More Trump fallout, billionaire donors, Dell exec.: Market Domination

The guilty verdict for Former President Donald Trump is dominating much of the conversation in politics as well as on Wall Street as experts debate the potential impacts it may have on the broader market. Billionaires like Tesla CEO Elon Musk (TSLA) and hedge fund manager Bill Ackman flock to Trump's side. West Virginia Senator Joe Manchin has severed ties with the Democratic Party and is currently registered as an independent.

Dell Technologies (DELL) Infrastructure Solutions Group President Arthur Lewis chats with Yahoo Finance about the latest AI advancements in its servers.

This post was written by Nicholas Jacobino

Video transcript

Hello and welcome to market domination.

I'm Julie that shot 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 the closing bell rings on Wall Street.

I'm doing something for this country and I'm doing something for our constitution.

It's very important far beyond me and this can't be allowed to happen to other presidents.

It should never be allowed to happen in the future, but this is far beyond me.

This is bigger than Trump.

This is bigger than me.

This is bigger than my presidency.

There is going to be a temporary drop in support here that can easily revert back home to Trump over the next 157 days of this election.

There is still a whole lot of time between now and November 5th and so to me, I think that ultimately, this is going to be viewed as a blip in what's otherwise going to be a much, much longer and probably convoluted story as this election season takes hold.

Trump is, is sentenced scheduled to be sentenced four days before the Milwaukee convention begins.

So I would say it's starting, it's probably got some intensity to go before we see Vicks.

Really speaking to the elections, we've got one hour to go until the market close and we're taking a look at the major averages here which indeed are not really reacting much to what went on in the courtroom yesterday, but could potentially have repercussions down the line for markets.

Of course, speaking about the presidential election, we're gonna get to that in just a moment for right now.

We've got the dow trending higher 267 points and near the highs of the day with a game of about two thirds of 1%.

But the other major averages are lower.

We've got the S and P down quarter of 1% and the NASDAQ down more than 1%.

I'm taking a look at the bond market again today because this morning, of course, we got the Fed's preferred measure of inflation.

It came in pretty much in line with estimates one fly in the o though we saw spending fall a little bit.

So that's something that is perhaps of concern or I should say spending came in lower than expected.

We've got the 10 year yield moving lower, but that's not really helping tech stocks today or the market more broadly, which is interesting to see, take a look at the sectors here and you'll see what I'm talking about.

Pretty broad based, sell off within the S and P 500 tech is the worst performer followed by health care and consumer discretion.

Actually, we're looking at a week, let's get back to today.

This makes more sense to me.

Tech is still the worst performer, but energy and real estate utilities are higher.

Yes, indeed.

That makes a little more sense.

Taking a look at the NASDAQ here that we do have some selling in the largest cap tech names.

Um So for example, you've got Amazon down by 2.5% meta down 1.5% NVIDIA down 2% and Microsoft down 2%.

So that explains the underperformance that we are seeing today in the NASDAQ, in particular with all of that selling going on and then going back here to our trending tickers for just a minute because there is one other stock that we want to check on as you're talking about this big story of the last 24 hours and that's the stock you see here, Trump media and technology DJ T as we talked about yesterday following the verdict, this is effectively a proxy for Trump himself and sort of a bet by investors on his election chances at any given moment today.

You've got that stock down by 6.5%.

Josh.

All right, Julie.

Now let's get to our top story, the fallout from the conviction of President Trump while the markets are not moving on that verdict.

It marks a key moment for the 2024 race as we count down toward November and joining us now is Brian Gardner, steel chief Washington policy strategist, Brian.

It is good to see you.

So, you know a question we're trying to get our heads around here, Brian is what this means.

If anything for the election, you know, you're the pro Brian.

That's why we turn to you.

What are you thinking about?

Yeah, there are so few undecided voters out there that I, I'm skeptical this has a big impact.

Now that being said, look, because it's going to be a close race.

Any impact can have an outsized influence on the outcome.

But these are two candidates who have been on ballots for years, right?

This is Joe Biden's fourth time on a national ticket in the last six elections.

It's, it's Donald Trump's third straight time.

Voters know who they are and they've already made up their minds.

The vast majority of voters have made up their minds.

So, is this going to move enough voters that's going to change the impact of the election?

I, I'm very skeptical, II, I think this is going to be one of those issues that voters have way down at the bottom of their priorities.

Um Whereas the economy, immigration, foreign policy, they're going to rate much higher and those are the issues that are going to impact the election outcome, Brian that said for some reason, this feels like more of the formal start to the campaign season with this conviction with this event, just because it's sort of injected a little bit of energy into the news cycle around.

And I wonder from an investing perspective, are there gonna be other catalysts that perhaps investors are waiting for to get a little more clarity here?

Is it gonna be the debate?

Is it going to be the conventions or do we sort of even have to wait until much closer to the election itself, for the markets at least to really start paying closer attention?

One II, I think, I think investors have already started to price in the possibility of a Trump win and when I talk to clients over the last several months more and more, I get conviction from groups that they think Trump's going to win.

I think that flows through into the markets.

How you quantify that?

I, I'm not sure.

But do I think that uh but I, I have a level of confidence that that investors are counting on a deregulatory low tax agenda that has been behind some of the rally over the last couple of months.

Um As for factors that are going to alter the race, I'm skeptical it's the debates because they're not going to reveal anything new.

I'm skeptical, it's the conventions because they're not going to reveal anything new.

Going back to my earlier point, we know a lot about both candidates.

They have been through several national uh elections.

They are fully vetted.

We know pretty much everything there is to know about them.

Even yesterday was kind of a known unknown, right?

We didn't know the actual outcome but we knew all the facts behind the case.

So what, you know, it really wasn't that big of a surprise.

What are the unknown, unknowns?

And I think the getting to your, your question, Julie, I, I think those are events from maybe outside the US surprise economic um uh uh uh events.

Um It's the surprise external event, not within the campaign but outside the campaigns where campaigns have to react that could mix up the elections but issues, personality policy issues surrounding the candidates.

II, I think there is a level of, of voter interest and already making up their minds that um that I don't think people really appreciate that.

We're, we're really far into this election already, Brian, you know, you look at these polls, the swing states, they seem to consistently Brian favor Trump here.

What can Biden do right now?

What should be his strategy?

What can he try to turn this tide?

So the, so the, the, the challenge for the president uh for President Biden is to turn this, the, the narrative of the election around.

Currently.

It's a, it's a referendum on him and when you look at right track wrong track polls, voters are very dissatisfied with the direction of the country, they're dissatisfied with the state of the economy.

So Biden needs to somehow pivot and talk about other things.

Get it back on Trump.

Um And, you know, I, I'm gonna go off on a little tangent here and, and try and use the third party candidates, especially RFK junior to Biden's advantage.

The, the narrative has been RFK helps Trump on a net basis slightly.

Well, there's some polling that suggests that there are a lot of voters who are not familiar with RFKS views on vaccinations and all those Republicans who are unfamiliar with his views when told they become more supportive of him and less supportive of Trump.

To me, the Biden campaign has an, has the opportunity to kind of drive a wedge into those voters and drive them away from Trump over to RFK.

Maybe the Biden folks don't get those voters themselves.

But if they can reduce Trump's numbers and drive up RFKS numbers, you know, II, I don't know how effective a strategy is, but it, it's something that if I'm a strategist, I'm looking at a campaign strategist, I'm looking at it, Brian, I coming back to something you said about the market sort of pricing in a Trump victory and you seem to indicate in your notes that the markets views that favorably, I was looking at the stock market returns, you know, as we know, former president Trump very much saw that as a report card on his presidency and indeed the S and P 500 from his inauguration day until Biden's inauguration day rallied some 70%.

It's been up about 35% or so under President Biden.

Of course, it's come back a lot from the pandemic lows.

But just why, why do people seem to think that another Trump presidency would be better for the markets?

Iii I think it's, it's um loosening animal spirits, right?

It, it's, it's lightning the regulatory burden that multiple sectors face.

And it's also um increasing the chances that the current tax rates stay in place, especially for individuals and also mitigates the, the possibility of a second Biden term in which the corporate rate who would rise.

And so, II I think that's why um why I expect uh markets to be more favorably inclined to a, to a Trump win than a Biden win.

Um Look, I I should note, I think the day after the election, the markets could rally regardless of which candidate wins as long as we have clarity and you know, reducing the the chance of, of violent unrest.

I just think it, they, the markets would rally more with a Trump win than a Biden win.

Brian.

I want to get you out here on this outside the presidential race.

One piece of news, certainly making headlines West Virginia, Senator Joe Manchin.

You saw this.

So leaving the Democratic Party registering as an independent Brian unclear now what his political future is gonna be since he previously announced he would not run for re election.

But it does raise this question of whether he will uh caucus with Democrats.

How do you think it through this one, Brian?

You know, I, I, there's so little going on over the next couple of months in Washington.

It doesn't change the calculus on Capitol Hill.

I think it's interesting because I, I'm viewing it as a proxy over the last several cycles.

We've had this move of kind of rural working class voters, sort of with white working class voters in 2016 Hispanic working class voters in 2020.

We starting to see this continue to black working class voters moving towards Republicans this cycle.

And I, I, you imagine as being close to that working class type of voter and I think it just, it, it illustrates the, the challenge that Democrats have.

That's their old base, right?

Um The, the Union Hall moving away from that party to the Republican party, the Republicans on the flip side have their own challenges because they're losing highly educated, wealthier white voters who used to be the kind of the country club set that used to be rock solid Republicans.

They're moving to the Democratic Party.

Um So I just, I, I see Manchin as a proxy for the ongoing realignment in American politics.

Ryan Good to see you.

Thanks for joining us.

Thank you guys.

Have a great weekend.

Well, within hours of that verdict, President Trump's campaign seeing renewed support as Top Wall Street and business executives doubled down in their support of Trump's 2024 run for re election.

He also got a big in pouring from individual donors as well.

Yahoo, finance senior columnist, Rick Newman is here, but let's talk about the big donors for a moment because they certainly didn't seem dissuaded.

There was a lot of outspoken this on social media, for example, in support of the pre of the former president.

And we're talking about guys like Elon Musk, Steve Schwartzman, Bill Ackman, some other billionaires.

I mean, everybody who's sick of self important billionaires, please raise your hand.

I mean, I certainly am.

Uh let's go back to basics here.

Um Somebody, one of these guys said this was a kangaroo court.

This was actually a jury trial.

Uh This is the way this is the, this is the foundation of the American legal system is a jury trial.

So you, you don't respect the validity of jury trials.

I think that's completely hy hypocritical.

I mean, here's why uh everybody in finance knows that the United States is the world's premier destination for capital in part because it has a rigorous and transparent legal system, contracts matter.

Everybody knows what the rules are, everybody plays by the same rules and guess what?

That's why people get one of the reasons people get rich here in America.

It's not Russia.

Ok.

It's not just uh, elites who are buddies with the, with the president.

Ok. Um The, all these guys ha ha have benefited from a terrific superb foundational legal system here in the United States.

And then to come out and say, oh, is it, this jury trial is a joke.

It's a scam.

It's a sham to repeat this garbage.

That Trump is saying, um if, if something went wrong in this trial, it will go, it is going to go to a, to appeal, uh the appeals court will rule appropriately and it will say, ok, there was a problem probably they won't, probably the jury is gonna stand.

So, I mean, if I had any of these guys here, I would say, ok, you don't, what other parts of the legal system do you us legal system you object to, you don't object to a jury, a jury trial by jury.

What else don't you like?

Well, I, we should, we should note though, Rick, it is not just billionaires who came out, right?

I mean, it, it was Bill Ackman and David Sachs Elon Musk.

But listen, I what did you make of Trump announcing $35 million Hall after that verdict?

And he said in the campaign saying 30% were new donors.

That's a lot of people.

So Trump's persecution complex is a familiar phenomenon by now.

I mean, it's still very peculiar.

I mean, it, it doesn't change the fact that may persecution.

That's a $35 million.30 percent of our new call.

I, I'm trying to get the point.

It's not, we can talk about musk and, and, but that's not really what determines it.

It's really a lot of folks, people identify with Trump's persecution complex or do they, I policies?

I don't think it has anything to do with Trump's policies.

I don't think it has.

I don't think people even know, I, I don't think a lot of these people even know Trump's policies.

They don't know Biden's policies either.

Uh I mean, Biden has done a lot of things that actually help people.

I mean, he's done affordable housing.

He's do, he's done all kinds of aid.

He did the last round of stimulus checks.

Um A lot of things that people don't give Biden any credit for that.

Um His uh Biden's green energy is helping Republican States and districts more than democratic ones.

Nobody knows or cares.

Um There's something that nobody has really completely figured out yet but it goes all the way back to 2016.

Make America great again, American carnage.

Uh China's eating your lunch, all this stuff.

I mean, there are just a lot of people who like this victim, victimology rhetoric or do they feel that they were just better off when Trump was president?

That, I mean, that's part of what's going on.

And it is actually true that gas prices even adjusted inflation were lower when Trump was president, not for anything Trump did.

I mean, that's just global supply and demand.

But I mean, this is the phenomenon of Trump, which is that he pulls some, he, he gets people to identify with him.

He'll, who feel the system has not worked for them, the system has screwed them over.

Uh They've been ripped off that the system is rigged against them and those are, those are, that's Trump's base right there.

They're not necessarily, people say white, working class, lower income, working class, low information voters.

A K A stupid people.

Um, they're not, they're not all, I mean, but there are a lot of people who are relatively successful who still feel the system is rigged, rigged against them for a whole variety of reasons and Trump somehow found out, figured out a way to Josh's point.

It doesn't matter how smart or stupid you are.

You know, if your dollar doesn't go as far now as it did.

And II, I don't know, I think it's really rick.

You really think all these Republicans are just saying, you know, it's rigged.

Are they saying that or they think, you know what?

I just believe in low taxes, less regulation.

I think it's better for the economy.

I think it's better for me, my company and the country, not as simple as you want.

It.

To be.

I'm sorry.

But I think you're making it simple though, that yours is not just Republicans.

I mean, you, you're actually describing uh old traditional conservative Republicans, which is not the Trump base.

I mean, Trump has pulled people out who never really were Republicans.

I think the Republican Party has fundamentally changed.

I take your point, the black magic that he has that other Republicans before him don't have and really no other Republicans have is this appeal to aggrieved people.

That is the thing that makes Trump Trump.

And I can't explain it.

I just know it's a thing and I know that explains why the money comes pouring in every time.

You're saying, I think a lot of Trump supporters would say they just don't like the direction the country is going.

I don't think those are the same thing.

They, the thing that gets Trump over the top is the aggrieved voter.

His coalition is bigger than that.

I mean, he had evangelicals in, in 2016 and 2020.

For example, I'm not gonna, I'm gonna wrap you.

But honestly, this is like a constant march right here.

So it's all, it's all anger but, but somehow there's never any invention of the anger on the other side, the other side.

So what people don't know is the producers are telling us to rap and you can't stop.

So we're gonna make a whole show out of this.

I would love to, I'll I'll see you guys.

You can just go, we can go at this.

All right, we got to all, all raps and they won't.

We'll be right back here.

We're just getting started on the domination core.

Personal consumption expenditure showed inflation slowed in April.

We're going to speak with an economist on the other side to break down the data.

That's the important stuff for us here.

Plus are taking today we're diving into the numbers of the president of Dells Infrastructure Solutions Group State.

T we've got more mark domination.

Still the latest inflation reading coming in earlier for the month of April in line with expectations.

But our next guest says we need to see more of these prints before the fed starts easing.

Joining us now, James mccann, Deputy chief economist at Aberdeen.

Good to see you James.

So how many more of these prints?

How consistent a trend do we need to see before the fed gets more comfortable with perhaps cutting rates?

Well, I think at least three and maybe more, you know, certainly the fed was alarmed by the spike in inflation over Q one and share power was very clear that 33 bad reports make something of a trend.

So I think for the Fed, they're going to be looking at at least three moderate inflation gains.

And honestly, maybe more.

I think that rules out that the June and July meetings, they probably put September as the first point at which they'd be comfortable easing as long as things go their way on that inflation side.

And James, when do you think we actually get back to the Fed's 2% target?

You know.

Do you see that as it's something the second half of this year, it's more of a 2025 phenomenon.

What's your timeline?

I think it's 2025 I think.

You know, actually they might get a bit more progress on bringing that year on year rate down over the next few months.

But then it's going to be really, really hard to do over the second half of the year.

The inflation they got in late 2023 was really soft.

And so they need to get even weaker inflation to drag that annual rate lower.

So I think they're going to have to wait till 2025.

But I don't think they necessarily need to see core inflation fall back to 2%.

I think they'd be comfortable doing, doing cuts before then.

As long as they think there's progress still going on and, you know, that's contingent on a few more months of better data.

Well, and James, there was an analysis out from the Cleveland fed that said in terms of getting back to 2% inflation that might not even happen until mid 2027.

Does that seem likely to you that we could see that kind of a timeline?

It's not impossible.

It's not impossible.

I think, I think there's a few things that will drive inflation lower though sooner.

I think shelter inflation will come in weaker over a number of months.

We've been disappointed in the, in the translation of that for some time now.

But I think that, I think that process is kicking in.

I think we continue to see signs of domestic growth slowing and I think that's feeding through to the labor market and to wages.

And I think those dynamics will feed through quite nicely.

You know, it's certainly true.

We had a big inflation shock and sometimes inflation proves persistent and it could take us a while to see some of those lagged and feed through effects coming through from that initial inflation shock.

So, you know, certainly there are inflation risks, but I do think we'll see pretty decent progress and I suspect we will get there before 2027.

That would be really bad news for the fed if it were to, you know, see an overshoot on that type of time.

Horizon James, I'm just interested to get your take on the consumer.

Uh how generally healthy resilient?

You think the consumer looks, James, we still, you know, obviously tail winds, low unemployment, decent wage gains.

How, how are you thinking through it?

I think the consumer looks in decent shape.

I think certainly consumer spending has slowed from the really boomy rates that we saw over the second half of last year.

And in some ways, that's probably a healthy thing.

You know, the fears were there that, that was driving a degree of overheating or driving a no landing style scenario for the US economy.

But if we look at consumer fundamentals, real incomes are growing at moderate pace, which looks pretty healthy, the labor market still looks pretty solid, you know.

Yes, they're not saving a great deal but their balance sheets in general look pretty reasonable.

So I think all the fundamentals are there for, you know, slower but still very respectable consumer spending growth about 2%.

And you know, that's a really strong engine of activity in the US economy and that should keep things rolling on pretty nicely we think.

Alright, James, thanks for joining us today.

Appreciate it.

Thank you.

Now, I'm checking in on some of today's top trending tickers, Japanese whiskey maker Santori reporting talks to acquire American Brewer Boston beer known for its same Adams brand.

Of course, that's according to a report from the Wall Street Journal.

Uh So this was interesting Julie.

So again, this is per the journal, they say the two parties that kind of categorize this as uh early talks, citing sources.

They say possible nothing actually happens here, maybe not even a transaction.

I don't see any kind of, I didn't see any details on pricing.

For example, Boston beer does have a market cap around 3 billion.

But the rationale the journal says, you know, Boston beer obviously gives Santori kind of a much bigger foothold here.

Right, exactly.

Santori has already made some acquisitions in the United States, including of Jim Beam whiskey, but Boston beer has had a tough go of it, of course.

And as well as being the parent of Sam Adams, it also owns truly hard Seltzer and there's been kind of a shift in consumer taste for hard Seltzer or at least an expansion to other types of newer um canned drinks.

Boston beer also makes twisted tea, hard iced tea that I guess has done a little bit better.

Um But it, it's sort of floundered along with some of the other craft brewers this year with the shares down about 25% before the pop that we're now seeing.

Yeah.

How much of this too is just, uh and the general kind of goes into this, just tasting preferences, non alcoholics becoming bigger deal.

Right.

Interesting.

Yeah, exactly.

All right.

I, we are gonna take a break right now, I believe.

Oh no, we're going to talk about Caesars.

Oh, Caesars next, I was hearing t next, it's very, it's very easy.

I got very confused.

So let's talk about Caesars Entertainment and then we can go and then we can go.

It.

Caesars is jumping today on a report that activist investor Carl icon has a sizable position in the company.

Those shares are jumping as well about 11% here and that is according to reports today from Bloomberg and the shares are rising by the most in about a year and a half.

We don't know what Icahn's plans were.

It would be, but he's bought casinos before.

Yeah, normally, obviously you think Icahn, you think activists caught out of stake, start rattling in cage per reports.

Julie, that is not Mr Icahn's intention here.

Um, or at least we don't know what his intention.

Well, the recording so far has been actually kind of suggesting he likes the management team, no plans for a campaign.

Um So listen, we'll see how that kind of develops.

That's at least the headlines.

But Caesars you pay attention to, you know, largest owner of casinos in the US and icon, of course, you know, very familiar with this sector.

Yes, indeed.

He has invested in it before.

Now.

It's the teeth you ever talked to Carl icon?

I have not.

It's experience coming up.

It is the latest edition of our series.

Goodbye or goodbye.

We take a deeper dive into two stocks to help you make the best moves for your portfolio.

Stay tuned, more market domination on the side.

It's a big noisy universe of socks out there.

Welcome to, goodbye or goodbye.

Our goal to help cut through that noise to navigate the best moves for your portfolio as the summer season is upon us for navigating a turbulent few months for the airline industry with a goodbye or goodbye score card.

Yes, for the first time ever, we're taking a look back at a call that a guest has made to see how it's done.

And so let me bring in Steve Trent City Airlines analyst, Steve, thanks for being here.

So at the beginning of the, you, you goodbye.

The so you liked was Delta and you said to avoid jetblue.

So big reveal.

Let's see how you did pretty darn good.

Delta is up about 25% year to date and jetblue has fallen about 1% or so for the year to date, including today.

So your call worked out pretty well, but you're sticking with it.

You say this is still a good call to have and you still like Delta here, right?

Yes, absolutely.

I think we're in the early early innings of this.

Ok.

So let's go through why you talked about wallet share gains for network airlines.

What do you mean my network network versus discount?

I assume.

Absolutely.

So if you bifurcate the US Airlines between the full service carriers on Delta side and the discount airlines that jetblue is on the other side of the fence, you've actually seen a big pickup pre pandemic.

If you look at the earnings wallet share, the network airlines had roughly 75% of the pie.

Uh on our numbers 2024 2025 they have closer to 92 93% of the party.

So I've seen these post Pande shifts in work.

Most people are no longer in the office five days a week.

So that fly out Sunday night, fly home Thursday night.

It's not totally gone, but it's diminished.

And I think that shift has led to hybrid travel, uh, which has really benefited the network airlines.

Interesting and, and also what we have seen is maybe more economic per available seat miles.

So ring more profit out of those, out of those seats at Delta.

How are they doing that?

Absolutely.

So, you know, the first issue you have not only are they taking higher share, uh but we also continue to have a paucity of capacity on a per capita basis.

So if we go back to 2019, there was a little less than $24 of economic activity per available seat mile in the US domestic market.

Uh last year that was above $29 this year, we think it's going to be a above $30.

These global aerospace supply chain issues are not going away.

So at the same time, network airlines are picking up more wallet share.

The wallet opportunity itself is getting bigger from that dearth of capacity we have out there and they're going to be able to price more effectively that scarce capacity than a discounter line.

It sounds like that means prices are going up for us.

Ok. And then finally, there are the co brand cards that they have and the money that Delta gets from that and that's going well, I guess it's going extremely well.

And I would say Delta really has the best brand of a US airline and they've spent years developing that very good brand and that's everything from being the very last airline to unblock the middle seat at the height of the pandemic.

Uh to the only major that did not dilute its equity holders uh with convertible debt or equity offerings during the pandemic with a very small number of warrants that got issued to the Treasury Department because of the Cares Act.

So when we think about that counter party profile, uh a big global uh loyalty program, uh they're making very good revenue off of that.

So we think that trend is going to continue as well as be a really important distinguishing factor between the network and the discount airlines.

So let's talk about what could potentially go wrong for a delta.

We could see a regulatory crackdown.

What would that look like and what effect would that have?

Sure.

Absolutely.

So you've seen little wisp of this already slightly trickier rules for the airlines in terms of being required to pay refunds to consumers after there's a certain number of hours of delays, stricter rules on compensation for checked bags.

Does that get more intense for the group?

I think it's hard to say.

But do we get something more extreme uh that will limit co branded card activity, limit loyalty program activity.

I'm not saying it's going to happen, but this is kind of the wild card one would worry about in this case.

Got you.

All right.

So let's get to jetblue now.

And your goodbye, the stock you don't like.

As we mentioned, the stock is not done terribly well here and you say it doesn't have its revenue vertical thriving.

What does that mean?

Yeah, absolutely.

So when we think about that fantastic loyalty program you have with uh a Delta or, or a United Airlines, for example, uh it's really tough for the discount airlines uh to have that same level of punch.

So a large financial institution as the partner loves the big programs for the relatively wealthy consumers, they can cross sell all day long.

You know, at this town airline doesn't have that, it doesn't have the global popularity.

Uh jetblue has a very good mint product.

Uh and they do some of that transatlantic, which is great, but that's a very small piece of the pie.

So there's no trans specific, they do not have a robust co branded card program like the others do.

They're largely domestic, you know, Mexican beaches, there's over capacity now, Caribbean, there's some overcapacity.

So they're in a tough spot.

Got you.

And then of course, there's the the big event that didn't happen with the company, right?

They were gonna um get together um with the sprint uh spirit, excuse me, that fell apart.

So now, what is kind of the question?

Absolutely.

And it's a tough one.

So if you're jetblue, in that case, you wanted scale, you wanted to jump to be the number five position uh in the group.

And it also sort of reminds me of what we saw years ago with Southwest Airlines acquiring Airtran, Southwest needed the pilots and they needed the equipment and they got both, uh jetblue, seemed like it wanted to do the same.

Uh The regulator said no.

Uh So we have the pilot and equipment issue.

Uh We have the Garret TOBA fan engine issue, potentially um making some hiccups here in, in, in capacity growth.

Um So it kind of begs the question strategically, what do they do?

I, I think it's a tough thing to make heads or tails of uh after that merger got blocked.

Yeah.

And then that leads to the idea that there's not a way back to sustainable margins when you have those kinds of headwinds, it's hard.

So getting back as well to what I mentioned on the network airlines having that really big post pandemic pickup and wallet share, you know, largely to network airlines.

Um If you're jetblue uh on our numbers, it doesn't look like an easy path to get back to sustainable margins and earnings when you're in that situation.

So there has to be some kind of course correct.

Um You know, on your verticals or on your seat, mark, cross profile and is not sure how either is going to get done and then what could go right for jetblue.

Will they have new management so they could come up with a plan maybe to address some of these issues?

Absolutely.

Look, they have a new CEO, she's terrific.

She's going to do her thing.

Uh Strategically.

Are there surprises that we can see from them?

Absolutely.

You've got some schedule, uh, 13 D filings out there, some new people on their board.

Uh Do they have some wild cards to show the market?

Uh I don't necessarily see any, but that's always something that you've got to keep your eyes on.

All right.

And any position in either of these stocks?

Me neither.

Ok. All right.

All right.

Well, you're sticking with it here telling people by Delta and avoid jetblue.

That's something that you've stuck with since January.

So, thanks for coming back.

Good to see you again.

Appreciate it.

Thank you for watching.

Goodbye or goodbye.

Will we bring you new episodes three times a week at 3:30 p.m. Eastern Dell handily beat across the top and bottom lines in its most recent quarter.

Thanks to strong demand for its A I server business, but the stock is tumbling during today's trade as questions linger on the company's margins and here to discuss, we are now joined by Arthur Lewis Dell Technologies Infrastructure Solutions Group, President Arthur.

It is good to have you on the show.

So let, let's dig right into this Arthur because the issue does seem to be uh margins, Arthur and, and margins around the A I servers.

You know, Bernstein's Tony Sacconaghi on the call.

You, you heard of Arthur?

And I think he kind of put his finger on it here when he said it looks like operating margins for A I services servers are effectively at zero.

So Arthur, can you, can you walk us through this?

What are the puts and takes here?

What do you see looking ahead and do you think Arthur that maybe is the market missing something here?

Hey, Josh, thank you so much for having me uh on the show.

Look, we see incredible momentum in the infrastructure of business.

Um You know, you think about $2.6 billion in orders, $1.7 billion in shipments, $3.8 billion of backlog and a next five quarter pipeline.

That's a multiple, there's significant momentum.

But I mean, think about this, I mean, this is a start up business for us that we started shipping in Q two over the last four quarters.

We've shipped over three and a half billion dollars of A I dedicated servers.

Um We are winning more share with the tier two C SPS and we are helping every enterprise customer out there think about their deployment of generative A I.

In addition to that, you know, we see growth in our server business.

Two consecutive quarters of year, over year growth, four consecutive quarters of sequential growth.

And so we're excited about the server recovery and, you know, as we said, the storage recovery, uh you know, sort of lags a server recovery by one or two quarters.

Uh So we see that uh ramping up in the second half, which is why we took up our guidance to over 20% in ISG and delivering operating income.

Well, within our long term growth framework of 11 to 14% Arthur.

It's Julie here.

At the same time, I did see some analyst commentary that your outlook for the full year implies that you are not going to see very much A I server growth.

Can you talk to us about that?

What sort of if you unpack your forecast?

Um what it implies on that front?

Yeah.

So, you know, we have sequential growth going into Q two and we have the second half sort of flat to that, you know, and the reason is because while we have a significant backlog, uh a lot of the demand is project based and is also based on, you know, sort of suppliers availability to deliver, especially around the black world 200 processor.

So it's it's really nonlinear demand that might be a little difficult to forecast.

So I think that's what you see uh in our guidance, Arthur Arthur.

Let's also talk, talk a bit about competition here because you got super micro Um, Wall Street loves that name built around its A I practice selling at relatively low margins.

You see Lenovo put, putting a lot of money to work in their A I game.

Are you and Arthur kind of feeling competitive pressures there, Arthur, you hear me on there, Arthur?

I think we may be having an audio issue there.

Yes.

Oh, I think we had some technical issue there, which is too bad, but that was we thank Arthur first time.

Yes, and maybe we can work on getting back soon.

Well, coming up as shoppers flocked to where they can find the most savings.

How should you be positioning your portfolio in the consumer staples sector?

Will tell you on the other side in today's investor playbook.

All right, we're joined by Arthur Lewis Dell Technologies Infrastructure Solutions Group, President Arthur, apologies for that technical snafu, the magic of live television, Arthur, what can I tell you?

I was, I was asking Arthur about competition because my point being super micro, you know, uh the street in love with that name built around its A I practice, you see them selling it relatively low margins.

You got Lenovo, they're putting money to work in their A I prac in the A I game as well.

Arthur, I was just curious if you're feeling any kind of competitive pressures there.

Look, we're very focused on delivering on behalf of customers.

Our innovation engine is firing in all cylinders.

Uh I don't recall a time that, you know, we've run our engine, you know, sort of this hot, you think about the 9680 you know, we had three killer design points.

Number one, a consistent uh a consistent architecture that offered up silicon diversity that would offer up GP US from NVIDIA from A MD from Intel, a design that had significant network capabilities and the most dense and energy efficient and we hit it out of the ballpark on all three of those.

Um We've done one better with the 96 AD L which is specifically designed for liquid cooling.

The first instantiation of which will be on the Blackwell 200.

We've improved density by 33%.

We've improved energy efficiency 2.5% and we've significantly improved our networking capabilities.

We also offer the opportunity to uh we also offer the networking capabilities with enhanced fabrics, Ethernet and in finan protocols as well as the world's broadest storage portfolio, especially on the unstructured side, starting with power scale and the F 910 that we just announced at Dell Technologies World last week.

So when we think about servicing customers and their needs, you know, generative A I is a system that comprises compute network and storage, there's only one company in the world that can deliver that system optimized and tuned for A I and that's us.

And we are, I have a privilege to service uh both tier two CS P and Enterprise Customers.

Arthur.

Let me ask you a bit about your partnership with NVIDIA Two.

you're real out front with it and it makes a lot of sense.

Jensen Wong has the, has the A I chips everybody wants.

But, um, you know, on the other hand, Arthur, they, they do cost a lot, uh, supplies limited.

I'm curious if that has held up sales in any way for you all.

it doesn't help, help hold up sales.

And let me just say, you know, we've been working with Jensen since 1996 when he launched the first um GP U.

They're a very strong partner and a very strong collaborator in our A I factory.

Um We also have, you know, obviously partnerships with other providers including A MD Intel and uh and Broadcom.

Uh So it doesn't really hold up orders.

It, it would potentially hold up shipments, but we have a very strong collaboration with NVIDIA.

I wanna talk about storage as well.

Um That came in flat Arthur.

And I, I know, you know, you kind of mentioned seasonality.

I, I guess my question though was, you know, if A I is such a driver oo of the business, why is storage?

Flat Arthur?

Yeah.

So, you know, the the storage market typically lags the server recovery by 1 to 2 quarters.

And so we start to see the storage market pick up in the second half.

Um And, and that sort of baked into our guidance and part of the reason why we raise our guidance for for the full year.

I would also say that, you know, the vast majority of while the vast majority of customers are enterprise customers, they are relatively small mix of the revenue.

And so you're gonna see a lot more of that storage strike come along as the enterprises start to uh start to pick up Arthur.

It was great having you on the show.

Apologies again for the the technical hiccup.

Hope to see you again soon.

Thanks, Josh, the personal consumption expenditures, price index P. Ce J Powell's favored inflation gauge revealing signs of consumer spending weakening.

It's coming as the US economic growth in the first quarter was revised lower, primarily reflecting a downward revision to consumer spending and shoppers flock to where they can find the most savings which names in consumer staples can rise to the occasion.

We're looking at how to navigate the big picture with the Yahoo finance playbook, Brian Spillane Bank of America Senior Consum Goods analyst.

Joining us now to discuss Brian.

Great to have you on the show.

Let's start like uh maybe big picture Brian.

Um You're covering a lot of names in your coverage universes, you kind of made your way through his reports.

You listened to the conference calls, Brian, what was your takeaway?

I'm just curious about the consumer right now.

You know, you can certainly think there's certain tail winds, low unemployment, decent wage gains.

On the other hand, we, we were hearing a lot of talk about maybe a more cautious prudent consumer, Brian.

What were your takeaways?

You know, the, the, the, the high level takeaway is there seems to be a disconnect between what we're, you know, what we all see in the macro data and what we're seeing in terms of the consumer staples companies and their, and their performance.

And, you know, I'd see a key theme through earnings season and I think we'll, we'll hear more of this as we kind of move into, you know, conference season if you will, is, is just volume growth or volumes are largely for, for most of these companies, uh, declining in, in the US.

And, uh, it's more pronounced in, in the packaged food companies, uh, kind of and than it is with, with beverages and then household product and personal care.

But it's been a really, it's been very surprising.

Um, I think the expectation as we, we went into this year was, was that, you know, consumption would, would begin to make a turn as we, as we moved into the spring and, and so far it hasn't really happened yet.

And, um, you know, you know, there's a lot of, uh, many different reasons that, that, that have been given for it.

But I think at this point it doesn't seem like there's any one certain thing that, that, that you can point to that says, you know, it's, it's, you know, the volumes are declining and we'll get a turn.

Well, what's so interesting, Brian?

Is that for a while?

It was ok.

The volumes weren't doing much because the companies were raising prices, you had price over volume.

But if volumes are going down, are these companies still going to be able to make up for that with price?

It doesn't feel like we're there, does it?

No, not at all.

And, and that's gonna be a big story line for this group really through the balance of this year because uh we are now anniversary most of the price increases that were taken last year.

And you know, for context, you look at like food companies, for instance, you know, prices are up anywhere between 25 and 30% since 2019 20% or more in beverages a little bit less.

So in, in household product and personal care, but we've rebased prices higher, right, in a way over the last five years that we haven't seen since the 19 seventies.

And right now, consumers have the, the, the elasticity hasn't really come back yet, right.

Volumes haven't come back yet.

So we are seeing changes in consumer behavior, more economizing and a lot of different ways.

But with, with that, with that pricing anniversary volumes don't come back, we're going to start looking at for some of these companies, you know, organic sales begin to you know, flirt with, with, with going negative and that's going to be a very big story line as we move through the back part of this year.

Well, and Brian, the conventional line during this period of inflation has been, prices don't go down, they just go up at a slower rate.

But in the case of some of these products, are we actually going to see some price cuts to get more volume through the door.

It would be historic anomaly.

I think we went back and looked at this over the course of the last 40 years or so.

And there's really been only one instance and you have to go back way back uh to the sixties where we had an instance where um inflation happened and then prices dropped basically through, you know, the o over the last 40 years through every, every cycle of inflation, you know, it's, as you said, it's just, you know, the rate of inflation might moderate but, but we've never reversed.

Um that said, right, we, we've got volume weakness.

Um We have uh you know, retailers, you know, looking to offer value to consumers.

Um We, we know in the, in the restaurant world we're beginning to see more um promotions in, with, with, with quick serve restaurants.

Um So I, I think the first step will be if we start to see companies maybe increase promotional depth.

Does that drive lift?

If it doesn't, then that might be the scenario where, you know, companies will have to face either, you know, accepting that that volumes remain sluggish or acting on it.

But I think it would take a lot for that to happen because the and implications of rolling back price is, is, is um is going to be value would be value destructive.

Hey, Brian, we had a, a headline dropped from the journal about how Boston beer and talks to sell itself to uh Santori not asking you to comment on that deal, those names Brian, but I am interested just in the general trend of alcohol consumption.

What are you seeing, Brian?

Yeah.

So two things I would say in response to that one is in this volume, conversation, alcohol across wine, beer and spirits in the US has softened, right?

You know, the beer industry in the US year to date is is declining at a 2 to 3% rate.

Spirits industry is, has moved closer to flat and and the wine industry also down slightly.

So it it's we we've seen that, you know, economizing behavior even occur within, within beverage alcohol.

And that trend I think is something that could precipitate more um transaction activity, right?

More self help type actions.

And you know, if you think about a company like Boston beer, um you know, again, just thinking about this theoretically, the beer industry isn't growing, we have this blurring of of beer and spirits with the right during cocktails you start to think about.

Does it make more sense than it ever has historically for beer, beer companies and spirits companies to, to somehow either merge or, or work even more closely together than they are right now.

Brian.

Great to see you.

Thanks for being here as always.

Appreciate it.

Yeah, you're welcome.

Have a great weekend.

You too.

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