Hello and welcome to Market Domination sponsored by Tasty Trade. I’m Josh Lipton live from our NYC headquarters. Here’s your headline blitz, Getting you up to speed one hour before the closing bell rings on Wall Street.
0:31 spk_1
I feel like I have whiplash and indigestion. I mean, it’s a very challenging market right now. I think that one of the reasons that the market is so challenging is it’s responding to every headline, and it’s not thinking about what’s beyond the headlines, what’s the ultimate strategy here? And the ultimate strategy here is this is, I think when we say tariffs we really should say trade negotiations. This is a trade negotiation going on between US and China.Uh, it isn’t clear to me what the ultimate trade deal might look like, but this is a negotiation.I think the bond market got through that turbulence now and is trying to find its footing, so I think the worst is probably behind us in terms of the turbulence, and the Fed has a variety of tools at their disposal to help things out, not rate cuts, using their balance sheet to try to smooth things out if need be.
1:27 spk_0
They’re getting back to their core franchise. They drifted off there for a while trying to get into consumer finance, uh, but I think now they’re back to, you know, in a sense their core strengths, and I think they’re hiring the right people and they’re getting the results.Alright, we’ve got one hour to go until the market closes. Let’s do a quick check here of the popular averages. It has been choppy, folks, but listen, bottom line, we’re in the green. We’re positive all over my screen right now. I got the Dow up about 460 points. I got the S&P 500, your broad gauge of about 1.2%. Nasdaq up about 1.1%. Your small caps tacking on about 1% as well as investors make sense of President Trump’s latest trade pronouncements. Let’s get a quick.The Treasury yields too they are lower. I’m looking at your 10 year back down to 436. Let’s kick out to Yao Finance is Jared Blicky for a deeper look at today’s moves.
2:26 spk_2
Jared, thank you, Josh. We are in rally mode. There are some things to like. There are some things that are a little bit iffy. Let’s go through the charts here. Here’s the S&P 500. This is the action today, as you said, Josh, it is a bit choppy. We actually dipped into the red briefly around lunchtime, around noon.We are well on our way higher here. I want to show you the year to date just so you can see how the price action has evolved. I’m going to put some candlesticks here and this was the low when we broke this low just at the end or the beginning of April, we crashed pretty hard and then we bounced back up and now this is the 2nd time we’ve used this prior support as resistance. And if you want another example of this, that low that we were just looking at, that was also the high of the late.2021 early 2022 bull market, so these things in the technicals do have a shape and the somewhat predictive power. I want to go to the VIX here. The VIX is dropping. Let me just show you the year to date on the VIX, and you can see we were really elevated. We had kind of this triangle formation. We have now dropped to just about the 30 level. That is an improvement, but 30 is still historically elevated. I’d like to see that get down into at least the 20s, but that just takes some time.Here’s a 10-year T note yield. This is also a year to date, and as you said, Josh, we’re heading a little bit lower today, but that is after the biggest pop, the biggest rally last week that we have had since 2001, 50 basis points, so that was absolutely incredible. Not surprising to see a little bit of that move taken off the boil here, and we’ll have to see what the bond market does next. In general, the equities markets do not like bond market volatility. Also, the US dollar index camping out at multi-year lows, that’s another.Thing we’re going to be looking at, but I want to get to some heat maps, especially the sector action, as you can see for today. Everything in the green. I said there were some things in the market a little bit iffy. Guess who the leaders are real estate utilities and staples. Those are defensive sectors. You don’t necessarily want to see those lead. Just kind of gives me the impression that this is a somewhat random market environment where we have 80 to 90% of everything moving either up or down any given day. Guess what today.It is to the upside. Finally, here’s the Nasdaq 100. Apple having a nice day, but the Mag 7 overall somewhat split. We see Amazon and Meta down over 1%. Alphabet up 1. 3.75%. I will leave it on, I will leave it on our leaders here, and we are seeing most of these in the green here, almost all of them in the green, led by solar, biotech, China, and regional banks. So go figure there interesting assortment at the top there.
4:56 spk_0
Josh, thank you, Jared.Appreciate it. Well, Apple and other tech companies getting a temporary reprieve from tariffs with President Trump announcing exemptions for tech imports into the US. And joining me now is Adam Johnson. He is the portfolio manager at Bullseye American Ingenuity Fund and Santos Rao, head of research at Manhattan Venture Partners. Gentlemen, welcome to you both. Santos, I want to start with you and Apple and Trump’s revised.Of plans there, Santos. Here’s how Angelo Zeno over at CFRA, here’s how he put it, Santos told his clients Apple is clearly the biggest winner across the technology space, avoiding a worst case scenario. We view the temporary exemption as going a long way toward providing better visibility and no longer expect drastic revenue and EPS revisions to our forward estimates. Santos, you hear that analysis. Does it make sense to you?
5:50 spk_3
Absolutely, uh, great to see you. Um, I think Apple had the biggest to lose, had the most to lose in this whole fight. Uh, I think, uh, this gives them time, gives them 90 days at least to kind of regroup, get their supply chain together while the atmosphere de-escalates. Maybe there’s fruitful outcome of this trade negotiations with China. Hopefully that’s a long shot, but hopefully something good comes of it. But you get, they have 90.Days to really figure that out. So that’s a good one. Yeah, that’s a big help. Uh, and so overall I would say like I agree with the analysts there that they are the biggest beneficiary. It benefits others as well, but more so for Apple because their iPhone comes from there and that’s their biggest growth engine. So I think they don’t want that disrupted, but they need to move fast and they need to be strategic and that’s the whole idea, and they get the time to do it. So that’s, that’s good.
6:41 spk_4
Santos, Adam, here, I totally agree with you. Uh, it makes perfect sense that Apple would be up on getting a break from tariffs. What I can’t figure out, maybe you can help us understand it, is Nvidia right now they’re going to build chips and AI platforms here in the US. So certainly, uh, tariffs aren’t going to be relevant for them once that’s up and running in a year. And yet the stock is barely up today, maybe 0.5%. Can you help us understand why Nvidia isn’t up more?
7:06 spk_3
Yeah, I think Nvidia has a lot of other things going as well. There is this suspicion that AI has run its course, uh, things like that, you know, maybe people have already got their chips already. So things like that, then we have Deepee and there’s some alternatives to Nvidia. Maybe you can do things cheaper and faster in some other ways. So that, that total dominance of Nvidia is being threatened, though I don’t believe that Nvidia is still the major player.Uh, you need them for everything from robotics to cars to everything else. They are the core piece of every, all the things that are going on or that are coming down the pike. So I don’t think Nvidia is at risk, but on the face of it, I think there is a risk, there is that feeling that maybe it’s not smooth sailing. They’re gonna have some, they need to do some reinvention and be ahead of the game. So there are some challenges ahead. So they had other issues going.As well, and Nvidia is playing the tariff game pretty well. They’re well positioned. They’re already in uh in Arizona, and they, they agreed to spend $500 million which billion, I think that’s, that’s great as well. So I think they’re doing the right things, so I think they’re OK, but overall I think uh AI, the whole, whole set up around AI is kind of not as smooth as it was before.
8:17 spk_0
Santos, I’m curious as you roll into earnings season now, and we start hearing from these chip companies. Do you think Santos, we’re gonna hear from chip companies, they’re gonna tell us a lot of their chip customers stocked up on chips, kind of pulled forward demand ahead of those tariffs?
8:31 spk_3
Yeah, we’re gonna hear some of that, uh, a lot of it. We don’t know exactly, but I think definitely that that was the sign that people have pulled forward, uh, and even from China itself and a lot of things happened there, uh, as well in terms of pulling forward and that’s so, uh, in, in terms of the export import, uh, imbalance there. So you are going to see some of that, but, uh, I think fundamentally.I believe that AI has still a long ways to go. There is tremendous demand. Maybe there’s some reorgan the reorder in terms of who’s leading it and who’s not, and maybe the competitive landscape just got wider, but overall, AI is needed and the companies that play it well will do well and NviDI is right there in in that whole space, though they they’ll have company going forward.
9:16 spk_4
Sotosh, let me jump back in here. Got a little pause and uh I don’t want to miss that opportunity. Uh, Microsoft owns, uh, call it about half of OpenAI, which owns Chat GBT, uh, but I feel like that’s a pretty sloppy way to play it, uh, right, because in Microsoft is so big and ultimately OpenAI is such a small fraction, even if it’s going to be larger. What’s the best way to play AI from your point of view?
9:39 spk_3
Well, I think I would continue to play the chips, but I think as we move along, the, the, the graph is going to move more and more towards the application side. So I think you’re going to see Microsoft and Google and all the other places that provide the applications and a lot of startups that are in the in the wings that we cover that we follow and we invest in, they’re also coming up. So that’s the best way to play down the road. In in the, in the near term, it was all about the infrastructurelayer, the chip layer, the top layer kind of get the front frontier models together, but now it’s going to be applications, so you’re going to see a number of winners on that side. Uh and um let’s see where that goes. But definitely, the, the graph is definitely moving to the side, uh moving right and up as the applications take more and more shape. And we saw that during the internet revolution as well, in the 90s, you had all the initially, you had all the infrastructure side and then we got the.Amazon and Google and all the other applications, the pet.com and all that, all those come in and you’re going to see the same thing, number of applications, AI applications that will come to you pretty soon, probably in the next 1 or 2 years, if not, that’s the maximum. I’m expecting 2026 you’ll start hearing more and more success stories in terms of application providers.
10:49 spk_0
Santos, we started with Apple. I want to circle back to the iPhone maker. I’m curious, Santos, how you see Tim’s.Tim Cook’s manufacturing footprint evolving over time. Santos, would you expect to see a lot more iPhone manufacturing, for example, in India, as maybe Apple tries to mitigate these US-China tensions? I was struck by this stat. I don’t know if you saw this. Sanders Bloomberg, citing sources, says Apple is now making 1 in 5 iPhones in India. I’m curious, do you see that footprint there just continue to expand for Cook?
11:21 spk_3
Absolutely. I think India is the first place to go, and it’s been going on for a while now. We’ve heard that and I was in India recently. I saw there’s a lot of chatter about it. Apple and how production is ramping up there as well. So I think you’re going to see India as the first stop, but I think President Trump doesn’t want that either. He wants everything to come here. So I don’t know how much, how much time he has in staying with India and building there, but in the near term it was all about Vietnam and India. So I think India is definitely going to be the biggest beneficiary of uh.Building this, they have the manpower. They just need to build that infrastructure around that and that’s also improving, but all that takes time, you know, you need a lot of manpower, you need the technology, you need the retooling. So all that takes a lot of time, and India has the capability of doing it. It’s going to take some time, but that’s going to be, that’s going to be the biggest beneficiary. That country is going to be the biggest beneficiary.
12:10 spk_0
Santos, let me ask you, what about domestic manufacturing, uh, US manufacturing of iPhones in your opinion, is that financially tenable for Cook?
12:21 spk_3
Well, you know, he, he has promised to do it. He’s, uh, committed to spending a lot of money. It’s going to take some time. The cost is definitely going to go up. Uh, iPhones are gonna cost a lot more than what, than made in China or India or other places. So yes, he’ll come in if he’s forced to do it. Hopefully, hopefully there is some economic sense and even.President Trump comes to some kind of an off ramp in terms of forcing everyone to come here and say, OK, strategically you do there, you have an advantage there, but uh have something here, some percentage here. So I hope there is some kind of a compromise in there because you really can’t get everything here and expect to get cheap phones here. It’s going to be an expensive proposition.At least initially down the road maybe you get the scale and all that stuff, but then initially it’s not easy to get everything over and expect to buy $1000 iPhones or whatever the cost is right now and uh see this, uh, and just expect to do, expect to have that. It’s not gonna happen. It’s gonna take some time.
13:20 spk_0
Santos, always good to see you, always good to have you on the show. Thanks for joining us. Thanks for having me.
13:25 spk_3
Thank
13:25 spk_0
you.We’re just getting started here on market domination. Coming up, Mark Zuckerberg’s empire at stake as Mena prepares to battle Trump’s anti-trust cops in court. When to get you the latest on the other side, stick around, much more market domination. Still to come.Well, day one is unfolding in the government’s high stakes antitrust trial against Mehta’s Facebook. The case, which was filed by the Federal Trade Commission during President Trump’s first term, seeks to force Mehta to sell off Instagram and WhatsApp. And here with the details is Yahoo Finance his very own Alexis Keon. Alexis,
14:01 spk_1
yes, so already up on the stand today, first witness out of the box for the FTC CEO Mark Zuckerberg. So he’s testifying right now. We don’t know so much yet about what he’s been saying, but hehas been asked about network effects, so the fact that buying up Instagram, WhatsApp, and other social media companies helps drive Facebook then. Bottom line, of course, now owned by Meta. Now the FTC in this case, it says that Facebook bought these companies in order to monopolize the market that they’re calling personal social networking. They say that they used it to block rivals and that they harm competition. Mehta, on the other hand, says no, we don’t even have a monopoly in.Social media or the personal social networking market, they say that the FTC’s market definition, their baseline, that they’ve got it all wrong. It’s flawed. They say that take a look at the different companies, the social media companies that the FTC is including in the market. So the FTC says included is Facebook, Instagram, WhatsApp, Snapchat, and another LA-based social media company called Miwe. Now not included, importantly, if you’re arguing for meta is linked.YouTube, Reddit, X, and TikTok. So TikTok, it launched in 2016 and Mehta is up there arguing certainly in their opening statement saying you got to include these other social media companies in this market, otherwise it just doesn’t work, FTC. So the judge in this case has acknowledged that this is an uphill battle for the FTC. I saw some tweets coming out from Metascoms executive Andy Stone tweeting from the courtroom. Part of the opening statement, he was saying that for every single one of the many activities.Offered on Mehta’s apps that it faces vigorous competition, he said he said we all compete for time in this market. Another graphic went up too during these statements showing that when the TikTok ban went into effect very briefly right in January under the executive order from President Biden that showed that traffic then flowed into Instagram, Facebook, and other social media and off of TikTok. So that’s a central part of Mehta’s argument here,
16:05 spk_0
reportedly elected.Reportedly from what I understand, Zuckerberg has been actually lobbying Trump here, right? Would you like the president to step in, intercede, settle this case. When you talk to folks, does that come up like whether that’s at all likelihood that the president would actually step in, step in, even at this stage of the case?
16:23 spk_1
Yeah,in this case, yes, you know, in a lot of things we say are first when it comes to Trump 1 or 2.0, I should say, the antitrust lawyers say it would almost be irresponsible.Perhaps for Mark Zuckerberg to not make these overtures because Wall Street might say, well why aren’t you doing it? He’s you need to curry favor with the president because this is how it works. You had the FTC chair Andrew Ferguson saying that he’s kind of deferring to Trump and that’s that’s also unusual, right? The FTC is usually thought as an independent body. So yeah, it might be looked at like you’re not doing your job, CEO. Yes,
16:56 spk_4
I totally agree with Meta and I am long meta shares, right, so perhaps I have a vested interest, but you know when youThink about it to not include LinkedIn or TikTok as social media competitors. I think it’s absurd. I think the only reason this thing is at trial right now is because the FTC used to be headed by Lita Kahn, and she wanted to go after anything that was big and techie because that’s where the money is. I am shocked that the new FTC commissioners didn’t drop the case. I just don’t, I don’t think there’s a case here.
17:26 spk_1
You haveto look back though. This case was originally investigated and brought under.1.0. It was a 2020 case
17:33 spk_4
and it took him five years,
17:35 spk_1
a long time, and also has made the point that the environment for social media competition has changed so dramatically, as Google has said in its case because of AI, right? So you inject that into these platforms and everything now 56 years later looks so different.
17:53 spk_0
If Meta loses Alexis, could Trump step in and tell these commissioners, Hey, let’s get a deal done. Let’s settle this thing.
18:00 spk_1
Yeah, absolutely, and certainly a deal can be made post verdict even. So and in this case this is a judge decision. This is not a jury trial, but yes, all the way up until I guess the fat lady sings.
18:11 spk_0
Yeah. All right, Alexis, thank you for helping us walk through it. Complex stuff. I appreciate it.All right, now time for some of today’s trending tickers when a chicken on shares of Palantirer, Weibo and LVMH. First up, Palantirer, some focus on news that NATO is buying the company’s Maven smart system.So NATO acquires this AI powered military system. Adam from Palantir. Dan Ives or at Wedbush, Mr. Ives, bullish as ever. This is how he put it. He said he told his clients this deal represents an additional tailwind for Palantirer with AI initiatives across both the US and European governments accelerating as AI remains a strategic focus on the federal front with Palantir. In essence, he says in the sweet spot, Adam.From what he calls a tidal wave of federal spending on
18:54 spk_4
AI. Yeah, better be in the sweet spot. I have never bought Palantirer. Now why not stared at it at $8. Uh, because, uh, 55% of the revenues come from the federal government. I don’t like the business model where they collect a big chunk of money up front, but they don’t get as much on the back end. They’ve since reversed that. That’s one of the reasons the stock went from.You know, 8 to 40 and then has kept going. The problem though is when it got as high as 140, it was trading at 200 times sales and 55 times earnings. So you’d need 200 years’ worth of sales or 55 years worth of earnings to justify the price. I can’t buy that. I mean that’s crazy. Um, so yeah, they do need uh some deals that are creative. This is, I believe, one, so it’s a step in the right direction
19:39 spk_0
to your point, most on the street are at a hold here. We’ve had plenty of smart folks come on. They tell me.I like carp. I like the tech. I just don’t like the evaluation and the target, by the way, average target, it looks like about 92 now. And
19:51 spk_4
where’s the sock? Where do we just show it? 97. So it’s already above the target, down from 140, which tells you just how high it was. Yeah, I, I can’t was it there it is 94 bucks. I can’t justify buying that. I mean, yes, it’s a pure play for AI, but, uh, wow, that is an expensive pure
20:07 spk_0
play. Alright, let’s move on. Weibo stocks soaring. It’s after the company went public via Sack merger last week. The digital.Investment platform has merged with special purpose acquisition company SK Growth Opportunities. A broader question I have for you, my friend, which was that I’m curious how you see the IPO market kind of unfolding in 2025. Now I had some smart venture investors. They were on this show like early January. They were very built up on the IPO market, and I, I, and I asked them, I said why, and, and immediately politics, right? I mean it was just, listen, Republicans are in charge, White House, Senate House. I like the.
20:42 spk_4
Few fewer regulations if Republicans in charge of that never mind the meta.
20:47 spk_0
They were, they were, they were pounding on the table. Now with all the volatility obviously new questions about that. I’m just curious, what do you see in 2025?
20:56 spk_4
Well, I think there was also an assumption that, uh, the Fed would be cutting rates and lower rates means, uh, lower financing costs if you’re doing a takeout and and paying cash for it and have to finance part of the deal. Uh, I would also argue that there’s a certain element of pent up demand.You know, Josh, if you go back and look at the number of IPOs and even M&A in general, uh, over the past 6 years and you compare that to the pre-COVID baseline still way down. So there is so much pent up demand out there for any number of reasons. Again, uh, rates you expect to go down as inflation comes down, uh, and you get a uh an administration that is uh friendlier, fewer regulations. So yeah, I think I agree. I thought we were going to see a surge of deals we.Haven’t, um, perhaps the reason that, um, that a wee bow is up as much as it is is just because of that pent up demand. I mean, it’s basically another Robin Hood. Do we need another Robin Hood? I don’t think so, especially not with Schwab out there and, uh, uh, IBKR, um, uh, what’s that? IBKR. What is it, uh, Interactive brokers. Thank you. And, um, I just don’t think we need another one, but, uh, the meme crowd says this is our name and we’re gonna runwith it.
22:06 spk_0
All right, final one, get your take on this.Luxury goods maker LVMH taking a hit today. That’s after reporting that sales fell 3% over the first quarter, missing expectations, signaling a sector slowdown. So this one, I mean, seen as kind of a bellwether Adam for the European luxury group company. I mean, listen, they they’re dealing with China now they’ve got tariffs. What happens next? Bloomberg, an analysts pointing out they were just kind of talking about the broader European luxury sector. Around 20% of the group’s revenue is generated here in America.
22:36 spk_4
Yeah, tariffs throw into question revenue streams for any number of companies, LVMH being one of them. I think ultimately, and we’re sort of figuring this out as we go, the tariff situation is, um, well, the, the, the bark is not or the bite is not as bad as the bark, right? In other words, it’s getting scaled back. In theory we’re in negotiations with 90 countries. We’ve already found out now there are exemptions for, uh, electronics products for semi.Conductors, uh, they’re probably gonna be exemptions for Canadian oil and Mexican oil because we need that heavier oil. We make light sweet crude, but our refineries don’t, uh, process light sweet. We need the heavy sour stuff, so they’re, they’re figuring out all these little carve outs, and that’s why I say I think ultimately uh tariffs will be much less onerous and companies that have fallen like LVMH stay down 6%, I think probably bounce. All
23:27 spk_0
right, we’ll leaveit there.Be sure to scan the QR code below to stay up to date with the best and worst tickers on the Yahoo Finance homepage.Well, day one is unfolding in the government’s high stakes antitrust trial against MEA’s Facebook with Mehta’s ownership of Instagram and WhatsApp on the line. Question arising over the Federal Trade Commission’s claims of meta monopolizing the social media market. Cornell Law School professor and former chief economist for the DOJ anti.Division George Hay joins us now to discuss. George, it’s great to see you. It is particularly great to see you, George, because I’m not a lawyer. Adam is not a lawyer, so we need your insight, George. I guess my first question, big picture, you think about this case, George, you read through it. In your opinion, how strong, George is the government’s case here in your opinion?
24:18 spk_5
I think it’s an uphill battle for the government that’s already been signaled a bit by the judge. You’ve got battles on a number of fronts. What’s the market? The biggest question what’s the market? What does what does Facebook compete with? But the conduct that Facebook’s accused of is, it’s quite different from the other big monopoly cases.
24:38 spk_4
Well, so can you give us a little background on some of these other, uh, big monopoly cases because if, if, and again, I’m not the lawyer you are, um, but, uh, they really haven’t produced uh a lot for the government.
24:51 spk_5
Well, I, I wouldn’t say that. I mean, uh, you know, the government sued Microsoft successfully. Now, did they get much? No, not much. Uh, we’ll see what they’re getting in school. But the big difference is in the other monopoly cases there were dead bodies. Uh, in Google it was Netscape, uh, so Microsoft was Netscape. They try to kill off Netscape. In Google it’s, uh, it’s other search engines. There are no dead bodies here.There are no competitors saying that Facebook squeezed us out of the market. Instead, Facebook bought up the potential competitors, so that makes it quite different than the other big monopoly cases.
25:26 spk_4
Do you think there’s a chance that they’d actually have to separate Facebook from Instagram, from WhatsApp, and all of a sudden there’d be 3 separate companies in the same way that years ago AT&T split up into 7 baby bells?
25:38 spk_5
Well, of course the government has to win first, and then the question is what’s the remedy. The case is so narrowly focused.Again, unlike other big cases where there’s all sorts of conduct involved, the case is really limited to those acquisitions. And so the natural remedy, if you believe that those acquisitions really did matter, that they really preserved Facebook’s dominance, uh, the natural remedy is to do something about it, spin off companies which can become alternatives to Facebook. There isn’t really much short of that that can be done. So if the government’s successful, I expect that the judge will be amenable to something like that.
26:13 spk_0
George, let me ask you, you know, Mehta, in a statement to the press says this. More than 10 years after the FTC reviewed and clear acquisitions, the commission’s actions in this case sends the message that no deal is ever truly final. What do you make of that statement, George?
26:28 spk_5
Well, it, it, it does send that message and there’s something in that message. There’s nothing in the law.Which says the government can’t go back and look at an acquisition happened 10 years ago and say now with the wisdom of hindsight we realize that acquisition was anti-competitive or has become anti-competitive.That doesn’t mean the judge might not say that, uh, there’s something unfair about that. You cleared the acquisition, uh, and there’s something inappropriate about then 10 years later going back, but there’s nothing in the law as it stands now, nothing in the statute, which prevents the government from going back as they did in 1950 in the, in the DuPont General Motors case. They went back and said the acquisition by DuPont of General Motors 50 years ago, we now think was anti-competitive, and they, they basically forced DuPont to sell off General Motors.
27:13 spk_4
George, let’s just pull on a string here as implausible as it might sound, what if, what if the uh new FTC leadership were to uh uh come together with uh the new Justice Department leadership and effectively say, you know what.This case doesn’t have merit. Have you ever seen a situation where because of such a radical change from one administration to the next, where a case like this ends up getting pulled? I don’t even know if that’s the right set of words to apply here.
27:46 spk_5
Well, certainly it wouldn’t involve any discussion between the FTC and the DOJ. This is an FTC case.It may involve a discussion between the FTC and the administration, but say if Chair Ferguson might well have a conversation with the administration. Uh, the biggest example is the IBM case, uh, which was filed under the Johnson administration, and eventually, now some years later,After a trial, uh, the government unilaterally dropped the case. Now there’s a lot more background that people who decide that case wasn’t really as good as it looked when the government filed it, but that is, that is an example where the government unilaterally dropped the case sometime after it was filed by a previous administration.
28:26 spk_0
George, finally, you know, reportedly George, Mark Zuckerberg, Zuckerberg has been lobbying Trump, you know, to intercede, step in and settle the case. I’m curious, George, in your opinion, how likely is that that Trump would step in here even at this stage?
28:42 spk_5
It’s uncharted war. In the past it hasn’t happened very rarely. It’s very rare for a president to intervene on antitrust matters.But this is uncharted waters. I can’t tell you what this president will do today, so it can happen. I don’t think there’s any love lost between Trump and Zuckerberg, and so that might affect the process, but I would, you know, it’s certainly possible that he will direct the FTC to drop the case.It puts Chair Ferguson in in a tough place because Chair Ferguson has has basically sent his team into battle and has basically backed his team and said we think we have a good case. So we’ll put him in a very embarrassing situation if that happened.
29:20 spk_0
George, great to see you today. Appreciate your time and your insights,
29:22 spk_5
sir. OK,thank you.
29:24 spk_0
Stick around, much more market domination still to come.Welcome back to Market Domination sponsored by Tasty Trail. Let’s get a quick check of the markets here. It’s been a choppy one, but guess what? You are positive, really across the board. I got green all over the place. The Dow is up about 460 points. Your broad gauge, the S&P 500 tack at about 1.3%. Nasdaq is also up about 1.3%. Just look at the small caps also up 1.3%. Treasury yields, by the way, they are lower. You got the 10 year back to 437 right now.Well, as economists continue to revise tariff rate estimates, most possibilities will take us back to the 1910s. Yahoo Finance Alexandra Kal joins us now with the very latest. Yeah,
30:09 spk_6
Josh, you know, we’ve seen a lot of back and forth with Trump’s trade policy, to say the least. That includes the 90 day pause and reciprocal tariffs from last week and then the more recent temporary exemptions on some Chinese electronic imports. But despite these series of revisions, the current estimates of the US effective tar rate.Still pushing us way back in time. Currently we have a range on Wall Street with estimates starting from 22%, reaching all the way up to 27%. At the top end of that range, we’re looking at tariff levels not seen since 1903. On the low end we’re at the highest levels since 1910. And just for some perspective, right now we’re hovering between 2 and 3%. So this is a very historic jump, one that we really have not seen.In modern times and what’s interesting is that despite these pauses, these revisions, they’re not really bringing that overall tariff number down too much for where we were 100 years ago. So if we take that and then we add in all of the confusion, all of the uncertainty that we’ve seen with this rollout, you get the increased volatility that the stock market’s really had to adjust to over this past week. City analyst Stuart Kaiser noted that the exemption of certain electronics is a quote.First, albeit unclear step toward progress, but a true optimism hinges on solid deals with major partners. Now for now, Kaiser puts it that this is more about reduced or delayed tail risk, not removed risk, and he went on to say that really good news is a near term headwind. You don’t hear that too much while bad news could build over the medium term. So until we get some clarity here on a path forward, it’s going to continue.To be volatile for the stock market and really add to that uncertainty on the consumer side as well.
31:46 spk_0
All right, we’ll stick around. I also want to bring in another voice on the latest moves, and that would be Jay Hatfield, infrastructure capital advisors, CEO and CIO, joining us now. Jay, always great to see you, especially on set.
31:57 spk_6
Thanks,Josh. Great to be on. So let
31:58 spk_0
me, let me ask you this over the weekend, Jay, I’m sure like the rest of us, you were trying to follow the bouncing balls of the headlines right on tariff policy, longtime markets guy. Jay, I’m just curious, you made what of that?
32:11 spk_6
Well, it was disconcerting as usual from this White House in that it seemed like the market was gonna rip and then over the weekend, particularly the hawkish wing of the White House sort of talked that back but I think that what investors should focus on now is what’s gonna happen going forward so we’re in earning season we’ve been saying for a month and a half that we need to get back into earning season so we’re getting real data from the company. It’s generally positive.And get past tax day, which we sort of already have that’s tomorrow, um, and so we have that news flow and then also if you really think about it, if you believe like us that the dovish wing.Of the White House has won out. So basically, um, that would be best and Hassard right exactly you can be somewhat hawkish but just phase it in, just be practical, which they obviously should have done from the beginning, even if you kept those rates, you could phase them in over a year or two.Because that’s critical to get that adjustment, you know, Apple has to resource everything, so we’re far more optimistic that the further announcements will actually be some countries agreeing to lower their tariffs and that we’ve sort of hit peak tariff, um, tantrum,
33:32 spk_4
yeah, or or maybe already have and.Um, let me ask, or let me put it to you this way, Jay. I’m of the view that we’re gonna continue to rally, and here’s why. So at the low we lost somewhere around $8 trillion in market cap, which is a staggering number. And yet the worst case scenario for tariffs, 25% of a trillion dollars a year, that’s basically 800 billion.We discounted 10 years, right, right, $8 trillion.10 years’ worth of tariffs. That just seems intuitively way too much to me.
34:03 spk_6
We have the exact same view. We use slightly different numbers, but it’s 13% of US GDP, right? And so if you do that math, that’s like 0.6%. And also, even if you look at inflation, we’re super bullish about inflation.The decline in oil offsets the increase at least for the initial tariffs, and so all this pessimism about inflation we think is misplaced. So we’re not to say we were bullish a week and a half ago, but below we were calling 5 I mean 5000 was kind of an obvious points 20% off where we ended last year. So I think it’s not that we determined that, but it’s encouraging that the market was playing it that way because even before.The Trump, um, walking it back 5000 was acting as a pretty good inflection point went a little bit below it, but even when there’s terrible news is coming back, so that’s why we’re bullish. We think we’re in a 5000 to 6000 range, which is super wide, but as you were indicating, Ali, that you know there’s a it’s gonna be a lot of news flow, um, and we, we’re actually we initiated our 6600 target for the end of the year with back ended, you know, focus because we really need to get the tax bill.And get greater clarity on tariffs before you can get super bullish. So Jay, you’re, you’re pretty bullish compared to others on Wall Street, and I’m curious, given all these unknowns, how are you viewing recession risks from the market perspective? We have Goldman Sachs that just came out. They have a 45% probability. JPM for forecasting a mild recession. What do you see for the end of the year? Well, we’re forecasting 1 to 2%, and we don’t do the probability game because then you sort of always are right.You know you can say, oh well, there’s a 40% chance Trump wins, and he wins. You’re like, oh look, we were right, 40 so we take a stand. So we’re 1 to 2. We don’t think the tariffs are that material. We do think the Fed is when you say 1 to 2, you mean GDP growth, yes, got it. So, um, but the, the issue is that the Fed’s super tight, which nobody seems to care about. They’re hammering the housing sector.But we don’t think this tariff issue makes things incrementally worse as do doge layoffs, but it’s not the key driver. The key driver is ultra tight monetary policy. And do you think the labor market story is that the one defense that this economy has right now? Well, definitely, I mean, I would argue more for 2 to 3% growth, but we think that will decelerate, and that’s why we’re the growth in the labor market that is, that’s why we’re sticking to 3 cuts.In the back half because the Fed is always behind the curve, they’re gonna need to see those two months like the tariffs are gonna show up in the even the 10% in CPI over the next two months. But keep in mind PCE core is like to be between 00, the consensus is 0.1 that rolls it down to as low as 2.4%, so nobody cares about that, right? Nobody mentions everybody’s stag we’re stag deflation, everybody’s, you know, stagflation.And so, um, we do think the federal cut when the labor market softens up some more or if it does, but that’ll be the catalyst because they, they’re terrible at analyzing inflation forecasting inflation. They don’t believe in the money supply which is like the Pope not believing in Jesus, which is totally awful. So, um, they’re gonna be late as usual, but we do think they’ll act in the second half.
37:27 spk_0
Jay, let me ask you, um, all this tariff discussion and debate, what does it mean for another issue you raised there which is front and center for investors as well, which is extending those taxcuts?
37:39 spk_6
Well, we became incrementally bearish, so we had a 7000 target which assumed an 18% corporate tax rate because it’s not.That complicated if you lower corporate taxes, earnings go up and the the price goes up. Some people don’t seem to fully appreciate that. And by the way, economic growth goes up because you hire more people. But with this populist bent, notwithstanding the dovish wing potentially winning out, the whole Republican Party has gotten very populist, so it’s anti-corporate.So they’re going to favor the personal tax cuts over the corporate tax cuts. That’s a problem for growth at the at the margin, but you just have to be realistic. So I think 66% or in other words, no big corporate tax decrease, hopefully no increase as well.
38:23 spk_4
Um, 6600 target on the S&P 500, you might be even more bullish than I am, and that’s saying something, uh, but could you just quickly tell us what, what’s the math, the earnings and the multiple math that gets us to 6600?
38:35 spk_6
Fortunately it’s simple. So, um, and we’re looking at next year’s earnings. So if tariffs do hurt this year’s earnings, we think that the adjustment will occur by next year.Those have come down a little bit, but they’re roughly $300 so we do think of 22 multiple with a pro business, notwithstanding the populism, but generally pro-business administration is reasonable and lower rates. We do need lower rates to really justify
39:00 spk_4
$22.23 times or
39:01 spk_6
22 times
39:03 spk_4
2 times
39:03 spk_6
300 right so that’s pretty easy math. It’s also easy math in that earnings tend to grow 10% a year because of retained earnings. We were at 6000 last year roughly.That was our target. And so 6600 is kind of a boring, you know, if there were no tariffs, that would be a boring target.
39:21 spk_0
All right, Jay, Ali, always great to see both of you. Thank you. Thank you. Coming up, Netflix is set to report earnings at the Bell. That’s on Thursday. We’re gonna hear from an analyst on the other side about what to expect from the streaming giant. Stay tuned. Much more market domination so to come.Well, Netflix reporting first quarter earnings after the close on Thursday. Company announcing it will stop disclosing subscriber numbers this quarter, leaving investors looking for other indicators for the company’s performance. For more we’re bringing in now, Alicia Reese. She’s vice president of equity research at Wedbush Securities. Alicia, great to see you. Uh, so Netflix earnings on deck, Alicia, what are you telling clients? What should they expect?
40:05 spk_4
Well, we were a little concerned going into the quarter given the pretty significant price increases across the subscription tiers, but at the end of the quarter, we conducted our quarterly consumer survey which showed that there was very little attrition, um, on the service, very little churn.A lot of people still intending to come back um to the service in the 2nd quarter. Our 4th quarter survey before the price increases had indicated quite a few people coming back to the service after not having it for a while. I think just on content.Um, this last year, Netflix gained so many subscribers, 15% in the first half, 16% in the second half, and on that, the viewership didn’t go up very meaningfully. I think that was just because of the lack of content. So when you see that content really becoming a far more robust in, you know, 2025.Um, and those price increases that should keep a lot of those new subscribers and return subscribers on the service. I think overall, it’s pretty positive, but we have to remember that Netflix isn’t going to be giving us subscriber numbers or the average revenue per member, so it’s going to be a little bit trickier to determine, you know, where the stock is going to go once they report. But.I think it’ll be positive. Alicia, I’m so glad you just mentioned that because I can’t help but feel when a company changes its metrics or stops reporting certain metrics, it’s kind of like when a restaurant changes up its menu or when a company changes its name. What they’re basically saying is something isn’t going the way we’d like it and we need to reinvent. am I am I being too harsh here?I don’t know if it’s harsh, but I think what, what the reason that they’re doing that is because in 2024 they were able to add so many subscribers because of, you know, the password sharing crackdown and because of the subscription or the advertising tier, which was much lower cost. So it was a lot easier to keep those members on the service versus them churning out because they want to save a buck or two.Um, for a month, a few months, um, so now, uh, in 2025 they have a very different focus, and that is keeping subscribers on the service and raising price, and they all their testing suggests that they could do this, that they could keep people on the service, and that’s largely due to the content spend, the content quality, um, becoming a lot more robust in 2025. After last year we saw.after strikes that really impacted the quality of content available in the market. And Netflix is just so profitable. They have so much more money to put into that content versus their peers. So they’re also adding live content like the WWE and so they have a lot to offer, and I think they can raise that price, and our survey indicates that they saw little churn in the quarter because of that.
42:50 spk_0
Alicia, I’m curious if there was a material economic slowdown in the US, Alicia, what could that mean for Netflix?
42:56 spk_4
Well, typically what we see, um, especially following the movies, is that people will cut travel, um, they’ll cut expensive purchases, and they’ll stay home a bit more. For Netflix, that’s great, you know, the more people are home, the more they’re gonna seek in home entertainment or perhaps going out to the movies, um.So that really benefits Netflix. On the other side, you know, they’re trying to grow their advertising model, and if they don’t have advertisers spending as much culing their, their budgets, that might impact the the advertier advertising tier growth for them and the revenue that they can derive from that.Alicia, I’m curious, um, any new super hot hits coming out of Netflix? I think about Drive to Survive, which completely changed the trajectory of F1, changed my trajectory too. I now go to F1 races. Is there, is there a next super, super show that’s coming up or maybe even a couple of them? Well, I think Netflix is, um, I think we are going to see the benefit, not for Netflix, but, um, for the movies in general, F1 coming out this summer. I think that’s going to be a big hit.Um, F1 is up for grabs, it sounds like, and there are a couple other sports properties that are up for grabs, so Netflix might make some, you know, waves by purchasing some more, um, some more sports content, more live content after the WWE.Um, but just the content that’s coming out right now, there are quite a few really good shows. Uh, frankly, they have to compete with some other big properties out there like The Last of Us. Um, but so far they have some really good breadth and depth and life content quality. So it’s really just the balance of that where they have something for everyone right now.
44:36 spk_0
Alicia, final question you’re looking at the stock, it is up nearly 55% over the past 12 months. Alicia, how do you think about valuation for this one?
44:44 spk_4
Yeah, the valuation is a little bit trickier now because they’re not getting the subscriber numbers and so it’s just a basis of revenue growth um capabilities, and they have to beat that revenue guidance by quite a large margin now, I think because they’re not giving subscribers, and what investors want to see is just expansion of that free cash flow.So if you’re expanding that free cash flow pretty meaningfully, the shares could continue to go up. It’s been a little bumpy as you, you know, through the beginning of the year because of these reasons, because people aren’t sure as much what to expect, but I think they can continue to, um, you know, expand as long as that free cash flow continues to expand.
45:23 spk_0
Alicia, great to have you on the show today. Thanks so much for your time.
45:27 spk_4
My pleasure. Thanks for having me.
45:28 spk_0
And while we are wrapping up today’s market domination, don’t go anywhere. We’ve got you covered with all the action following the closing bell. Stay tuned for market domination over time.
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