AI, value investing, Casey’s CEO on earnings: Asking for a Trend – Yahoo Finance

On today’s episode of Asking for a Trend, host Josh Lipton navigates through an array of topics, ranging from the transformative power of AI to the latest market trends and corporate earnings.

With the growing adoption of generative AI, Dialpad Founder and CEO Craig Walker joins to discuss the pivotal role AI plays in revolutionizing business communications. Next, Casey’s CEO Darren Rebelez sits down to talk about the retail chain and gas station operator’s impressive fiscal fourth-quarter earnings beat.

Shifting gears to the market at large, Yahoo Finance’s Julie Hyman breaks down the intricacies of value investing, and Alexandra Canal highlights the top market trends of the day.

This post was written by Angel Smith

Video Transcript

Hello and welcome to ask for a trend.

I’m Josh Lipton for the next half hour.

We’re going to be breaking down the trends in today that will move stocks tomorrow.

There’s a lot to keep track of.

So we’re focusing on what you need to know to get ahead of the curve.

Here are some of the trends that we’re going to be diving into great fed expectations.

The fed leaves rates unchanged as June meeting but now expects just one cut in 2024.

The decision coming after encouraging inflation data, this the fed chair Powell stressed more data was needed before a policy change could come.

Plus all it takes is a little A I oracle shares hitting a record high today.

That’s after announcing a string of A I contracts and partnerships with Google cloud Microsoft and Open A I.

But one industry insider warns big tech may be writing A I checks that software companies can’t cash and a record year for convenience store chain.

Casey’s companies fourth quarter earnings blue past estimates thanks to what it called a discerning but resilient consumers searching for value.

The CEO is going to join us with more on how the company is winning with inflation weary consumers.

Let’s start with those markets.

The S and P 500 tech heavy NASDAQ closed at a new record investors digesting cooler than expected inflation.

And the Fed’s latest policy decision here with more on the trading day takeaways.

Let’s get to Yahoo finances ALEC now.

Hey, Josh.

Well, you said it once again, new record through the S and P 500 the NA that and I want to start here with the S and P. It is the 28th record close for the S and P so far this year.

Right now, we’re treating it around levels of 5400 that is already above most year and targets for those analysts and strategists, which is crazy since we’re already six months into the year.

I was joking with our Marcus reporter Josh for that.

Story continues

We probably going to get more uh uh upticks on that when it comes to those year and targets U Bs and BMO have around 5600.

So definitely more room to run at that front.

I’m just going to refresh this a bit, but when you think about the NASDAQ as well, 16 of record closes for the NASDAQ so far this year.

And then I want to take a look at small caps is an interest rate sensitive area of the market.

We mentioned that cooler than expected inflation data, we know that the fed is projecting at least one cut this year, we saw small caps finish the day in the green.

And then finally, let’s take a look at the 10 year Treasury note.

This was shortly after that inflation print falling 11 basis points to train near 4.3%.

So we’ll see where things go from here.

But overall a pretty positive day in the market I would say.

Yeah.

Well, I mean, I listen, you, you listen to the fed and rates unchanged, but also I think you got that CP I print this morning.

It was too good, Prince in a row.

And Jay Powell tell you at least I think how the fed put they’re making mo kind of modest progress on their inflation target, right?

And related to that, all of that is fueling odds of a September rate cut.

So, you know, we did have only one cut from the fed.

That’s what they’re projecting, that is down from the three cuts that they projected in March.

And although that’s less than what the markets were anticipating.

Fed, Chair Powell and his presser didn’t necessarily shut, shut, shut down the option of potentially having to cut.

And if you take a look at the latest data from CME group, 61% think that we’re going to see some easing beginning in September.

And that is up from just a day prior and like it was mentioned with, with those fed projections, it was pretty close about 88 fed officials think that we are going to see two cuts, seven, think we’re going to see one.

So it’s a toss up at this point when it comes to how many cuts that will see.

And it looks like the markets are thinking maybe two with the first one coming in September.

Yeah, interesting.

We had, you know, economists, some of the push back al you’re already seeing on some of this, some thinking, you know, we’ll see how that goes, whether they might have to backtrack on some of that dot plot.

But we’ll see how the, how the data goes from here for.

And that’s something that Jay Powell continuously stress and then finally my third point, Apple briefly surpassing Microsoft and market cap.

They weren’t able to finish the job.

But look at how close this is.

Of course, this comes after Apple’s Artificial Intelligence announcements, Apple all the stock in the best two day performance since November 2022.

So something to keep track of something to keep an eye on, especially as Apple struggled at the start of this year.

But now we’re seeing it neck and neck with Microsoft got to think some of that is investors must be betting that what Tim Cook said is going to drive that product cycle.

Yeah, it was interesting because I feel like it was a mixed bag on the street with how important or how, how much this is going to move the needle for apple moving forward.

But you don’t really want, I bet against apple when it comes to this stuff.

All right, Ali, thank you.

Appreciate it.

The A I hype is alive and well, we were just discussing both oracle and apple hitting record highs today.

Thanks to artificial intelligence deals with open A I.

And joining me now is Craig Walker.

He’s the founder and CEO of Dial Pad.

Craig.

It is good to have you on the show.

Maybe quickly Craig, you know, for viewers who might not be familiar, just describe a little bit about your company, the mission and the the problem your your tech is trying to solve for Craig.

Yeah, Josh, great to be here.

Thanks for having me.

Yeah.

So at dialpad, we have an A I powered customer intelligence platform that really takes all of business communications and analyze it in real time.

So a contact center call, how to provide better support one of your sellers making sales calls, how to close better and with real time coaching and then how to analyze trends of, you know, what is customer satisfaction for certain things, which, which uh sales motions are working better than others and really using that entire communications stack to make your company smarter and do better at their jobs.

And Craig, we are in this A I moment.

You just heard us talking about Apple and oracle.

So, so Craig walk us through how, how is, how is your company leveraging that technology?

Yeah.

So when you think about it, you know, I used to run the Google Voice product and we started this company about 14 years ago and it was all about making the most modern communication platform.

And six years ago, we acquired a real time A I company to build that into the core of that offering to understand what’s actually happening in the conversations.

Now that you fast forward to the modern day with all this generative A I and these large language models, we’re sitting on our own 6 billion minutes, the training data and have built our own large language model to understand business conversations, to be able to give advice in real time.

So the real trick is understanding what’s happening on a conversation.

How do you use that understanding to make your customers happier, make your prospects, buy more, help your recruiting team recruit better and just basically let everyone in the company be more productive.

So the A I is a real application in that contact center sales and recruiting space.

And, and when you, when you talk about A I, Craig, of course, you know, um and you guys obviously are sitting on a ton of data.

There’s always immediate questions about um about that data, the security, the privacy.

How do you navigate that?

Craig?

Yeah.

So one of the most important things of owning your own largest language model specific to your industry or specific to us.

Business communications is since we own it, it sits within our servers within our infrastructure and we’re not sending it off to some third party to go analyze it.

So by having that built in house and running in the core of everything we do, it keeps it much more secure, doesn’t go off to any third party and it really is being trained on your own data as well.

So it’s actually more accurate.

It’s faster and it’s more secure when you own it yourself.

And Craig, it’s just a broader question too about this moment we find ourselves in because there are people Craig that say, listen, what you’re witnessing here is a paradigm shift.

I mean, really, it’s, it’s internet mobile and now A I, do you believe that Craig?

Absolutely.

I mean, you’ve seen other transitions in the past, like moving from on premise to the cloud and you’d have these cycles where, you know, early adopters would move quickly and then other Cio S would, would wait to see how it plays out even over, you know, a decade or more.

And that’s not gonna be the case with A I like every head of it.

Every large organization is under a mandate from their and from their management to use A I to deploy A I to make their teams more effective and make their company more competitive.

And Cio S these days are not going to have the luxury of sitting around and wait and see how it plays out because your competitors are doing it, you’re under the gun to do it and you see that in budgets too, the, the budgets are going to the A I powered solutions and not to the leg want.

So it is a, it is a real, it, it’s like last year was the year of hype around A I.

This year is the year that A I becomes real.

And then next year and beyond this year, the winners start to really, really monetize the A I.

All right.

That’s when we can distinguish between the winners and, and just the marketing fluff Craig.

I wish we had more time.

That was a great conversation.

Thanks so much for joining us.

Thanks for having me, Josh, appreciate it.

You got it coming up.

Shares of Casey’s General Store.

They are soaring at that over 16% today following their latest earnings report.

I’m speaking with the CEO on the other side to check in on the state of the consumer.

Stick around much more.

Asking for a trend.

Still to come on Wednesday convenience retailer.

Casey’s announced fourth quarter results.

The company beating on revenue and blowing past EPS estimates and joining us now to discuss this case, CS CEO Darren Reel is Darren.

Thanks for joining us.

Thanks.

Let’s start there.

Uh Darren because you, you reported you beat the stock ripped, just walk us through the quarter.

What drove the business.

Yeah.

You know, we had a, a couple of things.

We had a, a great quarter.

But first I’d, I’d just like to give a shout out to my 45,000 teammates in our uh 2600 stores.

They really executed at a high level this quarter.

So that was certainly part of the secret sauce behind the quarter.

But uh we really saw a lot of strength in our prepared foods business.

And if you don’t know, we’re actually the fifth largest pizza chain in the US.

So we have 2600 stores.

All of those stores have kitchens.

We make pizza from scratch every day and had really strong growth and prepared foods up almost 9% same store across there.

And that was driven by a couple of things.

Um, we launched a thin crust pizza platform last summer and we’re still cycling over that and really good growth there.

And then more recently launched a new lineup of hot sandwiches where, um, we were up 85% in the quarter in that hot Sanders lineup.

So that, that really drove the traffic.

And then I would say just up and down the PNL, the team just execute on every single element of the PNL.

And when you put all that together, it, it results in a kind of quarter.

We had hot sandwiches.

Uh Darren also, you have, I wanna get your take is you have really unique insight perspective on the consumer.

What’s your take on the consumer?

Right, in terms of what you’re seeing, how healthy, how resilient, you know, we’re, we’re seeing pretty good resilience with the consumer at this point and that’s across income brackets.

Now, what we are seeing is on the lower income consumer, they’re, they’re starting to shift behaviors, they’re still spending money, but they’re spending it a little differently.

How, how, so how are they spending?

I’ll give you an example.

I think it’s been pretty well reported that candy prices have gone up because cocoa prices have shot up.

So candy has become expensive.

Well, we have baked goods that we prepare in store every day.

So we’re starting to see low income consumers rotate out of candy but into cookies and brownies and our baked goods, it’s a little more affordable indulgence.

They’re, they’re satisfying the sweet tooth.

They’re just doing it in a little more economic way.

What about you?

And gas prices?

What, what, what average retail price now?

Dan, what, what is it now?

Versus, you know, in our footprint, we’re averaging about 308 to 310 a gallon.

You know, that was probably a dime higher last year, so not significantly higher.

And really, we’re not seeing the change in behavior that we sometimes do when gas prices get real high.

We’ll see consumers when they’re high shift into more higher blends of ethanol because that fuel tends to be cheaper.

They stop buying premium fuel.

We’re not seeing any of those behaviors right now.

So I think the consumers kind of, so they’re ok with gas prices right now, but then they’re being a little more discerning as, as inflation starts to pinch their wallets a little bit.

And so they’re, they’re deciding where they wanna shop and where they spend their money.

And we’re really positioned well from a value perspective.

And so we’re starting to see more traffic come into our store.

Any changes you all are making kind of inside the store.

Well, and inside the store is like new leverage you pulling innovation.

You know, we’ve, we’ve done a lot of that over the last several years and uh really re merchandizing our stores.

We’ve got a, a really robust private label program now with over 300 items in the assortment.

More recently, we got into the liquor business in terms of private label and our Frost Trail Vodka.

Our own proprietary vodka is the number two selling vodka uh only behind Tito’s in our stores.

And so uh the private label team’s done a really nice job of broadening out that asso and that just offers a more affordable, high quality alternative for our guests.

I wanna get you out of this because I’m interested mostly focused in Midwest traditionally.

So you are now moving into Texas.

How much of an opportunity is that?

Well, you know, uh Texas is a really big state as you know, we, we just made a small acquisition 22 stores in North Texas.

But as I like to say, everything from the I 35 corridor to the Mexican border is Casey’s country.

So I think we got a lot of runway to grow.

Sounds like a lot of w tarn thank you so much for joining us.

That was great.

I appreciate it.

Thanks a lot, Josh and coming up, I’m gonna tell you everything you need to know to kick start your Thursday.

Stick around.

We’re asking for a trend on the other side.

There’s no hiding in recent years, the poor performance from value in disease.

However, there’s more than meets the eye when it comes to the big picture with value investing.

Yah finances, Julie Hyman joins me now with a closer look.

Julie.

Yeah.

And today’s start of the day courtesy of Michael Kantrowitz over at Piper Sandler who really had this not digging into the seeming value under performance.

This is something we’ve been talking about recently, right?

We talked about the Bank of America yesterday thinks that value is going to start to catch up to growth.

We’ve seen that underperformance in recent years, but Kantrowitz says we are framing it incorrectly when we use value indices.

He says to measure this performance, that’s why it looks so weak.

So what he does among other things, this note had a lot of charts, but among other things, he looks at the value index, right, the Russell value index, which is underperformed and this goes um back um all the way to January of 1996.

And then he looks at individual stocks that he defines as value or being looked at through the criteria of value factors, which is just another way of saying in financial jargon criteria, in order to screen for certain stocks.

In this case, he’s looking at low pe low price to earnings ratio stocks and shows that they have actually performed just fine.

He quibbles with the construction of the value in this.

That’s the reason why that the value performance looks so weak.

And he talks about how that mentioned the value indices tend to overweight, things like financials and underweight, things like technology.

In other words, if you look within technology, there are stocks that you would define as value.

But because you’re looking at it through a sector lens, you get just things a little bit of out of whack.

He says if you look at the value factors across sectors being sector agnostic, you get a better picture of what value really is and that uh the performance does not look as weak.

So he makes this case as I said, there are a number of different charts, this is just one of them, but it was an interesting look that perhaps it’s the criteria that those industries are using in their construction.

That is part of the reason that value has, we tend to think of it as doing much worse than growth.

And Julie wasn’t correct me if I’m wrong, wasn’t it?

Michael Kantrowitz, who was on our show, uh, pan on the Table for Utilities?

Am I remembering that?

Right?

You are remembering that, right?

And utilities is one of those areas that typically traditionally falls into the value bucket.

That is a low pe group overall, right?

So, um, that’s one of the groups perhaps he’ll talk about.

He’s doing a call on Friday where he’s going give more details about all of this.

But definitely financials tend to fall in that bucket as well.

But he says in this note, you shouldn’t think of necessarily those sectors as value sectors anymore.

You have to think of what value means in a more holistic fashion.

All right, Julie Hyman, thank you time now for to watch Thursday, June 13th.

All eyes will be on results of the Tesla shareholder vote tomorrow to focal point, Ceo Elon Musk, $56 billion pay package and the decision to move the company’s incorporation from Delaware to Texas Calpers.

By the way, announcing today, it will vote against that pay package.

It owns more than 9 million shares.

Yahoo finance will have live coverage of the results tomorrow starting at 4:30 p.m. Eastern and moving closer to the economy.

The latest producer price index for May is coming out in the morning.

Economy is forecasting both overall PP I and core PP I to cool compared to April the new print, giving us another key piece of economic data.

And coming after the fed just left rates unchanged earlier today, fed chair Dr Powell reiterating that the FED needs to see more good data to reinforce confidence in inflation.

And finally, we’re gonna get some earnings tomorrow including Adobe Rh and Cigna Jewelers.

Adobe reporting second quarter results coming after the bell and is expecting the company not to raise its full year sales outlook.

That’s a wrap on today’s ask you 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.

Have a great night.