Roaring Kitty lawsuit, GDP forecasts dip: Monday's market trends

Yahoo Finance Reporter Josh Schafer joins Asking for a Trend to discuss his key takeaways from the trading day.

The Nasdaq Composite (^IXIC) hit a record high in Monday's session despite a higher move in the ten-year Treasury yield.

Meanwhile, the GDP forecasts keep falling. The Atlanta Fed's GDPNow forecast is below 2% for the first time this quarter, signaling slowing growth as the Federal Reserve has its eyes on a soft landing.

Finally, meme stocks aren't going away. In an SEC filing, "Roaring Kitty" revealed he has a 6.6% stake in the pet care retailer Chewy (CHWY). Gill also faces a class-action lawsuit for his social media posts that fueled GameStop (GME) volatility.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video transcript

Us stocks closing higher to kick off the second half of the year.

Investors beginning to count down to the key us jobs report young finances very own.

Josh Shafer joins us now with more of the trading day takeaways, Josh, yeah, Josh, Josh, the NASDAQ composite hitting a record high today despite a higher move in the 10 year treasury yield, that's gonna be my first takeaway today that I want to take a closer look at here.

So I want to pull up that chart of the 10 year and we pretty significant move in the 10 year treasury.

So you see they're up about 14 basis points typically over the last we'll call it a year or so.

Now if we sell at least it's been that long, if not longer as yields have gone up this much in a day.

Normally you've seen stocks go down.

I'll take a look at a three month chart here for us and we can look at April if you remember April, we had that big chug higher.

That's when we had a 5% pull back in the S and P, right.

So it's interesting for me to see that move higher in the 10 year today, but not really see it in stocks.

So if we take a look, sort of what the market looked like today, I think this is kind of intuitive for what this move really means for investors, right?

As yields go higher, you see kind of this move to quality is what strategists often call it, right?

Look at our top two sectors there.

Tech consumer discretionary, right?

And so uh sorry, yeah, tech mainly is what I'm highlighting there.

And what's interesting within that is you look at what succeeded today.

You had Microsoft close at an all time high, Amazon up 2% Apple at an all time high.

So as we get closer to 4.5% on the tenure strategists basically circle a couple of big companies and say good earners are gonna be what can do well in that environment but anything other than that and you start to struggle a little bit.

And then I guess the broad takeaway being as the tenure moves higher, we might not get that broadening out that people want to see that.

And you mentioned 4.5, is that sort of the level, you know, I would say is that kind of level folks are watching.

So when you take a look at the 10 year, we're close to 4.5 right now, 4.5 is kind of when people start to really go up in quality.

This is per Piper Sam where it's Michael Kantrowitz, he highlights 4.5 as kind of a key level.

And then if you get below 4 to 4.5, maybe companies that are just good earners can do well, if you get below four, then you get kind of the small cap broadening rally.

So really, I think this is gonna be important to watch because we had this big move up and you have that jobs report on Friday and we know that usually moves, yields a decent amount.

So that would be for take away number two, take away, number two GDP forecasts keep falling.

And this was not the story to start the year, right?

And it was not the story of 2023.

We talked a lot about GDP forecasts keep going higher.

The economy is doing better than expected, better than expected.

But let's take a look at the Atlanta Feds GDP.

Now for Caster, this is for second quarter and this went through all out the quarter, look at where we're down here.

Now we're down below 2% for the first time for the at N FA GDP.

Now of the quarter, this takes in real time data.

And then when you look at just consensus compiled by Bloomberg, this is via U BS.

We're at 2.3%.

You can see here what I was talking about.

We kind of came all the way up.

Right.

This was the expectation.

Now we're starting to come down a little bit and I think that's just an interesting picture of how people are feeling about economic growth right now.

We went from, are we growing too fast to?

OK, maybe it's gonna be a little bit less than expected.

And so, so uh economy cooling, inflation moderating.

What, what do you, I mean, some implications for the fed, do you think?

I mean, that's so landing, right?

It starts looking more reasonable.

I think that's soft land.

And I think that's important to remember like 2.3% is still good.

That's still about on trend with where you'd want to be.

So it's not necessarily bad to see these starting to come down.

Remember when we were coming up like this and we didn't know where we were going to stop.

We were talking about no landing, the economy is too hot.

That's a concern for inflation.

The fed is not going to cut it all.

So I think this is part of the reason you're starting to see two cuts priced into the market and that's maybe where we land here on kind of what the takeaway is for.

Now, the concern would be, it keeps coming down, but we don't know if it's coming down too far yet.

So we're gonna take away the fun one of the day, the fun one of the day, right?

So Keith Gill uh roaring kitty had an sec filing out today that he now owns over 6.6% of Chuy that is the pet provider, pet care provider.

This is not gamestop.

So a little bit of a different look from him there.

And Josh really my highlight from this one in his sec filing, you can kind of fill in a box and put in whatever you want to some extent, he decided to put in a box here that says check the appropriate box to designate whether you are a cat.

Keith Gill confirmed he is, are you not allowed to do that?

I guess, I guess I asked, I asked our Jared Blier or Mark, what did Jared say?

Jared said there is a box within the sec filing that you can essentially enter like a text box and sort of put in whatever you want.

And it seems like Mr went for it.

Mr Gill went for it, he went, he went for it there.

I thought it was interesting overall.

In the chewy story today, you just see shares decline throughout the day after that and it, you look at this filing closer.

He owned the shares last Monday.

Remember he tweeted on Thursday?

It doesn't seem like the internet was too happy with the fact that he already owned the shares then started tweeting.

Then it jumps, he's facing a class action lawsuit for what happened with gamestop people starting to question whether Keith Gill might be operating some level of a pump and dump here.

Those are just accusations to this point, but it doesn't seem like the retail crowd is necessarily following him and staying like they were in some of the others.

It was, we had, we have f financial analyst who covers Chuy on the show today and it was interesting.

I mean, listen, he's studying fundamentals but it was to get his take about how, you know, listen, you get a news flow like this and you get headlines like this and you get moves like it's in the stock.

Um He thinks it just becomes potentially a lot harder for like at least institutional investors to get comfortable with this.

In other words, a lot of them that he thinks are gonna, you know, who needs this.

Chewy Chuy is a lot more of a real fundamental story than games stuff too.

Right?

And I think that's maybe to the detriment of the company here in some ways to get this sort of thing involved when they actually have earnings were up last quarter.

They have kind of a positive fundamental story going with them.

Gamestop.

I think maybe a little bit more CEO CFO you can control a lot of things, tough to control.

Roaring kitty.

You don't, you don't know what me he's gonna put out, right.

And then all of a sudden your stock starts going wild.

Joshua.

Thank you.