In this episode of Catalysts, Seana Smith and Madison Mills guide investors through some of the morning's prominent market trends, from continued presidential debate coverage to consumer sentiment data.

The June University of Michigan Consumer Sentiment Index reading was 68.2, exceeding estimates yet down from May's reading of 69.1. The Russell indexes are set for their annual reconstitution, scheduled to take place after Friday's closing bell. Indrani De, FTSE Russell's Head of Global Investment Research, joins the show to explain why the reconstitution will focus on the healthcare and tech sectors. In continued presidential debate coverage, Eurasia Group's Clayton Allen tells Catalysts hosts why it will take a call from within Biden's "family cellphone plan" to convince him to step out of the race.

On the trending tickers front, Rosenblatt Securities has downgraded Alphabet (GOOGL, GOOG) stock to Neutral from Buy and trimmed its price target, citing transitional risks and increasing competition. Shares of UnitedHealth Group (UNH) are also moving after the company's subsidiary, OptumRx Inc., a prescription drug benefit provider, agreed to a $20 million settlement after the US government claimed the provider improperly filled certain opioid prescriptions.

This article was written by Gabriel Roy

Video Transcript

Here in New York City.

I'm John Smith alongside Madison Mills.

Let di into the catalyst moving markets today.

The market focusing now more on the data than last night's debate.

Consumer sentiment just crossing here falling slightly.

This comes after the latest PC print shows inflation is slowing.

So how will the feds preferred inflation gauge impact upcoming great decisions will discuss and prominent Democrats and donors raising concerns about President Biden's performance during the debate last night, we're going to dive into what this could mean for the election, what it could mean for your money in the markets and Nike is under pressure as China continues to be a problem for the sneaker maker.

What does this mean for the company's turnaround plan?

We're going to talk about that and more later.

All right.

First, we have some breaking data out on consumer sentiment coming in at 68.2.

That was higher than at least what the street had been looking for.

Although it is lower from the prior month reading the prior month reading was 69.1 this month coming in at 68.2.

The expectations index rising to 69.6.

That was up from 68.8 the prior month.

When you take a look at current economic conditions index that's fallen, that fell to 65.9.

That was down from 69.6.

The prior month here expect to change in median prices during the next year falling to 3% versus a previous reading of 3.3%.

We are seeing some reaction here in the markets this morning, Mattie.

Yeah, it's interesting, particularly given what we saw in response to the earlier P ce data looks like the NASDAQ is extending its gains as well as the S and P 500.

I did want to talk about that PC print a little bit here because it was so interesting seeing the fact that personal income is exceeding personal spending to a bigger degree here and the wage component in particular up 7/10 of a percent the strongest in several months.

I've been kind of monitoring to see if we get actually some type of Pennsylvania avenue reaction to this data about inflation slowing given the reaction to the debate last night so far, haven't seen any reaction there staying quiet for now, but I am curious about goods deflating that coming in in the PC print for the second month in a row.

I wonder what that could mean for company earnings moving forward as we do start to see the price of goods deflating now for multiple months in the row.

Also the totality of this data not to sound like the fed.

But does that lead to any kind of further concentration into take if people are worried a little about a potential risk to the economy?

The fact that we may have gone a little too high for too long on rates, do we start to see people having a bit of a flight to safety reaction and a bigger concentration into tech?

It's looking right now like that might be the case given that we are seen green across your screen, particularly the biggest strength in the NASDAQ so far today.

Also looking at treasury yields falling on the heels of this recent data.

I'm going to take a look here at yet.

You're seeing movement in the 10 year and the 30 year as well here bigger on the latter end of the curve there.

But we're going to dive in a more market reaction here with Luis Alvarado.

He's Wells Fargo investment institutes, global fixed income strategist.

We thanks so much for making time with us this morning.

I was just talking about personal income, exceeding personal spending to a bigger degree and what that could mean for the FED.

And then we also got this consumer sentiment data in.

Does all of this data warrant a conversation about lowering rates as soon as next month in your view?

Yeah.

Right now I think the FED is uh got a good print on PC, right?

And, but I think it's too early.

We can't have a victory lap yet.

Uh Like the fed has been mentioning it very later dependent.

But I think you have to see a continuity of at least three more months before we get some sort of better reaction from the day.

So at this point, we believe perhaps that the July meeting is a, is a nonstarter unit.

What about September?

Yeah, September is actually looking very interesting.

If you look at market expectations, the probability of September and December still kind of has most of the probability also what we have penciled in.

And I think that the key economic data that we're gonna see over the upcoming three months is gonna be more telling for the fed.

If they're able to go ahead and cut rates, we see prints of a slowdown all over, but like was mentioned, you know, personal income still there.

Consumers are still feeling, you know, strength from, from wages.

Uh, they feel wealthy still as the market keeps on going up.

So there's a lot of confidence for consumers.

I know we get print sometimes where the surveys are volatile month over month.

But overall, we still see a consumer that is out there spending and that is pretty much one of the most important engines that we've seen, um, in the US economy, at least over the past 18 months, there's so much data you can look at under the hood, when you get these prints coming out about the strength of the consumer and what's standing out to me is that wage component up 7/10 of a percent the strongest in several months there.

But what do you think is the single biggest data point?

You actually, I want to say you're looking at a chart here showing the difference between wage salaries versus inflation and that the very end of your screen on the far right hand side, you can see that big purple bar that's showing wages still staying higher for longer.

And you can't even see the blue which measures inflation next to it there because it's falling below the flat line least from your perspective though.

What is the single biggest data point that investors should be paying attention to, to understand the state of the consumer right now?

Yeah, that, that is a, that is an important, of course indicator um to look at when you're, you're trying to evaluate what the fed is going to be able to do.

It's difficult for the fed because that means that consumers are gonna still do what they do best, which is consume.

We're starting to see some other data uh showing perhaps more usage of printed cards.

And depending on the tiers of income, you also see some discrepancies or differences between what consumers are doing, but it's difficult for a defend if they really wanna hone in on inflation when you see numbers like this.

Um They just are are motivating consumers to still continue to go ahead and do what they do best, which is consume.

So I would say the unemployment and labor indicator is going to be the crucial component here.

I know the FED has been looking at that more closely to see if they have some leeway if, if they have some capacity to be able to cut eventually, if the unemployment rate starts sticking higher, if you start to see more unemployment claims rise higher and the new initial claims starting.

But for now, it's all so early that you still don't see any patterns or any, any trend developing there.

But we know because the fed has mentioned is that they're looking at that indicator as well and as long as people have jobs, um you know, it's difficult to see them stopping spending, Louis.

Let's talk about the reaction that we've seen in the bond market even here this morning.

You are seeing yields fall just a bit.

I'm curious just about some of the trends that you're watching there and what you think kind of that range bound, uh looks like from here on now, given so much of this uncertainty.

Yeah, it's interesting when you see yields, obviously, we have topped closer to like 470 at one point.

And then as soon as the economic data started to roll in, and the economic data is telling you that the fed is getting perhaps closer to being able to cut.

Obviously, the fed has wanted to cut for quite some time.

They told us that since November of last year based on their expectations and just the fact that data was so strong, they were just, their hands are tight still.

Right.

So, uh yields, we see them pretty much flirting between that range four and a quarter, 450 right now and we think they're gonna remain pretty much range bound for the rest of the year.

They, they're no catalyst uh to pretty much allow us to see rates falling even lower than that.

And just doing a simple, simple equation, if you look at just the real rates and you use a proxy like real growth about 2%.

If you look at inflation expectations about two and a quarter 250 that gives you essentially the nominal 10 year treasury yield at 450.

In other words, the market is not really considering any term premium right now and there is a lot of risk out there um in regards to the budget in regards to the deficit, in regards to the amount of treasury issuance that has not really been discounted at this point in time.

So we think it's for treasury deals to pretty much break below 4% given the amount of um that you can get from that term.

Yeah, Louis, since you bring up the deficit, I want to talk about the debate last night, both candidates were asked about the deficit and there wasn't a lot of clarity about the extent to which they are going to address it in terms of actionable policies moving forward.

I'm curious then, from your perspective, and you look at, you know, the fixed income space in particular, do you think there's a likelihood here of bond vigilantes coming back into the space to force the deficit issue after November?

I would say there is, I would say at this point in time, the amount of outstanding debt, the amount of deficit that is projected and we got recent projections from CBO.

Um It can pretty much tell you that there's gonna be some sort of reaction from bonds.

Like I mentioned looking at that simple equation.

In other words, the term premium is pretty much negative or at zero.

And it's really difficult to kind of envision that moving forward, especially with the amount of spending.

Obviously, we we don't have a lot of clarity right now in regards to what candidates, you know, first of all, tell you in, in presidential debates, nevertheless, what they will actually be able to implement into actual policies, right?

So it's a little bit difficult at this point in time, but we know that, you know, some of the key components of spending is actually interest, interest uh that the government has to pay on the amount of debt outstanding.

And that is starting to get or money more into that budget.

More and more so, obviously, it is in the interest of the government to see perhaps lower rates as well.

And that's when you have conflicting views between the FED as well.

If they're really pretty much uh committed to honing in on inflation.

All right, Luis Alvarado.

Great to have you here at Wells Fargo Investment Institute, Global Fixed Income strategist.

Thanks so much, Luis.

Well, the first presidential debate capturing America's attention after President Biden and former president Trump went back and forth on key issues including the economy, taxes and foreign policy.

We got to take a look at what I was left when I became president.

What Mr Trump left me, the economy collapsed.

There were no jobs, the tax cuts spurred the greatest economy that we've ever seen just prior to COVID.

And even after COVID, the fact is that the vast majority of constitutional scholars supported Roe when it was decided, the idea that states are able to do this is a little like saying we're gonna turn civil rights back to the States as far as Russia and Ukraine.

If we had a real president, the president that knew that was respected by Putin, he would have never, he would have never invaded Ukraine.

The only person on this stage is a convicted felon is the man I'm looking at right now.

He did beat Medicare, he beat it to death and he's destroying Medicare because all of these people are coming in, they're putting him on Medicare, they're putting him on social security, they're going to destroy social security for more.

We want to bring in Clayton Allen.

He's your Asia group's us.

Director Clayton.

It's great to have you here.

So let's take a step back because here we are this morning, we're about 40 minutes into the trading day.

And I think investors at this point are trying to gauge whether or not we actually could see a new candidate put forward from the Democratic Party.

I'm curious, your reaction to what we heard last night and what that tells us just about some of the uncertainty that lies ahead.

Certainly, thank you for having me on.

I think the one major takeaway last night is that Biden had a bad night.

The bar for him doing well was higher than Trump.

Trump had to avoid appearing sort of disorganized or aggressive.

And he largely did that for about 80 minutes of the 90 minute debate.

Trump kept his aggression in check.

He avoided major blunders.

Now he fabricated and in some cases, completely exaggerated any number of, you know, actual verifiable facts, but that doesn't matter much for the narrative.

The takeaway from last night is that Biden looks old and he looks weaker than he did going in.

So certainly, that's stirring speculation that he could, there could be a push to replace him.

Well, let's talk about that push our very own.

Rick Newman who covers politics for us said something that I thought was so powerful earlier that Jill Biden is the most important person in America right now because she could drive that decision.

What do you think about that?

And what do you think the Democratic Party can do moving forward if the decision for the Biden camp is to stay in this election?

Absolutely.

That's spot on.

There's a lot of speculation this morning about who in the democratic establishment could lean in and push Biden to step aside from the ticket.

The democratic establishment is the wrong place to look.

It's the Biden family cell phone plan.

Somebody on that cell phone plan is the only individual capable of convincing President Biden to step aside.

If anyone else could have done it, they probably would have already tried right now.

This is going to be a decision that only Joe and Joe Biden have control over the signaling out of the White House this morning is that the president's in this, he's remaining in the race, he's going to win.

Of course, that's the narrative you have to put out as a White House.

You can't say anything else the morning after the debate, this is going to add to some of the volatility that we could see in the markets.

It could, I don't know that that's necessarily what I would expect.

I think that the basic fact, the functional reality that we live in right now is that while there is a lot of media speculation about replacing President Biden at the top of the ticket to actually do that faces some major hurdles.

First of all, there's not a clear replace at hand, Kamala Harris has the strongest case for it, but she's perceived as a weak candidate by a lot of people in the Democratic Party.

There's also the question of primaries, the person at this, any replacement would be an appointed rather than an elected candidate.

And that turns off in big parts of the Democratic coalition.

They're upset that their person wasn't called up to be up to be the relief pitcher.

In any case, you don't have a clear replacement.

You don't have a clear process to do that.

I think that if anything, we get a lot of speculation about a replacement, but it doesn't necessarily add to volatility about policy shifts or other changes.

Shifting from Biden to potentially a Trump administration.

Clayton.

I also want to get your take on some of the policy decisions that were discussed in last night's debate specifically with regards to tariffs.

Let's take a listen, it's not gonna drive them higher.

It's just gonna cause countries that have been ripping us off for years like China and many others in all fairness to China.

It's gonna just force them to pay us a lot of money, reduce our deficit tremendously and give us a lot of power for other things.

These tariffs is 10% tariffs, everything coming in the country.

You know what the economists say that's gonna cost the average American $2500 a year more because they're gonna have to pay the difference in food and all the things that were important.

So Clayton, I know we didn't get a ton of clarity there on the exact nature of these policies.

And Trump has previously floated this idea of eliminating the US income tax to sort of be replaced with these tariffs on the imports.

But from your perspective here, at what point will the market start to really consider pricing in the potential impact of these tariffs?

If we do get a sense that Trump is starting to get ahead in the polls, I think we're starting to see a lot of investors really pay attention to that and take the tariff threat seriously.

The feedback we get from our clients is that people are generally of the mind that Trump has the much stronger edge in the campaign right now.

People take him seriously when he talks about tariffs.

I think the other takeaway from this is that people look at the sort of macroeconomic impacts the inflationary impacts of tariffs and recognize that Trump's narrative that this is other countries paying the US is perhaps out of step with the way tariffs work in reality that this will impose some inflationary pressure on us.

Consumers, then inflationary pressure could be exacerbated by immigration policy that raises labor costs across mass across various sectors of the economy.

And I think the feedback we get is that investors are increasingly cognizant and increasingly taking those those potential impacts seriously.

What do you think that inflationary pressure could look like?

More specifically, I don't have a good estimate of what the inflationary pressure could look like in terms of a percentage amount.

I think that the takeaway that we would look at here is that there's a lot of policies that Trump has proposed, which cumulatively would increase inflationary pressure across a lot of the economy.

You also take into account the deficit growth under Trump, which we now can put numbers to.

And I think that that paints a rather disturbing picture for us fiscal policy.

The takeaway is that deficits are increasing no matter who wins.

But there's a potential that some of Trump's other policies could exacerbate that inflationary impact.

Clayton.

How much do you think the Biden campaign needs to be concerned that the FED has kept rates too high for too long?

And that could put pressure on this economy as we get closer to November?

I think that that's a, that's a reasonable concern to raise.

I think that Fed policy certainly is one of many factors that are shaping people's view of the economy specifically as it relates to housing costs.

The issue though is that FED policy is not an immediate impact on voter sentiment.

There's a between a decision at the fed and people changing their minds in the ballot box.

Remember the first early ballots go out at the beginning of September.

We're very much closing in on the end of this race.

A fed decision in, you know, even the next meeting would probably come too late to have any real impact on the election.

So I think that it's a backward looking risk that the Biden administration would be evaluating.

All right, we're going to have to leave it there, Clayton, but really appreciate you joining us.

Thank you so much.

That was Clayton Allen, your Asia group's us director.

We're going to have all of your markets action ahead.

You're looking at green across your screen a lot of strength.

The NASDAQ hit its high for the day here up 1/10 of a percent watching Catalysts Alphabet getting a downgrade today.

Rosenblatt cutting its rating to neutral that's down from by trimming its price target by a buck there.

We're looking at a loss of just about 2/10 of a percent.

Now, the firm citing transitional risks in multiple areas that could impact a search ad revenue.

So we're seeing a bit of a reaction there in the South.

The analyst Baring uh Crockett also going on to say that he sees multiple areas of transitional risk that recommend stepping back for a little while to see how the company handles it when he talks about those areas of risk.

He says that it also includes A I impact on search, what exactly that is going to look like.

And also from a competition standpoint, the competition could really push that alphabet into a higher than anticipated Capex spending cycle here for A I Mattie.

Yeah, it's interesting to one other line that sticks out the transitioning of search ad revenue to retail media network seems set to accelerate as other retailers like a Walmart follow Amazon's lead and push into this area.

So potentially see some ad revenue pushing to the downside for a name like alphabet.

But this is very interesting.

I remember speaking with an analyst for a piece I worked on recently on the series side about the fact that Google is not always going to be the best search engine for folks.

And with A I, you can say something like I am looking for the most affordable but best lasting coat available on the market and it'll give you that exact product for that.

That's something that's a lot harder to find on a platform like Google.

And that's why we've seen the rise in social media influencing when it comes to products like that because you can get a lot more specific.

And I think that this note highlights a lot of that idea as well.

The idea that A I is potentially going to be a better search engine than something like Google is able to provide for consumers right now.

Shawna.

All right.

Let's take a look at un H UnitedHealth here.

It's a trending ticker on Yahoo Finance Optim Rx.

It's a prescription delivery service that operates as a subsidiary of that company of United Health has agreed to pay $20 million settle allegations of illegally filling opioid prescriptions.

Now, shares of United Health are rising this morning have been up more than 4%.

We're now looking at a gain of just around 2.5%.

So well off the highs of the day here.

But again, the settlement adding a bit of clarity here on that path forward for the stock and removing some of that uncertainty that clearly had been an overhang here for United Health.

Yeah, it's interesting.

I'm looking at a story on the finance platform right now showing that about half of this business is held by the top 18 shareholders of the stocks have seen a lot of institutional money in you, you and here also year to date the stock really struggling.

It's down about 7.5% still up over the course of the past year.

And it's also been down over the course of the past month.

But of course, in that rise to the upside today following this news, well, coming up, the federal deficit is a big issue for a lot of Americans.

But while it was asked about during last night's presidential debate, it was not clear how each candidate would be responding to it.

We're going to discuss investors responses in the presidential candidates responses as well.

After the break, crude oil is hovering near two month high as geopolitical tensions heighten in the Middle East to discuss those developments.

Yahoo Finance's nez for a is here with us as, yeah, Madison and the market has been creeping higher over the last few weeks.

The price of wt I now around just above $81 per barrel.

You've got Brent crude, that's just above 86 per barrel.

We're seeing a little bit of a decline over the last 30 minutes or so, but nonetheless, we are expected to end for a third straight week gains.

We've seen escalating tensions in the Middle East that's sending fuel prices higher Israel fighting against Hamas and now rising tensions with Hezbollah in Lebanon, Houthi rebels also stepping up some of their attacks on vessels and remember that Iran is backing these groups and so that puts the price of oil at these higher levels simply because Iran is such a big exporter of crude.

So really any interruption that if there is any interruption to supply coming from Iran, that would be felt throughout markets and that is what these markets are pricing in here.

I do want to pull up a one month chart.

So you can see where we're at with the action for the month and year to date.

Just pulling up the year to date chart.

Brent back at 13% gain for year to date and wt I up 15% for the year.

You do have interest rate expectations, markets still anticipating a rate cut this year in the US Europe already has started with theirs.

So this will spur economic activity.

So we did see some rising bills here in the US this week that had caused some concern with demand here in the US.

However, these rising tensions abroad, that's what is sending these prices higher.

And I just want to take a quick peek at where we're at with some of the energy stocks.

We are seeing a little bit of upward movement today, but I just want to show you, I'm gonna pull up a seven day chart so you can see some of the rotation that we have seen into energy stocks over the last seven trading sessions.

All right, Inez, thank you so much for joining us on that.

We appreciate it.

Now, the footy Russell said to rebalance the composition of its various indices today that's historically led to a spike in trading activity and volume in particular for more on this year's reconstitution.

We've got Johnny DF, the Russells Head of Global Investment Research here with us in studio.

Thank you so much for coming in today.

We appreciate it.

Uh I just wanna take a bigger step back and kind of walk our viewers through what this looks like what it means.

So talk to us about just the reconstitution in general.

Thanks for having me on the show.

The Russell reconstitution is obviously, you know, it's one of the biggest trading days in the year and why it's so important as I always like to say, indices are a representation of the market.

People want to invest in a market and hence, an index becomes very important.

Hence, it should be representative of the market.

So whatever is getting picked up in the reconstitution, it's picking up the underlying changes in the economy which is large and growth doing so well.

And in terms of industry, we are having so much innovation in the technology sector and health care, particularly biotech.

And that's one of the biggest trends being picked up in the recon this year that the largest number of companies moving into the Russell 1000 large cap space are from technology and the largest number of additions into the small Brussels 2000 are from health tech.

So those are some really big trends that are getting picked up.

Yeah, I'm curious when we take a step back and also talk about just this massive run up in this excitement surrounding A I I guess more specifically the significance of this.

And then when you look ahead, just the impact overall that this is going to have on the markets, given that massive growth that we've seen.

That's very true.

So just like the markets on a macro backdrop, we are constantly talking about rates and growth.

And similarly, in terms of a secular driver A I today is almost like what the internet did in the 19 nineties, a big productivity boom.

Initially, it starts in a certain part of the economy and then it broadens out.

And I think, I think we are seeing that because obviously technology getting bigger, the names that are coming into Russell 1000, many of them are A I related A I place kind of thing.

But I also think that innovation, the broadening out and the productivity gains is also one very important reason why biotechnology is seeing so much innovation.

I think A I itself is broadening out which has implications for the US economy.

And for the one question I had on that is in the tech names that have obviously had a strong year in the broader markets.

MC I is one of them that's going to be going from the Russell 2000 to the Russell 1000.

But so far since it was added to SPX, it's down over 20%.

And since that joining, and I think that that's just an example that points to some of the concern with some of these tech names that a lot of investors have, right, that there's this hype cycle and then the bad earnings print and then you know, the bad news follows that is that a concern for the Russell 2000, I think one of the biggest thing that sets apart the Russell indices is how rules driven quantitative.

It is the whole process.

It literally takes a human judgment out of it, which also makes for a very transparent process.

Like since the rank day on April 30th through May through June, leading up to the actual reconstitution, we put out the preliminary names, people know what's going to come.

So nothing takes the market by a total surprise.

It is a very big trading day because obviously passive funds will to rebalance even active managers.

Uh you know, uh in terms of their benchmark, what they need to do.

But uh it's a very transparent process and I always like to say indices, if they are quantitatively built to reflect the underlying economy, it's just going to pick up what's happening in the real economy.

I'm curious how you're looking at just this massive concentration that we have seen in terms of the out performance and maybe the risk that that then does pose more broad, speaking to the market going forward.

But also making it a bit tougher here for investors out there who are trying to mirror, trying to get an edge when only a handful of stocks really count for so much of the movement that we've seen and also brought waiting here on the indexes.

You are very correct that we have an enormous amount of concentration that is going on.

There is concentration in the economy where you see most industries, the bigger are getting bigger to a lot of extent, simply because they are more productive, resilient, call it whatever.

But in terms of specific numbers like the Russell 3000, the entire market year over year, it's grown about 20%.

But the magnificent seven have grown.

I'm talking market cap 43% 2.5 times the growth of the underlying overall market.

So there is enormous concentration.

However, I do believe as the A I story leads to more productivity gains and it spreads out across the economy.

This concentration thing may abate a little bit simply because of the whitening out of this productivity thing.

And John, indeed, it was great to have you here in the studio uh this morning.

Thanks so much for taking the time to join us here.

Glad to be here.

Thank you.

All right, let's do a quick check of the markets.

We're just over an hour into the trading day.

We are still looking at gains here.

Although you can see we are just around the highs of the session.

You now have the dow up 237 points here.

The S and P up about 7/10 of a percent, the NASDAQ leading the way up nearly 1%.

Now the move is higher up 8/10 of a percent.

So I guess that's a big rounding that I but the move higher coming following that PC that we got out.

This morning showing that inflation once again improving just a bit that disinflation story remaining intact.

And then we also got consumer sentiment out at 10 a.m. Eastern time today.

So again, having a big impact on some of the markets early moves.

Keep right here on Yahoo finance.

You're watching Catalyst, the first presidential debate capturing America's attention after President Biden and former President Trump went back and forth on a number of issues.

Now, just before the debate, when you take a look at the real clear politics, betting market average here giving Trump an 18 point lead over President Biden following the debate, former President Trump's lead has had expanded to over 32 points here to talk about that and more we wanna bring in Steve Pavlik.

He is head of policy research at Renaissance Macro Research, Steve, it's great to have you here.

So talk to us just about your reaction to the debate and what the markets are pricing in at this point.

The odds here that maybe we could see a heck of a lot of uncertainty here over the coming weeks or days.

Well, sure, I think you have to go back to, um, you know, the goal of the debate, you have two candidates that are relatively unpopular and I think the intent from both was to put the focus on the other.

And from that standpoint, I think that's where the Biden campaign fell short of expectations that were already low to be honest, that the fact that he wasn't able to clear that bar given the concerns over his cognitive ability, I think is really a major factor for them now.

And I think one thing to keep in mind is the fact that I think most voters are now starting to link some growing concerns about Biden's competence to these fears about his cognitive ability.

And it's very difficult to convince people otherwise based on what they saw.

Uh So at this point, as you alluded to, you know, we're seeing a movement in the betting markets, I believe now they're up over 35 points.

And I think when you look at the CNN post debate poll, two thirds of viewers actually gave Trump the win there.

Uh So I think we're gonna have to watch over the weekend probably into the beginning of next week is the potential progressive pivot away from Biden at this point.

There's a lot of pressure, I think on the Biden team to have him drop out and the messy process is who's going to replace Biden ordinarily.

It would most likely be Kamala Harris, the vice president.

Uh But polls show that she's actually less popular than Joe Biden.

So I'm not sure that's going to solve Democrats electability challenge at this point.

Looking at a Gallup poll, a lot of uh respondents sort of skeptical over what they perceive as policies that may be too progressive.

Um I think that sort of hurts the chance for somebody like Gavin Newsome to maybe jump in as a potential replacement.

If you just look at the electoral map, I think more likely scenario is somebody like a Gretchen Whitmer governor from Michigan or maybe Josh Shapiro, the governor of Pennsylvania, um to try to maybe preserve their chances of winning there and hopefully keeping the presidency.

So that's sort of keep an eye out for the next few days.

I think a big question just in terms of the commentary from normal people out there is this question about the Democratic strategy into this election and why there wasn't a bigger backup plan perhaps in place if voters were rebuffing President Biden because of concerns about his age.

What do you make of that piece of this, the kind of question mark about the Democratic strategy here?

Well, they were sort of victims in their, of their own success.

If you look at the midterms, I think at the time, there was this thought that this red wave is going to materialize based on the history of the party in power during midterm performance that didn't really happen.

So that would have been the logical time for Democrats to maybe make that pivot from Biden, obviously Biden and those that he employs want to stay in power.

Uh And so they sort of at this point have put Democrats in this uncomfortable position now to be fair, this conversation has been going on for a while.

You could argue, it actually goes back to what some referred to as a Biden basement strategy in 2020 with respect to concerns about his age.

And even in February, we saw reports from a number of progressive outlets uh suggesting that Democrats were already sort of preparing for a plan B.

And the way that that would have to work is that Biden would have to agree to step aside at which point his delegates would be free.

And then we'd have a situation in Chicago of, of all places where you could have a contested convention.

And you just sort of think back historically, I think the last time that happened there was 1968 when Lyndon Johnson, another democratic president agreed to step aside because he felt he was going to be a drag on the party.

When do you think the market is going to start really pricing in a potential for Donald Trump to become the next president?

Well, it depends on how you start looking at it and where you measure it from.

I mean, today, if you look at Trump media, I believe pre market they were up pretty substantially.

I know that natural gas futures were up, that may have been some reflection, uh people playing greater confidence of Trump performing well.

Our team has done some work with respect to the market actually performing higher, the correlation between that and Trump leading in the real clear politics, average of polls, I think we're still going to have to wait a few more weeks to get some polls that really capture uh the momentum here from the debate.

Uh In terms of when I think markets will be more certain, I think we'll probably know again within the next couple of weeks whether Biden is going to remain the candidate.

If there is an effort to replace him, then I think that just injects a lot more uncertainty as to what that replacement would be.

Uh And whether or not we're going to have this second debate in September.

So that's sort of how I think about it.

All right, Steve Pavlik, head of policy Research at Renaissance Macro Research.

Thanks so much for joining us.

Thank you.

Well, President Biden's performance in the first presidential debate of the year for the 2024 election against former president Trump.

Well, President Biden did struggle with his delivery and multiple points during the debate, poor performance, leaving voters increasingly concerned surrounding Biden's age and raising some questions about whether or not Democrats should replace him.

Now, we spoke to a number of guests today about how a potential Biden dropout could happen and who could replace him as a democratic nominee.

Our very own, Rick Newman here uh with more on that.

And Rick, when we talk about some of that reaction that we did get here.

Uh So far this morning, I think my takeaway so far is just the uncertainty that this leaves the fact that we could see, obviously a heck of a lot of changes between now and November and we ultimately maybe don't know who's going to be on the ticket.

Well, it certainly got a lot more interesting.

I mean, it's, it's not so much, just too boring guys, we know everything about anymore.

I mean, we now could end up with a new, with a new democratic candidate who's somebody new to the scene.

If it's somebody like Gretchen Whitmer, the governor of Michigan or Josh Shapiro, the governor of Pennsylvania, who most Americans don't really know, know much about unless you live in, in those states.

I, I would point out that uh the, I think the base case remains Biden is a candidate and uh uh there he, he has to step aside.

I mean, he has to agree to step aside for somebody else to uh become the, become the candidate.

Um And there's no indication yet that that's likely to happen from the Biden campaign is pushing back aggressively on all of this today saying, you know, cut it out that Biden is the candidate, he's not going anywhere.

Um So there's, you know, a lot more turmoil to come here and a question about whether or not he does have to step aside to win this election, given that former president Trump is still facing felony charges, we have more surprises coming.

So, um uh, let's not, the, the election is not tomorrow.

And among the things we know are gonna happen is, uh, there is a sentence Trump is gonna get sentenced, uh, for the 34 criminal convictions in the New York case on July 11th.

Uh, that is just a few days before the Republican convention.

Uh, there are some political analysts say that if Trump gets a jail sentence that is, could be a game changer in itself.

That would be a very, that'd be more tangible to voters than just he was convicted of something.

They're not, they're not sure what, but if he actually gets a jail sentence or he gets like a home detention sentence and he can't campaign, he has to, he has to stay in Florida that changes things.

Uh And um then we were probably next week we're gonna hear from the Supreme Court on whether the, the one of the other three tries.

Uh Trump faces can get started in Washington DC.

That's the one relating to election interference in the 2021 riots at the Capitol.

Um So there's a slim possibility that that trial might still be able to get started before election day.

Uh We will find that out next week and I mean, with two candidates and this old, I mean, obviously there, there's a health, I mean, health is an issue.

I mean, you know, somebody, somebody could slip in the bathtub and it changes everything Oh God, that was tragic.

Rick, what do you think the Democrats strategy is going to look like?

Or maybe the better question is, should look like here, at least over the coming days when this still remains in the headlines.

The strategy up till now was to make the campaign about Donald Trump.

Uh Biden just to failed to do that in the debate.

And remember it was the Biden campaign that wanted the early debate.

We've never had a debate this, uh you know, almost five months before the election, the Biden campaign wanted that because they thought it would be their opportunity to reset the terms of the debate and get everybody focused on Trump and the exact opposite happened.

I mean, it was just a total disaster from a, from a strategic perspective.

So can they get, you know, circumstances will help the Biden campaign perhaps?

So the sentencing on July 11th that will help them try to turn it back against Trump.

I mean, there is going to be one other, there's one other debate schedule scheduled and in theory, Biden has a chance to recover from a poor performance in this debate.

That was, you know, let's a lot of voters probably didn't even watch it.

So that helps.

Yes.

Yes, it matters.

So the second debate will matter more because more swing voters will be more tuned in.

But I mean, Biden's gonna be three months older.

I mean, he's not getting younger he's getting older.

Um So if the, if the, if the, well, if the underlying problem, by the way, I don't think Biden has done dementia, he clearly has like memory recall issues and he cannot express his, he can't, he loses his train of thought, that's not dementia, you know, just to be clear.

Um but it matters to voters.

Um And if he, if he cannot improve his performance and I don't know why we should think he would improve his performance.

Uh because this is the guy, this is who he is right now.

If he can, then he can another shot in uh in September, but it could just as well end up even worse in September.

You have to keep that in mind.

All right, Rick.

Well, I'm being yelled at to move on from this conversation and I can ask everybody wants to talk about this.

I understand, I understand we got to go, but thank you so much.

I really appreciate your time coming up here.

Investors spending billions on the space industry.

We're going to take a look at the return on that investment after this, Elon Musk, Jeff Bezos and Richard Branson.

These are the billionaires leading the space race, setting lofty goals for themselves and the future of space travel investors are buying in so far.

This year, the space industry is getting $6.5 billion in pe investment.

That's according to space capital.

And this week, Bloomberg reported that spacex is selling shares that value the company at around $210 billion.

But our next guest says it could take generations for the investments to pay off even if they ever do joining us.

Now to discuss, we got PP the Franklin Institute chief astronomer Derek.

It's great to have you here.

Thanks so much for being here with us.

I I'm interested in your take just on billionaire investment in this space in general.

Given that you are a space expert yourself.

How do you, how do you feel about it?

Well, it's really exciting that they're pouring all this cash into expanding our capability to reach low earth orbit and beyond uh with organizations other than the National Space Organizations like NASA or Ros Cosmos of Russia or any of the others, uh you know, Ariana Spas of France.

But the issue here is that how is it that they're going to be able to actually generate some income out of this?

Because right now the billion that they're pouring in are going towards building the necessary infrastructure to do the work that has to be done off planet in space and that is tremendously difficult.

It has very high risk, it's going to cost a lot of money and it's gonna take a long time to get to a point where you actually have a process that's turning product around that can then generate some positive revenue for you.

So Derek for investors there that are looking to see some sort of return and maybe in a more timely fashion, I guess, what do you think in terms of that angle or the catalyst of what is going to change here for investors over the coming months is probably too short of a time frame here in coming years.

What does that then?

What do those investments maybe more accurately look like?

Well, I think those, those those investments have to be looking toward uh what are the practical technologies that emerge from the development of all the technologies that are being developed to actually build this space infrastructure?

I mean, what kinds of technologies coming out of this can be used here on earth and driving that kind of development actually is important and can work because as those technologies are built for use and space, the application that they can have on earth can actually develop an avenue in which those uh investments actually begin to pay off sometime sooner than two or three generations from now throughout the course of your career, Derek, have you seen the kind of combination of the private and public sector have different impacts in terms of how much technological growth there is based on where the investment is coming from versus in each of those?

Well, the interesting thing is that on the public side, the money that's invested by governments does then turn into technology sharing for the, you know, the rest of the general public or for that nation.

Because in terms of, you know, for NASA, at least anyway, techno technology sharing is part and parcel of the investment that our government is making in developing our National Space program.

But for private industry, what happens on the other side is they now have proprietary right to all of the technology that they develop.

So in one sense, we have easier access to those technologies through the private uh through the public se sector, the National Space Organizations than we do through the private sector.

All right, Derek Pitts at the Franklin Institute's Chief astronomer.

Thanks so much for joining us here this morning.

Thanks for having me this morning, Financial freestyle.

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