark is going to keep investing uh you know he's not responding to the the winds of the quarters he's just investing in the right technology. That's the way I'd look at it. >> I'm sure you saw the the MongoDB guy is now headed over to a meta. How do these hires happen? Like Mark just reaches out to him and say hey we have an amazing opportunity. I mean the MongoDB guy was I mean he was leading his whole company. [laughter] I mean, this is why like, yeah, this is Mark. Mark. Mark is is got the memo, man. He he he will personally go out and reach with you. He'll deliver soup to you. He'll do whatever it takes to get the right people because he knows that talent is what drives a business like his. And you see, he's continually refreshing the key leads in the company, you know, um bringing a board member on to lead the compute side, you know, bringing on the MongoDB CEO, bringing on Alex, bringing on Nat and Daniel. Like, this is this is what he does. You miss Mark in there? >> Oh, I talk to Mark all the time and yeah, of course. Of course, it's an amazing place. So, I get to I get to play in two worlds. I get to still hang out at Meta and I get to sort of build the clean energy revolution. So, I'm I'm having a great time. >> We saw Mark at the White House with a lot of other uh tech leaders, Mike, and you know, on the sidelines, a lot of them may have, you know, the reports are that they approached Dario over at Anthropic and kind of asked him like, why are you sounding alarm bells on AI? If you saw Dario, what would you tell him? >> Yeah, I mean I think we just have to be specific and consistent. You know, what are the risks and what are the right ways to deal with them? When we talk in sort of big absolutes and generics, it's hard for anyone to engage. So, if we're talking about cyber security, we should talk about what are the things we need to do to to protect against that. We're talking about, you know, bio threats, then we need to talk about that. So, I think we're starting to get there, but I think we need to make the conversation a lot more specific. Just like anything, what are the risks? What are the rewards? Is it worth it? Like that's the actual conversation. What what is the biggest risk? You know, we saw, you know, Reuters still putting out bits and pieces of the perspectus for anthropic that I got I mean, shout out to Reuters like I mean they whatever they're doing, they they got it. But really inside there, the risk factor was there was an existential risk to humanity. Like what does that even mean? It's like AI can wipe out the world. How does that even happen? >> I mean, you you know, I grew up in the 1980s sci-fi, so you you could plenty of movies and books have been written about this, but but you know, I I think there's some real near-term risks that we should talk about. The most obvious of which is is cyber security. You know, we've already had systems hack. Um they're really good at it. And having run large scale systems, it's way harder to defend than it is to attack. I got to lock every single door. this agent can spend three days trying every single, you know, door and window until they find the one that's unlocked. Um, and so we got to do a lot of work to harden our systems. And I think it's exposing that. That's like a right now day zero risk. I think, you know, I don't spend a lot of time worrying about the existential risk stuff. I, you know, I think that the best explanation of it is, you know, AI gets out, self-replicates, and starts sort of consuming resources, you know, for for its own use and competing with humanity for it. Um, but that's not it's not the thing I I spend a lot of time on because I think we should actually be focusing on more of these near-term issues. Um, and the benefits that can get that can happen with these systems. >> What were your thoughts regarding the the safety declaration the group the group signed? I >> think it's a good good step. >> Does it make any will drive any change? >> I mean, again, I think getting the right people talking, you know, is is is a good step. And I like I said, I think we just need to get concrete about, you know, h how are we going to protect against these things? I think that the the other thing is, you know, we we started the segment talking about Muse. I bet you most people watching this are are and have been using some sort of AI this morning, maybe while they're watching me talk. And so, you know, there's a lot of benefit happening right now on a daily basis. I'm seeing it in all the companies I back who are accelerating their ability to deploy, you know, better, faster, cleaner technology thanks to AI. So, we need to have all those benefits and, you know, have a conversation about how we mitigate risks. >> I love the post you put out on X like you you you see you must see so many slide decks, so many pitches and you can't invest in every every one. Where where are you putting what what are you saying yes to besides that cool stuff in the water you and I talked about like data centers because that's I I do think that's really cool. >> Yeah, data centers in the open ocean. Why why compete in people's backyards when I can use the southern ocean, you know, use terowatts of energy that nobody's touching right now and use it to power data centers? Like I think that we are very myopic in, you know, thinking about the last 10 or 20 years as how the next 10 or 20 years have to be. And there's so many great solutions out there. I was just literally yesterday in Idaho at the Idaho National Labs looking at a facility that hadn't had a new nuclear reactor in it in 30 years. And there's a startup, Radiant Nuclear, that's building a, you know, container size reactor. So, so you give me three parking spaces and I'll power your building for the next 5 years. Um, you know, no grid hookup needed, no sun, no wind. Uh, it's just a magic box that makes power. And this is something that they're going to turn on shortly. Uh, and it is a sort of revolution in what we're doing. So, so I think things like that, things like data centers in the ocean, you know, we just invested in a company that's built robots that deploy solar farms twice as dense, twice as fast, um, can really like accelerate your ability to get get power to power your factory data center, home, city, whatever it may be. These things are, I think, coming faster than people realize. >> Is energy the big play here? >> I I mean, if you think about it, the the debate right now is which is the bottleneck, chips or energy? Um, and I think it's energy, other people think it's chips, but we're investing in both. Uh, but those are the two gateways and bottlenecks to to the AI progress. >> Mike, good to see you. Uh, as always, uh, I still got to figure out how to use Muse. I have not done it yet, but maybe you can help me. We'll take that off. We'll take it offline. >> Wait, wait, wait, wait, wait. Time out. You can't let it go now. >> What do you mean you don't have Muse yet? >> I didn't download it yet. I didn't download it yet. I got to do it. >> Can you download it now today? I'm not going back on the show unless >> I will download it. I will send you an image. I'm on it because I need I I need help like managing my life. It's It's getting tough. Mike, >> this is what it's there for. Find find me on I will give you tech support on this. Go download it and then come come find me if you need help. >> This is This is why I do this job so I can like talk to cool people like this. Mike, good to see you, man. I appreciate it. >> And then umbrella next time you see [laughter] >> I appreciate it, bud. Thanks so much. >> Coming up, we dive into Nike's latest [music] earnings. That's for an analyst. Next on Ask for a Trend. Heat. Heat. [music] [music] [music] >> [music] [music] [music] [music] [music] [music] >> Heat. [music] [music] [music] Heat. [music] Heat. Heat. >> [music] [music] >> Down. [music] [music] Ow. [music] Down. [music] Heat. Heat. [music] [music] >> [music] [music] [music] [music] [music] [music] [music] [music] >> Hello and welcome to asking for a trend. Well, Nike posting first quarter earnings moments ago. Let's get to those numbers. Revenue coming in at 11.21 billion versus 11.33 billion expected. That's a miss. Earnings per share 48 cents. Don't have a clean comparison for that just yet. Greater China EBIT also missing analyst estimates that came in at 248 million versus estimates of 312 million. The company also expecting revenue to decline high single digits in fiscal 27 shares taking a hit here in the after hours. Let's come more reaction to the report. We're going to bring in now [snorts] Zack Waring, analyst at CFR. All right, Zach. So, uh Nike reporting here looks like worse than expected results. The stock uh quickly down here in the after hours. What what's your just immediate reaction to the print, Zack? >> Yeah, I'm a little disappointed. Um, I have a buy rating on the stock. Um, and I think this is a quarter you would expect from a new CEO three or four quarters in, but not two years in. Um, you know, we think they're doing a lot of good things in a lot of different spaces and they've got new products working. You know, Nike Mind, you've had some success in soccer over the summer, um, with some of their cleat releases. Um, and so you're starting to see some momentum in certain segments, but I think they really need to nail down the operating side of the of the business and really focus on profitability moving forward. >> Zach, just to remind folks, I mean, let's take a step back because not not everyone follows this story as close, right? This stock is a disaster, Zach. I mean, heading into this print, it's down 40% this year. It's down, you know, around 50% in the past 12 months. Just in simple terms, Zach, what what is the issue or issues here? Break it down in simple terms. Then as an analyst who has a buy on the name, I guess also explain why, Zach, you think the issues are are ultimately fixable. >> Yes. So, I think coming out of the pandemic, uh, obviously valuations got really out of control. They did a lot of business during the pandemic as people stayed home. Um, and since then, you've seen a slow decline to, you know, revenues and earnings. uh and it's dropped off significantly over the last 12 to 18 months. Um and so you've seen valuation come down with earnings which is obviously a recipe for disaster. Um I think you know now moving forward I think the you know valuation and expectations have been reset. So I think moving forward you can now kind of move away from trading at 40 times 50 times next 12-month earnings. It's only trading in the teens now. So I think you've got low expectations and you've got low valuation and I think now they can kind of move forward and begin to return to growth, expand margins and start to really work on some of the geographies that they're they're slugg sluggish in which is obviously greater greater China and uh Europe. Elliot Hill is is the man in charge here. Zach, um what do you think of his tenure so far? How much confidence, Zach, do you have in him as a CEO? He's been on the job for a couple years now, right? Um, how much confidence do you have in his game plan, Zach? Is his strategy to turn this around? >> You know, I like the strategy. I think the strategies strategy is the right move. You really want to lead in sports. That's what made Nike huge. They they had star athletes that drove their brand recognition all across the globe. I think they've got to continue to do that. Now, I'm a little bit worried about the, you know, operating side of it. So, they need to not only drive the sports, but they need to operate efficiently. They're a huge global company. Um, you know, that that's one of the things they've put out in this release, their new pace um operating plan. We'll we'll hear more on the call about that, but I think that's really what they need to nail down here. Um Nike is a company that can easily earn over $3 a share. I don't think there's any doubt in any investor's mind that the brand still resonates across the globe. I think it absolutely does. Um, they've you've seen successful launches. They've got, you know, Caitlyn Clark just came out with her new shoe. Um, you know, Nike Mind's doing well, like I said, and they've done well in soccer. I think they just need to now work on the operating side of things. Clean out the inventory. In Asia, um, you're starting to see a turnaround in North America, and I think North America tends to lead um, for footwear and apparel companies. When you start to see a turnaround there, um, usually Asia and Europe follow not long after. How has the broader Zach I'm curious competitive landscape shifted for Nike like who do they have to be worried about who's taken share? >> You know a lot of people come on and talk about you know Hoka and on running um but Nike running has done well in recent quarters. Uh so I don't think they're the biggest threats. Um you know they're really operating across sports. Um and like I said running's doing well. So their running shoes are doing great which is a big product line for them. it's really their legacy products. So, you've got, you know, Jordan, which is is obviously been under immense pressure recently that needs to really turn around and work on operating. Um, but I do think they can do it. I think, um, they've done well with recent launches. They need to continue those launches. New launches need to have that success, most almost all of them. Um, but I think focusing on operating is their next move and that's what's going to drive earnings per share higher. >> Zach, appreciate your time and that instant analysis. Thank you, sir. Yep. No problem. >> Coming up, driverless trucks could be coming sooner than you think. We dive into that next on Asking for a Trend. >> [music] [music] [music] [music] [music] [music] [music] [music] >> Heat. [music] [music] Heat. >> [music] >> Down. [music] Heat. Heat. Heat. [music] >> [music] >> Down. Down. [music] >> [music] >> Down [music] down down. [music] >> [music] [music] [music] [music] [music] [music] >> Aurora is pushing to take autonomous trucking from a small commercial roll out to real scale, targeting 30,000 driverless less trucks on the road by 2030. Joining us now is the CFO of Aurora, David Mday. David, it's good to see you. Maybe David, uh, start big picture for us, David, just bring us up to speed on on on what's happening on the road, like how many trucks of yours are are hauling freight, David, and where where are they operating? >> Uh, thanks Josh. Appreciate you having me on here. U, hey, I think, uh, for Aurora, we're in a we're in a really unique position. We're really at a confir uh you know a a a inflection point to commercially scale our business today. We've got a handful of our uh second generation uh truck fleet with our second generation hardware uh operating on the road. We're building more trucks and adding them every day. Um you know customer adoption is really strong. We expect to be operating 200 trucks uh driverless uh throughout four states. We operate on 10 uh 10 lanes today. So we expect to have uh 200 trucks operating throughout these four states, 10 lanes by end of year and then we're just going to grow from there. Uh with the you know the continued investments that we've made, uh we should be able to build a thousand trucks uh and we expect to end 2027 actually with over a thousand trucks operating on the road next year. Yeah, I read these reports, David, just spinning ahead, you're now targeting, my friend, more than 30,000 driverless trucks by the end of 2030. That that sounds uh ambitious, David. Like, what gives you the confidence that you can get there? >> Yeah. Uh I I understand it sounds ambitious and I think for the AV industry generally, yeah, that makes a ton of sense to me. Um what I would say is for us uh we've since our inception we've made a significant number of investments to get to this point. You know we have uh and we've and we've continued to uh you know deliver on our roadmap our technology from when we launched last year to today we've greatly enhanced the capability of it. Before we were operating on a single uh lane in daytime. Now we're operating 24/7 and you know rain all kinds of weather conditions. We operate on 10 lanes. We essentially have a technology that is now generalizable and we're going to we're starting to deliver to customer endpoints. You know if you look out to 2030 we're going to be operating on more than 3/4 of the highways that truckers operate on today. So we're excited about that path. Why we think uh you know that this is a realistic assumption is you kind of look at both the uh commercial um you know demand piece of it. Our customer pipeline the number of customers that continue to get excited about that because of the value of autonomous technology when you think about the safety the total cost of ownership reductions the stable predictable supply of you know trucks and uh you know the asset utilization being more than double. So, uh, we think we're getting tremendous customer value. We have made the investments to be able to scale up our Aurora driver hardware kits. Again, we're going to build 1,500 of this second generation hardware and then with the support of Amovio and our partnership with them. Amovio is the former Continental automotive division. We're going to be able to build tens of thousands of trucks. We're going to build these with our international truck fleet as well as working with both Volvo and Packar to scale the business. Um, you know, those will be lineside installs at their assembly plants. And while 30,000 feels or sounds like a lot, if you think about the market, the market is huge in trucking. It's a trillion dollar market. 200 billion vehicle miles traveled every year. But importantly, there's over 2 million trucks driving over the road long haul today. these OEMs that produce more than 250,000 trucks a year in North America. So this is 30,000 accumulative number from now up until the end of 2030. This is a very small percentage, but it's a monumental step for the industry and it'll be great value creation for Aurora. Dead. David, uh, just to get into the financials a bit, I read you lost more than 800 million last year, but you told, uh, the great Phil Labau, my old colleague at CNBC there, you told Phil you're now targeting positive free cash flow in 2028. I guess what has to happen between now and then, David, to sort of just hit that financial bogey. >> Yeah, I I think for us, yeah, we we do expect to be by the end of 2018 positive from a free cash flow perspective. It's really three things, right? It's it starts with a our asset light business model. So, we're going to be scaling a business that looks a lot like today's business where customers buy trucks. They will own and operate the trucks and we will provide the driving service. The second thing is we've got a ton of strong demand for the product. As I mentioned before, this is a technology that can uh allow people to have uh lower cost of ownership, higher utilization of their assets, improved safety uh and a stable predictable supply. And we're working on the third piece of this, which is the supply side with our partner ecosystem. So, you're just going to see us continue to build. This is a technology and there are very few technologies frankly out there that can deliver so much value to an industry that we really think and it is kind of undeniable. Most of the customers will tell you the value proposition is here. It's did you put the right enablers and the right investments in place to be able to scale it effectively and safely. >> If your tech does truly scale, David, in the way that you all hope for, uh I'm just curious, what does that ultimately mean, David? potentially for the human, you know, truckers that that could be listing right now. >> Yeah. I I I think uh we we would say simply if you are a driver today or you want to be a driver, you will have a job like and in many cases it will probably be a more desirable job because it will probably get you home uh more frequently or even daily. Uh I think we believe this uh wholeheartedly. Our customers believe this wholeheartedly. Autonomous trucking is really about augmenting the industry, not replacing it. And again, in 2030, if we have 30,000 trucks in the road, there's 2 million trucks operating every day. This is a small percentage of the fleet. We're really going to augment it and help make it more efficient. Uh, but this is not taking over the industry. It is just creating tremendous value opportunity for carriers. >> David, finally, I'm just curious. Why should someone driving next to one of your trucks, why should they feel uh safe? What What's the the data you would point to? >> Uh I we would not put it on the roads if we didn't think it was safe. We all have family members that drive on the roads every day, every time we launch a new fleet. Chris Hermanson's the first guy to go out there and drive on it. Uh you know, safety is the very uh the thing that makes this business work. You know, our mission is to deliver the benefits of self-driving technology safely, quickly, broadly. You can't do it without the safe part. We uh the requirements that we put into the system uh is in the tens of thousands. The number of tests is in the you know, millions upon millions of tests that we run uh to make sure that it's safe. And you know, for us, it's not a one-time process. It is a continuous part of our culture and of our mission. And so we would not put it out there if we didn't think it was safe. >> David, so great to have you on the show today. Appreciate your time. Thank you. >> I appreciate it. Thank you. Have a good day. >> Stick around. More for a trend that's still to come. [music] >> [music] [music] >> Hey, hey, hey. >> [music] [music] [music] [music] [music] [music] [music] [music] >> Heat. Heat. [music] [music] [music] Heat. Heat. [music] [music] >> [music] [music] >> Time now for to watch Friday, October 2nd. We're getting a fresh look at the labor market on Friday with the release of the September jobs report. Economists forecast the US economy at about 88,000 jobs slowdown compared to the 162,000 jobs added in August. On the unemployment front, the number is expected to hold steady at 4.1% on a month-over-month basis. Meanwhile, economists anticipate that average hourly earnings are also should remain unchanged at 0.3%. [music] report providing critical piece of economic data ahead of the Federal Reserve's October FOMC meeting where the central bank is largely expected to hold rates steady. That's a wrap on today's show. Thanks for [music] watching. [music] Heat. Heat. [music] [music] [music] Heat. Heat. [music] [music] Heat. Heat. [music] [music] [music] Heat. Heat. [music] [music] >> [music] [music] [music] >> Heat. Heat. [music] >> [music] [music] >> Heat. Heat. N. [music] >> [music] >> Down. [music] Down. Down. [music] [music] Hey. Hey. Take a look. 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