Arm Holdings (ARM) stock slides further after the chip designer's fiscal full-year guidance for 2025 disappointed investors, begging the question of whether Big Tech's demand for AI semiconductors is starting to lessen. After missing earnings expectations, Warner Bros. Discovery (WBD) and Disney (DIS) announced a partnership to bundle several of its streaming platforms. Other trending stocks that Yahoo Finance is focusing on include Airbnb (ABNB), Robinhood Markets (HOOD), and the dating app Bumble (BMBL).

Moody’s Analytics Chief Economist Mark Zandi joins Yahoo Finance's Morning Brief to share his thoughts on why the Federal Reserve should raise its inflation rate target and give itself the green light to start cutting interest rates.

This post was written by Luke Carberry Mogan.

Video Transcript

9 a.m. here in New York City.I'm Sean Smith alongside Brad Smith.This is Yahoo Finance his flagship show the morning Brief.So features are slipping your 30 minutes ahead of the opening bell on the street, at least for the Dow and the S and P 500.We have the Dow on the six day win street, the S and P 500 breaking a four day win street.The now that composite though pointing to gains here at the open and treasury yields, they are taking higher the benchmark 10 year around 4.5% here.Actually, it's just barely lower as of right now.So we'll continue to track that the moves in equities and yields come as fed official signal rates may have to stay higher for longer to curb inflation further here.So let's get right to where the three things that you need to know your road map for the trading day.Yahoo Finance is J DH and Madison Mills have more right?Dow futures under pressure this morning after a six day winning streak, Wall Street is questioning the timing of rate cuts.Many fed officials push for that higher for longer narrative to get inflation down to its 2% target.And on the other side of the pond, the Bank of England holding rates steady at a 16 year high but the central bank signaled cuts are on the horizon.Two of the nine members voted to cut rates at today's meeting.We're tracking some further weakness around A I stocks shares of arm holdings falling despite A Q four earnings beat the move lower.Coming on a disappointing full year forecast for their fiscal 2025 revenue is projected at 3.8 billion to 4.1 billion.But analysts were looking for around 4 billion.So the lower end of that was disappointing full year profits are forecast to be a dollar 45 to a dollar 65 A share that lower and missing expectations of a dollar 53 A share and some signs of weakness in the streaming space.Warner Brothers discovery reporting weaker than expected results for the first quarter.Heads up to all streaming consumers, Disney entertainment and Warner Brothers Discovery announcing new streaming bundle that's going to include Disney plus Hulu and Max that new bundle launching this summer and it's going to be available to purchase on any of the three streaming platforms.Websites are also be an ad supported and a free plan.That announcement coming as Warner Brothers reports the first quarter results that missed expectations on both the top and bottom line.Good morning, everyone.We've got to take a look at some of the big movers of the morning, mostly driven by earnings here.And we're gonna go kind of around the horn here with it.One of the huge ones that I'm tracking this morning, Air B NBA company, of course, that did report yesterday after the close.However, we're still seeing shares move quite drastically here, free market, taking a look at shares.They're down right now by about 8% here with about uh inside of 30 minutes until the start of trade.One of the huge things that jumps out to me that was talked about on this call particularly is where this company is going to actually continue spending.And I believe that analysts and investors might have given a little bit of weight to this as well in two areas particularly where they're gonna continue investing in the business and could compress margins here that they talked about on the call, Ellie Mertz, the CEO uh CFO excuse me over at airbnb, talking about marketing, one of those areas that you could potentially see some margin compression in order to drive growth.But then there's also the opportunity they said to add more personnel that indeed a good thing for some of the product development pipeline.But at the same time, it's a new cost that a lot of investors out there may be trying to factor in.Yeah, I think Brad when you take a look at so many of these earnings reports that were out this morning.We have airbnb, what you were just talking about.We also heard from Hyatt, that was a big disappointment in terms of their guidance.And then we're also hearing from Roblox this morning and that's showing some weakness within their business and I bring all these three stocks up because it's really showing us a better picture of the consumer right now.right?And the pressure that the consumers are under given the fact that inflation has been so persistent.So when you take a look at Roblox numbers, you got that stock off nearly 27% here in the pre market.Their second quarter forecast missed expectations.They talked about weak engagement, booking guidance.So it's slowing growth rate and the ability here for that company to monetize the platform.Still a key question here for investors.And then when you flip back over to the travel segment, what hearing from Hyatt and what we're hearing from Airbnb, we certainly are seeing a bit of a pullback here in consumers willingness to spend.And then you also got to ask how much weaker this could potentially or worse this could potentially get for these names.If we do see a huge disappointment in this very important summer travel season, and if consumers aren't willing to spend like they have in the past couple of years, that of course could be a big headwind for.So many names within the sector.Yeah, absolutely.I mean, when you mentioned Hyatt and what we've seen kind of as a, a broader common denominator within some of the travel earnings over the course of the season is just how people are financing travel trips right now.Of course, it's way different for the Corp, the corporate travel spends that are starting to re emerge and really be a profit balloon for some of the companies right now as we were speaking with Delta early on in their earning season, some of these companies don't get to a profit without that corporate part of the business.And so now if you're focusing in on airbnb or on high end and looking at the leisure or leisure travel or even even, they're not gonna see that same type of profit level and the type of spending that they're doing as we were looking back to a firm's earnings just the other day and how many people are actually breaking things up into payments or, uh, in airbnb's case, they would talk about how people might tap into a partnership that they have with car now where they're essentially paying a portion of the trip and then saying, ok, I'll pay off the rest over time.I just need to make sure that I've got the thing booked that I can get out there experience the economy and this experiential economy, yada yada yada.But at the end of the day, I think the way that people are spending is shifting dramatically as well to your point here too.And that's showing up for roadblocks as well and the consumer there.And that's why you saw bookings down.Well, not down, the bookings just didn't keep pace with the growth that they had seen in some of the other parts of the business, both hours.And then additionally, just looking at the bookings only growing what 2% in this most recent quarter.And so real uh headwinds here across the sector for those names.Some of these names that are reporting this morning when you take a look at Airbnb Hyatt and also roadblocks.All right, let's get to the latest econ data that is out this morning.We're seeing a bit of a movement here in yields.You've got yields, a falling back and that drop actually came right on the heels of the jobless claims print that we got out this morning.So we take a look at the jobless claims number, jumping to 231,000.It was the highest level that we have seen since August.And this also comes on the heels of sudden softer than it.Inspector Prince, when you take a look at the manufacturing and services ISM prints that we have gotten out recently.So what does all this mean here for the fed?We wanna bring in Mark Zandi, he's Moody's Analytics, chief economist joining us.Now, Mark it's great to see you here.So, you've been talking about the fact that the Fed should be really thinking about cutting soon.We are clearly starting to see weakness within the economy.I'm curious.So, from your perspective, if the Fed does not cut this summer, what does that then do for the odds of a recession?Uh, well, it'll, it'll increase them.Uh, you know, I think the economy is fine.It's resilient, it's doing well.But the interest rates are high and it's, uh, those rates are like a corrosive on the economy.They wear the economy down and at some point something could break.So the, the risks that they're taking here is that, uh, you know, uh, they undermine the economy and recession occurs but, you know, a long way from that sha, uh, uh, I mean, I think the economy is, you know, generally resilient.Uh, but I, I would, at this point, uh, you know, if I were king for the day, I'd be, uh, really, uh, cutting rates at this point because I do think the economy could use that relief mark.What happens though if it doesn't, if we don't see the fed cut when we talk about the risk here of something breaking in the economy, what does that then potentially look like?Well, uh, you know, it could be a number of different places.I mean, the financial system is under a lot of pressure, the yield curve, you kind of forgotten about that.But it's still inverted, meaning short rates are higher than long, meaning the funding costs that banks and other financial institutions face is high relative to their lending rates.That's, you know, that's not really a good place to be for a bank.Uh particularly when uh loan growth is soft because of the tightening and underwriting standards and regulatory costs are up because of the increased scrutiny.Credit conditions are eroding.So, you know, uh the financial system is under a lot of pressure in, in that kind of environment.Uh that, that's, that would be a good case for something breaking.Uh You know, we got a taste of that a little over a year ago with the Silicon Valley Bank and uh and the bank runs.So, you know, we've experienced something uh like that.Uh but that's the kind of thing I'm, I'm, I'm worried, read about in the context of uh persistently high interest rates.So all these things considered, Mark, what are you gonna be listening for in the tone of the Fed?I mean, we've had a bunch of Fed Speak already this week and we're gonna, we're gonna end this week with even more Fed speak uh tomorrow and one more speaker later today, what have you made an aggregate of what they have to say about their read on the economy thus far?Well, uh they're taking a different position than I am.I, I mean, I I, they clearly realize that these rates are high and that they're putting pressure on the economy, but uh they are more focused on making sure that inflation is back to their 2% target.Uh And uh you know, by the measure that they're focused on the core, excluding food and energy consumer expenditure, fl uh we're not there yet.So they, they want to get there.Uh So I don't think at this point it's really about the data less about what the Fed officials are saying.They made it pretty clear that they're not going to cut rates until uh inflation by that measure is at two.And so that's going to take at least a couple three months of data that would square with that forecast before they start cutting rates.So I expect they're going to just stick to that message and uh you know, keep pounding it until the inflation data as they are focused on comes in mark.Should it be that 2% target?No.Uh You know, if I, if, if you were asking me de Novo today without the legacy of that 2% I'd say it should be closer to three.just given that the underlying growth rate of the economy is slower than when the 2% target was put into place.Uh But you know, uh I, I think the, the fed wants the Fed officials want to get back to, to establish credibility re make sure that they're, you know, they, they've done what they said they were going to do and then once they get that 2% then I think they'll take an opportunity to change the framework for conducting monetary policy.And I don't think they're gonna pick a number per se, but they're gonna, uh, and I'm not sure exactly how they'll, you know, do this, but they'll figure out a way to provide, give them a little bit more flexibility.They'll next time around, they won't have to get down to that too.Just a quick point of interest if you have a 2% target uh on inflation, uh given the underlying growth rates in the economy and given the typical amount of interest rate cutting the FED does during recessions in a typical recession, we're always gonna hit the zero lower bound, meaning the fed is always gonna bring interest rates down to zero and then have to quantitative ease.And that's something they really don't want to do.So that's why we uh two is not the right number.Probably something closer to three would make more sense is the fed once again, facing a credibility risk.I mean, transitory for, for too long.And, and then now we're staying in the higher for longer conversation for perhaps longer than we would have anticipated at this juncture at when we were coming into the year looking for several rate cuts.And now that's cut down to one maybe two.Well, I think they think their thought process is, they're, they're ensuring their credibility like they said, hey, look, we're gonna hit 2%.We're not, we're not cutting rates until we're at 2%.Uh, and, uh, we're confident that we're going to be there.Uh And so that's what they're desperately trying to establish here that, uh, they, they, they do what they say they're gonna do.Uh, you know, even though they're taking up an increasing risk that, that, that policy will break something in the financial system or the broader economy in the, in the liberal markets or somewhere else.And we, we land ourselves into recessions, but they're desperately trying to uh re-establish that credibility.All right, Mark Zandi Moody's Analytics, chief economist, thanks so much for taking the time.Always a pleasure to speak with you.Mark any, any time, take care.You too.Well, arm shares are under pressure today after its full year revenue forecast, missed the street's expectations, but the chip design company beating analysts eps and revenue expectations in its fiscal fourth quarter report to break down.What's next for Arm?We've got Yahoo finance reporter Dan Halley here, Dan, what do we know?Yeah, you know, obviously the, the miss on the, the full year revenue, not uh uh something that Wall Street really uh appreciate it.Uh I think that when it comes to a company like arm, uh they're still, you know, a relatively new as far as public companies go.Uh And I think a lot of people are banking on this as being a huge A I play the reality though is this is a company that makes the, the majority of its revenue through mobile devices.So mobile chip licensing, not necessarily uh data centers now, that doesn't mean they're not in data centers.They are uh some companies use them, some uh hyper scalar actually use them uh when they design their own personal chips for their own uh clouds, they're also in automobiles, they're in IOT devices.Uh So, you know, they are everywhere but the vast majority of their revenue still does come from uh those smartphone sales.And, you know, smartphone sales have been pretty morose, I would say uh over the past few quarters, uh since uh you know, uh the tail end of uh maybe 2020 2022 or uh in that time frame, they started to really uh fall down and they're, they're bottoming out, we're starting to see some growth again.Uh But look, that's going to continue to be uh a headwind for them uh As far as revenue goes.And I think, you know, Wall Street going into this, a lot of people were just amped up on A I um you know, we've seen this before with, with other companies where they don't absolutely blow away anyone in terms of uh their revenue, uh their guidance.Um they're not pulling an NVIDIA and so they're punished as a result, but not every company's NVIDIA.So, is this indicative, do you think of a sector wide, slow down or is this more specific here to arms business?I think it's more specific to, to arms business than, than anything else?I think, you know, if it was uh sector wide, we probably would have heard something from NVIDIA by now, right?I mean, expectations for them uh are through the roof.Um You know, you'd expect if there was some serious uh miss coming, you know, in the, the A I sector, then we would, we would hear perhaps something from them.But look, you know, this is, these companies are still obviously growing very well.Um A MD did uh pretty decently for its quarter.Uh They had issues on the gaming front and that was their problem.Uh Intel, they're still really trying to ramp up a lot of the A I efforts.Uh You know, and then look, we're, we're talking about uh the A I PC race that we're seeing.Well, you know, armed chips go into uh Apple.They just announced uh their new chip, the, the M four.they go into uh the, the Qualcomm as well.Qualcomm uses arm based chips.They're gonna be launching A IP CS so we, we could start to see a little more as far as consumers go outside of just the smartphones.But I do think that the, the, the key issue here is that people are just really jazzed up about A I and they expect everybody to be like NVIDIA and they're not, that's, that's just, you know, the fact.All right, all of us are gonna be watching closely for that NVIDIA earnings report and that drops in a couple of weeks here.Dan.Thank you so much hype already hype.Indeed.Dan.Appreciate it everyone.We've got all your markets action ahead and much more here on Yahoo finances.We're just getting started on the morning.Brief bumble shares are Abuzz after a sur in paying users, we're going to speak with an analyst from city next and Warner Brothers discovery shares after missing on expectations in the first quarter.Despite growth and streaming, we've got the full breakdown of those results on the other side of the break plus Air B and B sinking after giving weaker than expected guidance.We'll speak with an analyst from Needham later in the hour.All this and more.You're watching Yahoo finance investors swiping right on.Bumble earnings shares of the online dating app surging this morning after beating Wall Street revenue expectations driven by growth and it's paying users for more on the latest results here.We're joined by Igal Orian who is the city us internet analyst here.Great to have you here with us to break down.Why bumble shares are Abuzz this morning?What do you think investors are zeroing in on it.Hey, thanks for having me this morning.Um You look, the really, the, the, the biggest thing here is that the expectations have been so low.Uh Both for Bumble and, and the broader dating app ecosystem.Uh In general, ma match also reported ear earlier in the week, they lower their, their full year outlook.Um And, and, and we've seen declining data uh on on the payer side and the monthly average user side on time spent, um really for, for, for a couple of years now, uh the broader online dating ecosystem, um, bumbles seem uh pretty pronounced slowdown in growth, uh just really over the past couple of quarters and it happened pretty quickly.So the expectations have, have certainly gotten low.Um And with the, with the one QB and the fact that they didn't lower their full year outlook, I think that was enough to get uh investors a, a little bit more excited here, but there's still a lot that's hanging on, on, on a new, uh, a new product that just launched recently, um, or an app refresh and, and expectations that that's gonna lead to accelerating growth uh in, into the second half.And, and we're gonna need to see that play out for this momentum.Do you think it will?Uh Well, we, we hope so.It's a little early to tell.Um, the, the, the new app, um, the app we launched just came out last week.So it's just, just a week.I mean, management talked about it pretty positively on, on the earnings call.They're seeing some good early signals.Uh, they're, they're seeing some, uh, some strong adoption of, of some of the key features, oo on it.Uh, they say they've gotten good feedback and testing.So, you know, that's certainly what management is, is hoping and expecting again.Uh, just pointing back to, to match and what they're what they're expecting with Tinder.It's a very similar story.They're, they're expecting growth to accelerate and see an in reflection point in the second half.They, they've also refreshed the Tinder app.There's more, more product changes to come over time.And so both both Tinder and Bumble are expecting these products to, to kind of turn around the stories and some of the softness we've seen in user trends.Um and, and lead to re acceleration in the second half.I mean, and, and they've talked about how much they're leaning into the, the Gen Z customer on Bumble as well on the earnings call.You know, I I just wonder when we hear reports about Gen Z tapping into credit or or loans earlier than their millennial counterparts, how much of the customer lifetime value investors should really rely on to be infused into the the bumble financial performance over time?Well, Gen Z is super critical in, in, in this world, right?And I mean, that's the kind of obvious statement.Um they're, they're coming in in as early users and, you know, expected to, to stick around the, the, the move in and out as they get into relationship and, and out of relationships.But this is a young cohort that over time will, will presumably spend a lot of time and money and uh on the dating apps and uh some of the challenges that you've seen in terms of uh users and slowing growth.Uh It is really, we're seeing from Gen Z and younger audiences that, um you know, haven't been using dating apps, the, the same way over the past couple of years as, um you know, younger generations in, in, in the past have and um the management teams at, at Match Group and Bumble are really trying to evolve the products to make it more in line with what they, what, what younger audiences are looking for.Um and to try to bring them back into the ecosystem more.So I if I if they can get it right and um make the experience better, uh they'll, they'll get younger audiences to spend more over time.There's definitely some softness right now, uh match called, called out Twitter, um or earlier this week.And, and, and they're seeing some softness and how people are spending and that's not AAA new phenomenon.And they said that it did get a little bit worse, but this is AAA bigger picture than um just how gen Z and younger audiences are spending today.This is about um you know, getting interest back up to higher levels in the way that it's been three or four years ago.So, you know, you know, given that changing landscape that you're just describing here, the fact that companies are having to adjust to this new reality here within the industry, who then is best positioned, do you think to take advantage or best position to capitalize maybe on some of these changes that are happening?Well, I, I mean, the, the online dating ecosystem is uh uh at least in those, these specific apps are really dominated by two big players and that's that, that's match and bumble.There's, you know, plenty of smaller apps, but uh these are the, the two dominant players.So you would think that they're, they're the best positioned here.Um You know, but, but they do have to capture some of these changes.So some, some of what's happening, uh maybe a little bit hard to um to, to reverse in, in the near term.Um I think you're seeing um younger people that uh back at school and, and more in person, you're seeing that play out a little bit.Uh I think younger audiences are spending a little bit more time on social media and meeting people on, on, on social media.We certainly hear, hear that at least anecdotally on, on how, um you know, uh people are just messaging people on, on, on Instagram, for example.So the really those that will capitalize the most are the ones that can kind of follow these trends to make, make the experience strong and, and bring people back into their ecosystem, spend more time there.Um You know, I, I think maybe balancing this uh real world and, and and digital world in a strong way is maybe one of the most challenging parts to figure out.Um But the larger players are probably the ones that, that can handle it the most.But of all who, who though is best position bumble versus match right now?Given that, that, well, that, that, that's a, that's a really tough question.And um you know, it, it, it, it depends like I, I'll, I think I'll, I'll say it this way and then, you know, bumbles challenges, uh maybe a little narrower uh than, than Tinder above, but bumble is much smaller than Tinder, right?Tinder dominates uh the dating app ecosystem that has 40% of the time spent on, on dating apps is, is spent on Tinder.Tinder seen their subscribers decline for, for nearly two years now.So I think, um you know, what, what Tinder needs to do to really get back to a much healthier place is uh maybe there's, there's more work there.Um You know, bumble kind of, uh they saw some challenges in, in the numbers over a couple of months and quarters and then they, they quickly went to work and revamp, revamp their product.Um bumble still seeing uh users grow uh on, on a global basis, they're still much smaller than Tinder is.So the hurdle for them might be a little bit smaller.But that's not to say that um you know, Tinder is the market leader doesn't have the ability to, to, to get back on track as well.Just wanna see some of that first move data.Honestly, Ial just to see how many people are getting the opportunity or getting to put on them to make the first move.Um One of the hallmarks of bumble, of course, certainly, Ial we gotta leave it there.Thanks so much for joining us here at Yahoo Finance.Thanks for your time.Let's talk about another stock that is trending here this morning, Warner Brothers discovery shares.They are falling after reporting earnings and revenue that missed expectations in the first quarter.They did though see growth in their streaming business.This comes after announcing a new bundle with Disney which will offer their streaming services.Disney plus Hulu and Max at a price that's yet to be disclosed.Yahoo Finance's Alexandra Canal has the details on that for us, Ali.Hi, Shana.Yeah, the bundle was talked about quite a bit on the earnings call which just wrapped up management saying there are clear business benefits to this that includes driving incremental subscriber growth and since consumers will have to retain all three of those services.Disney plus who and Max WBD said it expects the product will increase retention and lower churn and help support lifetime value of the consumer.In addition to increasing marketing efficiencies and this comes as we seen bundles gain more and more traction over the past year or so.As media giants really attempt not only more subscribers to their service but retain the subs.The bundle will go live this summer.As you mentioned, we do not know a price yet, but management did say on the call that it will be based on the current price of Max.Max is one of the more expensive streaming services on the market with the ad supported t costing 999 and the lowest priced a free version coming in at 1599.But this announcement does come as we saw streaming momentum in the quarter, the Max Dream service adding 2 million subscribers ahead of estimates that direct to consumer division also profitable management saying that it expects to remain probable throughout 2024.But of course, not all positive uh moments in this report, we saw me on but the top and bottom lines, linear networks continue to struggle network advertising tumbling 11% year over year in the quarter.You know, it's really interesting and I keep, I keep thinking back to one of the stats that jumped out from that Deloitte digital media trend survey that you and I have talked about that we've discussed here at Lane with 36% of Americans believing they're not getting the bang for their buck on SVOD streaming on demand here.So how are, how is bundling, how is making sure that they're even going after specific titles or rights to broadcast certain sports even?How is that going to change the value proposition for a lot of these companies here?Well, it gives consumers more choice.And at the end of the day, the idea that you have more choice as a consumer that's going to be a net benefit moving forward.Also, when you think about content sports, in particular, the stickiness of content is important.You want to have people continuously coming back.Sports is one piece of content that you can't necessarily watch later.It's something that's on demand viewing you need to watch at that time, which is why the NBA rights are so important for a company like Warner Brothers Discovery, they did mention that on the call, he wouldn't elaborate where talks currently stand today.But Ceo David as I said that he's hopeful they will find a deal that is fair for both sides and that they have the ability to match.Third party offers a Wall Street Journal reporting that NBC Universal is given Warner Brothers Discovery a run for their money, literally when it comes to these NBA rights.So we'll see where that develops more sports documentaries I mean, it's a big time winning time all over again here in New York City right now with the Pacers versus the Knicks.Of course, the Knicks are up right now in that series anyway, that neither here nor there but that, you know, somebody's gotta be and it's me.All right.Thank you so much for breaking that down.We're just about 30 seconds here until the opening bell on Wall Street.Let's take a look at where futures are here ahead of the open because we are well off, off the lows of the morning.You've actually got the dow pointing to gains here, I believe at the open.Make sure that this is futures here.We also have the S and P and NASDAQ also moving here.Now, we saw a bit of a reversal after we got that jobless claims print out this morning here, Brad, we saw yields drop on that weaker than expected print.We take a look at the fact that claims rising the highest level that we have actually seen since August.So I bring that up because of course, and that brings into the, the debate about whether or not we will see the fed cut and if a print like that makes it more likely that the fed is going to cut sooner rather than later.Yeah, a whole host of fed speak that we're getting over the course of this week as the bill ceremoniously interrupts me and all of the different FED speakers that we're expected to hear from.It's gonna be interesting to see where that continues to move the dialogue as today we're gonna hear from San Francisco fed President Mary Daly at 2 p.m.Anyway, we'll get back to the Fed.Speak a hot second.Take a look at the Nyse and the NASDAQ while we have the shots up here on the day.You've got the Children's Tumor Foundation ringing the opening bell at the end Isc and oh my goodness, ferrovial is ringing the opening bell at the NASDAQ.Good friends from ferrovial.All right, let's take a quick check of the market sponsored by tasty trade.Here we are mixed out of the gate right now.The Dow Jones industrial average down by about 1/10 of a percent.The S and P 500.You're seeing that flat just barely to the upside.And then the NASDAQ composite tech heavy average, hold on to gains by about 2/10 of a percent to start off the day.Everyone.We will be right back on the other side of the short break with much more yahoo finance.We got stocks here on the move.A mixed prin here or a mixed picture here this morning.You got the Dow just below the flat line S and P and NASDAQ though holding on to gain three minutes into the trading day, Jared but creates a closer look at some of these movers Jared.Thank you, Shana.And indeed a mixed day but not a lot of movements.Looks like the Russell 2000 outperforming by just a little bit up about 1/10 of a percent.And uh just kind of thinking about where we are in the year.This is May.Um and this is the fourth best start to May that we've had in the history of the S and P 500.Here is the NASDAQ and by the way, we are on day seven.So you can see the dow is up three just a little over 3% in this time period, same for the S and P 500.And then we'll go to the NASDAQ that's up 4%.1 of the things I'm uh monitoring though is the fact that the volume is exceptionally low right now.And maybe that's because we are kind of in the summer period.Uh Nevertheless, take it with a grain of salt.Here's real estate that is in the first position today.That's up 1.5% tech, financial communication services all in the red.But let me show you what's going on in the month of May so far in these seven days.Utilities is the out performer followed by communication services and tech and then real estate.So you have two interest rate, sensitive sectors that are leading stocks this month.And also over the trailing month, you see utilities and staples So there is a slightly defensive characteristic that the market has taken on.Just note that as the S and P 500 is now about 1% from its record closing high.All right, Jared, thanks so much for that.Well, arm holding shares under pressure today after his full year guidance missing the street's expectations and feeling concerns about the A I slowdown in companies taking a hit for what investors need to know.Kimberly Forest Boca Capital Partners, founder and Chief Investment Officer Kimberly, it's great to see you again.So let's start with what we're just hearing from Jared and he K Matt, what is playing out?It seems to be within the A I space right now because arm was the latest company to not really live up to those sky high expectations when it comes to some of those tech leaders when it comes to the A I space.And yet we've seen this rotation into a more defensive type set up when you take a look at the out performance of utilities and consumer staples.What is that then?Signal to you at this point in terms of that market rotation.Sure.Well, it's a couple of things.Probably the biggest thing that is um in every investor's mind is, is A I for real, right?Because we've now had Intel A MD and Arm all kind of disappoint um especially with respect to the amount of uh their revenue coming from A I, and if you are a long time technology watcher, this should not be a surprise to you because technology doesn't spend um whenever it's being developed solely just moving upwards into the right at a 45 degree angle, right on revenue.That doesn't happen, it's more lumpy.Um companies will build out a data center and then pause and then build some more and pause and we might be hitting this.We'll know whenever in video reports next week, but I don't think you should throw in the towel.Now as for the defensive, it does feel like people are anticipating a recession and they often do pile into consumer staples and utilities thinking, well, the consumer has to buy those.You know, one of the, the common threads that we've heard for companies that are most uh benefiting from generative A I right now is that they're all gonna continue to invest aggressively and for meta platforms.I think what they said on theirs was, look, this first quarter just shows one instance how we're going to continue that incremental investment going forward?Are, are we witnessing right now?Perhaps the, I don't wanna say the first cracks in the generative A I trade because it still is an investment that these companies are putting forward.But when should investors expect some of those investments, the Capex to actually pay off?Sure.Well, I mean, you bring up an excellent point right now.People have been solely able to invest by investing in NVIDIA.I mean, let's just call it for what it is, right?And some of the other semis got a boost from it.But as I said, you know, building out the data center is part of it, then you're gonna have companies like Meta um Microsoft and Amazon and uh everybody else is gonna pile in and start using the generative A I to maybe increase productivity.So I think that's an excellent question that you answer or ask.And I would look for who do you think is most likely to benefit from using generative A I?And we've just mentioned them, right, Amazon, Meta and Microsoft and to me, Microsoft is really probably the best position because they'll get people to actually pay for it, not just advertising dollars.So companies can who wanna write better emails or sift through, you know, their stores of knowledge and figure out what they have in their, in their databases can use generative A I to mine that and maybe become a better, more productive company, Kimberly.How much do does FED cutting play into this?Or, or, or is this a sector just given the hype, given the excitement and given those real use cases, at least for some of these names that it almost doesn't matter really what the FED does in the short term.Well, I think if you're a short term investor, you don't really care what the FED is doing, I mean, you'd like a, a rate cut for sure because that would help out your multiple and you know, you your discounted cash flow and all the math behind it rests on that 10 year um bond and what it trades at the US treasury tenure, that being said, um I, I prefer to be a much longer term investor than, you know, the next 10 minutes or even the next year because it does take time for A I and a whole lot of um trends to kind of play out through the investing uh timeline, Kimberly Forest, who was the Boca Capital partners, founder and chief investment officer Kim.Thanks so much for taking the time today.Thank you guys coming up travel trends.Airbnb says it's experiencing robust demand for summer travel but shares slipping right now after earnings, we'll tell you why.After the break, Robin Hood shares rising after reporting record results in the first quarter, its revenue from Cryptocurrency jumping 232% to $126 million in funded customers increased by 810,000 from a year ago here.Uh You know, one of the huge things that also jumps out from this report, net income increased year over year as well.And we saw that ultimately move higher compared to the loss of 505 $111 million last year in the same comparable quarter here.When you take a look at these numbers here in terms of what is driving these better than expected results and the and the momentum that we're seeing within Robin Hood's business.Look at the Gold business, gold subscribers that gaining that of course, is providing some momentum here into the second quarter that we are currently in also some strength in their crypto trading business.That was something that was called out from a number of analysts here on the street.In the immediate reaction to this print, we have Mizuho's Dan Dole saying that the results were quote very strong and he was talking about some of the strength and the fundamentals of the business.When you take a look at funded accounts, monthly active users and that crypto business and his expectation that those gains are going to carry over into the current quarter, given the recent action that we have seen and given the fact that volumes are expected to take higher here at least in the month or last month, what we saw in the month of April.So again, it looks like the street is satisfied with these results and exactly what that means here for growth going forward for a name like Robin Hood.Yes, some new functionality as well that they're touting with this report.The 24 hour trading or 24 hour market is what they're calling it here.900 stocks and ETF S uh there that have we've been put into play there and the 24 hour market reaching new highs in overnight trading volume.So a lot of people staying up late, perhaps crushing some monsters and ultimately just figuring out what their strategy is gonna be overnight.And for the next day, let's get here and talk about the travel sector.We've got shares of airbnb actually falling after forecasting a weaker than expected revenue in the second quarter, the current quarter, the outlook here for nights and experiences booked in Q two also showing some slowing growth.Now this comes despite the company saying it's already experiencing robust demand for travel ahead of that peak summer season here with more.We wanna bring in Bernie mcturnan.He need him and company's managing director, Bernie.It's great to have you here.So we just laid it all out, right?They did be and when it comes to Q one, but I think the real issue here, Mar we're seeing the stock under pressure is some of the commentary that we've got surrounding guidance.So really what is this signal to you just in terms of not only Air BNB, but the travel industry at large and some of those headwinds that are facing the industry?Yeah.Well, I think it's key, especially the about the stock reaction today is the expectations coming to the print they certainly raised.Um following last quarter and numbers probably flat to moving slightly up for the year for Air BNB.Um And again, some of that commentary that the company made on investments that are coming, especially in the second half of the year around sales and marketing relative to our expectations, um like likely keeping a lid on what some of the bulls are hoping for.And remember, this is a transition investment year for Air BNB as well too.As you mentioned, the broader context of the travel industry, airbnb's growth is really slowed down to looking more like Expedia looking more like booking in the high, single, low, double digit range.And this is because you know, the the business doubled basically from 2019 level.So growth looking more um like the rest of the industry appears, the valuation is still at a premium, which is one of the reasons why we downgraded the stock heading into the print.What do you think this next iteration of of airbnb looks like, especially as the company was really focused on providing AAA value a value pitch and positioning to consumers before.Where do you see that moving now?Yeah.Well, first off, I think it's important to remember the opportunity that they have 90% of traffic comes to our airbnb organically, which sets them apart from their peers.And so they're trying to leverage that to move into other services, which makes a lot of sense.Um Brian Chesky CEO was talking about like an A IOT A app last quarter.Um He was talking about icons this quarter which is a, you know, high end or, or at least a very um unique experience.They're gonna be like the sneakers out with that Bernie.I mean, people just gonna be looking up the, the iconic experiences and stays and trying to make sure that it doesn't get all booked up before they can hop on there.Well, that's the thing is that we're talking about 4000 nights per year that are going into this and a company that does 500 million nights per year.So I think it's important not to, you know, there's a long way to go to its feature, make experiences broader.Um But, you know, as, as we talk about expectations, you know, when we talk to investors heading into the print, it was that a, they thought there was gonna be upside to, to numbers for the year because of third party data and then b this call option on expanding beyond the core.But again, like the premium valuation of the stock, we actually think it was a call option that you had to really believe that this was a company that would be able to take material share um in moving beyond the core.So if it was that a IOT app um really taking share from the Expedient booking, which again, that wasn't something that we are willing to uh put into our base case, at least Bernie when it comes to some of the, the slowing growth that we have seen in this.So this year, at least it looks like initially in demand heading into the summer season is the worst, not behind it then for a name like Airbnb.Yeah, I mean, that's what they're calling for.They're saying they expect revenue growth to accelerate in three Q. Um That's driven by some events like the, you know, summer Olympics in Paris, you got the Euros going on as well too.Um So I think that's the hope for this year.But again, we're taking the broader view of that.This is a company that has had decelerating growth over the past few years.Given the big pull forward from the pandemic.I mean, we think that, you know, absent a major turnaround in and taking, you know, major share in a new business line, you're looking at high single digit growth next year, probably trending to mid single digit growth over time.Um And again, for a stock that's a premium valuation and has done a great job in pulling forward margins as well.So margin expectations, 35% E dot margins for this year, their gap net income positive, they generate, you know, a bunch of free cash flow, 41% free cash flow margins.So again, um you know, company that's done a lot, but now, but now, you know, the markets forward looking and, and I think there's just been a lot of pull forward of, of the opportunity set for the company Bertie, you also cover Instacart.So let's talk about that stock move here real quick.The recent results that we're just getting the stock actually still under pressure off just about 2.5%.I'm taking a look at the note that you just issued following this print and you said that there is an upside surprise here.You talked about some of the strength that the company is seeing, especially in order growth that accelerating to 9% up from 5% the previous quarter.What do you attribute then the weakness and shares to today?Yeah, I again, I, I wanna say it's expectations.The stock has had a huge move since the, the end of the lock up.Um that kept a lot of investors on the sideline, given the huge lock up that happened post IP O and it really is flipped from a consensus long.So, um huge beat in the quarter, we're taking up our numbers a lot.Um But even on our, you know, our raised number stocks trading about 10 times 25 ya, um which is, you know, rel relative discount to in Uber or doordash, but really has where the stock has been, you know, settling out trading wise here.Post IP O. Um So we think it's an encouraging data point.We've been on the sidelines of the stock because of competition concerns.Um That's manifesting itself through Amazon's announcement a couple of weeks ago.About, you know, getting more aggressive in delivery.But the, the company did some positive commentary on cohort trends continue to move in the right direction.Um So we think it was certainly an encouraging data point for the company and the shared weakness today is probably a function of the, the strength that's been happening over the past two months.Yeah.And a question of when some of those partnerships will start to be really accretive to the business here or at least visibly a creative here over time, Bernie mctiernan, who is the need and company managing director, Bernie.Always a pleasure to speak with you and get some insights.Appreciate it.Thanks for helping me out.Thanks.Coming up, utilities has been the leading sector in the latest market rally.We'll explain why after the short break it might be time to get defensive.Utility stocks are outperforming the S and P 500 in Wall Street's recent rally after a tough April our own Josh Schaffer is here to break it down.Utility man, Josh Shafer, what do we know utility has been rapid?They have been so the sector is um that's basically a leading over the past month right now, it's leading over the past month.We'll leave it at that.No, it's actually interesting taking a closer look at this yesterday.I talked to a couple of our strategist friends that are friends of the show and sort of breaking down.What is actually going on in the utility sector.So when you look since April 16th, so really less than a month, now the sector is up 12%.That's about all of its year to date gains.It's now the third highest sector in the S and P 500 this year, four year to date gains.And normally utilities would be a little bit of a defensive play.Consumer staples have also rallied at a similar time point.There have been a couple indicators there, at least in economic data, we know we've been seeing some weaker data you could to something like jobless claims this morning, right?We're starting to see a little bit of weakness in economic data.You also had movements in the middle of April around rates, right?We had the fed come out and say that another hike is not necessarily likely.And so that sort of took the 10 year down the 10 year when the 10 year yield has come down.Utilities have gone up for just about the past year now.But really, when you zoom out the real story was just massive underperformance for utilities over the last year.Uh Utilities Keith Werner over at Cruz told me that utilities, the forward pe ratio compared to the S and P 500 valuation here was at its lowest level since 2009 entering March.So I think investors just largely seeing perhaps an attractive opportunity here in finding another sector that hasn't really joined the market rally to this point.And then could you make that same argument you would think then for the out performance that we have seen recently in consumer staples along similar lines?Yeah.So I'm looking at our Wi Fi interactive right now.If you go to last year, consumer ST in the last year consumer staples was up 0.2%.You had utilities up 2.5% even if you zoom out two years, you're really looking at a similar story here, right?You have consumer staples right there and utilities.So then we flip to the last month.What's now outperforming?It's your two sectors that just simply haven't done that well.So to some sense, it sort of just kind of adds up to a little bit of a OK. A catch up trade.We've talked a lot about different catch up trades over the last year.This is one that hadn't really participated yet.One other thing I want to look up while I have the interactive up here is we take a look at year to date because one of the questions I asked, strategists was ok.So what does this mean for market leadership?Are we going to see more from utilities or are we going to see more from com services or energy?And I thought Kevin Gordon over at Charles Schwab had a good answer to this.He said, when you take all three of these, you really get three different stories.Right.You get a cyclical trade, you get a growth trade and then you get utilities, which is perhaps, maybe a little bit more of a defensive play.What does that tell us?I don't really know.That was basically what Gordon told me in sort of a candid way of it.It's hard to really tell where the market's going from that perspective.And I think that really speaks to a lot of the starts and fits we've had with perhaps the broadening trade, right.We haven't had a clear broadening trade, largely, probably due to the Fed and West visibility there.So until we get more visibility, which we've been saying for a long time now, maybe more starts and fits in different sectors, sort of coming into favor and perhaps out of favor makes a lot of sense.All things on the trailing rebound for utility.We did, we did, we don't have to stay all defensive brad.That was the take away.We don't need to play a little offense.I mean, look, we could talk utilities for another hour.I know they have catalyst coming up at the top of 10 a.m. though, which is what you should stay tuned for.On the other side of this show break, I'll be back at, uh, what 11 a.m. AM.You better be here.Well, we'll see you on the other side.