Retail and institutional investors alike are fans of buying and holding Big Tech stocks.
However, investors should consider rebalancing their holdings as markets broaden and tech sells off.
Bank of America recommends increasing exposure to cyclicals and dividend stocks.
Buying and holding Big Tech stocks has led to great performance in recent years, but this might not be the case going forward.
A stock sell-off led by the Nasdaq last week spread across the globe and deepened early on Monday. Down 3%, the tech-dominant index led the S&P 500 and Dow in premarket losses amid concerns that Fed rate cuts will come too late and that the AI-fueled rally made valuations too high.
Because Big Tech stocks make up a large part of the market and individual portfolios, changes in just a few of these companies can have a big impact on indexes. As a result, buy-and-hold investors are probably seeing more red than they'd like in their portfolios right now.
Bank of America expects to see increasing rotation out of the tech sector for the rest of the year. Savita Subramanian, the head of US equity and quantitative strategy, provides two trades for passive investors to take advantage of a rebalancing market.
Big Tech overexposure
If you hold a lot of Big Tech stocks in your portfolio, you're not alone. The biggest institutional money managers are also fans of the buy-and-hold strategy. In a July 31 note, Bank of America shared that at least 70% of the large-cap long-only funds it tracks hold Magnificent Seven stocks.
There's definitely reason to be bullish on tech overall, especially as AI spurs growth, but overexposure to Big Tech isn't without its drawbacks. Subramanian points out that the Mag Seven declined more than 10% on average in the last two weeks of January. That's a cumulative $2 trillion dollar drop in market capitalization.
According to Subramanian, there's more room for Big Tech to fall, especially if investors don't see AI monetization cases soon. Hyperscalers like Microsoft, Meta, and Google are allocating billions on AI capital expenditures this year, and if AI revenues don't pick up in the coming quarter, buy-and-hold investors will be seeing more red in their portfolios.
Bank of America expects the rest of the market to start picking up momentum as well. "Earnings of the 'Other 493' are expected to accelerate throughout the rest of the year while Mag 7 earnings decelerate, suggesting the rotation may have further to go," she wrote.
2 ways to diversify
While it's tempting to leave your portfolio alone, buy-and-hold investors can benefit from some rebalancing as the market shifts away from Big Tech.
Subramanian identifies cyclicals as an area of investment. Buy-and-hold investors are extremely underexposed to them, specifically to energy, materials, and banks.
Long-only funds shed cyclical holdings during the first half of 2024, decreasing allocations in energy and materials by 11% and 5%, respectively. Fund holdings in banks are at the lowest levels in recent years, with exposure over one standard deviation below the long-term average since 2008.
With inflation slowing and rates expected to start coming down, Bank of America believes that the Fed will be able to engineer a soft landing for the economy, creating a favorable environment for cyclicals to do well going forward. Hard-landing risks appear to have risen since the note was published on Wednesday, however, with the famous Sahm Rule recession indicator being triggered on Friday by a rising unemployment rate. Still, it remains to be seen how much further the labor market will loosen.
Buy-and-hold investors should also consider swapping out the cash in their portfolios for dividend stocks, Subramanian said. Currently, there's over $6 trillion in US money market funds. And households are increasingly sitting on piles of cash: $18 trillion of it, to be exact. That's up $5 trillion from the pre-Covid days.
As the Fed begins to cut rates, investors will earn less on their money if they leave their accounts alone. Dividend stocks provide quarterly income and can be a good way to enhance returns as yields on cash decline. They're also relatively cheap right now — the forward price-to-earnings ratio on high-dividend stocks is at its 11th cheapest percentile relative to the S&P 500.
Investors interested in making the switch from a buy-and-hold to a more active strategy can do so by investing in funds such as the Vanguard Financials ETF (VFH), the Energy Select Sector SPDR Fund (XLE), and the SPDR Portfolio S&P 500 High Dividend ETF (SPYD).
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Carlos Alcaraz on court playing at the 2024 Olympic games.
Alvaro Diaz/Europa Press via Getty Images
It's the tennis match fans around the world were dreaming of as the two biggest names in modern men's tennis battle for gold at the Paris Olympics and the famous Roland Garros venue. Alcaraz goes in as the heavy favorite having already won the French Open this season and also beaten the Serbian recently in the Wimbledon final. Here's everything you need to know about how to watch a free Alcaraz vs. Djokovic live stream from anywhere.
Just be aware that the start time is a little hard to pin down, as the men's singles gold medal match is set to be the second game on-court today after the women's doubles bronze medal match. Estimates put it starting around 2 p.m. local time in Paris (8 a.m. ET / 1 p.m. BST / 8 p.m. AWST). To be on the safe side, we'd tune in earlier, just in case the ladies wrap things up sooner. The women's doubles gold medal match follows the men's singles, and you can watch all three of these medal matches via the viewing options below.
The Olympic tennis coverage is being streamed for free if you know where to look. If you want a piece of the action gratis, we can help you bypass geo-blocks that would usually stop overseas viewers from accessing the free Olympics tennis live streams. A VPN (virtual private network) changes the digital location of your viewing device (phone, laptop, Fire TV Stick, etc) to a country of your choosing, unlocking the international options from the box below, along with a range of other international streaming options.
How to watch a free Alcaraz vs. Djokovic live stream from anywhere
If you're not currently in one of the countries mentioned above and are struggling to find a decent option locally, you can use a VPN to temporarily change your viewing device's location to act as if you were located elsewhere. VPNs are an essential tool for any sports fan nowadays, as shown in our vast collection of streaming guides. They're not just great for streaming, as they protect your digital privacy online on all your devices at home and, more importantly, on vulnerable public WiFi.
If you fancy taking one for a spin, I recommend ExpressVPN. It's an efficient, user-friendly option that I've been using for years and has a 30-day money-back guarantee policy. You can find full details in our ExpressVPN review.
Watch Alcaraz vs. Djokovic live stream for free online.
How to watch Alcaraz vs. Djokovic in the USA
The cheapest option to watch Olympic tennis locally in the USA is Peacock. The streaming service covers the entire Olympics, and you can enjoy it all for just $7.99. This is for a rolling one-month plan you're under no obligation to keep once the Olympics end on August 11. With a strong selection of on-demand content to watch, you might keep it for a while longer.
We'd only stump up for the ad-free $13.99 tier if you're going to dive into the on-demand content, as ads still show on live sports coverage. So you're not missing out on any additional coverage or panelist discussion if you get the cheapest option - we've tested both to make sure.
Where to watch Alcaraz vs. Djokovic in Australia
Vast amounts of Olympic coverage will be available to live stream on 9Now in Australia, a free option you can access after creating a free account. If you want to binge on some top-level action, all of the gold medal tennis matches will be included in this coverage. Viewers outside of Australia can watch using a VPN.
Where to watch Alcaraz vs. Djokovic in the UK
For the most comprehensive tennis coverage, you'll need to head over to Eurosport, which is only £3.99 a month during the Olympics. If you want free coverage, 9Now in Australia (see above) is your best bet, as we see plenty of events on their schedule.
Note: The use of VPNs is illegal in certain countries, and using VPNs to access region-locked streaming content might constitute a breach of the terms of use for certain services. Insider does not endorse or condone the illegal use of VPNs.
Visitors watch a Brazilian Air Force Embraer C-390 Millennium take part in an air display.
JUSTIN TALLIS/AFP via Getty Images
Interest in Brazil's C-390 cargo plane is growing, competing with the US' C-130 Hercules in demand.
While Embraer's C-390 hasn't overtaken Lockheed's C-130, its worldwide presence is on the rise.
The Netherlands and Austria bought nine C-390 Millenium aircraft in a joint deal in July.
America's tried-and-true C-130 Hercules cargo plane is facing stiff competition from Brazil's new C-390 Millennium as demand for the Brazilian-built workhorse cargo plane builds.
Lockheed Martin's C-130 turboprop makes up a fifth of the global military transport fleet, according to aviation data provider Cirium.
While Embraer is far from edging out Lockheed in the global aviation market, the jet-powered C-390 is giving US cargo planes a run for their money.
Cargo planes are essential for fast-lifting the combat vehicles and ammunition troops depend on, and they can double as jump platforms for paratroopers. In this market dominated by the C-130 internationally, Brazil's Embraer hopes to make inroads with a faster and roomier aircraft.
'Now it is time for the Embraer C-390'
The Embraer logo is seen next to a blue carpet leading to a C-390 Millennium.
Taylor Rains/Business Insider
In July, the Dutch Ministry of Defense acquired nine C-390 Millenium aircraft in a joint deal signed at the Farnborough Airshow in the UK, allocating five to the Netherlands and four to Austria.
"This aircraft is the best choice in the market, offering an unbeatable combination of high performance, advanced technology, and low life cycle costs," Bosco da Costa Jr., president and CEO of Brazilian defense firm Embraer, said.
The new C-390s would replace the Austrian Air Forces' aging fleet of three C-130s, which have an average age of 56 years after the country acquired secondhand from the UK's Royal Air Force.
"Since 2003, the three Hercules aircraft have completed many missions and have always been a reliable transport device for our soldiers," Austrian Defense Minister Klaudia Tanner said last September. "Now it is time for the Embraer C-390."
Spacious cargo hold and fast speeds
A member of the C-390's crew holds equipment aboard the cargo plane.
Taylor Rains/Business Insider
The C-390 offers some advantages over the C-130: roomier cargo capacity and high airspeeds.
The twin-engined C-390 aircraft measures just over 115 feet in length and 38 feet tall, with a wing span of 115 feet.
The C-390's cargo hold is about 60 feet long and can carry a maximum payload of 26 metric tons (about 57,000 pounds) — with space to accommodate light vehicles, heavy vehicles, and helicopters.
The C-390 can fly at a maximum altitude of 36,000 feet and reach speeds of about 614 miles per hour. It also has a range of 1,080 nautical miles at full capacity.
By comparison, the C-130 has a slightly smaller cargo hold and travels at slower speeds, but newer variants have a longer range than the C-390.
A multi-mission workhorse
A view behind the jet engine of a C-390.
Taylor Rains/Business Insider
The C-390 Millenium is a versatile military transport aircraft that can be configured for a range of missions in three hours or less.
It can be deployed for cargo and troop transport, medical evacuations, aerial firefighting, search and rescue missions, and rendering humanitarian aid.
Featuring air-to-air refueling equipment, it can operate as both a tanker to refuel other aircraft or be refueled by another C-390.
Similarly, the C-130 functions as an aerial refueling aircraft as well as a tactical passenger and cargo airlift.
With the longest, continuous military aircraft production run in history, the Hercules is produced in over 70 variants. The latest of them, the C-130J Super Hercules, has logged more than 1 million flight hours carrying out combat, humanitarian, special ops, and refueling missions since it entered service in the late 1990s.
C-390 around the world
The C-390 Millennium transits a runway before taking flight.
Jakob Wert
The joint C-390 acquisition by the Netherlands and Austria comes after South Korea — a longtime operator of the C-130 — became Embraer's first customer in Asia last year.
In December, the country's Defense Acquisition Program Administration acquired three C-390s in a $544 million deal, or 710 billion won.
The C-390 first entered the Brazilian Air Force in 2019, later joining the Hungarian Defense Forces in 2020 and the Portuguese Air Force in 2023. Other countries have since been eyeing the C-390, including Sweden, Egypt, India, and Singapore.
By contrast, more than 2,500 C-130 aircraft have been ordered or delivered to 63 countries to date, according to Lockheed Martin, and 70 countries are known to operate them, including Canada, the UK, Japan, and Israel.
The C-390 in development
The C-390 Millennium takes off from a runway during an airshow ceremony.
Jakob Wert
Development of the C-390 first began in the late 2000s after Embraer was contracted to develop two prototypes of the medium-sized transport aircraft.
In its third attempt to build the aircraft, the first production of the C-390 made its maiden flight in October 2018. The Brazilian Air Force received its first C-390 in September 2019, and two months later, the cargo plane debuted at the Dubai Airshow, entering the global market with a new name: the C-390 Millenium.
The current C-390 fleet in operation has since completed more than 13,000 flight hours.
Riding in the cargo hold
A row of seating inside a C-390 cargo plane.
Taylor Rains/Business Insider
The cargo hold can accommodate up to 80 troops or up to 64 paratroopers. The cabin has temperature control and reduced vibration and noise, as well as a complete toilet and heated floors for passengers' comfort.
Medical evacuations
Stacked cots are seen inside a C-390.
Taylor Rains/Business Insider
When deployed to support ground operations or disaster relief missions, the Millenium's cargo hold can be configured to carry up to 80 stretchers to transport survivors or casualties, or less litters to provide room for up to eight medical attendants and equipment.
High-tech avionics
Two pilots sit in the cockpit of a C-390.
Taylor Rains/Business Insider
The C-390 is equipped with advanced tactical radar, threat detection systems, and aiming software that uses an algorithm to determine optimal drop points while giving the pilot an option to manually or automatically release cargo.
The interior, exterior, and cockpit systems have night vision capabilities for night flights, aerial refueling operations, or low-vision search and rescue missions.
Pitching the C-390 in the US
A C-390 aircraft flies during an air show.
Pete Syme/Business Insider
While there haven't been any public negotiations by the Pentagon to add any C-390s to its fleet, Embraer has made moves to pitch the plane to the US market.
In an inaugural visit earlier this year, the Brazilian defense firm showcased the C-390 at its facilities in Melbourne, Florida, to "an important and diverse audience," the company said in a March statement.
According to a press release, the event hosted a "diverse guest list of government authorities, military officials, prospects, and partners" and featured the A-29 Super Tucano, a turboprop light attack aircraft flown by some South American militaries.
The Embraer president da Costa Jr. said the A-29 was built "just hours away in Jacksonville, Florida," hinting that the C-390 could be manufactured in the US as well — a common requirement for foreign aircraft operated by the US military.
"The A-29 Super Tucano has been an important part of our manufacturing footprint in Florida for over 10 years," da Costa Jr. said at the time, "and we see big opportunities for both aircraft in the market with perhaps the potential to bring the C-390 here as well."
A Russian warship sailed near the Kerch Bridge linking the Russian mainland to Crimea in July 2023.
STRINGER/AFP via Getty Images
Ukraine has pushed Russia's Black Sea Fleet out of Crimea after two years of strikes.
But retaking the peninsula will be extremely hard, military experts told BI.
Recapturing it would require more manpower, firepower, air cover, and caution, experts said.
Ukraine has dealt a massive blow to Russia's Black Sea Fleet in Crimea.
Russia has retained control of Crimea since invading and annexing the peninsula in 2014 and secured Sevastopol as the headquarters for its Black Sea Fleet.
But following Russia's full-scale invasion in 2022, Ukraine has repeatedly struck back in the region, destroying or damaging around half of the Russian fleet's warships, including one submarine, according to publicly available information.
It has used aerial drones, sea drones, and anti-ship missiles against the fleet and the Kerch Bridge, to often devastating effect. Ukraine's campaign even pushed Russian warships to withdraw from Crimea to bases in the port cities of Feodosia, on the far side of Crimea, and Novorossiysk, in Russia.
It is degrading the peninsula as a key logistics route to its occupying forces across southern Ukraine and tainting its attractiveness to Russians as a summertime beach destination. But if Ukraine hopes to follow through on its pledges to retake Crimea, it will need a huge assault force steeled for what's likely to be the hardest fight of a bloody war.
"Retaking Crimea would be extremely difficult because Crimea is essentially an island," Mark Cancian, a retired US Marine Corps colonel who's a senior advisor at the Center for Strategic and International Studies, told BI.
"An amphibious assault is impossible because Ukraine lacks ships to carry large numbers of troops and their heavy equipment," he said, adding: "Further, Russia still has long-range aircraft and submarines, which are essentially invulnerable at sea."
Russia has a vast military infrastructure across Crimea that will have to be severely damaged in order for Ukraine to have a chance to seize it back, according to Basil Germond, an expert in international security at Lancaster University in the UK.
He said Ukraine "would first need to prepare the terrain by destroying or seriously degrading all of Russia's air, air defense, missile defense, communication, and electronic warfare equipment and capabilities in Crimea and perhaps the Kerch Bridge."
The Crimea peninsula's geography poses unique challenges for Ukraine to assault and for Russian forces to defend.
Ulf Mauder/picture alliance via Getty Images
A challenging location
Reaching Crimea has proven challenging due to its location away from the front lines, Russia's heavily fortified defensive lines, and Ukraine's lack of manpower and airpower, military experts and analysts told BI.
"Crimea is deep inside Russian-occupied territory and far from the current front lines," Cancian said.
And Russia has heavily fortified its 600-mile front line with anti-tank ditches, mazes of trenches, 'dragon's teeth' barricades, and minefields, with much of its defenses in northern Crimea.
"The Russians are heavily fortified and well-defended in these areas, and it will take time for the Ukrainians to break these defenses," said Mark Temnycky, a nonresident fellow with the Atlantic Council's Eurasia Center, who added that troops are proceeding with "extreme caution."
Without the options to ferry a large assault force by air or water, Ukraine will be forced to attack through Russian defensive lines to approach Crimea. Furthermore, were Russia to lose its hold on Kherson, it could mine and concentrate firepower on the few land approaches to Crimea, using similar tactics to those that stopped Ukraine's 2023 counteroffensive.
"Without an amphibious naval force to land in Crimea, how can Ukraine project enough troops onto the peninsula to claim its control?" said Germond of Lancaster University.
Ukraine hasresorted to hitting Russia's air defenses in Crimea with missiles and long-range weapons, including US-supplied Army Tactical Missile Systems, known as ATACMS.
Last month, war analysts from The Institute for the Study of War said Ukraine's sustained attacks against Russia's air defenses could render Crimea untenable as a military staging ground.
But they also noted that Russia was likely placing military facilities near civilians to try to deter further Ukrainian strikes.
Last month, Russian-installed Sevastopol governor Mikhail Razvozhaev claimed that a Ukrainian strike killed four people and injured 151 people.
"Millions of citizens live on the peninsula, and the Ukrainians do not want to harm the civilian population," Temnycky said.
Any Crimea assault comes down to numbers. Russia aims to commit 690,000 troops to the war by year's end, a large build-up that could bolster the Russian troops and Ukrainian conscripts on Crimea, a force perhaps 60,000- to 80,000-strong. It's likely Russia could commit well over 100,000 were Crimea to be threatened.
To have the best chance to push through their defenses, Ukraine is likely to need a well-supplied force three to five times the size of the defenders — a guideline that would balloon any operation to many times the size of the 2023 counteroffensive.
Benjamin Friedman, policy director at the Defense Priorities think tank, said that Ukraine lacks the manpower and air cover required to go on the offensive in a "major way."
"Even with F-16s, I don't think Ukraine has the ability to provide its ground forces effective close air support, given Russian air defense capability," he told BI.
Ukraine has attacked Russian forces in Crimea with naval drones and long-range missiles.
VIKTOR KOROTAYEV via Getty Images
Retaking Crimea
Despite the battleground challenges Ukraine faces, some experts believe it could retake Crimea with enough weapons, troops and time.
This would involve crossing the Isthmus of Pereko, separating Crimea from mainland Ukraine, or crossing the marshes to the east, called Sivash, to reach Crimea.
"That's what happened during World War II, when the Germans captured Crimea in 1942, and the Soviets recaptured it in 1944," Cancian said.
However, to do this, Ukraine first needs to break through Russia's Suvorikin Line, a complex system of defensive fortifications and obstacles across Russian-occupied territory in southern and eastern Ukraine that Ukraine has never pierced through. A force that advances through this also faces a high risk of becoming bottlenecked on the few land approaches and destroyed by the short- and long-range firepower Russia would almost be certain to bear.
According to Sergej Sumlenny, founder of the German think tank European Resilience Initiative Center, the question now is "when Ukraine will accumulate so much firepower, not just artillery, but also air force, so they manage to push through these defensive lines and then reach the operative space" of Crimea.
If and when Ukrainian soldiers do reach Crimea, Sumlenny said, they will be able to destroy the Kerch Bridge and the last ferry road over the Sea of Azov, cutting off all of Russia's supply lines to the peninsula and isolating Russian forces. Using long-range missiles to cut-off supply lines was a crucial element of Ukraine's grinding and successful liberation of the city of Kherson in late 2022.
Sumlenny added that Crimea has historically been vulnerable to offensives.
"There is no case in history when anyone could defend Crimea from an attack," he said.
In 1921, the Soviet Union's Red Army crushed the White Russians and took control of the peninsula, and in 1941, the Axis powers invaded the Soviet Union during Operation Barbarossa, with their land forces laying siege to Sevastopol.
The Red Army launched a massive counter-attack in late 1943 with 2.6 million men that pushed the Germans back and weakened their hold on Crimea. After two and a half years of German occupation, a Soviet force of over 450,000 regained control of Crimea in 1944.
It was transferred to Soviet Ukraine — one of the republics of the Soviet Union — in 1954, until the dissolution of the Soviet Union and Ukrainian independence in 1991.
Finally, in 2014, Russian forces invaded and occupied the peninsula before annexing it.
"If you look at all the cases when armies were clearly ready to fight and defend their positions, we can say that Crimea is practically an undefendable fortress," Sumlenny said.
"So, from my perspective, the moment the Ukrainian army will appear on the land bridge — the Isthmus of Pereko — between Crimea and the rest of Ukraine, the Russians will face a very simple choice," he said, "either they retreat immediately from Crimea or get slaughtered or captured."
Other experts, however, struck a more cautious tone.
Temnycky said a full-scale invasion to try to retake Crimea is "very unlikely" due to the huge Ukrainian losses that would result.
Friedman, meanwhile, said such an operation would require a "cataclysmic Russian collapse," which he said is "extremely unlikely though not impossible."
Indeed, there have been fears that Russia would consider nuclear force if its troops were on the brink of losing Crimea.
Cancian said that "because of its difficulty, retaking Crimea would be the last event of the war, not an intermediate event."
McDonald's has started trials of its new bigger burger — the Big Arch.
By using a brand name rather than a descriptor, companies can "signal superiority," a marketing professor said.
The Golden Arches are synonymous with McDonald's, just like Grimace and the Hamburglar.
The prefix "Mc" has become synonymous with the world's biggest burger chain.
It's not just in the name of the company. McDonald's has also launched McNuggets, McCafé, McFlurry, the McPlant, and CosMc's, and countless more products featuring its famous "Mc" moniker.
But for its newest burger, a supersized 14-ounce offering that's targeted at "the extra hungry," it's relying on a different part of the brand's iconography — the Golden Arches.
The new burger, the Big Arch, is currently being piloted in Canada and Portugal. If the trials go well, there are plans to roll it out globally.
The Golden Arches are "part of the heritage and the iconography" of McDonald's, Finola Kerrigan, professor of marketing at Birmingham Business School in the UK, told Business Insider.
Lots of the names of McDonald's products are unique to the chain. As well as the family of Mc's — like the McCrispy, McSpicy, McFlurry, McNuggets, McMuffin, and McPlant — you've also got the Big Mac and Filet-o-Fish. But many of its products also have more descriptive names with no company branding attached, like the Quarter Pounder with Cheese, the Triple Cheeseburger, and the Mayo Chicken.
By using a brand name rather than a descriptor — like calling it the Big Burger — companies can "signal superiority," Kerrigan said. "And so you elevate what is a big burger to a branded shiny thing."
And by opting for "Arch" rather than "Mc" or "Mac," you "don't take the risk of downgrading the Mac label until you're certain that it's going to win," David Hughes, emeritus professor of food marketing at Imperial College London, told BI.
But Kerrigan said that just using the word "Arch," rather than "Golden Arches," may not be enough to make an obvious connection with McDonald's in customers' minds.
Branding strategies don't always go to plan. For example, the McPlant's name signaled that the chain was taking plant-based food seriously and suggested that it would become part of its core lineup. But McDonald's dropped sales of the burger in the US after unsuccessful trials in California and Texas.
McDonald's has used arches branding for a product in the past, and it didn't go well.
It launched the Arch Deluxe in 1996, and the product flopped. The burger, intended to appeal to more sophisticated and "adult," used a mustard-mayo Arch Sauce, which the brand appeared to bring back for tests of a new product called the Archburger in 2018. That burger failed to make its way onto national menus.
The arches imagery is now returning to menus again, with the launch of the Big Arch and its accompanying Big Arch Sauce. The name of the sauce, like the name of the burger, gives no indication of what it actually contains.
Product names are important because "we talk about brands a lot," Kerrigan said.
"You show that you are in someone's club or part of their tribe by using the same kind of brand names," she said.
"Brand name has enormous value," Hughes added.
Other recent campaigns by McDonald's have made the most of its huge stream of brand imagery. Last year it launched the Grimace Shake and named its new coffee-focused chain after the lesser-known alien character CosMc.
Other recognizable mascots from the McDonald's universe include the Hamburglar and Birdie the Early Bird, as well as Ronald McDonald himself.
Are you a McDonald's superfan? Email this reporter at gdean@insider.com.
McDonald's is focusing on value as sales fall and customers move away from the Golden Arches.
Erin McDowell/Insider
McDonald's says it really wants to address its value problem.
The chain has raised prices in recent years in response to inflation, putting off some customers.
Its CEO said in a new interview that its temporary $5 deal is just the start of its refocus on value.
McDonald's isn't cheap anymore, but the company is promising to do something about it.
In an interview with CNBC's Squawk Box, the chain's president and CEO, Chris Kempczinski, discussed the chain's $5 value meal, which was initially launched in June for a month but has since been extended through August.
Kempczinski suggested that this deal is just the start of a renewed push into value for the chain.
"I would consider the $5 menu sort of chapter one of a multi-chapter value playbook that we're going to be writing," he said.
The $5 deal is "a bridge value program … what we'll be doing is putting in place a more permanent value program, much like we had previously," he said, referring to McDonald's' $1, $2, $3 menu.
Business Insider contacted McDonald's for more specifics on what it may offer but didn't hear back.
Kempczinski also shared his thoughts on consumer sentiment right now, pointing out that low-income consumers were being "much more price discriminating."
What started as a slowdown in consumer spending on fast food in the US has also now shifted to most of McDonald's key markets, he said.
"It's deepened and it's broad," he added.
McDonald's reported a 1% decrease in year-on-year comparable sales in its most recent quarter this week. And a 0.7% drop in the US.
During a call with investors after the company reported earnings, Kempczinski cited its higher prices — partly a response to high inflation — as a key reason for falling sales. Offering value is going to be key to winning customers back.
In February, it said that these diners were placing smaller orders and opting to eat at home.
"At the end of the day, the consumer is fatigued" by rising restaurant prices, Jim Sanderson, an analyst at Northcoast Research, previously told BI.
Even the most loyal fast food fans say they're switching up their routine and becoming less tolerant of the price increases as grocery prices fall and the value proposition of fast food becomes less apparent.
A Russian Sukhoi Su-57 jet fighter performs at an airbase in Russia's Moscow region in August 2020.
REUTERS/Maxim Shemetov
Russia is holding much of its airpower and more advanced jets in reserve, experts say.
One concern for the Russians is Ukraine's air defenses, which have shot down a number of Russian aircraft.
Another consideration is that these assets could be needed in a larger potential war with NATO.
Russia has kept much of its airpower and some of its most advanced aircraft out of the war in Ukraine. Experts say doing so signals Russian worries about Ukraine's air defense game but also considerations beyond this fight to one with NATO.
John Baum, an air power expert at the Mitchell Institute and retired US Air Force lieutenant colonel, told Business Insider that the Russians "could bring more advanced aircraft into the fight and they simply haven't done that yet."
Some Kremlin claims aside, there is no evidence Russia has used its Su-57s over Ukraine itself, despite the aircraft, at least on paper, being Russia's most advanced plane and supposedly built for a war in which the airspace is heavily contested.
The jet is Russia's first attempt at a fifth-generation fighter, touted by Russian media as a match for American fifth-generation stealth fighters like the F-22 and F-35. However, given limitations in the design, such as a lack of all-aspect stealth, analysts question whether the plane's actual capabilities fit that description. The aircraft also suffers from some lingering technical issues.
In January, the UK Ministry of Defense said the Su-57 had been limited to launching missiles from Russian territory, mirroring how the Russians have used many of its other aircraft in this war.
Unlike the ground troops it throws into the meat grinder, Russia tends to use its air assets in ways that minimize risk by keeping them back from Ukraine's defenses.
A Su-35 jet.
Sukhoi
"Russia is husbanding a lot of its air assets. So, a lot of the Russian Air Force, you are not even seeing over Ukraine," Andrew Curtis, an independent defense researcher who spent 35 years as a UK Royal Air Force officer, said. And he said Russia is using Su-57s in ways that there is "no risk."
Curtis said he thinks "the reason for that is simply that it is keen to make sure that it retains a credible modern air force for any future operations that it might want to undertake."
"And that in itself is quite significant," he said, "because it shows that at least somebody in the Kremlin is thinking beyond just Ukraine."
Russia is holding back its air forces with NATO in mind
Michael Clarke, a Russia and Ukraine expert and a UK national security advisor, said Russia is making some sacrifices in Ukraine for a possible future conflict. "If the Russians were throwing everything they had against Ukraine, they would probably be in a stronger, better position than they are now," he said.
He added that Russia's air force is holding back jets "because if it devoted all to Ukraine, it feels it will have nothing left if it comes to some sort of conflict with NATO."
The top US commander in Europe, Gen. Christopher Cavoli, told Congress in April that Russia has only lost about 10 percent of its fleet in Ukraine, indicating it has a lot left in its airpower arsenal.
Members are ramping up defense spending and making more defense agreements with each other, with the ones closest to Russia boosting their border defenses.
Clarke explained that "as this crisis goes on, the prospect of a general war against NATO becomes more real. That's not to say that that's very likely, but it's at least a bit more likely than it was two years ago."
Peter Layton, a fellow at the Griffith Asia Institute and a former Royal Australian Air Force officer, said that Russia may very well have a future NATO conflict in mind as it makes decisions today.
For instance, Russia may believe that in a war with NATO, its air forces can "survive long enough to counter some NATO air raids and help defend Russian ground forces for a short time." Such a plan would require not squandering assets in Ukraine. And Layton wasn't the only expert to share in that assessment.
Russian considerations may, in turn, be shaping current combat conditions in the war in Ukraine. "NATO's power in the air is inhibiting the Russians from committing all of their air power, or more of it, to Ukraine," Clarke said.
He said Russia wants to keep its air force looking strong as a weaker Russian air force would "weaken Putin's political hand in anything he then tries to do in relation to NATO politics." And, in a future conflict, Russia would want its air force to be powerful.
Ukraine is still downing Russian jets
The Ukrainian armed forces have a significantly smaller and older air force than Russia does. Its few jets are all Soviet-era, but Russia has one of the world's biggest air forces with many more modern combat aircraft.
But neither side has been particularly successful at changing the war from the air considering the threat posed to aircraft by the proliferation of ground-based air-defense systems.
Ukrainian President Volodymyr Zelenskyy standing in front of a Patriot anti-aircraft missile system, multiple of which have been given to Ukraine by allies.
Russia's losses are much higher than Ukraine's, though it has more to lose. According to an update from open-source intelligence site Oryx in February, Ukraine has lost at least 135 fixed and rotary-wing aircraft while Russia has lost nearly double that figure.
Beyond fighter jets and fighter-bombers, Ukrainian forces have also downed some high-value Russian aircraft. This includes an A-50 command and control aircraft in January. The Russians only have a few of these planes available.
This prolific threat to anything flying would potentially put Russia's advanced Su-57s at risk were they to fly combat missions over Ukraine. But avoiding the fight has not completely shielded the small Su-57 fleet. Ukraine managed to damage one in a long-range strike on an air base hundreds of miles inside Russian territory.
Holding its airpower back has largely protected the force, though. Layton said Russia has kept many of aircraft out of Ukrainian airspace since "at least after the first few months." Russia's air force has suffered high attrition rates from Ukraine's ground-based air defenses when operating in the country.
A Russian Sukhoi Su-34 shot down by Ukrainian anti-aircraft guns.
Nicola Marfisi/AGF/Universal Images Group via Getty Images
Russian combat aircraft tend to use weapons that let them "generally stay safely inside Russian airspace while firing into Ukraine." Russia notably saw big aircraft losses in February when more of its jets came close to the front lines to support land forces by launching glide bombs, Layton noted.
He said that Russia "has a lot of trouble replacing lost advanced aircraft," only making a few a year. And sanctions from many countries against Russia for its invasion could make things more difficult, he said.
Clarke said that Russia could use its strategic bombers more effectively if they flew over Ukrainian territory, but "they've only got a certain number of strategic bombers, and if they lose eight or 10 of them, then that will put quite a hole in the force."
He said the environment in Ukraine is too "risky" for Russia's air force, especially if it wants to maintain its force for a future fight.
Russia's comfortable losing what it's losing now
Curtis said Russia is using its most advanced assets in ways that keep them "completely safe," like launching long-range attacks from inside Russia. There's "effectively no risk," he said.
And Layton said Russia may be motivated by its own weapons industry, which has ramped up but still faces challenges. "Any losses impact possible future export sales as Russian aircraft now appear less capable," he said. Some experts have suggested this as a possible reason for keeping the Su-57 out of the fight, especially given Russia's significant activity in foreign arms sales.
Sukhoi Su-57 fighter jets perform near Moscow, Russia, in August 2019.
Sputnik/Aleksey Nikolskyi/Kremlin via REUTERS
George Barros, a Russia analyst at the US-based Institute for the Study of War think tank that has been closely tracking the war, said Russia only has a small number of many of its most advanced aircraft, which means they wouldn't make a big difference if Russia was taking on NATO's air forces, though Russia has other capable platforms to supplement.
He said that Russia has a propaganda reason for keeping them intact before any future conflict, one that even outweighs the effect they could have in Ukraine.
On the Su-57, he said, "if the Russians were to lose it, it would be just such an international embarrassment."
Experts previously told Business Insider's Jake Epstein that the absence of the Su-57 suggests Russia may not be confident in the jet and likely wants to avoid any potential reputational damage that would come if any were shot down.
Gustav Gressel, a Russian defense policy expert at the European Council on Foreign Relations, said Russia has "very few" Su-57s, and "they are expensive to operate." Other jets can do the same jobs needed in Ukraine, he said, "and it would be less embarrassing if they would be shot down." Russia is understood to have only around 20 Su-57s in service.
Tim Robinson, a military aviation specialist at the UK's Royal Aeronautical Society, said that Russia's Su-57s "are the high-quality assets, high expensive assets, stealth fighters, and they don't want to lose them."
Experts have also pointed to Russian fears that if its most advanced jets were shot down over Ukraine-held territory, it would expose their most advanced technology and could be a windfall for Ukraine's Western partners.
Robinson said that if any Su-57s are shot down over Ukrainian-held territory, Western intelligence experts would get" to crawl all over it and find out its secret."
Ukrainian President Volodymyr Zelenskyy sits in an F-16 fighter jet.
Mads Claus Rasmussen/Ritzau Scanpix/AFP via Getty Images
Baum said Russia's decisions on what goes into Ukraine and what doesn't may be "calculated." They may have decided "that they don't need to roll out their more sophisticated weapons yet or ramp up their sortie rate yet," he explained.
Curtis said that Russia is "happy to lose what it's using in Ukraine. And in most instances, I'm afraid, that's people." Russia has been known for treating its soldiers as disposable, including by using what are described as "meat grinder" tactics, such as high-cost "human wave" assaults.
He said that for now, Russia can afford to keep its most advanced assets out of Ukraine as its strategy for victory isn't by total military triumph. Instead, he said, Russia aims to grind down Western appetite for helping Ukraine and exhaust Ukraine's support.
He said Russia is "not really going to be too fussed about how modern and how useful the capability" it gives its soldiers is.
Defense reporter Jake Epstein contributed to this reporting.
