In this podcast, Motley Fool host Anand Chokkavelu, analyst Emily Flippen, and contributors Jason Hall and Jose Najarro discuss:
- Inflation ticks up.
- Nvidia and semiconductors get a China bump.
- The big banks kick off earnings season (and tell us about the economy).
- Is "crypto week" a thing?
- Bold predictions on which company will surprise this earnings season
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A full transcript is below.
This podcast was recorded on July 15, 2025.
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Anand Chokkavelu: Get excited. Today is the first day of earning season. Motley Fool Money starts now. I'm Anand Chokkavelu. I'm joined by two of my favorite Fools, Emily Flippen and Jason Hall to kick off earning season with some big banks, giving us a feel for the economy. We'll also give you the skinny on crypto week, and we'll have bold predictions on earnings season. Plus, we're bringing on a bonus Fool. Also one of my favorites, semiconductor expert Jose Najarro to talk about some hot NVIDIA news. But first, we had a fresh inflation reading this morning. June's consumer price index ticked up to an annual rate of 2.7%, up from May's 2.4%. Emily, what were your takeaways?
Emily Flippen: Well, if you thought you could have a peaceful Tuesday with no bad news, think again. Obviously, inflation is heating up here a little bit. I think we're just starting to see some of the impacts from tariffs as those price increases and core goods start to become more tangible, as opposed to theoretical. We had this really big front loading of inventory that happened at the beginning of the year as businesses stockpiled in anticipation of tariffs, and those are beginning to diminish, which I think is making it harder to protect products from rising costs. We saw that in core goods inflation. Those includes things like basic necessities like apparel and household products that accelerated last month. But the good thing is, in the silver lining to our Tuesday here is that this is a gradual acceleration. We're not talking about anything that's incredibly dramatic. Those numbers at 2.7%, that's an annualized rate. We're not talking month over month here. No need to immediately panic. But I do think this could have some overarching implications for what we're likely to see in future earning season, both coming up in the next couple of weeks, as well as toward the end of the year. It just makes me want to pay attention to what leadership is going to be commenting on because how this trickles down for consumer spending and how much prices are able to be passed along versus the impact to companies' bottom lines, that's really going to have a wide reaching impact in the later half of 2025.
Jason Hall: I think wide reaching is a good way to put it. Just looking at what the markets are doing today, the S&P 500, which I mean, let's be honest, that's indexed to gigantic companies is down about a quarter of a percent. But if you look at the Russell 2000, that's small caps. It's down 1.3%. You see where investors are seeing the potential impact of inflation on the companies that are most directly affected by it. What they're looking forward and seeing if we're being honest, is really going to be driven by the tariff story. That's still the big story in the background. If we look at May, we saw a massive increase in imports as companies tried to pull forward inventory as much as they could back in April, I should say. Then in May, it came down quarter over quarter, but May imports were still well up from where they were year over year. Maybe some of the concerns about empty store shelves later in the year maybe aren't as likely to come to fruition as a lot of investors have been thinking, because that would be a big thing that would certainly drive a lot of inflation.
By the way, all the data hasn't been reported yet, but June traffic at the Port of LA, it was a record level for that month. I think the market broadly is looking out and saying, hey, I don't really know if what we're seeing with the inflation that could be driven by the potential of the tariffs is going to be as bad as we think. But at the end of the day, what's the investor takeaway, guys? Peter Lynch probably had it right when he said, if you spend 13 minutes on economics in a year, you wasted 10 minutes. These things affect us in the real world. But as investors, I think our time is still just better spent looking for strong durable businesses with those great long term tailwinds. We start focusing on macro. What happens? We're reacting based on what our own biases and inclinations are. If we give our motions control of our portfolios, that's never the right decision.
Anand Chokkavelu: If you do the math on Peter Lynch, you should spend three minutes on Macro. That's about what we did. Give or take. We'll be back with some news about NVIDIA and China after the break. Jose, you've covered semiconductors before it was cool to cover semiconductors. Today, we've got some news on NVIDIA in China. What's going on?
Jose Najarro: Pretty exciting news for the overall semiconductor industry. Today, the stocks in the semiconductor space are up roughly 3%, 4%, 5% depending on what stock you're looking at. But the CEO of NVIDIA recently made a trip to Beijing and met with a few government and industry officials there. While he was there, he did provide an update to customers, noting that NVIDIA is going to be filing applications to sell the NVIDIA H20 GPU again to that market. Jensen assured that the US government has assured NVIDIA that the licenses will be granted and NVIDIA hopes to start deliveries there pretty soon. Just a quick backlog of what happened. On April 9th of 2025, this was still part of India's Quarter 1 earnings, the US government issued a new export restrictions on the H20, which is an AI chip meant for the Chinese market and that they could no longer ship to that region. For that one quarter and those few weeks that the export restriction affected, the company lost roughly $2.5 billion in revenue. Then when they gave guidance of Quarter 2, they mentioned due to these restrictions, they were losing about eight billion dollars in revenue per quarter for a full quarter. Now that you have this new entrance of this market, you can at least potentially see at least $30 billion added on revenue, not seeing any growth rates per year for the overall AI GPU space in China. A lot of companies are excited. This also did trickle down to a little some other companies. AMD also had similar export restrictions, and they did respond to similar comments that they will also be looking for these license approvals for their chips as well.
Jason Hall: This is not exactly the same thing as Richard Nixon going to China in 2072, but Jensen Huang going there in person, it's a reminder of how important China is for the semiconductor industry writ large.
Jose Najarro: Very important, and it also showcases how we want to have this AI technology being run on American technology. We don't want it run from other countries. It's coming from NVIDIA, which is a US based company.
Anand Chokkavelu: This is all very clearly positive news. Is the four trillion dollar in market cap for NVIDIA a buy, a sell, or an index for you at this point, Jose? Index means you just stick with whatever allocations in a broad based index fund, which with a four trillion dollar market cap, is it pretty sizable at this point?
Jose Najarro: For me, it's definitely more in that index position. I'm not looking to add anymore to my portfolio. Obviously, there's a lot of growth opportunities, and that's why I'm willing to hold. But obviously, you could see plenty and plenty of short term tailwinds that could create volatility. For me, it's a perfect index play, as you mentioned, pretty much just hold and write this AI wave.
Anand Chokkavelu: It's a jam pack day. Let's move on to the story I thought we'd lead with. We had three of the major banks report earnings this morning. That's JPMorganChase, Wells Fargo, and Citigroup. As bank lending goes, so goes the economy. Jason, what are the banks telling us about the economy? I know Jamie Dimon must have some thoughts.
Jason Hall: He always has thoughts, the godfather of the US banking industry and a little bit of a permabear at times, when things are going very well, he's very bearish. He does get a little more optimistic when things are a little bit questionable. But what I really saw this quarter was there's less of what management says, and then what the businesses did and then what management is doing, thinking about the businesses. Overall, again, JP Morgan, Wells and City, the results were fine. Again, that's looking backwards though. The one thing that we can look at that gives us some indication of what management is acting on going forward is provisions for credit losses. Frankly, there were no major changes here for any of them. This is what they're doing on their books to bolster their balance sheets for expected future loan losses. Wells and City reported increased allowances, but they were both commensurate to things within the mix. Wells had some changes in its portfolio mix, a little bit less asset backed stuff like mortgages and a little bit more credit cards, and cities went up mainly because its loan portfolio just got larger. I don't think we really learned a lot broadly that we didn't already know. Now, you look at these three. Wells' stock is down, call it 5% today. Management lowered guidance for net interest income. That's the most important source of profit for Wells Fargo because it's a big main street lender. Maybe there's a little bit of an indication there.
Emily Flippen: I found it really interesting that to your point, Jason, Dimon is considered such a bear when things are good and such a bull when things are bad. But the JP Morgan CFO said during the call that the consumer seems to be fine. That is an exact quote, which feels to me like a bit of a reach because to your point, a lot of the data that these banks are working off of is lagging. They're basing off theories about credit and consumer spending based on their own consumer credit portfolios. To their point, that is led by labor markets, and with unemployment, it's still less than 5%. It seems to be fine, but that lagging indicator, I worry, could just be something that sneaks up on these types of businesses because we've seen unemployment tick up continuously for over two years now. More than half of all American consumers say they expect to be worse off financially next year in comparison to this year, and consumer spending is declining. The Federal Reserve is looking to manage inflation, not unemployment. With less rate cuts this year, I feel like that could further worsen unemployment rates. That lag in between, I think, what some of these banks are experiencing in terms of the quality of their credit portfolio versus what the average American is experiencing right now is incredibly clear to me when I listen to these earnings calls.
Anand Chokkavelu: No way our listeners want to hear the nitty gritty details on three different banks. They're probably zoning out already, Jason.
Jason Hall: We don't want to talk about return on tangible common equity for all three of these. Come on. That's fun stuff.
Anand Chokkavelu: We'll get to the stress tests, all that stuff. No. You get to talk about one and only one, Jason. Of JPMorganChase, Wells Fargo, and Citigroup, which had the most noteworthy earnings for stock pickers out there?
Jason Hall: Honestly, I don't think we had really any outliers here. Just a couple of really quick points about each of them, I think it probably serves our listeners better. JP Morgan continues to be that gold standard. You look at their return metrics. Nobody fall asleep on me here, but they're extraordinarily high. Directionally, we're talking like twice as good as a city, which is struggling with years of issue. Morgan also had pretty decent loan growth. Jane Fraser is doing a really good job of dragging city forward. But again, they're bragging about 8% return on equity versus, like, 17% over at JP Morgan. That's the difference you see there. Now, looking at Wells, it may be the one that really signaled to the market that consumers to Emily's point are feeling more of a pinch than anyone else. Again, looking at that bringing down their expected net interest income, this is the one of all of these that's most concentrated on, like, traditional Main Street, USA banking and lending. Maybe that's the biggest takeaway for me is that.
Anand Chokkavelu: The million dollar question. By seller index on these banks, Jason.
Jason Hall: You know how I do this. I can't give you any of those three. I'm going to say none of the above. If I'm buying bank stocks today, valuation really matters with these giant mature businesses. There are some positive things. Less regulation, lower corporate taxes is compelling. But there's just much better values to be found, if you look at some of the larger regional and a handful of more specialized banks out there. That's who I'm looking to hear from this week, like Truist Financial, for example, it's really in the sweet spot of the demographics, like the Southeast migration trends. I won't steal Emily's thunder, but there's a big regional bank with national reach that just made a really interesting acquisition that has that one on my radar, but I'll let Emily talk about that one.
Emily Flippen: I completely agree here with Jason. I think there's a fair point that a reduction in regulation across the board with the new administration could just be a boon for the industry, but that doesn't make me want to go out and be like, I'm going to start indexing these banks. If I'm indexed, index a total market of which you get exposure to a lot of these high quality companies. But if you're going to want additional exposure in my book, pick the high quality ones. The JP Morgan's and to Jason's earlier point, a company that should be on everybody's radar, which is Capital One Financial. They just closed their discover merger, and that makes a behemoth in this space. But skip the bad ones. I was going to say that I think quality is more important than price here, and I think that is true. But I was thinking of that in the context of those small regional banks that can sometimes get really attractive on a price basis, but you're losing out on quality. I think Jason's point about understanding the price you're paying for even the larger banks is incredibly important because these are mature businesses, and the market can have pretty stark reactions for factors outside of their control when it comes to the broader economy. Focus on quality here, but don't ignore price.
Anand Chokkavelu: Let's move on to crypto Week. I've heard about Shark week for years, but this is my first crypto week. I've seen Bitcoin touch new highs at over 120,000 per Bitcoin this week. What's going on, Jason?
Jason Hall: Unlike infrastructure week, which has been playing out for 20 years now, crypto week's actually happening. This week, there are several pieces of legislation that it looks like Congress is going to be taking up that could really clarify the regulation regulatory framework more in the US. That's a big positive thing. There's more going on, too, really. This really started over a year ago when the Supreme Court basically forced this Securities and Exchange Commission to actually regulate crypto instead of just suing crypto companies. That's what led to the approval of Bitcoin and Ethereum ETFs, and they've been around for about a year at this point. There's a massive amount of institutional investment into crypto that's increased over the past year. The things that are happening right now on the regulatory framework, they don't guarantee the future, the crypto future that bulls have predicted, but it should result in a continued increase in investment into the DeFi and Fintech tools that are being built on blockchain. The other thing, too, recently, all of the things with stablecoin, there's been a massive amount of news, companies like Shopify are partnering with stablecoin creators like Circle and Coinbase which is in the middle of it and Stripe as a payments processor to start building transactional mechanisms using stablecoin. The type is definitely favorable right now for everything crypto.
Anand Chokkavelu: One free bold prediction. I think we'll probably be talking about crypto on this show later this week again. But after this break, we'll have some bold predictions on individual companies this earning season. Time for a segment we call bold predictions. This time with an earnings season flavor. Emily, start us off. What's your bold prediction on a company who will surprise us this earnings season, either on the good side or the bad side?
Emily Flippen: Unfortunately, for me, it's going to be on the bad side, and that is actually Etsy. This is a fine business, be very clear about that. They're cash flow positive, and leadership has done a great job admittedly over the course of the past decade of growing this company, but they have made a lot of really questionable acquisitions, and I worry that with the increasing narrative around the type of purchaser that is coming to their platform, there is a disconnect between what management is seeing versus what their customer is seeing. I see that right now around tariffs. The reason why I think they could surprise to the downside here for earning season is because management has come out and said, look, very little of our product is shipped from China. In fact, if anything, tariffs are going to be a boon for Etsy because we have all these wonderful handmade products right here from the United States. I think any of the consumers who have used Etsy listening to this show are probably aware of the fact that there's a lot more Chinese made and foreign made goods on Etsy's platform than leadership is probably willing to admit. Many of those companies and people claiming to ship from the United States actually get their products and raw goods from foreign countries, including China. I actually worry a bit here as we head into earning season that the tariff picture for Etsy could be a lot worse than what management thinks. The reason that could position investors poorly is because management has communicated the exact opposite. I'll be really interested to see what they say here where they report earnings at the end of the month.
Jason Hall: I've got an optimistic one. I've got a bullish one for us here on a company called Confluent, ticker CFLT that I've followed really closely. I'm going to make a bold prediction that they beat their guidance. Company set an expectation that subscription revenue was going to grow about 19%. They report close to the end of July. Revenue was up about 26% in the prior quarter, in the first quarter, and I think that they're sandbagging, but I think they set a really conservative guidance. I think they're going to do better, and they're going to surprise the market because more and more companies need to be able to take on these data streaming products, especially as AI and being able to make decisions with data in real time becomes more important. The AI tools demand real time data, and I think confluence is going to surprise everybody.
Anand Chokkavelu: I'm going with Warner Brothers Discovery myself. Last night, I took my eight-year-old to see Superman. I've got good news for comic book fans. They fix no spoilers. They fix all the problems that are inherent in the Superman narratives, and they've built the DC Universe the Justice League for future films. I'll be very interested to hear the earnings call from Warner Brothers Discovery this quarter. Here at The Motley Fool, we live on feedback and cinematic universes. To be part of that feedback or to ask a question, email us at podcast at fool.com. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy yourself based solely on what you hear. All personal finance content follows Motley Fool Editorial standards is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our full advertising disclosure. Please check out our show notes. Emily Flippen, Jason Hall, Jose Najarro, and the entire Motley Fool Money team. I'm Anand Chokkavelu. We'll see you tomorrow.
