Saks-Neiman Marcus merge, Tesla stock jump, UK election: Catalysts

In today's episode of Catalysts, hosts Brian Sozzi and Brad Smith delve into the biggest developments across the retail sector, notable stock movements in Friday's trading, and the results of yesterday's UK election where the Labour Party achieved a landslide victory.

The show kicks off with major retail news: HBC, the parent company of Saks Fifth Avenue, has struck a deal to acquire luxury powerhouse Neiman Marcus. Sozzi and Smith explore the potential ramifications of this merger on the luxury retail landscape.

The focus then shifts to analyzing stock reactions of trending tickers. Notably, Tesla (TSLA) shares have surged by an impressive 20%, while Evercore ISI analysts maintain a bullish sentiment on Apple (AAPL).

In the wake of the Labour Party's big win over in Britain, Rabobank's head of FX strategy Jane Foley joins the show to discuss the implications of this political shift for the UK economy.

Pangaea Policy founder Terry Haines also comes on to discuss the greater political ramifications around the UK election and current doubts around President Biden's candidacy in his US reelection efforts.

This post was written by Angel Smith

Video transcript

It is just after 10 a.m. here in New York City.

I'm Brad Smith, still alongside Brian Sozzi and Miles Lin is joining the action now as well at the desk.

It's almost like our viewers tweeted in and said there are not enough for in this show more.

All right.

Well, we're all here and locked and loaded for you guys.

Let's dive into the catalysts moving markets today.

All right, I got some catalyst for you.

The labor market continues to moderate as June, non farm payrolls came in below the average monthly gain and unemployment ticked higher.

Could this slow down in hiring be the catalyst?

The fed needs to slash interest rates in September?

I know you like that miles.

Well, you know, speaking of labor UK stocks rally as Britain's Labor Party unseats the Conservatives after 14 years leading the British Parliament, we'll discuss the impact on potential global markets coming up later in the hour.

Plus, it's a critical weekend for President Biden.

As wealthy Democratic donors say they will pull funding.

If he does not drop out of the race, we'll discuss the critical weekend ahead for Biden's campaign.

But first, we have to dive into this June jobs report 206,000, uh, jobs a little bit above expectations.

Goldman Sachs very wrong looking for 100 and 40,000, uh, increase miles.

You're, uh, you've been digesting these numbers, uh, all morning long.

What do you think this means to, to what the fed may or may not do on rate cuts?

Yeah, I, I mean, the, the pressure to cut rates in September is currently building and it, it is really starting to feel like when the fed meets in, what is it?

Three weeks from now?

Four weeks from now at the end of July, um they're going to set the table for a September rate cut and, um I was looking at, you know, so the unemployment rate is obviously the real headline here.

We see highest unemployment rate since November 2021.

And I think if we look at the dot plot from June, so this is fed forecast.

We've talked for weeks now, fed forecast, just one rate cut in 2024.

And that's true.

But if you look at the way the dots broke, you actually have a plurality of fed officials, eight fed officials looking for two rate cuts in 2024.

The real change is that you had four officials in June now looking for no rate cuts.

And I think what we really see in this cluster of dots for 2024 it's probably not too much of a challenge for Jay Powell to get the fed on board and for fed officials, you know, over the next several weeks, we will have the Jackson Hole symposium at the end of August.

Another crucial time for Powell to set the table for policy changes.

It's not going to be in my view, super challenging for Powell to get the rest of the fed on board with the idea that it needs to be a 25 basis rate cut, uh, basis point rate cut in September and probably again in December, they'll buy themselves some time to see how the fall plays out, election, et cetera.

But it is starting to feel like it's less and less tenable for the fed to not act when September rolls around.

Yeah, I mean, look, I'm gonna pull up this dot pod at my next barbecue and, and see how many people I did it yesterday that it was so great.

I mean, I know it was to the upside, especially if you have one.

I was looking at the video stock charts, but at the end of the day, a lot of people just wanna figure out when am I gonna actually feel better here with the inflation that I feel like I'm paying more for in grocery stores where I'm also looking across job prospects and those being available and at the right wage to offset where inflation is persistent in the services part of the equation for themselves too.

Well, if we keep it in like markets talk, right.

I think economists are going to are circling the idea.

The fed is now behind the curve.

So, or is looking at being behind the curve, meaning to your question, Brad, a lot of that stuff, you know, that horse has left the barn, we know the job market is tougher out there and it does feel anecdotally like 4.1% understate the tension or, you know, kind of the looseness in the labor market despite it being normal, despite it being normal, I think there are a lot of folks who, especially a certain class of worker.

It's like you're on linkedin, you're talking to people and it's like, quote unquote, no one can find a job right now.

It's not entirely true, but it feels like it's tighter or looser.

Rather I keep mixing it up than a 4.1% unemployment rate.

And it feels like this notion of, you know, housing costs will get under control, inflation will get under control.

It feels like that's over.

It feels like we're all like, yeah, not, not a great vibe out there in the economy.

And I think that's where the, the fed is gonna feel some pressure to act now because the softening is starting to look a lot clearer.

Absolutely.

All right, let's bring in our next guest for more on the latest jobs numbers Biaa Man Mani is the city Global Equity strategist Biaa.

Thanks so much for joining us this morning.

Uh I wanna get your read in on what we're seeing more largely here on the trend of economic data that's coming in.

So, city economies have been highlighting for quite some time, this underlying weakness in the labor market.

So under the surface weakness and this is starting to play out and, and be visible in the in the coming data especially today.

And what that means is there is a silver lining and a city economists view is that we are indeed going to get the first cut out of the FED.

Uh this coming September, uh how many rate cuts are you you expecting uh from the FED this year?

So we are above consensus there.

We have uh well, city economists for the US have three cuts starting in September.

So your expectation is that inflation from here will continue to slow in large part because of continued slowing job growth, correct?

So inflation is slowing down the underlying weakness in the labor market is starting to show off uh show up and the FED has a dual mandate and they are going to act on it with that in mind as we're taking a look at the probability for a September cut.

I mean, what, what as we're, you know, looking past almost this year because now we've gotten from six or seven cuts that we were talking about coming into this year down to one maybe two.

What is that set up for 2025?

That's a good question.

Remains to be seen.

We see continuation of cuts into the next year.

But of course, as you mentioned, the market has been changing its mind uh a lot this year and, and has been quite data dependent.

So uh remains to be seen, we see more cuts coming um coming through in the next year as well.

You are a global equity strategist.

Uh So I would love to go a little bit more global with this conversation.

We gotta get your reaction to the UK election results.

Prime Minister tendered his resignation this morning to King Charles.

What can we expect from a majority labor Parliament?

So most of all European equity strategies, so I can tell you much more in detail about what it means for equities.

So in terms of the election, very widely anticipated outcome, what you need to know about it, that it's a more business friendly uh labor party uh that we are having right now.

And in terms of what it means for the equity market, it's really going to play out number one through rates and number two through starting.

So in terms of growth for the so and our view on on the FTSE 100 or mess I UK, we are not, we are more bullish on other markets than this particular one.

However, within the UK, our preferred trade election trade is 40 to 50 versus 100 or small and medium sized stocks versus that size stocks.

So they are more exposed to local economy.

They have um they are better positioned to benefit from the rate cuts that are coming through.

Perhaps as soon as August from, from Bank of England, they are more exposed in a positive way to potential strength in the pound that we see in the short term.

And also what is very important is that they have der a lot versus large cuts or FTSE 100 over the past two years, they are down, they underperformed 25% since the peak in 2001, uh underperformed year to date.

And they are actually uh showing a superior eps growth, um double double the one for, for F 100 or the larger, larger cups.

So that's our preferred uh trade uh in the post election ward for, for the UK for those uh us, investors concerned about volatility ahead of the election and they don't want to play Europe because Europe is growing very slowly.

It's unclear when they, when the ECB may come across with another rate cut.

Are there emerging markets that investors that us investors could look to for potential alpha?

So uh in terms of our global allocation, we are right now overweight the US market which we have recently um upgraded to overweight immediately in the aftermath of this snap election announced uh in France downgraded continental Europe to neutral emerging markets are already neutral.

But within emerging markets, uh those countries that we like the most are uh Taiwan, Korea and India.

I appreciate the insight, Piara Man City, global strategist.

Good to see you have a good weekend.

Likewise, turning to retail, the parent company of Saks Fifth Avenue H BC says it will acquire Neiman Marcus Group in a $2.65 billion deal.

Yeah, I mean, II I wanna be more excited about this but I think this has been and I've talked to Mark Metric before.

I think he has been working on this for some time.

So this was largely to be expected, but it really, it comes against a backdrop of really of a department store space.

This continues to fall apart.

You have Macy's closing hundreds of stores and I think this is ultimately a play, I think on the e commerce business for these companies and then maybe for the uh the off price business, I was gonna ask you.

So I was like, what is the future of the department store business like in general?

I mean, I think Macy's is giving you a taste of it.

It is probably you have 200 to 300 stores open in a locations the best of the best and everything else just doesn't exist, then it's just all online, it just is online.

OK. That was gonna the follow up though.

Is like, is there a combined ecommerce business here?

And I say it because I find myself as a consumer and I think the businesses find this as well.

Everyone has pretty much everyone.

Now, they would say some of the luxury houses they play with, maybe don't have an ecommerce presence, but pretty much everyone does.

And I usually have a general idea of what I want and, you know, let's call e commerce warehouse type uh um websites, you know, even the ex Amazon division, it's not the most pleasant experience like browsing through a variety of brands.

I don't really know what I'm getting.

So if I'm at a combined Sachs Nieman website, I'm gonna see some brand.

I would probably rather go to that brand's website and figure it out for myself there.

It's more coherent inside of a brand.

That's why the, the ultimate player is a Louis Vuitton that is well off its high.

So this is a brand that has been able to control their own dest, they're opening shops.

You want Louis Vuitton, you go to a Louis Vuitton store and get that full on experience.

It's just a better experience.

Well, here's the thing, the, the reason that department stores to your point did so well was because people didn't know what they want.

So what's, what's become the kind of modern day resolution for that for retailers online?

It's inferential technology, artificial intelligence in some cases that tells you what you want and essentially takes your purchase history and is able to aggregate enough information around you to suggest, hey, you're either running low on this or this is where we're gonna uh generate demand in another part of your home or in your lifestyle.

And then on top of that, the mall was successful because of traffic, traffic has shifted to go online or, or the new mall is essentially on your Instagram app where you're just searching through there and you get a bunch of ads that get thrown in front of you as if you were walking through a mall and having that discovery uh process taking place in a virtual concept instead.

Yeah.

And I think like, you know, we, we talk a lot about our own data and the integrity of our data where it goes.

But to your point, Brad, I think I've made peace at least and I think a lot of people have um OK, Instagram knows pretty much everything about me.

Guess what?

Over time they'll probably target me something that I will eventually buy.

And I'll be like, you know what I do like that.

I like I did want that.

Exactly.

And that's fine.

You know, you would have probably you would appreciate, I think the nuance on this one.

I think the story here is, is Amazon uh being a minority investor in this combined company as they're not only an investor, but they're also focus on the logistics.

If I'm a ups and fedex, I'm looking at this, I'm like, Amazon is really playing ball in logistics, the subtext, it's a whole different conversation that we don't have time for.

But the whole subtext of the, what do you do with these combined e commerce storefronts?

The Amazon experience has plenty of problems that we could go for hours about.

And I wonder how the current team with all the high pressure is what's going on a aws, what they do with the retail piece going forward to make that just like a more Amazon experience.

I mean, there's plenty of good things about it, but there are plenty of things about going on Amazon and a lot of other, you know, warehouse type e commerce sites these days.

That is uh not the greatest thing that I've ever experienced.

No.

Well, sir.

All right, coming up, we'll take a look at a few of the, uh, trending tickers on Yahoo Finance.

Stay tuned.

If you're watching Catalyst shares of Tesla in the Green this morning continue its comeback after second quarter deliveries beat analysts estimates earlier this week.

Shares are up over 20% for the past five days.

And it's just only in Tesla land guys, you'll see a company show declining deliveries.

This is an embraced set of results.

I think a lot of the folks right now are just afraid to be short this name into that August 8th Robo Taxi event.

Well, also, the stock was down 40% year to date at its lows in mid April.

So if you were short coming into, if you were short coming into this year, um I think there's probably a, you know, hey, we don't need to press our bets anymore at this point.

And as I've been looking at this, you know, rally because an S for a has written three days in a row now, a Tesla story for us and the story is kind of just like, uh stock keeps going up because you know what it's worth letting people know, hey, stocks still going up.

And I, I'm wondering if there is not an like look at what happened with Xa I, they raised a bunch of money.

There's some bullishness about the general Elon verse, if that's not a part of like the meme part of the Tesla stock as like the purest play on Elon Musk.

If things in general for Elon Musk's business interests are looking up.

Tesla is the place that you can express that most easily as an investor or as an individual investor who, you know, does not have access to things like a Well, let's remind folks too.

I mean, he is disappointed at some of these events, the energy, they had an energy storage event.

He let people down.

I think the stock got hit too.

So there's no guarantee that come August 8th, Elon is gonna come out with his mind blowing Uber rival that's gonna instantly take market share in under a year.

If, if history is any good, he won't, he won't.

What targets has he met the cyber truck?

Even when it did come out lackluster on actually meeting what was promised going into the launch of the, I saw my first cyber truck.

Uh, yesterday, actually I saw the, I saw it but I actually touched it.

II, I touched it, touched the side.

It was pretty cool.

It was a good moment.

The text.

It's big.

It's just smooth.

It's weird.

It's too big.

It's too big.

It's too big.

Can't, anywhere on the road.

They are very big.

Um, but you know, the stock is now making its way back towards break even for the year.

So, you know, look, we can, we, you can kind of hack up the time frame with Tesla at any point in time and find a good or bad story.

Well, the robo tax was supposed to come out in 2020.

Yeah, I mean, this is, in fact, this entire fleet was supposed to be something that happened four years ago.

Now you can give them a little bit of grace, I guess because of the pandemic.

But then at what point do you say?

Ok, you guys promised us this by 2020 we'll give you uh what one year, two year grace period.

I just feel like you cannot, if you're, if you're in this thing.

You cannot earnestly sit there and be like, Elon is disappointing me again.

It's like it, that, that story is so well baked.

You are just making a long term bet on Elon's vision and the deliverables, meeting these certain timelines that is stuff or stiffs to talk about.

I mean, I just don't think that can really be part of it.

You have to have made peace with that already because it's 2024.

He's been at it with this company now for 1516 years at it with everybody too sec his own investors.

There's folks on the internet.

Yeah, exactly.

Yeah.

One part of the internet that he owns too.

That's right.

We're also looking at Apple this morning because we're always looking at Apple Evercore.

I si reiterating their buy rating and a $250 price target on the stock firm saying the company had another good month for the iphone.

You're taking a look at shares up by about 1.5% right now.

Um, ok, so another good month for Apple.

I think it's gonna be a larger question though of how many people are waiting to get into the new iphone because of the promises that they were making at WW DC is generative A I enough of a demand generation driver for Apple in the next inflection.

This data is pretty, um, pretty compelling shipment data up uh in May according to evercore I si 40% year over year coming off a growth rate of 52% in April.

That's good.

Uh Suggesting that this acceleration is easing concerns about Apple's position in China.

I mean, China has been a just a weak spot for Apple, at least for the past several quarters.

You know, I was reading this note and I was thinking about another note we saw from Mike Kantrowitz on Wednesday, but he doesn't want to talk about the SNP anymore.

And because the SNP is all A I, right?

And I'm reading this note and then like, ok, we wanna do the A I iphone upgrade super cycle, but go back in time a few months, the story was Apple is not playing in A I to the stock is lagging and you sort of wonder if we start to sour on the A I theme even a little bit in the second half of this year.

Wouldn't it be great for Apple to just go back to talking about regular iphone sales in China in its biggest growth market?

And they don't have to worry about A I, they make a ton of money, they pay a dividend, they buy back a ton of stock.

It's a safe place as an investor to say, hey, we're overweight app.

It was not very fun to say that a few months ago because there again was not quote unquote an A I play that story.

Obviously, we've seen the stock chart you know, since late April has really turned around but being a more conservative entrant within that field and just getting back to the basics of selling a lot of people, a lot of iphones and a lot of services related to the I OS system.

Maybe that's the best play for Apple, who we'd argue with Warren Buffett.

I mean, full time holder and Apple guy knows a thing or two.

Well, somebody else, the trade, he probably just had to sign off on it.

But, you know, at the end of the day for Apple, if you go back in the annals of history, they're never going to be kind of over the past two decades instances where you look at Apple and say they were a first mover in putting technological innovation out there.

They see what the market demand profile looks like.

They get a sense of what the fair pricing that consumers who have already bought into their ecosystem would be comfortable with.

And then maybe say, well over time, we might be able to charge a little bit more, but they've never been, especially under Tim Cook, never been the one to say, ok, we're gonna be first in mp3 players or at least that was back when he was CEO um or CEO O, excuse me.

Um We're not gonna be the first ones to be, you know, fully uh touchscreen phone, even under jobs.

At that point, there were other instances of innovation where companies beat them to that.

And generative A I is another instance where they're being extremely calculated and I think that's where we didn't hear from them for months.

Almost a year, essentially on the generative A I front so that they could be conservative to your point but calculated as well.

Yeah, I mean, and you go all the way back to the jobs report today.

If the economy is entering a different phase and markets are entering a different phase, isn't it better for you to have a better core business to talk about?

Rather than to say our story is playing in the next gen of tech because rates are high.

Uh the situation for your core customer base, regardless of what business you're in is gonna be changing isn't just better for Apple to say we all got our macs on the table and our on the Well, Julie su says the job is John Mark's gonna say hot.

So she's good.

We'll see, you know, we'll see.

All right.

Um let's talk a little bit about what is in our closets.

Let's play a fun little game called in or out and we're gonna talk about three retail names that I know the three of us all have plenty of exposure to Nike Lulu and Deckers.

Let's start with Nike and you take it any direction you want Brad, I'll start with you, Nike.

Are we in or out?

I'm still in?

Ok. And are we talking in my closet or are we talking however you want to interpret it?

However you want to interpret the stock, the, you know, the logo?

Anything?

Yeah, the iconic swoosh.

Are you done with this year's Olympic uniforms?

So I think for Nike, there are a few things that are alarms for some consumers, some investors out there even.

Uh and we'll get to the dunks that you're seeing on the screen because that's, that's a large portion of it.

You know, we were, we've been speaking quarter after quarter, especially with Adrian Yee Barclays about what needs to happen at Nike.

And I wrote up a story earlier this year that still holds true from Adrian and our conversation talking about they need more innovation.

This company needs more innovation.

You think about the number of brands that are doing really well at taking market share on the apparel side purely because they're able to tap into audience bases that listen to Nike.

But also listen to them over platforms like social media.

They see all their friends wearing a gym shark, they see all their friends wearing a O or a lo I don't even know how we pronounce it out.

Great.

So I was over for two VV.

So all of these new players have entered into the space challenged the behemoth that Nike Adidas Lululemon even.

And I know we'll get to them that they are and ultimately put pressure on them to say, ok, now you have to out innovate these new, smaller players that are either more esg minded that are perhaps even more creative in how they're marketing and go after that same consumer.

And on a pricing perspective, figure out a way to make sure that as consumers are looking at this discretionary purchase that they're, uh, they're gonna buy into a Jordan shoe that they bought back in 96 and, and once again, here in 2024 or if they're gonna wait for something else that's actually worth the $200.

I'm very simple.

Uh I'm uh Richard Nixon out, I'm piecing out uh of Nike.

I'm out on Nike and, and my thesis is, is very simple one.

I think CEO uh John Donahoe has done a terrible job and I think it's his time to announce successor.

There has been some chatter that you will get the next CEO of Nike uh coming up within the next year as should happen.

I think he's disappointed investors for the past four quarters in terms of results and guidance the street does not like to see this.

I think John has held on to this job for too long.

Number two, China, uh I think the inventory level and China remain too high, the sales results and operating margins in China remain under pressure and these things uh for a business, the size of Nike does not change overnight.

Companies probably looking at 23 more challenging quarters in China before they course correct.

So until I see some form of who the successor is for the CEO role at Nike and better results of China, I can't be in this name just a stat real quick.

Toss up those panda dunks once again here because I got one I gonna say in, I'm just gonna say in just because you, I, I wanna talk about my own foot wherever Brad continue.

Number one selling sneaker on goat and fly club.

Number one most wanted shoe and go for the second straight year in a row.

Last year in 2023 average profit margin when it sold on those platforms, 33% people were buying into something that came out back in what the eighties again and for higher profit margins, higher mark ups here.

So that is the, that's both a gift and a curse.

I wanna know what I tell me why my new Nike Maxes are peeling.

I wanna know I just got them and they're peeling and they're garbage.

So I, you know, did like everybody else.

1819, you know, was like, I got, I need sneakers, right.

It's the cool thing to do.

And so I have or I had four pairs of ones that I thought were sweet and I wore a pair of the office like a month ago and I'm like standing there and I'm looking at my feet.

I'm like, what doing.

I am, I am a father.

This is not cool like this is out get a pair of sketchers and, and I I just, it just doesn't feel, it doesn't feel like it.

Right.

Speaking, speaking of it, let's talk about Lululemon.

We mentioned Fury before.

So I know they are selling footwear, maybe more of an apparel play Brian Sazi.

Are you in or out on Lulu?

Staying with Richard Nixon.

I am I am peace and out on Lulu Lemon.

And this is very, very simple.

If you go into uh Lu Lemon's latest 10-Q uh keyword, the word conversion uh in the most recent quarter, there was something that happened in Lule that I have not seen in some time.

It's a major red flag conversion rates were down.

What does that mean?

You go to a store?

You leave with nothing because they're clothes stink.

I think this company is having problems with color fit.

They've lost key executive talent.

So until I see better conversion rates from Lu Lemon usually takes two or three quarters to course, correct that I can't be in this name either.

Bradley.

I mean the competitive advantage for a while while you saw that stock rising back a couple months ago.

And now the retreat that we've seen is because consumers are recognizing that they can get the same fabric at different stores for lower prices and it's uncreative right now.

I mean, it's just colors on clothes it does feel when I walk into my local Lulu Lemon.

Of course, I have a local uh that it's kind of the same thing, just sort of re skinned.

Now.

I will, I will say I'm still in, I'm still in on Lulu because the clothes do hold up a lot better than other brands that I have owned and for my needs, which is basically feeling not like a working stiff, like I'm seated right now.

Uh it always meets my needs.

And I again, I think the durability for my closet has played out over time and maybe this is the problem for the stock.

Me, a boring dad who's like, I just kind of want the same thing.

It is still kind of the same thing.

So this is not great.

That's why stocks down 40% not great for investors, not great for the story, but as a core customer I'm still in, I'm not really shopping around for alternatives like an Aloe or like a vio even though both those stores are now just down the mall aisle from I know we gotta get to Maz I was sitting around at the barbecue yesterday.

A bunch of 50 plus year old dads.

They're all talking about the new Sketchers shoes.

You gotta get, they're the slip ons.

They have the, the, the, the cushioning 40 about 4045 ales get you into these.

It could be time my father wears sketchers really good.

They're really comfortable.

You know what else my father wears, he wears.

Ho let's talk about Decker's outdoors.

Decker's outdoors.

Really?

The story here is Hoka.

The changes that have happened in the technical running footwear space of the last 10 years.

I would love to do a whole show on Brian.

Are we in or out on Hoka?

I know you had ans on the other day.

Where are we at with the big guys?

I am chunky boys at Hoka.

I am also out on Hoka.

You look all the, all the, all the I love, I like the shoes.

I like the Ugg story.

Like all those things I'm concerned just from a pure stock perspective.

A monster monster and the growth rates have started to slow even for Hoka.

This was a brand a year ago growing at about 100% year over year.

Now it's down to about 30 40% when you're a growth stock and your growth is slowing.

Usually not a great setup.

I'm in on Deckers for a different reason though, for Uggs Uggs for some reason, continue to be like the thing that II I don't but I know too many people that do in this day and age and I just can't figure it out honestly, even though they're so soft.

Oh, the men's slippers bread.

So just the fur.

Is it fur?

Is it fur?

It's like, what is that?

I don't know, it just suits your foot so nice.

It's just so nice.

I mean, so, yeah, it could be Alpaca for all.

I know, like at the end of the day I just know, I see a lot of people around them.

Yeah.

So for some reason they were popular back when I was in middle school and everybody was just like, ok, we're gonna make that cool again.

Gen Z is really doing a number on us.

So I would say on balance here it feels like some of the bigger public names in the athletic apparel space we didn't talk about on which is sort of the, the one meeting in Adidas feels like we were mostly out.

I, I'm concerned, I'm concerned that I now see on, on the feet of uh older folks and uncool people that was usually a telltale sign, you know, who just bought, just bought on this guy.

I really, I didn't, well, I can't see this is the worst part I had.

Well, I have, there's one model they have and I've had a few pair.

I get like one pair a year and I had to refresh but it's, it's Cloud Monsters.

No, it's the Cloud Nova that I'm seeing them everywhere now.

They are not the most durable shoes.

That's what not the shoelaces.

No, they're at the right spot.

Ok.

Uh One bonus one here in or out.

Mark Zuckerberg.

His celebration, let's say Fourth of July holiday.

Oh, I'm in.

No, that is, I, I'm in for that.

I think that shows the power of a meta A I and I'm bullish.

I'm thinking, I'm hoping an orca absolutely comes and capsizes his surfboard like they do those boats.

One of, I mean, I'm assuming he's in Hawaii has a big spread out there.

So this is one of the richest men in the world in a tuxedo, drinking a beer on a, I think he powers this thing with his legs, I believe is the story like he, he like pump it and it goes, it's not, doesn't have, not of a motor.

Uh And he has an American flag.

No, this is not him.

I thought it was like a I, that's really, I think that's him.

We're the security guard, this guy in the middle of an, I suppose it would be a great way to show off the A I capabilities.

But I do think that's him.

It's something I think, I, I think, I mean, not as ho as on the beach.

So I actually, I think what Zuck is speaking to in this and it has obviously plenty of upsides and downsides.

We'd see it with a few other people.

Elon Musk is in here.

People say, what would you do if you had all the money in the world, how would you spend your time?

The answer is usually I'd post more on the internet.

That's basically what he's doing with his time.

He's now like I have all this money I control this company.

I will post what I want when I want and I'm gonna have fun with it.

And, you know, I guess good for him, for having fun.

Was this from his Hawaiian compound that people were upset with him for buying?

I mean, we, I don't know the location.

I assumed it was Hawaii because he has that spread.

Although, you know, he also has a place in California is where the company is space.

You, you could be in the water there.

I just keep, you know, Northern California doesn't feel like I'm gonna go out and, you know, hang out on a, is that a, is that a, is that a high noon?

I think it's a beer.

It's actually that caffeine, I think it's a pounder.

It looks like a large can.

So I don't think it's a high noon.

Really.

The best part of high noon is the can, can form factor if you're a meta shareholder.

This is uh this is good stuff.

That's the balance you want.

Yeah.

Is that, do we have, do we know what the stock is up today?

How NASA is that?

You asked us, how are investors digesting this?

Uh They're sending it higher by about 3%.

A leading performer in the NASDAQ 100 right now?

Meta All right.

Miles.

SA thanks so much.

Happy to be here.

Good guys coming up.

We're taking a deep dive.

Into the currency market that is next on catalysts.

Hey, welcome back to Catalyst.

I'm joined now by Yahoo Finances Nez Foray and Nez, thanks so much for joining us on the desk here.

Let's dive in to the currency market for this next conversation.

The US dollar is edging slightly lower after the US added more jobs than expected in June.

For more on this.

We have Jane Foley, who's the head of FX G at Rabo Bank.

Great to have you here with us this morning.

First and foremost, I wanna get your reaction to what we saw come through in that piece of economic data and why we might be seeing this type of reaction, what the typical kind of nature of uh in correlation to the dollar and the employment report is.

Well, first of all, thank you for having me, but this wasn't necessarily all about that headline number.

It was about what else came within that report and particularly the revisions.

So we saw a significant downward revision to the last uh two months worth of payrolls data, meaning that a month ago when we were here, you know, staring at what we thought was a very, very strong payrolls report that month.

Well, actually, it wasn't as strong as we thought.

And so in addition to that downward revision, uh we also got a tick up in the unemployment rate and I think put that all together, you know, and, and you can say, yes, you know what, we, we got a report which perhaps, uh went into the same sort of way as the economic data that we had earlier that the week was suggesting, which is a cooling in the US labor market.

Certainly not one that is falling out of bed, but certainly one that is cooling.

And that only served to just reinforce some of that excitement that had built during the course of this week that yes, you know what a fed interest rate cut in September and then maybe even later in the year as well is certainly, you know, a primary risk, certainly.

And, and how many cuts are, are you pricing in from your own purview?

Well, here at Rubber Bank, it's, it's two which I presume isn't too far away from a market consensus.

So a September interest rate cut and probably another one in December.

But that said, uh you know, all economists in addition to, you know, the fed policymakers are still going to be looking at forthcoming economic data to get further justification for those sorts of forecasts.

I think so far, you know, the data that we had this week, the ISM numbers, uh that the, the labor data we had today that the labor sub index of the ISM data all point to the prospects that yes, you know, that the economy is slowing down sufficiently to bring that interest rate cut.

But uh again, you know, you look at that prices paid sub sector of the ism.

It's still quite sticky.

So you know that there are still elements here with respect to inflation and particularly services sector inflation, that policymakers are still going to be a little bit concerned about Jane.

I wanted to get your take on the labor party win in the UK and the movement that we've seen with the British Pound against the dollar of the year against the dollar as well.

What's your take?

Well, you know, if you look at, uh, at cable, well, yeah, you know, that has done pretty well.

In fact, Sterling right now is the best performing currency over the last 24 hours or so.

The dollar, of course, is weakened by itself over the last few sessions.

As a market market looks ahead to the possibility of a September interest rate cut.

But Sterling has done well.

I mean, the gains that we saw today great.

They were fairly moderate, but actually Sterling is now the best performing G 10 currency in the year to date.

And that doesn't mean it's a strong currency, but it does mean that it is improving really from a very low base that we had back in September 2022 when we had, you know, tronics and, and the gilt market really worried about what that Prime Minister may do.

Now.

She Liz Truss today lost her seat and we have, of course, an awful lot of headlines telling us that we had, we've now got a landslide victory for the Labor Party.

Now that of course is true.

But if you dig a little bit deeper into the data, perhaps you see something not quite so encouraging for the labor party.

Now, in the UK, we have a first past the post system, but labor managed to pick up this majority of seats by only getting a very small increase in the national share of votes.

Because what it appears has happened is that voters that previously had voted for the Tory Party haven't necessarily all migrated to labor.

They've gone to smaller parties instead, meaning that Labour hasn't really picked up an awful lot more votes this time around.

And that suggests it's going to have to deliver on growth and productivity and, and, and people's incomes if it really is going to win the election next time around and the Euro edging higher with the next round of voting in the French election taking place this weekend as well.

What, what are you anticipating there?

Well, you know, I think that's a lot more interesting perhaps than the UK election.

Now, the market has been encouraged.

The Euro is certainly moving up as, as polls come out that the far right, the pens far right party is unlikely to win a majority.

Now from the market's point of view, a hung parliament is, is better than a majority for the far.

Right.

But, you know, it's very difficult to celebrate a, a hung parliament because if we think about France's budget position, it's not great.

The, the budget deficit in France is, is 5.5% of GDP.

Uh Brussels has wrapped um France on the knuckles along with Italy and six other EU countries uh earlier.

Well, just about two or three weeks ago for not doing enough really to, to curtail their budget deficit.

And when you have a hung parliament, yeah, you may not have the far right in enacting some of their policies.

But it's going to be tough to try and get that budget deficit in a lot of the far right policies.

Things like wanting to reduce the retirement age could be expensive.

A lot of the policies of the of the left wing alliance, which is second after the far right in this election are all so uh potentially going to cost France more money.

So it could be quite difficult to get that budget deficit in.

And that probably means as we go into the second half of this year, we could be increasingly worried about some of the budgetary positions of, of countries such as France and maybe Italy too, Jane Foley.

Thank you so much for taking the time here with us today.

Head of FX strategy over at Robo Bank, Jane Foley, coming up, President Biden, facing more and more pressure to drop out of the presidential race.

What his decision could mean for markets.

Next President Biden facing ongoing pressure from within his own party and beyond to bow out of November's election after last Thursday's debate performance with many calling into question his mental fitness for another four years in office.

For more on the president's future.

Bring in Terry Haines Pangaea policy founder here, Terry, what are your anticipations going into this weekend?

Knowing that there's a big interview that President Biden is going to be doing where the Americans will have another opportunity to assess the acuity.

Well, thanks for having me.

II, I said right after the debate last week that I didn't think the president would, would get out.

Uh for a very simple reason, you don't try to become president for 50 years and then uh chuck it after 11 debate performance.

Uh But now he's in a situation where, you know, the he doesn't have three strikes and you're out.

Uh, he's already had one strike.

He gets one more.

So every day between now and the election, he's either going to have to convince people that regular voters that as well as the party grandees and fundraisers and the like the regular voters that he's up to the task and he's able to actually carry this thing off and win it otherwise he's gonna be gone pretty quickly.

What do you make of the number of big money donors that are shifting, how they're prioritizing they're giving to the Democratic Party and specifically to the, the Biden campaign with this question mark kind of looming large over this weekend.

Look in, in politics as in many other professions.

Uh, you know, the, the, the motivations have a whole lot are a whole lot more selfish than, uh, than you'd think.

And I think, uh, that's what's going on with a lot of these donors who have already, have already put up a substantial amount of money, have pledged a little bit more and are in a situation where, you know, they're threatening as you say, to, to uh repurpose or whatever.

But uh the fundraisers always think they have an outside outsized impact on the political machinations on the inside and they, they're not able, I don't think to uh to affect the result much.

Uh they can provide a little extra push if it comes to that, but they're not in control, Terry, you're currently in London.

What's your reaction to yesterday's UK election results with Labor taking over in the next government?

And what would happen if Trump were to win the presidency or if Biden or another Democrat were to win?

Well, you know, the uh the election is an interesting one of a landslide with no mandate.

Uh Jane Foley was talking about this a little bit, but I'll give you a kind of a slightly different look for it.

Uh Labor won about two thirds of the seats in the commons yet had a 35% vote share of the uh and first past the post really means, I mean, for American audiences really means nothing different than what we have.

But what you had in uh in the commons elections were, were three or four or sometimes even five political parties going at it for, for each individual seat.

So you get a sense of situation where Labour's vote, labor's seat totals are pushed up because the opposition votes split between the Conservatives and Reform, let's say similarly, Conservatives lost an outside number of seats frankly, because of reform.

And you've got two political parties, the lib Dems with their best ever showing.

And you've got this new Reform Party with four seats even though they got 15% of the vote.

Uh But what, what you see here is not a mandate for labor or labor's policies, but frankly, a situation where there's disgust and dissatisfaction with conventional politics as it's been practiced in, in, in the UK.

Now, finally, what Starmer is going to have to do is proceed cautiously and frankly, you know, bring the country along with him.

So, you know, you're not going to see labor jump in here and all of a sudden start wildly taxing people.

Uh You know, the way a prior government might have done because that's just not gonna wash with people.

They've worked very hard to get credibility back and they can't squander it immediately.

Terry Hanes PGA policy founder, Terry, good to see you here and thanks so much for taking the time.

It's gotta be at least afternoon, some, some time over in the UK.

Thanks so much.

Sure thing.

And thanks for joining us and Nes Farre as well here for the back half of this hour coming up, everyone wealth dedicated to all your personal finance needs.

I've got you for the next hour.

Stay tuned.