David Faber, Leslie Picker and Mike Santoli led off the program with reaction to the June employment report, which showed better-than-expected job creation -- but also downward revisions on growth for May and April. Acting Labor Secretary Julie Su discussed White House reaction to the numbers with the presidential election just four months away. The anchors also weighed in on this week's tech rally and new all-time intraday highs for the Nasdaq. Some members of the "trillion-dollar club" entered Friday's session at record closing highs, while Tesla moved closer to erasing its losses for 2024. Also in focus: The Labour Party's UK election landslide, decision day for Boeing, retail buyouts in the spotlight, banks rally, the 2nd half playbook on energy, Mark Zuckerberg's unique 4th of July celebration.
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will be exciting unlike perhaps what the market looks like so you know that's riveting even if it's not moving much if it's getting Mike Santoli excited then you know you got something going on let's get to our roadmap it does begin with continued job market resilience not slowing the tech stock rally Microsoft Amazon and alphabet all set to notch new highs at the open plus Tesla's bounce back shares rallying again on track for an eight-day win streak it's the longest since June of last year and the labor landslide the UK's opposition party winning a huge parliamentary majority in the country's general election unseating the Conservatives after 14 years all right let's get to that June employment report non-farm payrolls rose by 206,000 that was ahead of forecast job growth estimates remain April though were revised downward the combination there of those two months 111,000 fewer jobs and had been previously reported the unemployment rate hit 4.1 percent and according to Rick Santoli when I was listening earlier last time we saw that number or that high was November of 21 looking through the report as well and obviously they analyzed it at length on squawk box 74% of the jobs government education and health care and Mike listen we've been paying attention of course to yields in the bond market this week in terms of potential tell I'm curious to sort of get your take on both the employment report and the impact on the job on the on the bond market and that's the stock market yeah the net takeaway is it's softer than not under the surface so the downward revisions of the prior two months of more than a hundred thousand jobs there had been this somewhat perceived disconnect between the payroll report and the household report household which drives unemployment rate somewhat weaker so there's been a little bit of convergence there yeah private sector job creation was below expectations average hourly earnings softened up so in general it still paints the picture of a cooling labor market bond market immediate reaction was yields rush lower now not you know to to anything alarming but basically two-year yield down it 464 something like that's like where it was three months ago so you had this little bit of a scare that maybe there was gonna be this higher for longer story it really does intensify the what should the Fed do in the July meeting perhaps to set the stage for a September rate guy I think you're starting to have that chorus sing a little bit more loudly in the sense that the preference is for the Fed to be somewhat orderly and proactive and deliberate in how it decides to ease off of these restrictive levels of rates that it still says it's restrictive and if you can you'd want to go sooner than later so you're not rushing to rescue an economy that's really in trouble I keep measuring things market-wise and economy-wise by the magic desired 1995 soft landing scenario that's always been the idealized version of how you do it because unemployment actually didn't go up during the tightening cycle back then it really didn't go up this time during the tightening cycle you had two quarters of stalling economic growth in 95 sub 2 percent in fact I think one an initial report was below 1 percent and so there was a growth scare one cut then another one several months later it wasn't really a big easing cycle it was just taking the pressure off and of course equities were at all time highs as they are right now and so this general sense of you know you can kind of loosen things up while you have the luxury of an economy that's still functioning pretty well near full employment yeah another concern that people are pointing to was temporary help declining 49 K in June and the swaps market to your point now predicting 72% probability for rate cut in September which of course we've seen this movie before with this you know the swaps market being wrong in terms of when to expect rate cuts but notable that you believe that there was potentially enough kind of friction in this report to suggest that September is still a likelihood incrementally yeah and I guess the cases building is the way I would put it in next week you have the CPI report that's probably got to get thrown into that mix as well and we've been surprised at the stickiness of inflation along the way but really it is the cumulative evidence is we've seen the downside surprises in general economic data for weeks now you know some services the other day as well so all of that fits together into the into a similar story of hey we thought the economy would and should decelerate to some degree how much it will we remains to be seen it's kind of showing that to be happening right now now what's interesting too is that private sector profit growth is still expected to be really good and in fact start to pick up in a lot of areas of the economy so there's been this kind of you know asynchronous way that the profit cycle and the let's say labor market cycle have been operating you mentioned 95 of course yeah and that does bring you to do what to tech stocks as well yes the beginning then it's interesting there's sort of put that in perspective of an incredible rally that I can well remember yeah I would say 95 we were just we didn't have much of an inkling of the the kind of multi year multi decade tech renaissance that you might but it was fueled by obviously a so-called a revolution then it was the internet now it's AI which does get us to these stocks you're looking at right there Microsoft all-time high it's up 10% in the last month you can see it Apple has finally sort of found its footing after what sort of was a difficult year for the stock to a certain extent but take a look at that gain over the last three months and then alphabet as well and it goes on from there Tesla also of course we talked about earlier this week Mike was significant gains I think it's seven straight sessions yeah I don't know it's just the same story yeah didn't even mention Nvidia here though that's right well Nvidia is the one that obviously you know massive overshoot to the upside I mean overshoot relative to everything else in the market it basically and it's it's trading you know double digits below it's high so I that's that's the one that's kind of consolidating after this massive move the rest of them it is this impression of a market that keeps sort of discounting the same well-known news every day where that comes to these stocks which is all the things we know about how they're in the right place right time they can invest for any scenario and as I like to say they live in a world without painful trade-offs it's not like well if we do this capex we can't do the buybacks and we can't do you know we have to we have to lay people out no they can kind of afford it all at this stage and at the moment the markets rewarding them for that that long-term perspective now I think the bulk case really for the market is that other companies outside of that cohort start to actually show better earnings growth start to kind of justify maybe a little bit more help on the valuation but it hasn't really come to pass basically well I thought of you this morning though because I know in the past we've talked about the correlation between Bitcoin and at least Nvidia and it seems like that has decoupled this week with Bitcoin said to reach its lowest level since February worst week in over a year in terms of performance so it's definitely decoupled with regard to the overall market or the NASDAQ and and the degree of decline in Bitcoin from the high it's like down 25% off the highs it certainly exceeds anything we've seen in any of those big stocks that said you know Nvidia peaked right around when Bitcoin peaked you know like it's not so much that you they go step for step but it is a similar cadence and of course there's some unique factors with Bitcoin people expect this supply of these sort of seized Bitcoin to hit the market but to me that's that's more excused than cause usually because it just shows you this market needed to it didn't back off a bit let's get further reaction from the Biden administration to the latest jobs report joining us from Washington DC is acting Labor Secretary Julie Sue nice to have you a strong report as we've been saying although perhaps some signs of at least a weakening economy I'm curious to get your take particularly given a great deal of the jobs were added in both government education and health care travel and leisure for example seem to seem to abate a bit in terms of its addition of workers yeah we saw growth in construction as well again these are signs of a strong economy and a historic economic recovery the 206,000 jobs created brings the total now since President Biden came into office to nearly 16 million none of this was promised none of this was inevitable they are the result of leadership and economic policies that include a plan to invest in America and America's workers and again we are seeing the impact of that month after month and the unemployment rate remains at really historic lows we did see a slight uptick in prime-age workforce participation that often can be associated with with a slightly higher unemployment rates also that's people in the labor market looking for jobs we're seeing that it's taking a little bit longer for people to get those jobs but that's why the work that we are doing to ensure that there is a clear pathway for everybody to get a good job in their community remains so important yeah you mentioned of course and we're now 4.1% in terms of the unemployment rate the highest we have been since November of 2021 so that is a bit of time ago you mentioned the participation rate going up so is it a concern for you at all I mean obviously most economies we would be happy with 4.1 percent but it is up from where we had been in terms of historic lows recently I mean exactly to a point about most economies right we had an unemployment rate at or below 4 percent for the longest stretch since you know Armstrong stepped onto the moon and now we've it's ticked up slightly to 4.1 percent and as you said this is still a really historically low number by comparison let's just remember on this day in 2020 during the last administration the unemployment rate was nearly 12 percent and so we've come roaring back from that time period and most people you know celebrated July 4th I'm here in DC seeing people you know get together with their families come outside in 2020 people were told to stay home and stay away from everybody so this is the kind of economic recovery that is only possible when there is wisdom experience leadership and real investments which is what we've done and what will continue to do that sudden economists have been pointing to the fact that today's report technically triggers the sombre which says that the economy is entering a recession if the three-month moving average of the unemployment rate rises 50 basis points above the trough do you see any evidence that a recession may be around the corner I don't and we have been you know like hearing about potential recession pretty much since since 2021 and that has never come to pass I would say that based on the numbers we've seen not just this last month but that I come here every month to talk about if this isn't a soft landing I don't know what is I guess the the counter to that might be that it almost always looks like a soft landing until it becomes something a little bit worse than that so what would you what would you hope to do to try and ensure that it doesn't it doesn't happen and honestly in terms of even practical you know sort of policies it feels as if the policies from the administration are kind of in place and and not necessarily in train that is the right question so let's look ahead right what the president has always said and always known and help make possible is historic investments in our country's infrastructure in fixing hundreds of thousands of roads of bridges of ensuring that every family has clean drinking water when they turn on the faucet of putting high-speed internet into every single community those are the kinds of investments that we are delivering on every single day but the reversal of decades-long disinvestment in American industry in American jobs in American workers it doesn't happen overnight so the fact that we've had these numbers now for as long as we've had is a sign that the president's economic strategy is the right one we're on the right track but we do have more work to do and the good thing is we have a plan we have investments in place and we're gonna keep at it president Biden is trailing significantly in the polls to his rival former president Trump now there could be any number of reasons for that but certainly perhaps his failure to successfully articulate what you are saying which is that there has been a historic addition of jobs could be contributing to that is it a frustration for you in the administration that perhaps you're not getting the credit at least you believe you deserve I mean the president talks about this all the time he has said from day one the way to build a strong strong economy is to invest in America's workers is to create American jobs and these jobs numbers reveal time and time again just how solid that economic strategy is you know if your question is what I'm concerned about I have the same concerns that the president has whether workers are getting a fair share how to combat the massive gap between CEO pay and frontline worker pay where CEOs make in a week what their workers have to work years to make making sure that we are cutting the cost of prescription drugs making sure that student loan debt is forgiven so people can look toward their future with hope ensuring retirement security so American workers can retire with security saving pension funds giving workers a raise just this past week over a million workers became eligible for overtime because of this president's policies and so I don't think it could be clear what we stand for and and what we're trying to do and we know that the work is not done and that's why we're so focused on doing the work all right thank you for your time acting secretary so appreciate it thank you coming up the Labor Party's landslide victory in yesterday's UK elections to look at what to expect after 14 years of conservatives being an hour let's give you another look at futures getting more and more exciting by the moment isn't it wow we're squatting the streets straight ahead at ever north health services we believe costs shouldn't get in the way of life-changing care we're doing everything in our power to make it possible behavioral health solutions that also keep your projections at their best it's possible pharmacy benefits that benefit your bottom line it's possible complex specialty care that cares about your ROI it's possible because we're already doing it all while saving businesses billions that's wonder made possible learn more at ever north dot com slash wonder support for this program is provided by Chevron demand for energy is projected to continue rising in the future to help keep up chevron is increasing their u.s. oil and gas production and they're innovating to help do it responsibly across their operations including their Gulf of Mexico facilities which are some of the world's lowest carbon intensity operations helping supply energy that's affordable reliable and ever cleaner that's energy in progress learn more at chevron dot com slash meeting demand welcome back a changing of the guard across the Atlantic the Labor Party winning yesterday's uk elections in a landslide marking an end to 14 years of conservative rule but frost is here with the latest 14 years 14 years but onto a new start because the uk has got a new prime minister and a very powerful prime minister that secused armor and his Labor Party won 412 of the 650 seats available and they'll now be able to govern pretty much as he sees fit his majority of 175 on par with that of Tony Blair when Labor last took power in 1997 the defeat for the conservatives losing 244 seats and winning just 121 seats on just 24 percent of the vote was historically bad starmer by the way won his 63 percent of the seats on just 34 percent of the vote that is a record discrepancy why well in part because Nigel Faraj's reform party took 14 percent of the vote thus Sunak oversaw a split of the vote on the right compared to the way in which Boris Johnson united the right four and a half years ago turnout too by the way was lower than normal it was in the low 60s typically it's in the high 60s well here is secused armor in Downing Street giving his first speech as Prime Minister about America but whether you voted Labor or not in fact especially if you did not I say to you directly my government will serve you politics can be a force for good we will show that we've changed the Labor Party returned it to service and that is how we will govern country first party second so Starmer is the most powerful Prime Minister domestically for a generation but also somewhat out of nowhere in the eyes of the rest of the world he heads to the NATO summit next week is one of the most powerful leaders there of course in stark contrast to President Macron of France and reasonable contrast to all our shots of Germany and I guess President Biden here too of course you guys do not give your outgoing Prime Minister a lot of time to pack up now no time to pack up I mean by the way the positive thing both Sunak and his goodbye speech and Starmer in his arrival speech they both commended each other yeah very smooth and conciliatory handover of power but yeah very swift hand over power no delay until the inauguration day no nothing like that all right but more importantly you also get the indignity of the Prime Minister goes to Buckingham Palace as Prime Minister in a government car and he has to leave out the back in his own vehicle that's just an MP so it's quite brutal as well yeah it's it certainly reality hitting you what can we expect though from this from this Labor government in terms of you know important initiatives that will be undertaken so already the house building stocks up sharply today because that is something that the country has desperately needed more homes but under the Tories never got round to it because it would disappoint their base if you change planning laws it's expected that will be one of the first things they do even as early as July in the Parliament before it goes on break for August again big issue for business will be the EU in negotiation in 2025 it comes early in his term it gives him a lot of cover to perhaps do more than has been talked about on the campaign trail certainly won't rejoin the EU but perhaps tighten the trade ties which had been broken that could be good for business on the sort of overall fiscal plan there's not much money to spend and he wanted to play things safe because he thought it would lead to a big victory and clearly it has and there hasn't been much promises on more taxes more spends we'll see how close he sticks that but they're both seen Sunak and Starmer coming into this election as as ultimately centrist and pro business all right well we'll see in the next hour as well thank you so that Wilford Frost coming up right here what to expect from the energy sector in the second half of 2024 the group did under perform the S&P at least it has so far to see you can see that on that chart we got a lot more spot on the street for you straight ahead and ever North Health Services we believe costs shouldn't get in the way of life-changing care and we're doing everything in our power to make it possible behavioral health solutions that also keep your projections at their best it's possible pharmacy benefits that benefit your bottom line it's possible complex specialty care that cares about your ROI it's possible because we're already doing it all while saving businesses billions that's wonder made possible learn more at ever north dot com slash wonder take a look at the the gainers as we head into a full session today by the way of course on Wednesday we had a abbreviated session full session of trading today five minutes from now in Tesla quite a week it's having that stock at least a racing virtually all the game all the losses excuse me that the stock is seen for the year we're back read for this and don't forget by the way you can watch us anytime and anywhere by listening to and following the squat in the street opening bell podcast Boeing is facing a key deadline the company must decide by the close of business today whether to plead guilty to a felony fraud charge that's in relation to those fatal crashes of 737 max planes in 2018 and 2019 if it doesn't it could face a criminal trial the Justice Department has until Sunday to determine whether to prosecute Boeing for violating terms of a January 2021 agreement which would have shielded the jet maker in connection with those crashes like I don't know how to engage this in terms of impact on the stock I wonder if the if the key question is how if at all it affects the CEO search you know I mean you can probably game that out either way I mean you cut you would want to see you know what he or she were walking into in terms of that side of things but no I really don't I think it's down to these levels where it's like oh we're trading off of the long-term duopoly value here we don't really know what the impact is the spirit error systems thing fine that was a loose end that was tied up but in general it feels like you know kind of this limbo situation and the market streaming is yeah and to your point new studio so it's been led by the ball and cough we used to run call home and is obviously leading that search as a board member of Boeing quite believe that there's deal in the works you have skill care which is yeah but to be honest or with an asset industrial manufacturing company great technology such a recent IPO merchant Marine Academy based in Kingsport played up right now far from the border New York City that's right yeah right on the border on under and on the water as you might expect we make sense it does yeah you know I think the key thing in the outset is how the bond market's script has been scrambled a little bit in the last few days I mean remember we were just a couple days away a week ago really when we were dealing with oh we have another melt up and yield people focused in the fiscal situation maybe handicapping the presidential outcome and now this run of softer economic numbers has you know created this undertow in treasury yields once again so down to 430 on the on the US treasury which is this kind of kind of median area of this neutral zone we've been fine with for a while the two-year yield also kind of collapsing a little bit and you know it really does create a little more of sharpness to the debate about what the Fed ought to do and what's interesting is do we see the parts of the stock market that theoretically should rally on increased Fed rate cut odds do so and it's been a mixed picture I mean small cap stocks for example have not really taken the bait in a consistent basis because of all the other things you know overhanging it nobody's really quite sure if it's gonna if that that playbook really applies in the current cycle well it feels like riskiness is is gradually being inserted back into the rate complex given just the uncertainty is involving the US election the potential for increased deficit spending what that means for the prospect of those cuts you know obviously since Thursday that's been a key part of the conversation and what it means for people hoping to get some semblance of games in their bond portfolio now that's more called into question over the last week or so for sure you know and again it's we're still just kind of like me entering around this range for the most part I think it's been okay but it feels as if there's a little more urgency to this question of maybe you know the Fed's been dealing is if it had the luxury of patience and there wasn't a lot of risk to inaction for a while waiting for the data to come through and again next week's in point inflation numbers are going to matter a fair bit for for swaying that one way of the other and it's the usual suspects that are that are up Apple meta alphabet Amazon Microsoft actually up just well one cent and then Tesla continuing what as we said has been a very strong week for the for the automaker although Elon Musk would would not like to hear it called that prefer to call it an AI company with a robotics arm and that happens to also make some EVs sure I think is what he'd prefer but the delivery numbers encouraging investors as well that we got earlier in the week and the stock is now let's call it flat for the year approaching an eight hundred billion dollar market value yet again yes what it hasn't seen in in some time you know to the point of whether it's you know in here now a car company the the delivery data I think probably had the effect of taking a little bit of risk out of the earnings report which is coming up you know later this month and the idea that you could start to make the case that things are bottoming demand is responding to you know more financing incentives and things like that and in general you know we've maybe seen the worst of the clients in terms of volume growth expectations that being said it just was a laggard in the mega cap tech related beta trade and those laggards are getting bought and there has to be someplace for the wild skies the limit energy that was feeling in video to go and one place it goes is Tesla it's also lots of overlap I don't know how we can handicap this there's a lot of overlap between people who would be excited for a president for a second president Trump administration and people who generally are excited about anything Elon must touch touches so I'm not saying that's the whole story or even most of it but it's it's all traveling in a similar direction I would I would argue and then you have this August 8th robo taxi event and Tesla stock does best when there is something dangling out there that says hey this is when they're going to tell you how they're creating the future whether it happens or not whether the timeline is is plausible or not it doesn't matter until you get there yeah August 8th of course is when we hear about the robo tax or at least get the latest and perhaps a lot more details in terms of in terms of full self-driving but before then guys I don't know if you realize this being that it's just after July 4th I know what you're gonna say a week from today yeah we've already started to get a slew of preview notes kind of given us a sense of what to expect we got one from Mike Mayo of Wells Fargo on Wednesday short and trading day but that is not stopping the research from coming out he actually increased Mike Mayo increased second quarter estimates on capital markets oriented players I know that'll peak your interest David yeah JP Morgan Goldman Sachs Morgan Stanley and lowered on several regionals including Key Corp America and truest those downward revisions on the regionals reflected some weaker net interest income commentary which I believe we saw out of some conferences including the Morgan Stanley financials conference a few weeks ago there's in this overarching question and this kind of goes back to our rates discussion about when you'll see that inflection point when you'll see that trough in net interest income and a reminder to our viewers that's the profitability metric from loanmaking and whether or not higher for longer interest rates will impact when that trough happens whether it will have to be pushed out further beyond the 2Q which is what a lot of people were expecting so Mike Mayo focused on that the prospect of that trough getting pushed out even further and then of course you have this story in the Wall Street Journal today which is an interview with Marianne Lake who runs basically Chase and Consumer Banking for the bank talking about how regulations are impacting their need and the potential for their need to pass down some of those fee restrictions onto customers so the story goes into this idea that the CFPB is proposing of an $8 cap on credit card late payment fees a $3 cap for overdrafting bank accounts plus these bank capital rules that we've talked about many many times on this program would require additional fees elsewhere for consumers and Marianne Lake is quoted in saying the people who will be most impacted are the ones who can least afford to be an access to credit will be harder to get in other words those fees may be capped in certain places but you will see additional costs pop up for the consumer elsewhere yeah looking at that chart especially the even shorter term when there it is you know the last earnings report this stock got crushed now it's made it all the way back as you can see and is right around the same performance as so many of the other big cap banks Bank America City Goldman and Wells Fargo all sort of up somewhere around 21 to 25% but that was an ugly report you might want to just refresh our take on it because going into next week it might be worth worth remembering yeah I know a lot of it had to do with that NII inflection point that we were talking about and the guidance that they gave that disappointed the street in terms of what it was expecting for the rest of 2024 however since that time there's been significant capital return from Jokey Morgan they had kind of an off-cycle dividend hike they just hiked the dividend again I believe they have increased that dividend about 19% this year that's well and above any other bank in terms of the percentage gains in that dividend although we did see some significant dividend hikes following the stress test which were largely seen as tougher than expected that said the banks are kind of evaluating their capital positions relative to a potential watering down of the Basel 3 capital rules so they're kind of striking that balance in terms of what to return to shareholders but clearly JP Morgan is in a position where they just have an exorbitant amount of excess capital so they have decided to return a lot of that and charge for checking yeah there you go forget the excess capital being used to cover a checking account fee I mean the thought used to be that the way you paid for checking is not getting interest on your balance yeah I know right well though you get interest you get 0.01 yeah yeah I think the point that Marion Lake made it in the journal article was that or at least the the journal reporter did was that the Basel 3 rules would require you to reserve more against the credit card balances that you have therefore you have to kind of rein in the amount that you are able to lend as a result of these policies you know going into the last earnings report for JP Morgan the level of outperformance of that stock versus every other bank was monstrous it was just tremendous so every sector has like the one big anointed defensive bulletproof name and that was JP so it's not quite the same this time around because the other banks David said kind of have participated in other than one Leslie which is Morgan Stanley under new leadership it's still up but it is lagging noticeably why a lot of it has to do with some disappointing disappointment surrounding net new assets obviously wealth management has now comprised about 50 percent of Morgan Stanley's revenue base so you've got 50 percent which is tilted toward the capital markets which have been not not the best although it sounds like Mayo thinks they could improve yeah and then the other 50 percent is this excitement surrounding wealth management which has historically done really well it's become this behemoth obviously under James Foreman's tenure that was kind of the hallmark of his his duration at the top of this firm there's some concern among the investor community that that's stagnating some and that has kind of created a bit of a an overhang on this stock so far this year yeah we on M&A you know I would only say that we're going to I'll be paying close attention perhaps as soon as later tonight this weekend whether we get that final deal for paramount that we have outlined so many different times that seems to be the expectation going into this weekend I had sort of said that already on Wednesday I'll be very interested to see the overall capital contribution what that looks like because you are talking about seven point seven five billion or so in new equity number four and a half billion to buy the B's and some of the A's the B's at 50% of the B's 15 bucks billion and a half contribution to the balance sheet and then the money is well going to pay Sherry Redstone some 1.75 billion that takes me to Oracle's stock price because Larry Ellison's likely to be a lot of that money sure and don't forget as Oracle now hits 400 billion dollars in market value he owns 41.69 percent at least that's the latest numbers I see Mike yeah and so it'll be interesting when we sort of all is said and done and that transaction does get put into contract to to remember that Larry Ellison may well end up being by far not just the control shareholders so to speak because of his ownership but very significant capital country what it what it means for the economics of the business because if he chose to he could fund a lot of losses he could actually backstop that company to a fair degree to a level that you know WBD doesn't really seem like it could keep up with that is true but who knows if that's part of the 14 billion in debt we need to remind people with a tiny little market cap of some seven point seven billion but stock up again in part as people try to weigh of course listen you know at when this thing closes half your equity you're gonna be able to get a nice premium for at least based on the current stock price and you bring up the capital markets and we've seen some interesting deals this morning with regard to the sax and e-men with the Amazon infusion there there's reports that the Macy's bid is getting raised as well so there's some fervor surrounding these department store names which is kind of an interesting you know yeah note for this holiday week yeah Apollo's I think their credit fund providing some financing as well to that transaction you're looking at right there and then as you point out brigade and archives in Macy's that's a report from the journal saying they've raised although it's unclear on this traction they're really getting there I haven't been able to get a sense or if it's it's price sensitive or something else yeah Macy's if nothing else maybe just says that you know private money says that there's rock bottom value department stores Macy's trades like 20% of sales and you never saw that outside of the global financial crisis before this last cycle so who knows if that's what that means that being said I mean it's it's a little bit spotty in terms of deal activity right I mean it's not like there's a lot there there is not a lot and I do those are kind of done almost I mean emanates better than last year but that's not saying anything last year was a horrible year in terms of activity right and we're not seeing you know keeping an eye on HubSpot I got nothing new to add we'll see if we actually ever get there in terms of where that leads but not a lot of big deals and most recent conversations indicate perhaps there's a waiting game going on now in terms of the election as it as it looms absolutely I'll go you kind of get to this point where you know it takes how long to get a sticky regulatory deal done at least a year usually oh yeah yeah yeah 18 months at least under this administration so if there is some sort of change in control that would you know warrant a more friendly antitrust environment you have to believe that those discussions have maybe ticked up over the last week or so let's take a deeper look into the energy sector as we kick off the second half of the year year to date it's been underperforming the SMP 500 but the growing demand for power to fuel AI data centers has put the spotlight on this group joining us now with his outlook as Rob Thummel tortoise senior portfolio manager Rob let's turn there this this AI tailwind maybe unexpected to those of us who don't follow energy closely do you see it continuing or do you think that most of the games surrounding this excitement have already been priced in in the first half of the year okay more endlessly thanks for having me on so I know we think that at tortoise we think that there's an opportunity for AI basically for the energy in in the energy sector if you think about what's going on everybody talks about the technology infrastructure what everybody forgets about is the energy infrastructure and a lot of people are starting to talk about it so you as you mentioned you need more power so you need more electricity and so you need more natural gas to fuel that electricity so what I like to say tortoise is there's no AI without EI or energy infrastructure because you need this critical infrastructure to provide the fuel to keep the lights on electricity flowing you know 24 hours a day seven days a week all of these data centers really around the world and around the US the best performing energy stocks are infrastructure names as well as some refiners do you think that the tailwinds boosting these names are also ones that can continue for the rest of the year yeah AI is part of the part of the equation but I think the other part of the equation is that these stocks are pretty simple stories there they are generating a lot of earnings they're converting those earnings into cash flow and they're really returning that cash flow back to the investors in terms of high dividend yields as well as stock buybacks and so that's a simple equation a lot of these energy infrastructure stocks have these big economic modes Warren Buffett likes to talk about these these asset footprints are very difficult if not impossible to replicate so investors are starting to to recognize that and frankly reward back and and you know all investors like to receive a lot of current income and growth yeah Rob that certainly all the case in terms of how these companies are navigating the industry I guess one of the areas of pushback is that you know when it comes to oil and gas every cyclical peak in absolute demand is seemingly going to be lower than the prior one and you're seeing that with gasoline usage and miles driven and all the rest of it so how do you I guess filter that into your outlook for the kinds of energy companies that are well positioned you know like so what's not talked about a lot is if you just and a lot of that has just come out on this reason so global energy demand is at the highest level it's ever been set a new record from last year next year we hire record we just continue to see global energy demand continuing to rise in fact you look back global energy demands risen 38 out of the last 40 years but really what's interesting in the US this has become the largest producer of oil the largest producer of natural gas and the largest exporter of energy in the world and and and so the US energy sector has made a significant contribution I guess not only domestically but globally both economically and socially and we frankly just don't see that changing anytime in the next several decades so that it's really the opportunity for the broader energy sector including energy infrastructure so then how are you constructing your portfolio right now and are you doing any allocation shifts as we look ahead to to H yeah so so a little bit of allocation chips I mean it's still the big picture is still energy infrastructure but recently one of our top names is Chinier Energy that's that's a company that we've talked about or liked a lot before they took the company just announced a new capital allocation policy and you know since they've been announced the capital allocation policy in 2021 they've actually increased the dividend 50% they've learned their debt 20% and bought back 10% of their stock their new allocation policy allows them to buy back another 10% of their stock so capital allocation policies are companies that have high free cash flow with these type of capital allocation policies are the companies that we're looking to buy and continue to add to our portfolio all right Rob appreciate it Rob Thummel with a look at energy in the second half of the year before we had to break let's give you another look at the bond market it's time for the bond report Mike of course talking about about 43 on the 10 years so we've been hanging out there although we've been and I'm had an interesting week you see right there we're at 431 and the two year also down to 4.639 definitely continues to have an impact does it expect on the overall equity market we're back up to this as we move further into the summer season what can we expect from the travel sector in the second half of the year Sima Modi is back at HQ with a look ahead hey Sima hey Leslie listen the demand story still remains strong we had the latest data from Mastercard which shows travelers intentions to go overseas remains high helped in part by lower airfare the main flation report did show that airfare prices dropped it by 6% year over year and then there's those major events this summer driving interest to Europe from Taylor Swift era's tour the euro cup to the Paris Olympics that's feeling deal activity as well hi it just announced it's acquiring an urban lifestyle brand in Germany which is a feeder to other vacation hot spots like Greece and the Balaric Islands right now hi it generates just 5% of its earnings from Europe while Marriott is at 15% Hilton at 10 percent that's according to according to truest estimates Hilton did recently acquire majority controlling interest in Sedel group to expand the London based luxury brand no bad hotels and private equity is also shown interest just last week blackstone acquired village hotel that's a group of 33 properties in the UK that appeal to business travelers Mateja at noble investments who has invested about 2 billion in hotels in hospitality in the last 18 months is valuations are driving the broader activity in the space with public hotel reads trading at 10 times even that's a 25% discount to private market values he has that hotels are also seeing sizable returns even with interest rates remaining high and growing supply guys that's one of the key ways these hotel operators can compete more effectively with Airbnb you'll see Airbnb still outperforming the major hotels up about 12% this year Marriott up 6% David see me thank you see my motor back at our headquarters and Mike thank you as well as always for joining for the hour we got a lot more coming up on this week's tech rally Nasak new all-time highs keep it right here you've been listening to the opening hour of CNBC's squawk on the street all opinions expressed by the squawk on the street participants are solely their opinions and do not reflect the opinions of CNBC NBC Universal or their parent company or affiliates and may have been previously disseminated by them on television radio internet or another medium you should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of an opinion such opinions are based upon information squawk on the street participants consider reliable but neither CNBC nor its affiliates and 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