Deck and while we await another fed decision, that is there on wednesday at 2 00 p. M. Lets bring in jack ablin, crescent capitals Founding Partner and cio. Lets start with earnings, why dont we which ones will you be looking at most closely . And if corporate earnings are coming down as many predicted, why is the market going up im scratching my head with that one too, tyler. Yeah so i want to look at tech earnings tech is really the only sector thats expected to be up year over year. I think Consensus Forecast has about 12. 2 Earnings Growth for the tech sector in the s p 500 meanwhile, the s p overall is expected to be down about 10 . So clearly its the tech sector that im watching to see if it not just can deliver on expectations but really needs to exceed expectations in order to justify the values that they currently have so how do you explain the markets performance during this very nice month of july so far is it as simple as, well, if you look at the s p 500 its capitalization weighted and the seven stocks that are the most heavily capitalized are the ones that are doing best. How do you explain the performance that weve seen . Yeah, i think maybe investors are watching Interest Rates because really these are companies that you have to discount so far out into the future that any change in Interest Rates or any expectation of change in Interest Rates will likely impact that sector the most. And given the fact that the it appears the fed has won the war against inflation that perhaps investors are saying okay, lets put that inflation issue behind us and lets look forward now. Yeah. Along those lines, jack, you could make the argument potentially this is a market at least right now that is not trading on fundamentals, its trading on narratives. To your point. And whether its the fed being close to done if not already done with its hiking cycle, the disinflation narrative weve seen take root in the market and has certainly been a little bit up for debate. But i mean look no further than some of the data we got this morning to see that its happening. How much does that shift as not only do we get earnings as the week goes on but also as we do get the fed, we do get powell speaking and by the way, pce later this week too . Thats it, margaret i think youre right on point here the fact is that earnings season forces us to look at valuations, forces us to look at fundamentals and my view is even if companies deliver, lets say just the s p, even if companies deliver on the expectations and maintain the current expectations for the next four quarters earnings and dividends, i still believe the s p is about 11 overvalued. Now, youre right. A lot of its pretty top heavy and i think a lot of the under the radar screen names can catch up but i do think that we could see there is a risk that we could see a pullback in the s p and the nasdaq and you think nasdaq is even more overvalued than you think the s p is, which leads you to some unloved sectors like reits, which a lot of private equity and hedge funds seem to be dabbling in these days and also dividend growers. Name some. Sure. A lot of these dividend stocks and the reits are fond alternatives and investors decided why have a bond alternative when i can own bonds. But we like mccormick. Mccormick company, spice company, has a very its about a 1. 8 dividend yield, growing at 8. 7 annualized for the last five years. We like Archer Daniels midland again, two foodoriented companies. 2. 2 dividend yield. Highquality Company Growing at about 5. 4 annualized. And then alternative energy next era, 2. 5 dividend yield, growing at about 11. 3 annual rate if you go back in time and look at Dividend Growth relative to inflation over long periods of time, its a great way of earning income from your portfolio. Got it. Do you stick with u. S. Specifically or in a week where you have ecb and boj on tap as well and a dollar that has i realize it bounced back a little last week but it has this year been weakening does that mean more opportunities elsewhere . Yeah, i think, morgan, there are huge opportunities overseas, particularly in developed international. You have International Stocks in general trading at about half the valuation of the s p 500 theyre in about the 30th percentile of their historic its historical range whereas the s p is closer to the 70th percentile of its historical range. And then take on top of that the dollar is expensive relative to some key currencies. So for example, 20 overvalued relative to the euro 40 overvalued relative to the yen. So now if you own as a u. S. Investor International Large caps really there are two ways to win either the valuation catches up or at least closes that gap or the currency picks up. All right, jack, thanks very much always great to see you, sir all right thanks, tyler. Jack ablin. Lets drill into some of these stocks set to report this week obviously, big tech is always in focus, but what are some of the other key sectors . First, restaurants chipotle, mcdonalds all on deck many analysts have been expecting a Consumer Spending slowdown, but maybe thats not the case kate rogers has more hi, kate hey, morgan we started the earnings parade with dominos this morning and many more to come this week as you mentioned including chipotle, sweetgreen and mcdonalds, which will give us more color on the consumer and while many restaurants is outpacing inflation at Grocery Stores consumers are continuing to dine out. Thats a trend that should continue this summer as tourism picks up while the traditional thinking may indicate consumers are cautious or price sensitive which would boost stocks that offer lower prices for diners like mcdonalds, wendys and yum. Those names are some of the weaker performers on the year. Theyre up between 8 and 20 . Wendys is lower on the year the best performers of the year so far are actually those with a higher ticket cost for consumers. Shake shack, sweetgreen and chipotle and interestingly enough the casual dining names are outperforming the fast food stocks darden, the parent of olive garden, texas roadhouse and blumen brands parent of Outback Steakhouse are all up about 20 year to date while many of these names dipped into takeout and delivery during covid theyre most associated with that sitdown dinein experience that tends to be a bit pricier. And finally well turn to pizza. Dominos this morning reporting mixed results. They say the Delivery Business continues to be challenged in the u. S. Dominos up about 12 year to date papa johns is just lat. Pizza of course one of the cheapest ways to feed a family if you are choosing to dine out these days, guys back over to you a lot of pizza in the household. Its very popular with the toddler set. I do want to go back to dominos part of what pressured the top line miss in dominos was food disinflation and the way that plays out between the company and its franchisees. Is there an expectation that as we see some of these costs associated with some of these food commodities that that could be a situation that plays now the some of these other names too, either positively or negatively well see as you mentioned, dominos obviously a supplier to the franchisee thats great for the franchisee, the costs are lower for dominos not so great because theyre the supplier we have to see what some of these other big names mentioned in terms of inflation. But its interesting because we talked about both mcdonalds and chipotle, two very different price points for the consumer but both mentioned that they werent seeing too much price resistance again, mcdonalds being a little bit cheaper, chipotles being a little more expensive. This was last quarter. But neither really seeing pullback and not a lot of trading down away from a chipotle to a mcdonalds all of these businesses seem to be pretty stable and as mentioned a lot of the casual dining names which are more expensive, especially if youre feeding a family, those stocks are doing really well and those companies also were performing quite well last quarter. So well have to kind of see how inflation weighs on all of these names heading into the back half of the year. But everyone seemed quite optimistic last quarter. Ill be watching to see if that trend continues this quarter we know youll bring us all of the details as those reports roll out kate rogers, thank you lets also take a closer look at some of the big industrials that are reporting results this week. On tap tomorrow we have General Electric thats benefited from its health care spinoff in january with more spinoffs to come of its remaining energy business. The Aviation Business beginning of next year in the past 12 months that stock has gained almost 110 check out that chart largely outperforming big tech names like apple and alphabet. Joining me now to preview is dean dray. Always good to see you want to get your take on ge ahead of results tomorrow. Is this really just all about jet engines and the aviation recovery thats playing out right now . Yeah. Hi, morgan its great to be with you. Yes, ge has been a story stock, a deal stock really ever since larry culp arrived and were coming down to the wire now its two businesses, granova, the power of renewables, and the Aviation Business. Thats what most investors are focused on the Aviation Business thats going to be remainco. Thats where the growth is coming thats where we see valuation. And the storys playing out very nicely and the stock has been real strong this year its up almost 70 year to date. And we still see upside from here on some of the parts basis. Which is compactly my next question for you do you buy at these levels or do you wait for a pullback . Oh, we still like it here everything seems to be on track. We got an update on june 20 from ge at the Paris Air Show supply chain issues. Looked at the favorable now. And we think its a good time to be an owner of ge. Whats left of ge just the aviation basically . Yeah, so its two businesses, two segments vernova, which is the power and renewables business. Thats slated to be spun off in early 24. And that will leave aviation as remainco is this then a lesson in Financial Engineering or Corporate Management or both tyler, its all of the above. We also call it weve been talking about this for five years, about this whole trend towards the demise of the conglomerate, the demerge, portfolio simplification, addition by subtraction. Investors reward companies with a more focused portfolio so the timing was perfect for ge to simplify the story and now its down to its lowest common denominator, aviation. Mark my words long after i am retired, ge will reconglomerate, as will many of those conglomerates. The Investment Bankers will go to them and they will say youre going to be stronger with these other bolton components attached and watch, in 20 years itll look a lot like the old company. I bet. Tyler, its going to happen a lot sooner than that love that well pivot from saying well be back to an urge to merge. And were getting pretty close to it. I think that pivot will happen a lot sooner than your 20year mark maybe ill still be here, then who knows . I do want to ask one more question another bloue chip thats reporting tomorrow morning is 3m they have not succumbed to the urge to demerge quite as aggressively as some of these other names that weve talked about like ge. Your thoughts on that company, especially since the stock has underperformed over the past year plus. Yeah, morgan. 3m has really fallen out of favor. Its no longer the blue chip that it once was we do have a sell rating the whole earnings story is completely overshadowed by litigation on two fronts, the pfas and the combat arms and really that has rendered the stock uninvestable at this stage. Deane dray, thanks for joining us that is about as clear a position as you can come by. Uninvestable thats a pretty firm stake in the ground there for 3m. All right. Coming up, fighting for control. The ftc and white house ramping up their antitrust fights this year, and despite more guidelines and Suits Companies are not backing down but neither is lina khan well discuss next plus Technical Support for meme stocks many of those names climbing over the past month. And based onnast aly targets they could have even more room to run well be right back. Would alwa you need to fuel the body and you need salt. I would always be the kid not cramping, ready to go. Fast forward 20 years and i go from eating salt out of my palm to drinking lmnt. This is ge vernova, helping generate and move the energy that our world needs. Welcome to a new era of energy. Welcome back to power lunch. As the ftc and the doj release 13 new proposed guidelines for merger federal trade Commission Chair lina khan speaking to the Economic Club of new york not long ago after losing two key antitrust cases. Heres what she had to say about how the losses affect the ftcs strategy moving forward. We in federal court have lost two merger cases we have brought somewhere between, you know, 13 and 20, depending on how you count and gotten abandonment so in the scheme of our merger Enforcement Program losing two is okay. Obviously, we want to bring we only bring cases that we think we should win, that we can win. Every time we have that type of setback we look very closely at, you know, where could we have done better, where did we fall short, and use that to inform our approach Going Forward joining us now to discuss is bill baer, former assistant attorney general for the antitrust division at the department of justice and a visiting fellow at brookings hes the only person to have led enforcement at both antitrust agencies of the ftc and the doj. Bill, welcome. How are you . Good to see you. Thank you great to be here what is your response when you hear lina say weve won more than weve lost but the two losses were pretty significant ones involving Big Companies that Everybody Knows i think shes right that you dont bring cases that you think youre going to lose you think youve got a factual basis for. But many of the other challenges theyve brought have resulted in companies saying we give up, were not sure we can win in court. And so those numbers are relevant to an overall assessment of how well shes doing at the ftc and her counterpart Jonathan Canter is doing at doj as you step back and you look at miss khan and mr. Canters approach to antitrust, something you know better than maybe anybody in the country, what would you say is being articulated about their approach is it different from the way it was . Are they going after qualitatively different kinds of combinations or concerns or what . How would you what is the biden administration, the regulatory philosophy that is holding true today thats a great question i think to try and put it simply they are saying that over the last 40 years antitrust enforcement has gotten too conservative and whats happened as a result . We have more industries that are more concentrated, less competitive, and that does not serve consumers, it doesnt serve competition, it doesnt serve workers well so they are going back to basics, these new Draft Guidelines saying two companies are merging, lets look at how they interact today and whats going to be lost in terms of competition if thismerger goes forward. So it is a more realistic, less dogmatic, less theoretical and more practical approach to making sure consumers, workers and the overall American Economy benefits from competition. So if youre reimagining or revisiting or expanding the definition of antitrust, how much of that is actually the jurisdiction of the ftc and the doj versus congress . Basically coming with new legislation. Sorry to interrupt you there. What the antitrust enforcers under biden are saying is we need to go back to what the statutes actually say when it comes to mergers and acquisitions is there a tendency, a risk that a combination, a livenation ticketmaster will end up harming consumers thats what the merger statute says, its taking a look at risks that things will get worse and it involves a prediction and the Chicago School of economics has basically taught us that lets just tighten the standard, require the government to prove a certainty rather than a risk or a tendency. So i dont think we need new law. We just need more fair application of the law that congress wrote so what is your takeaway, then, of what weve seen play out in the u. S. Court system because i realize theres still a european and uk specifically regulatory situation going on. Specifically in the u. S. Court system around microsoft and activision well, first of all, the ftc was unable to prevent the acquisition from taking place. But in the course of the u. S. Investigation, the european investigation, and the uk investigation microsoft effectively conceded that without commitments it had both the incentive and the ability to favor itself and its gaming system over its competitors. So microsoft was forced to make ironclad commitments to make games like call of duty available to its competitors so while the government did not successfully block the thing in its entirety, it extracted concessions which potentially hopefully will allow activision games to continue to be widely available. So the interpretation and enforcement were seeing now of antitrust and sort of this rethinking or back to basics, i guess, around antitrust and its application in the market in real time right now, how sticky does it become if this administration logs some wins and or casts a pall over companies that maybe different administrations in the past would have been looking to merge and are now not doing that how sticky does that become for future administrations and future regulators over time . Well, i think it becomes sticky if the courts go along with it. Right . We are a common law system and we rely