Join Josh Lipton on Yahoo Finance’s Asking for a Trend to make sense of June 4’s biggest market themes. Stocks (^DJI, ^IXIC, ^GSPC) inched out slight gains in the trading day, curtailed by weak JOLTS data (Job Openings and Labor Turnover Survey) reported by the US Bureau of Labor Statistics. Julie Hyman joins later to compare and contrast patterns in US job openings and the unemployment rate.
CarGurus Director of Industry Insights and Analytics Kevin Roberts comes on the show to explain why Ford (F) is seeing such a significant sales boost from hybrid vehicles alongside EVs.
A veteran in the retail space, Alex Mill chairman and former Gap (GPS) CEO Mickey Drexler expands upon the pricing pressures still pushing away consumers. Catch Yahoo Finance’s interview with current Gap CEO Richard Dickson from last week.
This post was written by Luke Carberry Mogan.
Video Transcript
Hello and welcome to Yahoo.
Finance is asking for a trend.
I’m Josh Lipton and for the next half hour will be breaking down the trends of today that a move stocks tomorrow here, some of the trends we’re gonna be diving into keeping a cool job openings in April will fall to a three year low.
And another sign that the slowing economy is impacting the labor market.
Now, all eyes, of course, on that big jobs report coming Friday morning plus E slow down where for report sales for its hybrid in all electric vehicles jumping 65% in the month of May.
This as the company recently pulled back on its push into es instead focusing on hybrids as its future play and it fashion recession proof depends on the brand names like Gap and Abercrombie bucking rumors of a more cautious consumer with robust sales in the most recent quarter, a deeper dive into the state of retail that is coming up.
It was a busy day for the auto sector carmakers reporting monthly sales for May and Ford was a standout rising 11% compared to a year ago.
But if you look at hybrids and EVs sales of those vehicles soared 65% from last year.
Joining me now, Kevin Roberts Cargo is Director of Industry Insights and analytics.
Kevin, it is great to have you on the show.
So listen, I looked at these Ford numbers, Kevin and, and you know, they look solid us auto sales.
They popped 11% in May from a year earlier, but you are the pro Kevin.
So walk us through it.
Give give me your reaction to this report.
Yeah.
So we’re seeing new inventory continue to grow and that’s really helping to improve new vehicle sales.
And you’re seeing that with the top line numbers, uh obviously, the hybrid and EV numbers are coming from an overall kind of smaller base compared to internal combustion engines, but definitely seeing positive growth there.
And I think the really interesting trend is that, you know, for so many years, it was all the focus was on evs and now I think hybrids are really starting to get their chance to shine uh in this spotlight and really look like they might be kind of the goldilocks kind of opportunity for consumers out there as we transition away from, you know, fossil fuels to electric vehicles.
Now, that’s interesting, Kevin because hybrids are hot and, and you kind of characterize there as goldilocks.
Why are they popular, Kevin?
And how is Ford kind of um capitalizing on that trend?
Yeah.
So hybrids tend to be at a price point that’s somewhat in between uh EVs and inter combustion engines.
So affordability is always a key fact for consumers when they’re looking at vehicles.
So the affordability is there and then you deal with the fact that uh ranging and kind of concerns about the overall usability of evs and charging and our charging infrastructure and all that really kind of kind of holds back some of that kind of ev adoption where with hybrids particularly hub plug in hybrids, you can get kind of the best of all worlds where you get the kind of uh reduction in greenhouse gas emissions and some of the utility that you get with evs.
But then you still have that internal combustion engine uh around for longer road trips and the like that can really be beneficial for consumers.
And let’s talk about evs too, Kevin, you mentioned it there.
What is Ford’s sort of tactic and strategy with that market?
It doesn’t seem like it’s a volume game.
Is it a cost gunning game?
What’s the move for them, Kevin?
So what we’ve been seeing Ford do is we look at the, you know, which models are seeing the largest kind of price declines and particularly with the Ford F 150 lightning and the Mustang mach E, we’ve been seeing some pretty significant price declines on those new EV models.
And I think what you’re seeing is as that price kind of gets reduced, consumers are showing much more kind of interest on that front.
We’ve seen that a lot with used dvs, in particular, the prices for used dvs have dropped quite significantly and as the prices really start to slow down for EVs adoption and interest really starts to pick up in line with that.
And Kevin, I just want to get your thoughts on e the EV market in general, not seeing the growth.
Kevin that we used to.
What do you see ahead?
What jumpstarts this market?
Yeah, I, I think we’re kind of in a kind of res resettlement period right now with evs where we had a lot of the early adopters who were very enthused to get into evs.
Now we’re starting to get into that more kind of mainstream adoption.
I think it’s a couple things.
Uh range is less of an issue than I think what people think it really comes down to charging the charging infrastructure needs to get much more in place for consumers to adopt a little bit more and the cost needs to come down there still is a pretty significant cost premium for evs.
And once we get down to relative cost parity between evs and internal combustion engines vehicles, I think we’ll see a much more uh faster adoption rate.
But until we get that charging infrastructure in place and the cost in line, I think it’s gonna be a little bit more of a difficult challenge and that’s where hybrids can really come in and help the auto manufacturers out.
Kevin.
I wanna get you out of here on this.
Listen, we talked evs, we talked hybrids.
Give me your take on, on pickups beyond for just industry wide, Kevin.
As you look at that category, how healthy, how resilient.
Yeah, I mean, it’s, it’s definitely still really healthy from a sales volume point of view, but we are seeing as those inventory numbers I mentioned continue to grow.
We’re seeing much more pickups get into the marketplace.
And so it would be really interesting to see if automakers are able to balance that kind of demand and production without having to uh increase incentives too much to kind of move those vehicles that are sitting on lots.
Kevin.
Great chat.
Thank you sir for joining the show.
We appreciate it.
Thank you.
My pleasure.
Stocks eke out gains as labor market cools and investors shift their rate cut expectations after weaker than expected economic data.
Yahoo finance his very own Josh Schafer joining us now with more on the trading day takeaways, Joshua.
Yeah, Josh, we’re gonna start with that eco data and you just mentioned the word weak and cool and yes, job opening did come in lower than expected today.
A little over 8 million in April.
But I want to take a closer look at a different part of the data in a different way to sort of think about job openings.
What we’re looking at here is job openings per unemployed worker that hit its lowest level since February 2020.
Josh, we know what February 2020 is and why that’s significant?
That’s pre pandemic.
So when you take a look at this here, you get your nice line back to February 2020.
And that’s what economists have been looking for in different labor market levels is, are we getting back to pre pandemic level?
And sort of saying staying there for instance, the quits rate, how many people are quitting their jobs has been flat for four months and 2.2%.
That’s in line with pre pandemic levels.
And so the takeaway here sort of being cooling.
Yes, but perhaps just normalizing, maybe we’re just getting back to where we were before the pandemic and maybe that’s an OK thing and sort of this soft weak data isn’t actually bad.
So that’s what I wanna kind of go with you, Josh is like, is it was today just kind of one more data point into that general theme we’re seeing of softer economic data coming in.
No, it definitely is.
And it’s interesting sort of think about the different data points, right?
When you think about something like yesterday’s PM is manufacturing data versus the labor market because the labor market is still pretty resilient.
I mean, you’re looking at an unemployment rate that’s been below 4% for 27 months.
We haven’t had that kind of run since the Vietnam War.
That’s a strong labor market, right?
That is, people are still getting jobs.
You can also see here we’re still historically, if you go all the way back to 2004, there are job openings, there are jobs for people to apply to.
So people feel like yes, the labor market is cooling but not enough where it’s not gonna fund consumer spending because that’s kind of the key thing we’re talking about here with the labor market, right?
We need to have jobs to go and spend money.
And for the companies we talk about every day to make money off of us.
And right now people feel like we’re still in that position.
All right, give me, give me Schafer bullet point number two, bullet point number two.
Energy, energy.
Why are we talking?
We are talking energy because energy has not been doing so hot recently.
So we spent a lot of the first part of this year talking a lot about energy and a lot about utilities and utilities and energy started leading when tech came back, right?
And they were the top two performing sectors up until about a month ago.
And what’s been interesting here?
If you take a look at the last month, you’ll see energy has been the worst performing sector.
And if you take a look at the last two months, you again have energy as the worst performing sector in the S and P 500 couple things here to highlight, I think for one, when energy started rallying, we were talking a lot about a potential reflation trade.
We were talking about worries in inflation through the first quarter, right.
Energy usually benefits in that sort of scenario over the last month as we’ve been talking about softening data.
If the economy slows down, that might be good for inflation.
So that’s one thing that sort of feeds into it.
The other thing that people have brought up, you have oil prices coming down pretty significantly.
Definitely that kind of downward trend.
You see, and when you take a look at just overall earnings estimates right now, not that strong for the energy sector.
And we know earnings are sort of what drives stock action.
All right, fair enough.
Our last take away, we gonna flip back to our other screen here.
What happened to the meme trade reversal?
I mean, we had one day yesterday, we had a, you could feel it.
Yeah, and like it’s just over, it’s already over.
So let’s take a look at Gamestop here.
I think it’s interesting when you look at GME, I’m looking at a two month, you can see it’s up 100 and 29% but I wanna go to the five day because when you take a look at the games stop only up 11% over the last five days, you can see that here.
And then when we pull up the five day actual chart here.
So we had the screenshot, you have your jump here and that’s it, it, to me, it just has been interesting to sort of watch this and people are just tracking what Rowan Kitty is putting out on either Reddit or Twitter.
And that’s kind of it like, there’s not a lot of other catalysts to your point.
That’s what, 2021 there was this kind of like, OK, who’s gonna get it next?
Who’s got the target on their back this time?
Of course, much more focused on GME.
We, we have an entire meme stock board in front of us right now.
Josh, a five day look and if we were really talking about a meme stock rally, we should see a lot more green and we should see bigger numbers.
Quite frankly, you’re kind of just bored with the Shafer.
You’re over it.
We’re done.
We’re done.
I think this is, this is our last market takeaways with the means that it’s gonna be Josh Shafer.
Thank you, my friend, appreciate coming up closer.
Look at the dynamics at play in the labor market.
In our chart of the day, we’re asking for a trend on the other side per data out this morning.
The number of job openings in the US fell to a three year low in April market.
Now look into Friday’s May.
Jobs report for the latest reading on the health of the labor market and Julie Hyman joins me now with a close look at the relationship between jolts and jobs indeed, job openings and then the unemployment rate, that is our chart of the day today.
So what we have here is job openings as measured by that jolt survey.
That’s the purple line here.
And we saw those job openings just over 8 million at the end of April.
And then you have the unemployment rate here which is expected by economists to stay, have stayed steady last month at 3.9%.
So Jones obviously a little bit lagging in terms of when the data comes out.
But in terms of what it indicates here, it does tend to at least coincide if not lead a little bit the upticks that we see in unemployment, that is what we have seen in the past.
They have, you know, they kind of are coincident here.
And once again here, we have heading lower the unemployment rate though.
It’s not necessarily seeing a big uptick at all.
I mean, this line looks pretty steady here up until now.
So is it going to show a more dramatic increase in the unemployment rate this time?
We don’t know yet, but what it does show is that it’s in line with some of the other economic data we’ve been getting, whether it was manufacturing yesterday where there are some of the recent spending and consumer confidence numbers that have been coming in a little bit weaker and hitting the bond market as we know, pushing down yields and kind of causing a little bit of trepidation about where we are in terms of economic growth, Josh and so Julie with, with the big fed meeting now on deck, how do you think Jay Powell was thinking through all this data?
I mean, it seems pretty clear that the FED has been more focused on inflation than they have on what’s been going on in the job market.
I mean, this is even as again, if you look at that unemployment rate, which hopefully will come up here in just a second here.
So here’s the unemployment rate and you go take it all the way back here going to uh late 2019.
Even if the unemployment rate is ticking up a little bit, it’s still a pretty historically low level.
So we don’t see a lot of concern being expressed by the FED yet about that figure, they are really laser focused on the inflation numbers.
And still we do see the trend that Bob and large, especially if you’re judging it by PC, which is the Fed’s preferred inflation measure that there is some moderation in the pace of inflation.
I suspect who knows what J Powell is going to say.
I suspect we will get some version of, we still need more good data showing us that that trend is intact.
But we shall see Julie, I think that is a very good, safe bet.
I agree.
Thank you.
Appreciate it.
Coming up, Alex Mill chairman and former Gap, Ceo Mickey Drexler joins us in studio to talk all things retail that’s next on asking for a trend.
The results are in from major retailers signs point to consumers on the hunt for savings as discretionary income is pinched here by prolonged inflation and we know higher interest rates too.
Meanwhile, retail earnings from names such as Abercrombie and Fitch delivering a shining quarter despite a tough consumer, we’re spending backdrop for more on how to read the current state of retail.
We have the perfect guest Mickey Drexler, Alex Mill, chairman and former CEO of Gap Mickey.
Great to see you.
I say perfect guest Mickey because we were talking off camera.
You’ve got earnings season largely behind you.
A lot of retail names and, and, and you, you got a lot of reports and conference calls CEO S CFO S is an investor trying to get a sense of where this sector is at.
And we were talking, I said generally my gut was it seems decent, but you’re the guru.
Well, I I’m not the guru because I make a lot of mistakes between big.
Ok.
So um I do my service before I appear to talk about the industry.
Uh and I called them a bunch of people, this counters, designers and all that.
I think it’s selectively good.
I don’t think it’s all or nothing.
I think quarterly reports I’ve learned this after running gap and J Crew public companies for years, quarter to quarter.
And I asked about color.
I looked, I wanted to get some color on the discounting today.
And inflation is crazy when you do these surveys, this is Nicky Drexler.
You’re going into the stores.
No.
Well, I go online.
Is it a online tells you how much goods are on sale, how, what percentage is off and all that.
But I’ve been saying, first of all, inflation to me is kind of a nightmare.
Still travel.
Uh, your, your point is in that it’s increasing at a slower rate, but of course, it’s still increase on top of 40 year highs.
You know, the government doesn’t have people going to the supermarkets going to fashion stores and shopping.
You actually need food and gas, you’re saying?
No.
No.
Yeah.
But, but how did they know it’s slowing in apparel?
Uh, I hear mostly complain.
Well, I hear complaints about everything, designer prices.
Uh, it’s stunning to a lot of people, even those who can afford it because the rate of increased prices is hugely high and there’s no, uh, doesn’t seem to be a letting down.
I told that the designer business, um, whatever it means is kind of slowing down.
But, uh, if you look at quarter to quarter, pick, pick your spots and I’m, I’m a merchandise product, that’s what I look at long term.
And is that a concept that’s gonna work.
That’s the unexpected that sees around corners.
Uh And I don’t hear a lot of or see a lot of that designers, in my opinion, it used to be when I was a young guy, you know, you go to get Gucci buckle shoes and it was like a kind of a deal.
And today I don’t know where I’m not, I’m not for the man of born, but I don’t know where people don’t buy designer clothes or what level and the weights for the be and it’s mostly accessories from what I know and accessories are kind of like carrying around a little logo or maybe a bigger logo.
But um I think uh I, I think you buy goods, you buy the styles, you buy the products you buy service.
And as I warned in a, I forgot where I was quoted.
I said if I were a consumer today buying a pa I would actually, before I gave them the credit card, I go online and see where I can get it at a better price.
Almost like a commodity in a way.
I know that sounds weird.
But there’s so many different price uh issues and a lot of companies now have an online deal and if you’re a customer, you slept to the store, you don’t know about the online deal unless you know about it, then they’ll honor that.
So retail, not an easy one.
I’m not a, a good investor.
Really because, uh but I’m impressed.
Well, not a lot of people I always mention TJ Max because Carol’s a great merchant and you know, you go and that’s the real price.
Let me ask you, you mentioned GJ Max.
I would love to get your take on gap as well because they report Mickey, they knock it out of the park.
Stock is a monster over the last 12 months.
What are your thoughts on that name?
Well, uh, good for them.
All right.
Uh, but three months if you’ve been in the stock, well, I, I used to be in the stock but that was a long time ago.
Uh, I, I think that obviously perceived to be doing a good job.
Uh, I don’t pay much attention.
Um, I did include a gap in my percentage of summer item sale, but I’m not gonna repeat that because Richard’s a friend and I think that moving forward but three months or a year after 20 years of see, for me, I have a high standard for everything I do.
Uh, and for everything everyone else does and when I see a stock, not just, oh, great earnings report.
Boom.
Because I think, I don’t know, I don’t follow gap but I think it’s, they’re happy.
I’m sure I spoke to some friends and I congratulate you and ask you one trend.
I’m very interested to get your take on this.
We’re talking about this show.
Now, you’re seeing online retailers mo really get into this, just old fashioned brick and mortar game.
Like I’m thinking of Wayfair, of course, Warby Parker Figs.
It interests me that you see this trend.
Do, do you think that’s a smart trend or there’s risk to that?
Well, you know, trend is an interesting word.
I’ve learned not to follow trends because when you follow them, you follow them but you gotta call the end of the trend uh things, you know, it’s interesting.
I met the two founders a long time ago on their game.
Every time I go into a doctor’s office now or wherever a nurse figs, figs, figs and people wear that stuff, not just working in a doctor’s office.
I think they’re really smart and they know much more than I do.
Uh I don’t know from who would you mention a way, way, fair way, Robbie Parker.
I just, it interests me because if you’re, I get it, but at the same time, it could be expensive and, and it seems like it could also carry risk like you’re moving into a new area.
Like, do you know that strategy as well as you know, the online world?
Maybe the skills that the retail business has always been very logical for me.
You, we all have huge practices being a customer.
Some of those stores have too many stores, those business are opening too many stores gap.
Oh my God.
I’ll never forget I was in an old navy in Arizona.
I said to the store manager, I said anything we can do and she says, yeah, we have two stores within 15 minutes each and, you know, something I was so, I, I, it, it annoyed the hell out of me and I blame myself.
It kind of sounds like a Starbucks.
Yeah.
Well, yeah, and, and more is not better.
And in stores, I think one at a time the landlords now and you know, we only have two shops who are opening a third.
We get lots of demand for having a, a shop in someone’s area.
But the landlords, they’re my friends.
But you know what the rents are.
And I, I actually appealed to a couple saying, you know, Alex Mill, it’s cool.
We’re getting hot.
I always felt that and, and I like our clothes at fairly priced.
You don’t need a mortgage and it’s a taste style that we like.
That’s what my, what I do.
My son started its sack came from J crew after 15 years.
Gets it gets it.
Nicky.
I could talk to you a lot longer and I talk to you.
I love, I love you coming by.
Thank you, my friend.
It was great to see you.
You too have me more often, whatever take care and that is a wrap.
Uh Today’s asking for a trend, be sure to come back tomorrow at 4:30 p.m. Eastern for all of the latest market moving stories affecting your wallet.
Nicky’s out of here, but we’re gonna have him back soon.
Have a great night.
