A cybersecurity stock to play the AI trend, and why U.S. exceptionalism in markets isn't over
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors on Wednesday are looking at cybersecurity stocks as a way to play the next phase of the artificial intelligence trade. Plus, one investors breaks down his bond market forecast as hopes for Federal Reserve rate cuts in 2025 grow. Worldwide Exchange Pick: Cloudflare Sevasti Balafas, CEO Goalvest Advisory sees Cloudflare as a broader way to play the AI an tech trade. "A big part of the reason that we like them is that 80% of their revenue is stable subscriptions based and secure," said Balafas. "They are a broad platform it's not just cybersecurity that they are focusing on, they make our websites faster and more secure but it's not just security. They have a broader platform that we like. " Cloudflare shares are more than 60% higher year to date. The stock also makes up 5% of the Amplify Cybersecurity ETF (HACK) and 4% of the First Trust Nasdaq Cybersecurity ETF (CIBR) . Both funds are trading near all-time highs this week. Fed impact on the bond market With fed funds futures pricing in as many as two rate cuts in 2025, Ben Emons of FedWatch Advisors is seeing dovish signs. "The Fed has room, but the timing seems to be challenged because of the uncertainty ... I think the Fed is in a position to cut and will likely follow through," said Emons. But Emons believes rates will also stimulate the economy enough to significantly boost yields. "Yields should go higher from here as opposed to lower at least at the initial phase. I think we are going to test close to 5% (yield) on the 10-year simply because the economy is picking up," he said. Global market view from the SuperReturn Conference Julian Salisbury, co-CIO of Sixth Street Capital, shared his view of the global markets and U.S. exceptionalism. "I don't think the U.S. exceptionalism story is done; it's still the best investible market in the world," said Salisbury. "A lot of people are starting to say I have kind of gotten overweight just given the outperformance of my U.S. assets over the last five-to-10 years and maybe there is a chance to rebalance."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
32 minutes ago
- Miami Herald
President Trump sends harsh message to Federal Reserve on interest rate cuts
President Trump upped the ante on the Federal Reserve hours after the latest jobs report, angrily demanding Fed Chair Jerome H. Powell slash the federal interest rate to create greater demand for consumer loans and better terms for business investment. And POTUS wasn't shy about it. Related: Veteran fund manager resets stock market forecast amid Musk, Trump fallout The president pounded out a furious message to the central bank chair, once again calling him "Too Late" Powell in Truth Social media posts. The lashing included references to rate cuts in Europe, plus a debatable declaration that there is "virtually no inflation (anymore)." The President's June 6 comments came as the Department of Labor reported that hiring remained stable in May with employers adding 139,000 jobs, gains that were slightly higher than expected but down from April. The unemployment rate stayed the same at 4.2%, as expected by most economists. Image source:While stocks bounced on the jobs report and recession concerns eased a tad, there is still a strong sense of caution due to the recession and, in some corners, even stagflation concerns. The $36.21 trillion U.S. debt, one of the major points of debate of Trump's "Big Beautiful Bill," now in the Senate, also made the president's screed. "If 'Too Late' at the Fed would CUT, we would greatly reduce interest rates, long and short, on debt that is coming due…Very Simple!!! He is costing our Country a fortune. Borrowing costs should be MUCH LOWER!!!,'' wrote President Trump. Related: Jobs report shifts Fed interest rate forecasts President Trump, just days before the June 6 jobs report, blasted the central bank chairman as "unbelievable" and a "disaster" on Truth Social for Powell's delay in lowering interest rates, a move Trump maintains is choking economic growth. Minutes from a meeting of the Federal Reserve Bank leaders, which was held in early May and released on May 29, show the central bank voted to undertake open market operations "as necessary" to maintain the federal funds rate in a target range of 4.25% to 4.50%. The Board of Governors of the Federal Reserve System also voted unanimously in early May to approve establishing the primary credit rate at the existing level of 4.5%, meaning interest rates for lenders, consumers, and the rest of Americans likely won't fall in the short term. This led to Trump's increasing displays of frustration against Powell. Veteran fund manager Chris Versace wrote on TheStreet Pro that the market will likely rethink the three 25-basis point rate cuts expected per the CME's Fed Watch Tool. "With Atlanta Fed President Raphael Bostic signaling ahead of this data that he sees room for just one rate cut, the growing likelihood is more Fed heads will fall into that camp based on the aggregate data published this week." Versace says. " We also have to wonder if Bostic's comment helps lay the groundwork for the Fed's upcoming set of economic projections that it will publish alongside its next policy decision on June 18.'' Related: Analyst resets stocks, gold outlook after rally The chances of more than one rate cut in the second half of 2025 will likely increase if May CPI and PPI inflation data released this coming week support "May inflation data we've seen thus far and there is no meaningful progress on trade deals,'' Versace says. The president isn't buying it. "Too Late" at the Fed is a disaster! Europe has had 10 rate cuts, we have had none,'' Trump posted. Note that Europe has actually had eight central bank cuts recently, not ten. "Despite (Powell), our Country is doing great,'' Powell said. "Go for a full point, Rocket Fuel!" The "Rocket Fuel'' moniker is apparently a new one from the White House. A spokesperson for the Federal Reserve, responding to a comment about the full point cut, said, "We don't have anything to share here." Related: Veteran fund manager who predicted April rally updates S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
an hour ago
- Yahoo
Elon and Trump's Breakup Results In Hilarious Consequences For Dogecoin
Elon Musk and Donald Trump's nasty feud has had some unintended consequences for the meme coin that inspired the Department of Government Efficiency. As CNBC reports, Dogecoin fell 10 percent on Thursday, the day that the Musk and Trump spat spilled over onto social media, and was down 22 percent week-over-week at its lowest point last night, when it was worth less than 17 cents per token (don't gasp too hard, but it's now soared back up to 18 cents.) Given that it's a meme coin, Doge has never been worth all that much to begin with. At its absolute peak in 2021, the coin traded just under 75 cents thanks to Musk's endorsement — and despite regular peaks and valleys, it's never again surpassed that all-time high. Despite its near-worthlessness, Dogecoin has been a useful metric for tracking the way Musk affects market. As CNBC notes, the meme coin spiked 15 percent in a day when Tesla began accepting it for merchandise in 2022, and jumped 35 percent later that same year when Musk bought Twitter. Just as Doge giveth, Doge seems to taketh away. The unelected billionaire has entirely squandered the gains he garnered for the meme coin when riding on Trump's coattails, first with the announcement of the agency's creation and again when its official website was launched just after the president's inauguration. As Cointelegraph reports, the coin could be poised to slip even further. Dogecoin's three-week Trump slump suggests, per the site's analysis, that it could fall to as little as six cents per coin if its bearish streak continues. Should it continue to fall, a massive selloff event may occur as itchy investors seek to rid themselves of the tarnished token. Over on the everything app, Doge bros are, as usual, acting absolutely bonkers about the coin's chances of survival. "Looks like yesterday was just another bear trap for Dogecoin," one such investor tweeted alongside a chart showing projected "euphoric" highs that almost certainly will not be attained. "Let's go!" In another unrealistic prognostication that borders on tragic, one account shared a graphic explaining that if investors "hold together, nobody will fall." "I'll keep reposting till we hit the Dollar," the delulu poster exclaimed. In Washington, the fiery feud between Musk and Trump has shaken the status quo — but for crypto types, it's just another weekend. More on meme coins: You'll Never Guess What Happened to Trump's Meme Coin After He Announced His Tariffs
Yahoo
2 hours ago
- Yahoo
AGNC Investment: Its High Yield Looks Tempting -- Why the Stock May Be Ready to Rebound
With a high yield and monthly dividend payout, AGNC often draws the attention of income-oriented investors. However, AGNC has struggled in recent years due to rising mortgage rates and an inverted yield curve. The setup for the stock now looks a lot more favorable. 10 stocks we like better than AGNC Investment Corp. › AGNC Investment (NASDAQ: AGNC) has one of the highest dividend yields in the market, sitting at about 16%. But with a stock price that's steadily declined the past few years, investors are right to ask: Is the payout sustainable, and more importantly, is the stock a buy today? For those unfamiliar, AGNC is a mortgage real estate investment trust (mREIT) that owns agency mortgage-backed securities (MBS), primarily guaranteed by Fannie Mae and Freddie Mac. Because these securities are backed by government agencies, they carry virtually no credit risk. But AGNC's business is far from risk-free, and here's where the story gets complicated. The biggest issue facing AGNC the past few years has been higher mortgage interest rates. There have been two main issues that have pushed up rates. One is that the Federal Reserve aggressively raised benchmark interest rates a couple of years ago to combat inflation. This resulted in mortgage rates also climbing. However, that was not the only reason mortgage rates shot up. Spreads between MBS yields and Treasury yields also began to significantly widen. During the COVID-19 pandemic, the Fed was a huge buyer of MBSs, driving down yields and narrowing the yield spread between MBS and Treasuries. However, after the pandemic, it stopped purchasing MBSs and began letting them roll off its balance sheet as they matured. About the same time, banks also began to back off buying MBS as bond prices fell, and the collapse of Silicon Valley Bank, which was heavily concentrated in long-duration MBSs, only pushed banks further away from the MBS market. During this period, the value of AGNC's MBS portfolio, as measured by its tangible book value (TBV), plunged. From the end of 2021 through the end of 2023, AGNC's tangible book dropped 45% from $15.75 to $8.70 per share. It has slipped a bit further since, and stood at $8.25 at the end of Q1 2025. Ultimately, where AGNC's TBV goes, its stock is sure to follow. Despite the rough stretch that AGNC has seen, the setup for the stock now looks a lot more favorable. Fed Chairman Jerome Powell has signaled that more rate cuts could be on the table, and the Fed's own projections point to lower rates in the years ahead. That should be a much better environment for AGNC. Fed rate cuts could benefit AGNC in two main ways. First, it would likely reduce its short-term funding costs; AGNC tries to borrow money to invest in MBSs with longer maturities and higher yields. Second, lower rates could help increase its TBV by boosting MBS valuations. The past few years, the Treasury yield curve was inverted, which means that shorter-term Treasuries, like the two-year, had a higher yield than long-term Treasuries, like the 10-year. Not surprisingly, this is not a good environment for a company that generates its income from the spread between short- and long-term rates. Now, AGNC actively hedges out its funding costs to better align them with the duration of its MBS assets. However, it's not able to fully offset the pressure from an inverted curve over an extended period of time. With the yield curve flipping from inverted to positive (long-term yields being higher than short-term yields) late last year, though, AGNC stands to benefit from wider spreads. AGNC's portfolio is also well-positioned if MBS yields begin to fall. More than 80% of its holdings carry coupons of 6% or lower, which helps limit prepayment risk. Prepayment risk is highest when homeowners begin to refinance into lower-rate mortgages, forcing mortgage REITs to reinvest in lower-yielding MBS. While high dividend yields are attractive, they can also be a warning sign. However, AGNC has maintained the payout through a very difficult environment, albeit sometimes at the expense of a lower tangible book value. It's not fair to say the dividend is completely safe, but if the yield curve continues to steepen, the dividend should become more sustainable. If MBS-to-Treasury yield spreads narrow from historically wide levels as banks or other institutions reenter the MBS market, AGNC could see a meaningful recovery in both its book value and share price. That's the best-case scenario. However, even if that doesn't play out, AGNC still has room to deliver solid total returns. The company pays a monthly dividend of $0.12 per share, which equates to a yield of about 16% based on recent prices for the stock. That dividend income alone puts it in a strong position to outperform in a market that seems to have stalled. With even a modest portfolio value recovery, AGNC could deliver annual 20% to 25% total returns during the next few years. Overall, I'd consider AGNC a high-risk, high-reward income play. However, the stock has already taken the brunt of the blow from higher interest rates and wide MBS-to-Treasury yield spreads, and the current environment may finally be turning in its favor. The wild card is whether historically wide MBS-to-Treasury spreads begin to narrow, because if they do, the upside could be significant. For investors who understand and are comfortable with the risks, AGNC offers a very high yield with strong potential upside. It's not a set-it-and-forget-it stock, but at current prices, it could be a smart investment for income-focused investors during the next few years. Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. AGNC Investment: Its High Yield Looks Tempting -- Why the Stock May Be Ready to Rebound was originally published by The Motley Fool
