Consumer Weakness and AI's AI Threat to Software

Summary

Inflation is accelerating, driven in part by the war, pushing interest rates higher, with the 10-year yield now above 4.5%, a level that makes analyst Steve Eisman cautious. Consumer spending showed weakness at Target and Walmart, with both retailers citing fading tax refunds and higher oil prices as factors. In the software sector, an analyst initiated coverage on Salesforce with an 'underperform' rating, citing concerns about AI disrupting traditional software businesses, a sentiment echoed by Intuit's slowest revenue growth since 2024 and significant layoffs. On a brighter note, Nvidia reported an impressive 85% revenue increase year-over-year, though its stock saw little movement after hours. The utility sector is seeing consolidation, with NextEra acquiring Dominion Energy to meet data center demand, but utility stocks are sensitive to rising interest rates. Building material suppliers like Home Depot and Lowe's also reported lackluster results, reflecting sluggish residential activity due to higher rates. In a mailbag segment, discussions touched upon private credit, the creditworthiness of the US, and the real-life covering of the Big Short trades in 2008.