Let's bring in Crossmark CEO and chief investment officer,
Bob Dahl. Bob, good, good morning.
It's always great to speak with you.
What is your reaction to what we've seen in the
last 24 hours?
Well, it's nice to see the green on the screen
today,
but we have to go back to last week.
Even before that. The economy has been weakening for some
time.
And I think the employment report on Friday woke a
lot of people up to say,
you know, it's not as good as I thought.
Inflation may not be going to 2%.
We may not go double digit earnings growth this year
and next year.
And stocks are pretty expensive.
I think I'll sell a stock or two.
And of course, the Japanese yen carry trade
clearly exacerbated the the direction and the amount of the
move.
So we're in a reflex rally now.
We probably have to come back and test.
I'm not sure we've seen the lows yet.
Cheryl. OK, I want to bring in Rebecca Walls or
to this conversation because Rebecca is saying the same thing.
You two share in that sentiment.
Rebecca, go ahead. Yeah, Bob,
I just love that you brought up the yen carry
trade in the reverse carry trade.
I know that it's from some 4 trillion.
And we certainly didn't see it all unwind yesterday with
the Bank of Japan coming out this morning and kind
of soothing
comments about future rates and where it's going after the
July 31st hike.
What are your thoughts on
this being unwound and and still being a problem global,
even if we have a little bit of a recovery
dead cut bounce here today?
I, I agree with your sentiment that is this problem
is not necessarily over the veracity of it may be
over,
but they're more of that trade to unwind and that
will put pressure on most risk assets over the next
few days.
All right, let's talk about the two year and the
10 year in particular.
Let's look at the 10 year treasury this morning
because right now, and, and obviously that was
yesterday morning. The two and the ten were the two
signals that I really noticed
were were giving us pause besides the numbers on the
screen.
But now you've got this conversation about the Fed and
futures are showing
that basically the Fed, the prediction is they're going to
cut interest rates to a range of 4%
to 4 1/4% by the end of year.
But that means we'd have to get one and a
quarter percentage points in cuts over meetings,
September, November, December. And you know,
Bob, we've had some investors say we need an emergency
rate cut.
What would that signal to the market in your opinion?
My guess is if the Fed goes between meetings,
people will say, oh, my goodness,
something's really wrong. It's very rare they do that now.
They they talk a lot so they can condition the
market to say something like,
look, if conditions don't improve,
we'll have to lower rates by 50 instead of 25.
And there's signals they can send
short of doing a, a,
a cut between meetings. All right.
Well, yeah, exactly. And we already had one Fed official
speak yesterday
and we have time until the meetings,
which again is the the is the 17th of September.
All right, so let's talk about earnings with you.
Caterpillar Dow component, they had a double beat this morning.
They were lifted by demand for excavators,
other construction equipment, increased infrastructure spending in the United States
that helped Caterpillar that stocks up more than 4 1/2
percent.
Obviously that's helping the Dow this morning.
You have Uber that's up
6% right now. Uber that was a double beat steady
demand for ride sharing and food delivery services and and
their monthly active platform consumers up
14%. Total trips for the quarter up
21% at nearly 3 billion.
And then Fox Corporation, the parent company of this network
of actually lower the stock is,
but they did be on earnings.
They did miss on revenue,
Television revenue hitting 1.62 billion and the cable network programming
revenue hit
$1.4 billion. And I want to add here,
we're going to get Disney,
Warner Brothers Discovery, that's tomorrow.
Paramount Global is Thursday. Bob,
So what are your thoughts so far on what you're
seeing with these numbers?
So if we look at second quarter earnings reports so
far,
they've been better than many people thought,
myself included. If I want to pick on those earnings,
I'd say the top line revenue didn't live up to
expectations.
So in other words, I had to come from better
margins,
which are only sustainable for so long.
I think we will begin to see as the economy
has slowed and will continue to companies ratchet back some
of the earnings expectations.
So for the back half of this year,
I think we're going to see some more earnings disappointments
as companies begin to cut costs.
That's why the employment numbers are fading somewhat.
I know we had weather etcetera that affected last week's
number and we want to hang our hat on one
number.
But my, my guess is the very robust earnings expectations
probably are not going to be met.
Well, well, look, McDonald's I think was the first sign
that something's going on with the the consumer in particular
at the lower end.
You know, when McDonald's misses global sales by 1%
and it's a great deal,
that's that's a surprise. I do want to ask you
about Google before you go.
So that federal judge did rule that Google has illegally
held a monopoly in two market areas,
search and text advertising. This alleges that Google had kept
its share of the general search market by creating strong
barriers to entry and a feedback loop that sustained its
dominance. And this marks the first anti monopoly decision against
a tech company in decades.
Do you think that we're going to see more actions
like this in the courts against Big Tech?
I suspect we will, especially if the Democrats win in
November.
Look, these lines are not black and white.
They're Gray. And so there's room for a lot of
interpretation,
but I suspect we will see more of
that against these mega cap tech companies.
Yes. All right, Alphabet is lower this morning and we're
going to watch that stock.
Bob Dahl, always great to see you.
It's been a while. Thank you for being here.
Thank you. All right, we'll see you soon.