On today's episode of Market Domination, hosts Josh Lipton and Julie Hyman explore trending tickers and the afternoon's leading market events.

Yahoo Finance's debate coverage continues as Pimco head of US public policy Libby Cantrill joins the show to explain why Biden's chances at reelection are much lower now and who Trump is likely to tap as his running mate. Rick Newman also outlines other "surprises," such as Trump's sentencing, that voters can expect down the line as the race continues.

In the latest edition of Good Buy or Goodbye, GraniteShares founder and CEO Will Rhind argues that Walgreens Boots isn't a buy without an AI story. Meanwhile, six different financial firms, from Morgan Stanley to Barclays, downgraded Nike (NKE) stock after the company slashed its full-year guidance.

On the trending ticker front, shares of Uber (UBER)and Lyft (LYFT) traded higher on Friday after the rideshare companies agreed to offer drivers a minimum wage, paid sick leave, and other benefits as part of a $175 million settlement with the state of Massachusetts. Network provider Infinera (INFN) also saw its shares soar on Friday after it agreed to be acquired by Nokia (NOK) for $2.3 billion.

This article was written by Gabriel Roy

Video Transcript

Hello and welcome to market domination.

I'm Julie Hyman that Josh Lift in live from our New York City headquarters.

We are giving you the ultimate investing playbook to help tune out the noise and make the right moves for your money.

And here's your headline blitz getting you up to speed.

One hour before closing.

Bell rings on Wall Street.

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 during the night.

There were an awful lot of e mails and texts from Democrats who are now really worried about losing the House, the Senate and the White House.

This report itself was probably the best that, you know, one can expect.

And it certainly helps the Fed, I think, give them a little bit more comfort on their path to starting to ease policy, which we still expect to start happening in September.

We've got one hour to go until the market close.

So let's take a look at the major averages here.

We've got a little bit of a deceleration, deterioration in the major averages over the course of the day, even with that P ce, a measure of inflation coming in line with estimates.

And as market participants try to suss out what last debates last night's debate means if anything, we got the dow lower right now by 157 points, that's about a third of 1% the S and P quarter of 1%.

And the NASDAQ off about the same, you can see all of them showing that downward turn as the day is gone on a couple of things to note here.

One of course, it's the last day of the quarter.

And so you do have some market participants kind of doing some end of quarter, settling up of accounts in some cases that might be selling in some cases, it might be buying, but that also plays into what we tend to see on the last day of the quarter.

It's also the last day of the first half of the year.

And it's been a pretty remarkable gain that we've seen for the major averages.

We've got the NASDAQ up 19% this year.

By the way, the NASDAQ and the S and P earlier today were set to close at records before this little bit of a pullback.

The S and P up almost 15% for the first half of the year.

The dow the laggard pretty notably here up 3.5%.

And then there's something else that we have been watching very closely.

That's been big, big theme for the first half of the year pretty consistently throughout.

And that is breath in the market, how many stocks are participating in the big gains that we have seen?

And as we know, it's not that many right, a lot of the gains, the bulk of the gains are accounted for by mega cap tech stocks.

So we've got the S and P equal weight index much more in line with what we saw from the dow than what we saw from the S and P 500.

Implying again, that lack of participation, another way to look at this, this cool chart brought to us from Dow Jones, which shows the gap in performance between the S and P 500 the S and P equal weight.

Another measure of breath.

And you can see here that really what we have seen is a huge out performance.

And again, another way of measuring this lack of breath in the market, which goes, this chart goes all the way back to 1990.

And this is the largest gap at least since then.

This has led a lot of strategists to question the sustainability of the rally.

If all those other stocks don't start participating in a more significant fashion.

Josh.

All right, Julie in Thursday night's debate, a soft spoken and halting Biden did little to assuage fears that the 81 year old is capable of serving for four more years, making sure that we're able to make every single solitary person uh eligible for what I've been able to do with the uh with, with, with the COVID, excuse me, with um dealing with everything we have to do with.

Uh what if we finally beat Medicare?

Thank you, President Biden with us.

Now, Libby Cantrill Pimco, head of us public Policy, Libby, uh you're the perfect person to talk to about this.

I'm so happy to have you on the show today.

Uh Maybe just start big picture Libby.

You watched that debate.

What did you make of it, Libby?

What, what were your big takeaways?

Yeah.

Well, I'm adding that clip encapsulated a lot of it.

I mean, that was a very low moment for the president.

Um, you know, unfortunately for his campaign, there were many of those moments, even in the best moments, he was having a hard time making a point landing an insult.

Clearly, he had rehearsed a lot of the comments that he did make last night, but they just did not gain, they did not gain traction.

And to your point, none of what we saw last night reassured voters that not only is Joe Biden, uh can he make it through 90 minutes but he can't make it necessary through through four years.

But I think that the most important thing here for markets is that Joe Biden doesn't seem to be indicating that he is going anywhere.

And I think that that folks, uh and I, I could say it's sort of the West Wing effect.

They do sort of think that some how the party, the Democratic Party is.

This is sort of this big conspiracy and that there will be somebody else put on the ticket.

Uh That may be the case, but it seems unlikely.

This is Joe Biden's decision to make and mechanically speaking, he is the person, the candidate who controls all of the delegates.

99% of the Democratic delegates, uh Joe Biden controls so only Joe Biden can release those delegates and allow them to support another, another candidate so mechanically here, very difficult, not impossible but difficult to see at this point.

Uh Joe Biden dropping out of the race.

The last thing I will just say is that the tell has been in minority leader Hakeem Jeffries in former Secretary of State, Hillary Rodham Clinton and former President Obama.

They have all tweeted over the last few hours that yes, he did not have a good debate, but that does not make him a bad president and that folks should focusing on his values, not necessarily on what he said last night.

So we'll see if that actually gains any traction with the voters.

But for now, it looks like President Biden is absolutely in this race.

Yeah, I mean, it was pretty remarkable this morning to see all pretty much unanimous reaction on the op ed pages of the New York Times.

In contrast with those surrogates, you were just talking about who all of whom pretty much called for Biden to step aside and let me maybe this is a West Wing kind of question.

But if indeed Biden does not make the decision to step aside and relinquish those delegates.

Is there any path for someone else to become the candidate?

You know, there was a path in the 19 sixties before the parties changed the primary rules, but now the primary voters have voted and they have voted for, for Joe Biden.

And as a result, Joe Biden has gotten the vast majority of the delegates at stake, he will technically be the nominee.

So unless the DNC changes the rules uh which you just cannot see happening again, Joe Biden will be the nominee.

You know, again, unless he makes the decision, now donors could put pressure on him.

Pundits could put pressure on him.

I do think again, a tell is that the fact that President Obama has come out in support of Joe Biden is very important because he is probably another person who could have put pressure on to drop out.

But that does not look like it's going to be the case.

So a long way of answering your question, no, at this point, there really is no other mechanism to push Joe Biden to put mechanically to push Joe Biden out.

What do you think Libby Biden actually does now though, I mean, post debate, what do you think, what shifts or changes in strategy or messaging would you be looking for?

Yeah.

So I think a couple of things, I mean, one is he's actually just had a rally in North Carolina and of course, it was, it was based on a teleprompter, but the Joe Biden of the State of the Union back in March, which was much more on display today, certainly than he was yesterday.

So I think that the campaign will just try to push him out as much as possible.

I don't think we will see another debate we will see there is supposed to be another debate scheduled on September 10th.

Of course, I'm not sure whether President Trump really thinks that there's a lot of benefit for him to actually go into that debate given how well he did last yesterday.

So, you know, that that is something else to be, to be watching.

The other thing I will just say is in terms of polling in the next few weeks, you know, we know that folks, the swing voters really don't like, they're called double haters for a reason.

They really don't like Joe Biden, but they don't also like President Trump.

And so where does that potential support go?

And I think if we see an uptick in the third party figures, that actually could be pretty interesting because not a third party candidate is not likely to be the next President United States, but could very well be a spoiler in this very close margin, right?

And then the other thing I would just say is that the choice of running mate for President Trump important just because again, the both of these gentlemen are of advanced age, but I actually think the vice president's debate will be really important that hasn't been necessarily scheduled yet.

We're thinking of end of July early August time frame, but that also could be important.

Just I think the stakes, the focus on their running mates now, I think are probably going to be you know, a bit clearer and a little bit starker after last night and presumably we will be a younger person, whoever Trump ends up picking.

So it'll be a very different debate.

Libby at this point.

Yes.

You know.

Well, al almost all of the debate reaction has centered on President B's performance, much less has been around former President Trump's performance.

But, you know, and much has been made of how he sort of was more conventional in the first half.

But then he got wackier and wackier as the night went on.

Manchurian candidate kind of stuff.

I is that kind of irrelevant at this point are, are voters just sort of used to that?

I do think that there are, um, they are used to it.

They are used to a lot of folks just rationalize that as, you know, Donald Trump being Donald Trump, he was, you know, I think the Biden campaign really did want to make this a contrast in temperament and personality and they did, but not the way that they wanted to.

I mean, you know, Trump was much more disciplined.

He was much more restrained.

You're right at the end then maybe he let a little bit of that restraint go.

But for all intents and purposes, this was a different candidate than we saw.

Certainly that first debate back in 2020 where President Trump we now later know had had COVID and, and what have you.

But I think the point here again, for sort of for markets is that if Joe Biden does stay in.

And again, I think that is our base case.

Um There is a higher chance that we see President Trump become the president and not because necessarily he gets a many more votes after last night.

But the folks who may have voted for Biden maybe just don't turn out right.

I think in some ways, uh, turnout may be lower.

We'll see again 4.5 months to the election.

A lot, a lot can still change.

But I think at least as of now, the upshot here is that there is a higher chance today than there was yesterday of a Trump presidency.

And so when does the market start pricing in, in particular tariff risk?

I mean, I think this is something that we have reiterated to our clients over and over again.

We need to take President Trump both seriously and also somewhat literally in terms of his threats in terms of increasing tariffs, tariffs, just a fancy word for taxes, as we all know, also potentially inflationary and potentially a headwind for growth.

So I think it's a question of, you know, when the markets actually kind of get around to the fact that yes, actually Trump does have a very decent, higher than 50% odds at this point of getting elected.

And you know, when do they actually start sort of manifesting that in terms of, uh, in terms of markets, Libby, I'm gonna get you out of here on this.

You mentioned that VP debate.

I'm looking forward to that too.

Libby.

I, I wanna know who, who do you got?

You wanna play some, some bets here on Trump's VP, Tim, Scott Vance Huckabee Sanders.

Come on, Libby.

Give me, give me some, give me some odds.

I mean, I'll tell you what the conventional wisdom says in Washington, by the way, the conventional wisdom is almost always wrong.

Um, but they, you know, the conventional wisdom is that it is, uh Senator Marco Rubio from Florida, uh Governor uh uh Doug Berham from North Dakota, uh or JD Vance from Ohio.

The one thing I think that Marco Rubio has in his favor, um is that, of course, he is of Hispanic descent, he's of Cuban descent.

He can speak Spanish on the campaign trail and Nevada's and Arizona's crucial swing states uh for, for Trump, for Trump to win.

But also that, then, you know, allows for, uh governor desantis to appoint another uh senator from Florida.

And I think Byron Donalds could be, uh could be a candidate.

So in some way, this could be sort of a too for if you will.

Um from Trump's perspective, he gets Marco Rubio, you know, somebody of Hispanic, but then also he could have, um, you know, another black senator uh ascend to that seat.

Um And that is something that he could also campaign on.

So I would say, you know, if I had to commit now, I think Marco Rubio probably um would be in the ready.

But again, that's the, the conventional wisdom and the conventional is, is probably like, it always is like, usually is, is probably wrong.

Um Libby, there are, are, are fewer people we would rather talk to today on all of this stuff than you.

We really appreciate your time.

Thanks so much.

Appreciate it.

Thanks.

Well, President Trump appeared back on the campaign trail today attempting to, I should say President Biden appeared on the campaign trail today attempting to dismiss concerns around last night's performance.

I don't walk as easy as I used to.

I don't speak as smoothly as I used to.

I don't deba debate as well as I used to, but I know what I do know, I know how to tell the truth joining us now.

Yahoo Finance is Rick Newman.

Where was that guy?

That's exactly what I'm wondering.

So, what, what medication did he take that?

Instantly?

Fixed his voice, you know, 12 hours later.

I don't know.

Um I have no idea what to say about this.

I mean, uh that is not the guy we saw last night.

Most of the people who saw the debate last night are not gonna see Biden in that clip.

Um And we basically have two or three, Joe Biden's running for president.

I guess I, I get I mean, the other thing is that the viewership of the debate last night was, it was considerably, but that's not how people watch things anymore.

Right.

They watch viral moments and we all watched earlier the clip that went viral, which was the, the president's comments about just blanked out.

I mean, he, he just lost his train of thought completely, which happens to all of us.

Well, all of us don't run for president.

Exactly.

Exactly.

Well, and that wasn't his only moment like that during the night.

That was the one that has just been sort of spread most virally, right?

So, um, what could change the outlook here?

I mean, is, you know, is, is Biden sunk.

Uh, I mean, you heard, uh, Libby Cantrill saying, and I think that's astute that Biden is in this race.

He, he's, he, he will be the last person who thinks he needs to drop out and he certainly doesn't feel that way now.

So the, we were before this debate, we were having a lot of discussion, like, watch for surprises in this election.

Right.

Well, we got, we got kind of a surprise which some people say it's not surprising, but, uh, Biden totally crashed and underperformed last night, obviously.

Could we have any more surprises?

The answer is yes.

So Donald Trump gets sentenced on January 11th for 34 felony.

Uh, sorry, what say January, sorry, July, uh, July 11th, uh, 34 felony convictions.

There's a good chance he will get some punishment.

He's probably not gonna get, uh, go ahead.

You're fine to time served.

He could get home detention, which creates the surreal uh scenario that, uh, he may be accepting the Republican nomination remotely on a Zoom call because he's not allowed to leave his home in Florida.

Um We, we're gonna get the Supreme Court decision next week on whether Trump is immune in one of those three other, uh, trials he's facing small possibility that, um, that, that could clear the way for that trial to begin.

Probably not end but small chance that trial could start.

And I mean, again, these guys are both old.

Um, there are still other surprises that could happen.

So it's, uh, uh, iii I, until the election day itself, it is always possible that the definitive thing that will decide the outcome here has not yet happened.

What do you think, Rick?

I mean, there's a lot of talk right now, you know, I is actually BN gonna be the candidate.

I, I know we just spoke to Libby Cantrell and she's right, you've heard from Barack Obama and Hillary Clinton.

But I mean, I'm still waiting to get line of some of the big donors, the big names who write the checks.

I think that's gonna be really interesting.

Is that kind of leaks out?

I'm still waiting to see do democratic congressmen go public with worries.

I mean, if you were to place the odds.

How likely is it, do you think?

Seriously that, that Biden is not the candidate and that it is gonna be Kamala Harris or Gavin Newsom?

Uh, Libby in her note today said it probably went up from about 10% to 20%.

I think he could push it a little higher.

Um, even higher than 20%.

You could.

Uh, yeah, you could say one third, I guess.

But if it doesn't happen soon, it is not gonna happen voluntarily.

Uh You know, if, if there's a health emergency, that that's a different story.

But Biden controls his delegates as Libby pointed out, they're not up for grabs.

He won those delegates in primary elections and they're his delegates to dispense with as he he chooses.

Um So who can, who can persuade Bi Biden to put, to withdraw and who might do it?

His wife, uh he's close with his sister.

He's got a few family members and I think that's about it.

He's got, you know, he's got five super close friends uh and political advisor, he's had for decades, if all of them got together and collectively said, you know, we have to work, we're performing an intervention here.

Um Then maybe that would, that would get it done.

I suggest Joe Biden has that much influence, you think?

Yeah.

Yeah.

Oh yeah.

And, and the other thing is if, if he did step down and somebody else would run one of the people you mentioned, the, the Democratic Party would want a sure thing and there's nobody else out there.

That's another problem.

I mean, it's not that Biden is a sure thing either.

So, you know, John Linda Johnson withdrew uh earlier in the year in 1968 and Hubert Humphrey was the vice president.

So Hubert Humphrey was stepped in right in his candidate.

You assume that Kamala Harris would play that role, except I think there would be instant opposition to her.

You'd have immediate jockeying uh from other people, super ambitious people um that we've been going through the list all day.

But uh Gavin Newsom, California, Governor Pete Buttigieg, you know, in the, in the cabinet, Gina Raimondo already in the cabinet, these guys are already in the inside the beltway.

They would be vying, you know, they would suddenly be going after after Biden's delegates.

Um And how does that shake out?

I mean, I mean, there's a method, there's a procedure for which for to make it happen, it would just be ugly and then what you, you probably have all this infighting in the meanwhile, which might be even worse than a Joe Biden.

You know, the Democrats at a civil war three or four months before the election is a worse look than Biden put on last night.

So this late in the game, there are not very many uh reasonable options for Democrats.

By the way, the, the comeback theme is already showing up among the opium Democrats.

You know, Biden is apparent.

Apparently Biden started his comeback today at that North Carolina rally.

Well, we'll talk to you next week about the next development when they, when they come back is really picking up the come back.

We're just getting started here and market doin coming up, Nike having its worst day in over 20 years as analysts turned bearish on the apparel giant following its latest earnings report.

We'll check in on some of our top calls of the day later in the hour and at 330 it's the latest issue, our series, goodbye or goodbye.

Stay tuned.

Much more market domination.

Still to come.

Declines on Wall Street accelerating here into the close the dow near the lows of the day.

The moves coming after the latest P ce reading showed more signs of cooling inflation and joining us now is Shana Cecil banner capital management, Ceo Shana.

It's good to see you.

So let's start there.

Uh with that P ce print, you know, Shane came in as expected.

What did you make of it?

What do you think Jay Powell made of it?

Well, I think it's gonna be uh good news for the fed.

I think Chairman Powell will be happy with what he's seen.

Uh We had slightly higher personal income numbers but P ce came in right in line and continues to show slowing.

So having a strong consumer and slowing inflation.

That's kind of exactly what they're looking to achieve and Jaya, everybody's out um with their sort of mid year outlooks lately and there seems to be a lot of continued bullishness out there.

Although uh you've got the likes of Marco Kilanowicz over at um JP Morgan who are saying that the earnings broadening is just not gonna have trouble materializing enough to continue to boost stocks from here.

Where do you sit?

Well, I think that for the larger cap and the mega cap names, uh we will continue to see broadening earnings.

Uh My concern is more on the smaller cap names which have struggled all along and continue to underperform.

Um I don't see much of a tailwind or any sort of catalyst for that uh to turn around anytime soon.

Um but I do think that having slowing inflation um could very likely leave the fed to do a rate cut in September, which could be a catalyst for continued economic growth and continued positive market returns going into the end of the year.

What about China that, that jobs report we're getting next Friday?

How important do you think that is in terms of just confirmation the fed needs when they do start cutting?

Could that shift?

You think that September cut you're possibly expecting?

I think the only way it would impact the probability of a September cut is if it came in too strong because remember there's a dual mandate here.

So they're concerned about inflation, but they're also concerned about employment and if the labor markets look hot, that is a negative and unlikely to result in a rate cut.

Um that has not been what we've been seeing in recent months.

In fact, um they've been making adjustments to previous months down uh and the unemployment rate has been ticking up ever so slightly.

So um unless something very surprising happens, I expect that to continue to this trend of uh a healthier less tight job market which again would be positive for the fed.

So Shana put it all together for us and tell us about strategically how you're thinking right now and, and you know, where you're sort of adding to positions.

So we've seen on a technical level, um increasing correlations between equities and fixed income and bonding is focused on alternative investments in general.

So we see a lot of opportunities here to add diversification of portfolios through things like managed futures, commodities, real estate, real estate debt, things of that nature just to sort of um take advantage of um their diversification benefits as we see this rise in um correlation between fixed income and equity, which has been a problem now for quite some time, I want to say for the last two years.

Um We think that that's where the real opportunity is uh to maintain strong portfolios and continue to have potentially even good income with things like real estate debt.

Um I think the opportunity is now to really add these types of things into portfolios.

What about China, the the A I trend?

You know, we did hear from Mike Ron this week, they reported uh investors were disappointed with that print.

How are you thinking about that mega trend and how do you want to invest in it?

So uh there's no uh mistake.

I am a NVIDIA Bull.

Um It's one of my favorite stocks and has been for years now.

I talk about it a lot.

So your your viewers uh who have seen me before will know that um I am a bull on A I, I think we're very early in the development of A I technology.

I think it impacts every single industry and the biggest player and the leader in in the space is now there's other opportunities I like to say NVIDIA has done so well that let's look at some second derivative opportunities.

Things that are the next potential beneficiaries of the development of A I and look at something like bird it.

Um VRT which um does cooling systems for data centers, which is very important because there's a lot of computer computing power needed for these machines learning technologies.

Um That's one and then there's some firm like Cisco which is a stock that I've been burned on a ton.

Uh But it's very cheap and it does have a second derivative uh exposure to a I that could benefit that stock going forward.

So those are some of the names I like and that's kind of how I'm looking at it is we know NVIDIA is gonna win but who wins next?

Yeah, it's a good way to look at it.

Shayna.

Thank you.

Appreciate it.

Thank you.

Let's check in on some training tickers.

Now who was starting off with Uber and Lyft shares of the ride sharing companies rising after both agreed to offer a minimum wage, paid sick leave and other benefits for drivers.

This is all part of a $175 million settlement with the state of Massachusetts specifically.

So this means the drivers in Massachusetts are gonna be getting 3250 an hour.

That's the minimum wage of that settle and Uber is gonna pay $148 million of it.

Lyft will pay the remainder, but, you know, you've got all these sort of regulatory overhangs in different regions and so this removes one of those.

Yeah, I was reading that most of the funds.

It sounds like you're gonna be, um, it's like they'll be distributed as back pay to drivers, former and current kind of this broader fight.

I mean, all the companies wanna, it sounds like kind of hammer out these deals that give driver benefits but still, you know, kind of classify as independent contractors.

Yeah.

And is, in addition to this, Uber and Lyft are going to withdraw their support.

There was a, there was a referendum in Massachusetts as well that was asking, um, voters there to say yes indeed.

These folks are independent contractors.

Now, Uber and Lyft aren't going to support that referendum.

It doesn't mean they're not gonna pass but they're not gonna push it as they have been as part of this settlement.

And I was reading that there's actually more news on this front.

I was reading that there.

We're still wait for a decision from the California Supreme Court about this 2020 voter approved ballot measure that classifies dryers as contractors.

So you got, you got more news on the way, a lot, a lot going on there.

Uh, let's talk about a deal today as well.

Network provider, infer stock soaring today after agreeing to be acquired by Nokia for $2.3 billion.

So basically, this is nokia's attempt to get in on A I further.

Um And will according some analysts be competing more with the likes of Cisco and Sienna, which are networking equipment companies as well.

This is the biggest deal that we have seen, um, from Nokia since it bought Alcatel Lucent back in 2016.

That was a much bigger deal.

But nonetheless, we haven't seen a deal like this for in a while.

No, I mean, a Nokia CEO here saying to call reporters.

Um, you guessed it.

It's about A I Julie A I uh, is driving significant investment and data centers at the moment.

And one of the key attractions of this acquisition, they're saying is that it significantly increases our exposure to data centers.

I do think it's interesting as Bloomberg analyst pointing out just how it does potentially maybe make some shifts in the competitive landscape here calling out, you know, Cisco and Sienna there.

Yeah, definitely.

We'll see how it plays out.

All right, coming up, it's the latest edition of our series.

Goodbye or goodbye.

Stay tuned.

We're much more market domination.

Still to come.

It's a big noisy, universal stocks out there.

Welcome to, goodbye or goodbye.

Our goal to help cut through that noise to navigate the best moves for your portfolio.

Today, we're scoping out the relationship between retail and artificial intelligence.

I'm here with Granite chairs, founder and CEO Will.

Right.

Good to see.

Well, thanks for being here.

Thanks.

So let's get to your buy stock and that is Amazon and the stock has already done quite well over the past year.

It's up around 50% here.

So let's talk about your continued case for why it could go up and it starts with that market cap milestone.

And I guess you could argue the wind is sort of at its back.

That's right.

There's a lot of momentum, clearly, the company has made a number of changes since the pandemic, all which has benefited them really greatly.

And I think the two trillion is just a nice milestone to say that Amazon is back, but it's in the league now with the NVIDIA and Microsoft and the other $2 trillion market cap companies.

And speaking of those other companies, of course, one of the reasons that we have seen them gain so much is what's going on with A I.

So where does Amazon sort of fit into that universe right now?

So Amazon is lucky because it benefits from its Amazon web services business.

And it's one of these hyper scalar cloud data center businesses which is benefiting from the huge demand that we see everywhere in the market for A I and for A I BASED products.

So that was one area of weakness that Amazon had in the last sort of couple of years where the growth in that Aws business slowed down, but we're starting to see a reeler of Aws and the services that Amazon is providing again all on the back of demand for A I.

And of course, they are also using A I, not just for Aws, but in the retail business, I mean, they have always used machine learning and A I.

But I imagine now they know everything about me unfortunately, as a prime customer and I'm sure they are using it to their advantage.

Absolutely.

And this is only going to get better.

So the convenience, the all things that Amazon does to offer the best kind of product and service to the consumer is only going to be augmented by further advances in A I up selling me more stuff.

And then finally, it's not just on the demand side, it's also they are still sort of cutting costs and getting leaner.

That's right.

And again, one of the big, big things that Amazon did was in an environment perhaps where we had zero interest rates and we had a market that was awash with liquidity.

The market share pursuit type strategy that Amazon was pursuing was maybe the right idea or the right strategy for that time.

But clearly with the interest rate environment that repriced all business models like that, there had to be a focus on costs, there had to be a focus on efficiency on improving margins and that was the discipline that was injected into Amazon.

And so the new CEO of course, has really focused on that the last few years.

And the business from a margin perspective, profitability if has improved vastly and you expect them to continue with the cost cutting or more just sort of reaping the benefits of it.

No, absolutely.

I mean, the company has laid off, I think 20 27,000 people over the last few years, there have been big efforts to improve on the logistics side of the business to manage inventories better.

And I think the market clearly loves that part of the Amazon story, hence part of the $2 trillion market cap.

So from that perspective.

I think there is no reason to believe that the company won't continue to do this.

All right, let's talk about what could potentially be a risk here and that's that there could be a slowdown for Aws.

Is that because of market share issues or how could that happen?

I think it's more we saw before, such as if A I doesn't turn out to be the growth story that perhaps everyone predicts or just a lack of spending from a competitive perspective vis a vis other competitors, Amazon is not the only player in that space that competes with other hyper scalar in the business such as Microsoft's Azure product or Google's Cloud Solution.

So it could suffer from competitive pressures on that front.

All right, let's get to the stock that you think folks should avoid on the retail front.

And that is Walgreens Alliance.

The stock is already down some 50% or so over the past year.

So kind of a mirror image of what we've seen with Amazon and it just reported third quarter numbers that the street did not like cut its outlook.

So it has been struggling.

That's right.

Q three numbers were horrible.

And I think again, it's a, it's a, it's a useful case to position it against the stock like Amazon to really think about the challenges that a lot of these traditional retailers are facing.

And this is a combination of all sorts of factors.

But unfortunately for the Walgreens franchise at the moment, very challenging time and they are also shutting a bunch of locations.

So we've got sort of broad consumer weakness.

How is that playing out with Walgreens?

Because on the one hand, the company sells stuff that people need in terms of drugs and stuff, but I guess there is also a discretionary factor.

That's right.

It's a kind of tale of two halves in a way.

On the one hand, you've got a lot of physical locations and clearly Walgreens doesn't have the sort of technological online delivery logistics part of the business that a company like Amazon enjoys.

But the physical stores, too many physical stores, companies looking to rationalize by cutting down under performing stores and then within the stores themselves, the pharmacy business, the health care business is performing quite well.

But the retail side much less so.

And again, because it's competing with these larger players.

The other challenge in pharmacy, of course, is the drug market and the fact that they can't fully control what they charge customers for prescription drugs.

And that's also an issue that is broader than just Walgreens itself.

So kind of a few pressures there, macro pressures as well.

And then finally A I, is there any A I here when it comes to Walgreens?

And again, there's no A I story because this is a story where it is a traditional retailer as such and therefore doesn't have the luxury of a hyper scaling cloud data business to fall back on or at least to be part of those services.

And I think when you're talking about the convenience factors that companies like Amazon have improved, that offering consumers since the pandemic have gotten more and more used to convenience in everything that they do.

It again, makes it especially challenging for these more traditional retailers to compete in that environment.

All right, let's talk about what could go right for Walgreens and that is sort of leaning into the business that you said is working, which is health care.

That's right.

And we all know that the demographic issues that we have in this country around health care.

And we all know that health care is a sort of a booming business at a very macro level and will probably only get stronger as more and more people get into retirement and have more demand for health care products and services.

However, that part of the business like I said is actually performing quite well.

It's really trying to rationalize the underperform parts of the business.

So I think if they can do that and clearly, that's part of the CEO strategy as part of the strategy of the company to get rid of under performing stores, rationalize the product line, focus more on health care.

Then that clearly is the is the upside case for the business, right?

Well, we'll see if that happens and meanwhile, you don't have a position in either of these stocks, right?

No, I do not.

Ok. Well, thanks for being here.

Good to see you and thank you so much for watching.

Goodbye or goodbye.

We'll be bringing you new episodes next week at 3:30 p.m. Eastern.

Let's get to a call of the day.

Now, Nike gets six different downgrades today.

That's including from Morgan Stanley, the analyst.

They're highlighting another disappointing quarter and reducing the outlook for the shoe company.

So I mean, Nike just those shows just nose diving today, Julie and it's not already was well in the red over the past 12 months heading in into the print, but you can see a cratering there revenue.

The fourth quarter fell 1.7% and missed.

They offered a full year outlook that missed.

And as we noted, the street's been responding, Morgan Stanley goes to equal weight lowers the target of 79 saying the company's strategic changes leave us with low visibility into its P and L. Um a decline of 19.5% or more in just today session will be a record one day decline for Nike here.

What's going on?

Well, Nike basically over the past few years, according to analysts and probably itself has not been innovating enough, has not been refreshing its lineup and has not been necessarily performance forward enough with its footwear.

And so it is trying to do that it's going through um sort of a transformation period.

I talked to Anisha Sherman at Bernstein this morning and she pointed to this sort of uncertainty around whether these new models are gonna work and be appealing.

The people aren't spending as much now, but they're willing to spend if they feel it's worth it, if they feel it's something fresh and interesting and Nike is sort of fallen down on that job as of late.

So I thought that was interesting, Jim Duffy over at steel was one of the other downgrades that we saw uh for the stock here.

And basically, he said we can't support a compelling upside case growth inflection becomes more tangible.

It seems like there is some optimism that they can improve at some point.

It's just that they don't seem to know when, yeah, I mean, when you see a print and a re I mean, look at it down 20% you'd also wonder whether you know how many folks in the street.

But also investors have questions about whether this is the C suite.

This is the management team that's actually gonna turn this thing around and stick the landing that Yeah, definitely.

Well, the Supreme Court significantly weakening the power of the federal government overturning a precedent from 1984.

Joining us now with more our own Alexis Keenan.

Uh thanks so much for joining us Alexis and this, this was expected and also a big deal.

It was expected based on the conversation between the justices and the lawyers who presented oral arguments.

However, it's a huge deal.

It's a big overhaul in the way that agency laws are interpreted.

Because in the past, ever since 1984 there was a precedent at the Supreme Court, a conservative ruling ideologically that the agencies, they, when they interpret laws that are ambiguous, when they're on unclear that judges courts, they must defer to the agency's interpretation of that law.

So that gave tremendous power to these agencies.

So when they would pass a law, if there were some sweeping conditions within these laws, and you think of things like even COVID-19 and the FDA coming in and telling the public how things are going to go financially health wise, you have, you know, so many departments working together, it's the agencies.

So the courts didn't really get involved too heavily because they knew that this law was on the books.

Now, everything changes and what it was called is Chevron Deference.

The case comes from AAA case that in that involved the oil giant uh going all the way back.

Now, what for 40 years did I say?

2040 years?

Um So this case though, in particular, it involved the National Marine Fisheries Service, that's part of the Commerce Department.

And you had commercial fisheries that were mandated under the Trump administration to put federal monitors on their boats and they were trying to control overfishing of Herring on the eastern seaboard these fishing companies, they said, no, we don't like that because we don't want to pay for these monitors.

But the federal government said no, you have to pay.

So that's how this particular case evolved.

But this ruling came down six three along ideological lines.

Uh with the conservative justices having the heavy hand there and uh with uh Chief justice John Roberts writing the majority opinion, he said Chevron was misguided because agencies have no special competence in resolving statutory ambiguities.

He said courts do so broad picture.

Uh The court has really pared down the federal agency power here.

These are non elected officials running these agencies.

So you have to also take the point that well, maybe we want elected officials or judges in this case, making these decisions, but it's going to argue the agencies might not have statutory expertise, but they have expertise in the subject area that they are expertise.

We'll see how this could be a flood of litigation.

We don't know yet.

All right, thanks Alexis.

Appreciate it.

Coming up at the halfway point for 2024.

It's time for a media check up on big farm.

More on which names are best positioned for the months ahead is next in today's Yahoo finance playbook.

We are doing a mid year check on the pharmaceutical industry string of negative headlines and promising new developments present ideal buying opportunities for investors and joining us now to discuss is Chris Shibutani Goldman Sachs, senior biotechnology analyst in Global Investment Research, Chris, it's, it's good to see you.

It is that time of year Chris where it feels right to maybe take a deep breath and, and, and figure out where we are and where we're headed.

Um So when you look at your coverage universe Chris and may maybe we can start with the large caps uh that you cover pfizer, Merck, Eli Lily, big picture Chris.

Um How healthy, how resilient does that sector look to you, Chris?

Yeah, thank you for having me on Josh.

I think the pharmaceutical industry is very much considered the beachhead property within health care.

Broadly, the industry is quite healthy but naturally, there are always cross currents happening.

I think from an innovation standpoint, we're seeing tremendous advancements in the development of novel therapies to address some of the most daunting unmet needs that uh people have in health care, particularly in cancer and cardiovascular disease.

Clearly.

And I'm sure we'll touch upon this therapeutics that address obesity and overweight have very much captured headlines and drawn attention very broadly.

Maybe some of the negative headwinds include the traditional aspects of thinking about policy implications.

We know that the Inflation Reduction Act has a drug price negotiation component for Medicare that is beginning to play out and this is part of the overall backdrop that the industry is navigating its way through Chris.

I want to get to that Medicare pricing in a moment.

But first, I want to ask you a little bit more about this obesity versus everything else because as you noted, it has captured a lot of the headlines, all of the air in the room, the dollars et cetera.

Are you think, do you think as a result that there are treatment areas and therefore companies that have been sort of overlooked that you, that you think investors should be looking at right now to be fair.

I think that there are certain aspects of the industry where almost holy grail like opportunities have always been out there and and finding approaches for the management of weight overweight and obesity is clearly been amongst those for decades.

Uh And then I think we are at this juncture where we have therapeutics that are delivering meaningful benefit and also with a profile of acceptable safety that has made them go mainstream and therefore has earned that capture of attention.

But to your question, I would agree, I think that there are very significant developments that perhaps don't quite connect as tangibly with mainstream folks.

Uh in terms of thinking about the benefit that isn't to say that it isn't creating very important innovations at the scientific level, whether it's genetic based therapies, gene therapies, we're seeing some of the first that are approved trend levels of unmet need that are being addressed, perhaps not on the same scale and scope and potential global opportunity but yet very meaningful from the when you think about the long history and the trajectory of our understanding of certain diseases.

And uh I think of the constant drumbeat of the fact that perhaps in cancer, something that touches so many people's lives directly or indirectly, we are seeing continued innovation and developments, advances of some of the traditional therapies like chemotherapy.

Now, the next generation version that's becoming very much a promising source of active treatments and research antibody drug conjugate.

So there are other areas that are very relevant.

It's just hard as you say because all the oxygen seems to be getting drawn out of the room by the scale of the obesity opportunity, Chris, another theme your space has been M and A and you know, listen, why not big Pharma has plenty of cash.

Do you see that theme?

Continuing, Chris?

And if so, are there any potential acquisition targets on your radar?

Yeah, I think in any of the major industries and whether you look at the landscape, it's just part of the natural history, right?

We have several leading companies, I think typically about a dozen leading global companies in the US and Europe and of those companies at the revenue scale.

In order to move the needle in the minds of investors, you need to be able to continually replenish your new products that are driving the growth as well as the pipeline, which hold the promise for future growth, embedded risks as well.

All companies recognize that the innovation that they focus on in the research laboratories is very important.

But the not made here, mentality is the source of risk or failing for companies who relied too much upon that.

So I think we would expect to see continued m and a another important factor in the drug industry.

Patents, patents have defined dates of effect, inspiration.

And we think of them in terms of ends of exclusivity or loss of exclusivity, perhaps cliffs or erosions or revenues.

Companies recognize they can see this coming down the road years in advance because these are date certain events, Josh and so from that standpoint, companies know they need to replenish their portfolios.

And that's often another important reason why business development and ma is just a foundational part of the playbook, Chris, as I mentioned, uh let's get to those uh Medicare drug price negotiations, as you say, it was passed as part of the IRA.

But we have seen sort of aspects of, of these negotiations becoming more clear to some extent.

So which drug makers do you think are most and least affected?

Do you think it's going to be material for the industry?

So I think ultimately, it will touch upon the entire industry.

Certainly the first year that we're seeing play out there were 10 drugs that were selected for which the drug prices that are ultimately determined and negotiated will go into effect in 2026 we're going to learn what those 10 negotiated price levels are by September 1st.

So that's not too far away from now, from that standpoint, this will go on as part of the Inflation reduction Act, Ira with a set protocol.

In terms of thinking about how in subsequent years starting in 2027 2028 it will expand both in terms of the number of drugs and not to get too inside baseball.

But in terms of thinking about Medicare, there's part D but there's also part B and so there'll be an expansion in the number and the breadth of potential drugs that could be included.

So ultimately, it is very relevant for every company across the industry.

However, need to recognize that innovation is at the core of the driving force.

Companies can again anticipate this and therefore we're seeing that markets for products are truly global.

Medicare is an important pair, but only one of several components, Chris, great having you on the show today.

We appreciate your time.

Have a great weekend.

Thank you, Josh and Julie.

Good to see you both.

While we wrapping up today's market domination.

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