Global debt, market takeaways, CrowdStrike: Asking for a Trend

Today's episode of Asking for a Trend, hosted by Josh Lipton, delves into global debt concerns, market movements, and the recent CrowdStrike (CRWD) update fallout.

The show opens with a focus on rising global debt, as public debt reaches record levels worldwide. Yahoo Finance anchor Julie Hyman provides a breakdown of the countries with the highest debts, discussing the strategies being employed to address these financial burdens.

Markets (^DJI, ^IXIC,^GSPC) take center stage as the episode explores the impact of President Biden's decision to step down from reelection and the anticipation for upcoming tech earnings. Yahoo Finance reporter Josh Schafer offers insights into the day's top trading takeaways.

The spotlight then turns to CrowdStrike, following a company update that triggered a global outage affecting various industries. San Jose State Professor Ahmed Banafa analyzes the outage and the steps needed to resolve the issue.

This post was written by Angel Smith

Video transcript

Hello and welcome to ask me for a trend.

I'm Josh Lipton for the next half hour.

We're going to be breaking down the trends of today that will move stocks tomorrow.

There's a lot to keep track of.

So we're focusing on what you need to know.

Get ahead of the curve.

Here are some of the trends.

We're going to be diving into a positive start after suffering its worst weekly drop since April the S and P 500 rebounded to start the new week.

All three major indices ended the trading day higher.

Boosted by big name that tech rally marks a change of pace after last week's rotation, investors have a busy few days of earnings to digest ahead including mag seven member Tesla's results coming after the close tomorrow.

An election shake up President Biden endorsing VP Kamala Harris as his successor after withdrawing from the 2024 race.

Now, several party heavyweights including Nancy Pelosi have backed Harris's bid but she still does need to the nomination at next month's DNC and of course, pick a running mate plus more fallout from Friday's outage crowd strike share tumbling again in today's trade as industries continue to recover from the weekend's global tech disruption caused by a faulty system update.

Hundreds of flights mostly at Delta Airlines were canceled today as airlines struggle to get back up and running.

We're going to have more on the fallout and what it means for crowd strikes future.

The 2024 presidential election got quite the shake up on Sunday but whoever winds up running for Democrats, most likely Vice President Harris will still be arguing against Donald Trump and his brand of populism.

But is there an ideological evolution taking place just under the surface of the Republican Party joining us now is Oren Kass American compass, founder and chief economist Oren.

It is great to see you.

Um So obviously, listen, a historic event or over the weekend, President Biden withdraws does endorse Kamala Harris is going, things are about to get even more interesting Oren.

But if Trump and Vance do take the White House or I think a lot of viewers are still trying to understand what exactly that that could mean.

Or in terms of economic policies, obviously, you know, traditionally, you would think, ok, Republican White House, I get it, you know, tax cuts, deregulation, free trade.

Would you expect the same this time around or I think probably not.

Uh you know, we already saw the last time President Trump was in office, a very eclectic mix of policies you had on the one hand, more big tax cuts.

But on the other hand, you had, you know, frankly a trade war with China, a lot of tariffs, a real effort to crack down on immigration enforcement.

Uh And so what I think you're seeing is just a different orientation when it comes to what is good for the economy.

What is good for the nation, the, the old kind of free market obsessed Republican party that was so closely aligned with the Chamber of Commerce and thought, you know, whatever is good for profits, whatever is good for the stock market, that must be what's good for America.

Uh That's out the window and, and especially with the selection of, of Senator Vance as, as his running mate, I think, you know what Trump is signaling is this time around even more so that this is not gonna be an administration that's, that's frankly trying to be especially friendly to Wall Street.

And do we know or listen if, if Trump advanced to the White House, Trump is president, he sets the economic policies and agenda, do we have a line of sight or of how just closely aligned Trump is with Vance?

You know, when, when Vance really goes after, um, business and corporations, multinationals, Wall Street, do, do we know how aligned the two are there on that?

Well, look, he, he picked him right.

I mean, you had, if you think about who the finalists were, uh, at least reportedly you had, you know, Vance and Rubio, who are both leading members of, of this new economic thinking on the right.

And then you had Doug Berham and, and Glenn Yin, who would be sort of very conventional pro-business, republicans much, much more in the cut of, of Mike Pence and, and Trump chose Vance, right.

Vance.

Vance doesn't get up and, and give that speech on Wednesday night without, without Trump in the campaign knowing exactly what he's going to say.

And so I think, you know, Trump himself is, is obviously always a very pragmatic politician, not, not at all ideological.

II, I wouldn't predict he's just sort of all in with this way of thinking and you're going to see AAA careful and consistent set of policies always coming out of the White House.

But if you think about the, the distance from a Pence choice to advance choice that that really tells you the story of the transformation that has gone on in the Republican Party, uh, in the last eight years.

It, it certainly indicates a change in Trump's thinking.

Uh, and, and it shows a huge change in Congress.

I mean, when Trump got to the White House last time, he, he looked down Pennsylvania Avenue and, and at the other end, there was Paul Ryan sitting there with, with a big tax cut waiting.

Uh, when, when you look down into the Capitol, now you see, obviously Senator Vance was there, Senator Rubio, Senator Hawley, Senator Cotton the, the, the energy and, and the leadership in the Republican Party among policymakers is, is all pushing in this direction.

So, uh I, I don't think it's going to be a clean sweep.

It's, it's not gonna be, you know, the, the JD Vance agenda, but it, it certainly is going to be a lot further in that direction than, than what folks are accustomed to from the Republican party.

And Oren, let me ask you this, what evidence do we have that you would point to that the economic policies advocated by populist conservatives like Senator Vance.

So, you know, tariffs industrial policy, Lina Khan is great.

What what evidence do we have or that, that actually really does help uh the people that populist conservatives say they want to help the American working class.

Well, you know, that was the economic policy for the 1st 200 years of the American Republic.

Uh and certainly the Republican Party's agenda, whether you're talking about Abraham Lincoln or Teddy Roosevelt all the way through Dwight Eisenhower, the Republicans were always the party of tariffs.

The Republicans were the party of trust busting Republicans were the party of, of free markets, of the idea that that you want to have healthy markets and competition with a real focus on the kind of investment that's going to be good for American workers.

And, and we saw what we, we saw the result of that America became the in the industrial colossus with, with the middle class.

That was the envy of the world.

It's really only in the past 20 or 30 years, especially since the end of the Cold War that you had the Republican Party taken over by these market fundamentalists who said more free trade is good.

Even with China, more immigration is good.

No matter how low wages go.

You know, we don't need anti trust, we don't have to worry about monopolies.

Uh You know, we're gonna bust unions.

That's, that, that is a, a flash in the pan in o over the long run and, and the world's results have been terrible growth, got slower, industry got hollowed out wages stagnated.

And so I think we have to get back in, in a sense to, to the actual model of capitalism that works.

That says if you want to make it a buck in America, you make it with American workers.

Do you see or areas of overlap between the economic policies of populist conservatives like AJ D Vance and progressives like Kamala Harris?

You know, there are certainly some, I think you see the most overlap on, on the diagnosis.

You see Republicans and Conservatives.

Now acknowledging there are real problems, you know, a rising tide doesn't just lift all ships just having a free market, doesn't mean that things are going to work out well for everyone and, and workers and, and working families have been falling behind when it comes to what to do about it.

It's, it's very interesting in an area like tariffs.

Uh You actually see now the, the Democratic Party starting to, to follow the Republican Party a little bit, you know, Joe Biden obviously maintained most of, of Trump's tariffs.

I don't think anyone knows what Kamala Harris would do.

Uh Certainly, you know, someone like Lina Khan focused on antitrust enforcement, uh has a lot of overlap with, with much greater focus on competition in the Republican party.

But again, it's been reported that that's not necessarily the direction Kamala Harris would go in general, the, the Biden Harris administration.

If you think about their main initiatives, it's been essentially uncontrolled immigration.

It's been, you know, hundreds and hundreds of billions of dollars investment in, in green climate policy.

It's been forgiving student loans.

Uh, it, it, it is not at all the conservative agenda and, and it's not one that, that really helps workers.

There have been some things that, that I think have been good, the Chips Act, the Infrastructure uh act, but, but of course, those, those were bipartisan or in such a fascinating conversation.

It was great having you on the show today.

Thank you so much for joining us.

Thanks for having me.

Debt loads across the globe are rising this year and they're expected to continue edging up Yahoo finances, Julie Hyman, Georgia.

Now with a closer look, Julie, yes, this is sort of a related conversation to the one you were just having and sort of at the fringes of many of these political conversations, you know, we talk a lot about deficits, which is the amount that we spend versus the amount that we take in as a nation.

And then there's debt to fund what we do as a nation as well.

And we're not just talking here about the United States, this is a global phenomenon.

Japan sort of dwarfs everything else on the chart because of some idiosyncrasies to Japan specifically.

But there are also a lot of populist elections that have happened over the past six months.

You look at places like France, you look in Mexico and the expectation as many of these populist candidates will want to spend more in order to fund their policies.

That means that debt as a percentage of GDP in many areas is expected to go up.

The blue line here is the US number and that is indeed expected to go higher.

You've got the Euro area, which is sort of flattening out China ticking up and emerging markets excluding China.

But really the line here, 100% of debt jet debt to GDP.

If we drew that imaginary line off, the higher that you get above that level level, the worse that it is perceived to be.

We earlier had this conversation with Ralph Schlosstein who is the chairman Emeritus of Evercore I SI and he talked about this sort of intractable challenge of addressing this issue.

I do think we have a long term, uh you know, challenge in our economy and that our fiscal policy is uh too loose.

We cannot, you know, go on forever uh to generate the kinds of deficits, particularly in a period of uh high employment as we're in right now.

I happen to be of the view that, uh you know, neither of our parties is particularly focused on this at the moment.

And Josh, what I thought was really interesting is both Schlosstein and Douglas Holtz Eakin, not on the same sort of political side.

Both of them saying the same thing, which is that a crisis will likely need to happen when it comes to this issue for it to be addressed on a national level by either the candidates in this election or in future ones.

Yeah, not comforting Julie, but um I think it might be onto something there.

Thank you, Julie.

Appreciate it.

Coming up.

The aftermath of fries, outages caused by crowd strike could leave the door open for fishing, scams and cyber attacks more on that.

When asking for a trend returns, all three major averages closing higher and join me now for today's market takeaways.

Yahoo Finance's very own mark reporter Josh Schafer Joshua.

Yeah, we gotta start with tech, Josh because tech was the leader today.

So let's take a look at sort of the sector action and what we saw within the market today.

I'm gonna flip over to our heat map here and you'll see the sectors looking at an intra day there.

Tech took off.

Right.

Tech was the queer leader of the day.

Of course, last week we've been talking a lot about a rotation, great rotation out of tech.

And that was sort of on the S and P 500 right?

And we talked, remember last week, we talked about the weighting of the technology sector, how much of the S and P that is.

So when you see tech up 2% it's not a surprise to also see the index up.

And specifically when we look at what had a good day, it's the kind of stocks that we know have been weeding this market rally.

Really over the last year in video, I know we got a couple of price target raises today.

People starting to get excited about that Blackwell trip, uh uh chip alphabet rising, heading into earnings tomorrow.

And that was what I want to take a closer look at here, Josh Chris.

When thinking about big tech, we have big tech earnings coming up and I thought this data from Factset was interesting.

So this is earnings growth for the S and P 504 96 and for four specific tech companies, you're looking at Amazon alphabet meta and NVIDIA, they're expected to grow earnings by over 56% this quarter.

So really still when we talk about earnings in the broad, the S and P is gonna grow earnings by 9% year over year.

You're still really just getting that from four companies and then the rest of them are growing at 6%.

So I think starting tomorrow, how these big companies perform is just still gonna be a key market driver because so much of your earnings growth is in purple and not necessarily light blue here.

So you don't.

Yes, we're talking about a rotation.

We're talking about a pick up in some of the other company earnings.

But overall the earnings story, excuse me is still largely about Big tech.

Do you think that cats today kind of broadly?

Do you think maybe it was partially just that simple, like tech earnings are on deck and that just kind of has it refocuses traders, investors like, oh yeah, earnings earnings.

I mean, you look at sort of where people were placing their bets today.

If you want to put it that way, you're looking at alphabet up Tesla up, they report earnings tomorrow, right?

That's people positioning into that report and then we'll sort of see what the reaction is coming out of it, right?

But the other thing that we've also been digesting take away to here is politics, right?

And we have current President Biden announcing that he will not be running for the presidency over the weekend for the 2024 election.

And 11 interesting thing that I was sort of tracking.

This was from a note from Rory Cavasso over R BC capital markets she was pointing out.

So what you're looking at here is blue is the odds that Trump is gonna win the presidency.

Purple is the S and P 500.

You can see as we went up in blue, we went up in purple essentially.

I think what was being priced in here is knowing who is gonna be in office.

So when more than more than, oh, I'm thinking tax cuts and deregulation, I think it's more than the Trump trade, so to speak.

When we talk about the index broadly, Calvina was making the point that it's more about the certainty and we were close to pricing in a 70% chance per certain betting markets that Trump was going to be in the White House.

So the concern would be, you can see that's come down a little bit since Biden pulled himself from the race.

What if that continues to come down and this becomes a tighter race?

Is that something that could on markets?

Because the uncertainty of who's going to be in the White House in 2025.

That's how sort of macro strategists are thinking about the ongoing with the election, right?

Almost less than policy, just having some degree of confidence in who you think is going to actually be in the White House markets.

Well, certainty, right.

That's the number one mind.

We always love to say.

And with that, when we don't have certainty, we get volatility, right.

So I want to take a look at the vics, the vics picked up at the end of last week as the S and P 500 pulled back.

And you'll see when you look over the last year at the VIC is gonna take me a second to get here as we load, we got it up here and we're looking at a one year, Josh, so you can see we had this little pick up here.

Perhaps the key thing to point out is it hasn't been.

So remember when we come up, that means markets are getting more volatile.

It had not been very volatile when we just had that recent rally.

It wasn't that volatile from November when we had that rally into the April pullback.

The back pinning of this bull market has been pretty quiet on the volatility side.

Data track was out pointing out today a couple key metrics for you.

So essentially 19, these are levels to watch.

These are the levels to watch.

19 was around where we got in that April pullback.

They said if they got to, if the vics kept chugging higher, like it was to end last week and we got up toward 19.

No, we closed down today and that was part of why big tech might have rallied.

If we kept going up to 19, that would be a level to watch where maybe we've gone far enough and then they sort of pointed out that if you thought we were gonna get a big, big sell off, you could go to a number we don't even have on this screen right now, which would be 27 which is pretty high.

But, and in general, Vic's up not the best backdrop for stocks.

So, Vic's down today was good for stocks I watch.

Thank you, Joshua Delta still facing the fall out of the crowd strike outage last week, the airline canceling more than 800 flights already today and nearly 1500 flights delayed Delta.

Now saying it expects more flight cancellations this week.

And this coming after Delta Co Ed Bastion issuing an apology over the weekend saying the airline relies heavily on windows applications, especially one of its crew tracking tools which has led to the airline having a hard time scheduling pilots and flight attendants.

Delta shares closing down more than 3.5% today.

And it's not just airlines that were hit hard by the crowd, strike outage sectors from health care to hospitality are feeling the effects.

The other question will bad actors now try to capitalize on this outage for more on the cyber security landscape we're bringing in Ahmed Bena professor at San Jose State University, Aman.

It is good to see you and you know, I thought it'd be interesting a and just to to frame the crowd strike event because I've heard it described as the most spectacular it failure ever.

Do you agree with that?

Aman?

Absolutely.

Because this is going down to the impact on people.

I mean, before you have some kind of uh uh breaches or some kind of an it outage, which is will be specific for a company specific for a certain sector.

Now, you're talking across the sectors and people fill this one, especially during one of the busiest weeks of travel, you know, in the summer.

So, so that that label is really worth it.

Ahmed.

How long do you think it is before we are fully recovered all systems back up and running?

Is this hours?

Is it days longer?

That's a good question.

Uh Josh, here's, here's the real story.

Here.

There are two categories of the companies or the computers that impacted by this kind by this outing.

One of them that can be fixed by rebooting very quickly remotely.

The other one, which is the one that we still dealing with as you know, as consumers is the one that has to be done manually.

You have to have a USB drive, go to that computer, the endpoint, that's the name of it, you know, from, you know, from a technical point of view and then go and delete that file that, that's the file that created all this.

Now you're talking about thousands of computers has to be done manually.

So it's not days it could be weeks.

And Ahmed.

Do you expect, um, bad actors, criminals to try to take advantage of this event in some way?

They, they already started.

I mean, and they always on this stand by, uh, you know, uh, case or state where if there is any kind of chaos anywhere in the world that created by online services, they will do many things.

For example, fake website that will tell, uh, people.

Ok, just uh you know, enter your information here or download this uh uh program that's gonna fix the problem.

Uh fake impersonation.

Somebody will start calling those companies and say I am from Crowdstrike or from Microsoft and I would like to get access to your system so I can fix it.

Uh The other thing is that sending some kind of script, which is the, the programs to fix the, the the problem and phishing emails sent by millions and somebody will click on it and then we're going to have a ransom problem instead of dealing with this.

So Ahmed all that sounds pretty spooky if you're a viewer and you're listening to this, what steps should you take to try and protect yourself from those threats?

Well, number one is, there is a, there is an important principle in cybersecurity which is think before you click and always check the uh the source.

For example, if I receive an email or a phone call or, you know, uh I looked at the website and I have this feeling that this is this website, is there a problem because the link looks, uh, you know, shady in a sense that don't even go close, that go to the website of the company crowd strike or Microsoft and look for the help from them.

Don't try to get it, you know, straight from somebody else.

And this is what they've been talking about the whole morning.

Would you expect?

Ahmed after all is said and done here from Microsoft to re evaluate the relationship it has with crowdstrike.

I think this is, would be a possibility.

I don't think that the Microsoft is happy with the pr that generated and the loss in the stock market that they hit, you know, by, uh by this kind of action because uh just the one of the things about it, why this one is really went through the, the cracks and nobody noticed it is you never question updates when you have an update, you know, for windows or update for one of your software, you know, it's coming from the company so it's safe.

So what happened is that went through all those 8.5 million devices and they are really in a very essential, you know, a point of our economy.

I'm not gonna be surprised of uh Microsoft, you know, is, is in, in looking at it very carefully and trying to see if this is uh this relationship can continue find finding plan B for them because it's not good for Microsoft at all.

A man.

It was so helpful to have you on the show today.

Thanks for walking us through it.

Appreciate it.

Thank you, Josh.

Stay tuned more.

Ask you for a trend on the other side.

Let's take a look at what's trending after hours and XP semiconductor shares tumbling on earnings.

Guys, Dutch chip designers, revenue forecast for third quarter come in below estimates of $3.35 billion.

While eps outlook for Q three also came up short of expectations for the company's second quarter.

Both adjusted earnings and revenue came in line with estimates and you got Cleveland Cliffs shares as well.

They are rising in the after hours here following a mixed report for the second quarter and Justin Ida fell 58% year over a year but came in above estimates for the quarter.

Steel manufacturer also issued a mixed reading on the rest of the year and they topped expectations for the third quarter guidance.

But lowering its full year expected expected capital expenditures range.

That's a wrap on ask for a trend.

Be sure to come back tomorrow at 4:30 p.m. Eastern for all the latest market.

Moving stories affecting your wallet.

Have a great night.