HPE earnings, bitcoin mining, discount retail sector plays: Market Domination

On Wednesday’s episode of Market Domination, hosts Jared Blikre and Julie Hyman discuss retail sector plays, Kerrisdale Capital’s call to short Riot Platforms (RIOT), and the afternoon’s trending tickers.

Snowflake (SNOW) shares are under pressure in the midst of its Data Cloud Summit, with Riot Platforms trending in the same direction as Kerrisdale Capital’s CIO calls the bitcoin mining industry “sort of a scam.” Yahoo Finance reporter Anjalee Khemlani joins the show to explain why pharmaceutical companies focused on psychedelics are under pressure after a Food and Drug Administration (FDA) panel voted against adopting MDMA treatment for PTSD.

Later, Freedom Capital Markets Chief Global Strategist Jay Woods joins Market Domination host Julie Hyman to do a price check on his previous retail sector call. His advice: avoid Dollar Tree (DLTR). Hewlett Packard Enterprise (HPE) CEO Antonio Neri also speaks with Brian Sozzi; the CEO says he’s not surprised by the reaction to the company’s earnings, saying “the market is finally waking up to the idea that HPE has a big role to play in AI.”

This article was written by Gabriel Roy

Video Transcript

Hello and welcome to market domination.

I’m Julie, I alongside J in for Josh Lift.

And today we are live from our New York City headquarters and 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 before the closing bell rings on Wall Street.

Yes, the headline number is solid.

But what we’re seeing is weakness in manufacturing, but also weakness in B to B businesses tied to white collar jobs and professional business services and information.

So this is a not a one note jobs market.

There’s some weakening trends tied to both consumers and producers that bears attention.

The FED does face a tricky situation though.

You know, I think there’s a sense that if they leave rates at this level for too long, it could trigger a recession.

So the FED is trying to balance the risk, you know, they want to start trimming rates.

But there’s a real question as to whether those rate cuts will start in time to make it a soft landing rather than something of a, you know, more serious downturn when we look at the depreciation expense coming through from all this Capex build, we think we have it in the models and uh as long as the top line growth is there, uh and, and they cut back on employees and other expenses which we’re seeing across the space.

We think they can, they can manage the extra depreciation that’s coming through over the next few years.

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

So let’s start with the major averages here and see where we stand.

We are seeing a rally across the board here today.

Although we still have divergence as we’ve seen recently between the Dow and the NASDAQ.

So the Dow is higher about a third of 1% about 100 and 20 points or so.

But the NASDAQ is up 1.7%.

So big gap between those two averages, which shows the strength that we’re seeing in technology today.

And then there’s the S and P 500 which is up 1% sort of in the middle here.

What you have is economic data today going sort of against the grain of what we heard yesterday from IM Manufacturing today.

We had Im Services that came out ahead of estimates at the same time, prices paid below estimates.

So a better recipe for a stock rally today.

And at the same time, we continue to have yields that are pushing lower to their lowest since around March now, four point to 9% on the 10 year note.

So if we look at what’s going on sector wise here today, you’ll see that technology is indeed strong.

The XL K up 2.1% industrial communication services and materials doing well.

So cyclically led recovery or cyclically led rally today and then you have the more defensive staples uh that are falling as we talk about what’s going on in tech today.

Gotta talk about what’s going on in the NASDAQ 100 where you see, I know we’re not saying Magnificent seven anymore.

But the Magnificent Seven are rallying today.

Let’s just say that NVIDIA leading the way, we’re going to dig into that a little bit later, but it’s a 4.5% right now.

But you see the other large cap tech stocks are also gaining ground, Jared.

Yeah, it looks like the NASDAQ 75 there or the mag 75.

I think investors will take that.

So it’s another day.

It’s another drumbeat of data.

And according to ad P private payroll growth, it slowed in May to a four month low, providing yet another sign of weakness in the labor market here to discuss what the latest readings mean for the broader market and your portfolio.

We’re joined by Glenn Smith, Chief Investment Officer at G DS Wealth Management and thank you for joining us here today.

Uh What do you think about these, about these economic reports.

We’re getting AD P a little bit out of consensus today.

Everybody looking ahead to that big payrolls report on Friday.

I think the market’s trying, trying to digest all this information.

Um, the, the payroll numbers Friday, we, we think they’re gonna be in line with the last few months, probably expecting about 200,000.

Um, 22 hun 200,000 number, maybe 100 and 95,000.

That along with next Wednesday’s CP I numbers is gonna give the fed a, a couple of things to digest in terms of what they’re gonna do with uh rate cuts going forward.

I think the market is softening a bit a bit and as evidenced by the 10 year treasury uh coming down.

So I think um there’s gonna be some opportunities here going forward in terms of volatility and, and there are some signs of a little bit of a slowdown.

Uh That being said, unemployment numbers have been almost 27 months now, sub 4% which is the longest streak we’ve had since the 19 sixties.

So, on a positive note, the economy uh Rear, rear looking has done well, just forward looking.

I think it could be a little bit of a different picture.

Yeah, and I’m curious, uh you guys have about a billion dollars under management.

What are you hearing from your clients about whether they feel like the economy is slowing or what their concerns are around the market.

Main concern we’re hearing is regarding inflation.

Um while it has come down from nearly 9% trending to that two, number 2% number the Fed wants, it’s still higher than people would like.

And the best opportunity to beat inflation when it comes to investing is gonna be with equities.

So it’s so most of our clients have, I would say 60 to 90% of their portfolio in equities knowing that it gives them the best opportunity to beat uh to, to beat that inflation number.

Um It’s important on a fixed income side of the portfolio to remember if you’re, if you believe that interest rates are gonna come down some uh in the next year or two, you wanna look at extending your duration on the bond pilot portfolio to give you a little opportunity to for, for a little bit extra yield.

I’m wondering what you uh what you like in terms of sectors here.

Tech is outperforming today as it has the uh entire year, but we’ve seen other sectors uh rise and fall in various fits and starts.

Financials have reared their head.

Uh We’ve also seen some of the cyclicals pick up and uh just wondering where on the spectrum you fall when it comes to some of these uh large cap sectors.

Well, tech’s been amazing.

I think a lot of the easy money has been made at this point.

Uh the two sectors that we find most attractive are gonna be financials and energy financials.

We love JP Morgan.

Best of Breed Bank, in our opinion, while it’s had a rough couple of years with investment banking, we think that’s gonna start turning around in terms of um if interest rates stay elevated has a bit of a hedge net interest margin should do amazing with JP Morgan and if rates do come down, uh lending should pick up um and you can invest in the JP Morgan at 11 times earnings, which is very attractive when you compare it to a magnificent seven.

If you will, in terms of energy, we love Halliburton.

It also can be, can be…

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