Transcripts For CNBC Closing 20240706

The job numbers did push Interest Rates higher and not enough to push stocks today. Even tech which is rallying as well it leads us to our talk of the tape whether this teetering rally goes much further in the weeks ahead, especially if the fed is finished lets ask professor Jeremy Siegel of the Wharton School hes back with us. Professor, its good to see you. We have a nice rally on our hands today. How does the market look to you now in what has been a very big and interesting and important week the market looks very strong, scott. Without question i think the bar is very high for the fed to do another increase i think you would have to see the next employment report to be very strong, Even Stronger than this one i think tuesdays Inflation Report would have to be much above expectation, and by the way, the first day of their june meeting they get the may Inflation Report, and that would have to be i think it would have to be a triple strong in my opinion, for them to raise again. I know we just reported that james board, who has been a superhawk thinks that one more 25basis point increase is called for, but he actually changed it, and suggested that we are in the zone of the maximum tightening of the fed, and i think thats where the market is taking its cue remember. Bullard even threw out the seven handle for the terminal rate remember that . It wasnt that long ago right when he was talking about maybe going to 7 . The needle has moved a little bit. Just let me ask you pointblank. Do you think the feds done . Was it ten, and thats it . Yeah. I think i think it is as i say, you know, if things really get much more, and the Unemployment Rate goes down to 2. 31, and we continue to see commodities pick up, which i think is a low proebability, i think the fed is done. That being said, at this point, the bar is also very high for a decrease in rates. I think that would only come with a negative payroll number, which by the way, i dont think we can rule out at all in the middle or second half of this year, but certainly, you know, that that certainly doesnt look imminent, but that would start the conversation dont forget, scott. We are entering into the Political Part of the 2024 race, you know, certainly the democrats and biden dont want to go in with a recession, and he if they see those payrolls are negative and Unemployment Rate go up, there will be a lot of pressure on chairman powell to say, hey. Listen maybe you should think about cutting those rates. I still think they will be cut by year end, and i think more than really what the what the fed is saying and what the market is saying. Do you think the fed made a mistake this week by raising rates again . I wouldnt have because i think theres a lot to play out with the cumulative effect of Monetary Policy, but, you know, its 25 basis points is that going to tank the economy . No the cumulative effect of the 500 basis points, plus the lending restriction which, now i think is equivalent to maybe even four or five basis point heights, i think is, you know, more than enough i dont like to see 11 consecutive monthly declines in the money supply ive voiced concern about that i think we need to start expanding that part of the Credit System again because i think without it, i think the risk of recession go up, but nonetheless, no. It was a stronger report than i expected even though we had revisions to february and march. Chairman powell this week of the Banking System for example declared it, quote, sound and resilient. Do you agree with that assessment by the chair . Well, i think he was i think the Regional Banks that are in the commercial lending certainly are im not going to say in trouble, but i think their profits are definitely going to be impaired and maybe wiped out. I dont think theres a bavnkin crisis i think the loan spigot from the fed is open, but i think its at 5 its not like the 1 they get on deposits so if deposits leave these banks, the banks will have recourse to the fed, but at a much higher rate so, you know, if theyre lending longterm mortgages, well, as we thought first, the republic at 2 , 2. 5 , and the borrowing from the fed is 5 , this is one of the problems of inverting the phillips excuse me. Inverting the term structure of rates that as you say, is low profits. I agree with him in terms of runs, in terms of impairment of the Banking System, you know, im not concerned. So if you think that the fed is, in fact, done, or at the very, very minimum, that the bar is now increasingly high to raise hates again, what does it mean for stocks now . Lets just say over the next few months, do you think well, i think that i think the stocks also just like the fed is going to be datadependent dont forget, you know, payroll can turn quickly, and what i hope is when it turns, the fed starts thinking about, okay. Lets start restoring a more natural rate lets talk about maybe increasing the money supply, credit again weve seen the last 11 months the dibiggest decline in 85 yea of the money supply which is, you know, something that i watch carefully. I hope that they respond that way. I think that certainly today, the reaction is theyre done theyll respond to a downturn, and as a result, you know, my original prediction, 10 to 15 on the s p maybe it will come true ive kind of downplayed it to 5 to 10 when i thought the fed wasnt getting it, but, you know, perhaps the fed now sees that its policy has been restrictive and will start on a more neutral course. Well, professor, lets expand the conversation if we could, bring in malcolm ethridge, and Brynn Talkington i think the professor is making an interesting point, and i wish i shared his optimism that the fed is absolutely done here and not planning already their next hike in june and i say that because the wage report was the biggest, most important piece of it. The fact that Wage Inflation is on the rise means a real inflation is probably on the rise too. If hes right, and dthe fed done, is that bullish . Does that make you feel more positive it makes me more bullish that by the end of the year, were going to be in positive territory. I dont think were going to get that cut that the market is hoping for, and i dont think thats going to matter whether were in the negative or positive territory i think just knowing where were going to stop is what really gives the all clear signal to the markets that now we can start to make our bets and actually feel good about buying into companies longer term. You made the argument all along. Dont fight the fed. If theres nothing left to fight, are you more positive on where we go from here . So ive always felt this year that theres such a wide range of outcomes and a good example today, there was a tremendous amount of Short Covering finally in the Regional Banks where you saw Companies Like pacwest up 80 or 85 i think we have these cracks in the system, and so i definitely think its positive if they stop i dont think they needed to do the 25 basis points. I also think that he said this banking crisis is over i hope those words dont come back to haunt him later on because we really need this Regional Bank, the whole sector, the 4,200 or 4,300 banks to be solid. I think im still in the camp that there are other little land mines out there, and if the fed stops here, at least everyone can just, like, start doing math equations again about lending, about mortgages and not consistently trying to do resetting their Interest Rates because the fed is going to overtighten. I also think i would be, you know, interested in professor siegel, the only reason i feel like they would lower rates later this year is if an event occurs Strong Enough to say they need to pivot. So to me, that would be a negative the markets would go lower, you know, and you would have this event. So i think the narrative of were just going to start cutting rates for no reason is not is not correct, and there would be a massive event, you know, you could go to the Regional Banks and pick one of those. So im still in that cautious camps of wide range of jutoutcos and thats why i have a lot of cover calls on the portfolios because i dont think stocks are going to run away from me. Great points you make professor, what do you say about that wouldnt the idea that the fed has to cut thats not a how could that be viewed as a positive i dont know if there has to be a major banking event i think if you get payrolls negative, you are going to get pressure to cut, and the Unemployment Rate rising either of those two factors i think will put cut onto the plate of the Federal Reserve because i do think now, lets talk about malcolm mentioned Wage Inflation one thing that surprised me i listened very closely to the News Conference afterwards, and i heard powell say, i dont think wages are higher wages are the cause of inflation that surprised me because i thought that that was his position earlier on. Ive taken the position that we have to have a rise in the real wages because there was a structural shift after the pandemic, one that jay powell mentioned in his november conference youve got to have real wages rise somewhat relative to prices to bring people back into the labor market i think that has happened. I think theres a little bit more than that happened, and i think to be obsessed with wages go up by 4 dont forget. Over these last three years since the pandemic, wages have lagged inflation by every measure. So its hard for me to sort of say, oh my goodness. Now we should press them down even more so people are further behind theres got to be an adjustment, and yes. That will make Service Inflation a little bit higher, but as i say, we need those people in that Service Sector that accepts that, and will normalize that labor force and the labor on the good side is already under control. Malcolm, you want to respond . Yeah, i want to point out that on the flip side, the professor is talking about payrolls being able to come in line pretty quickly and adjust back to where they should be, but we have to also consider the fact that along with Wage Inflation, weve now seen unemployment hit the lowest level it has since the late 60s rie , right . We cant just gloss over the fact that while were talking about dire situation with lending and Small Businesses cant do their business, and were also seeing unemployment continue to go downward. At the same time that the fed is doing its work, and so i think that pressure is moving against where they actually want to land which is 2 . Professor, do you think the chances of a soft landing are increasing or decreasing i mean, you could say, look at the jobs increasing, but the flip side likes it so much maybe theyre decreasing. You could say by the body language powell had, you know what dont forget the fed late last year probably were going to have a 1 percentage point rise in the Unemployment Rate. So far we have had a slight decline, and i agree with malcolm that i was shocked at 3. 4 that ties the low, and let me tell you if that continues to go down 3. 3, 3. 2, 3. 1, you know, a year and a half ago, i interviewed James Bullard and he thought it was going down to 3. 5 by a the end of 2022, and if that continues to go down, that would be ammunition for continued rise of Interest Rates by the fed now i dont think thats going to happen, but that is one thing that im certainly watching, and certainly did surprise me, 3. 4 today. Lets be honest bryn, the Unemployment Rate is falling. The fed is not exactly getting what it want when it comes to my word, not theirs, cracking the labor market it depends how much and how intent they are in getting to the point, and it may take longer than anybody thought. Well, the problem they have is that were still short, what . 4 million or 4. 5 million workers, and i dont think outside of california with silicon valley, i dont think unless we have some event, youre going to see some structural move higher in unemployment just because were still short those workers, and people are still trying to hire, and so from the feds perspective with a very, very blunt instrument of raising rates, if unemployment is their key, they will definitely overtighten, and so i just think were in such a unique environment in the job market because we are so short those workers, but i will say by june by the end of june, even if cpi grows month over month at. 4 , were going to have a three handle on cpi just because of the dropoff of the first half of 2022 so i think once we see cpis in the threes later on this summer, i think that gives the fed further ammunition not not to move higher, and be more datadependent. All right were going to leave it there. Bryn, thank you. Malcolm, to you as well. Good to have you here onset. Professor, its wonderful to talk to you after an incredibly busy week. Thats professor siegel. We get to the twitter question of the day does todays job report put june back on the table for a hike yes, or no head to cnbcclosingbell on twitter to vote. Well share the results in the hour. Coming up, former Federal Reserve vice chair rich clarida is with us we get his take on the next steps and what it might mean for the economy. Mike santoli just caught up with a longtime berkshire investor where hes seeing growth in the space. Well do it next youre watching closing bell on cnbc. swords clashing had enough . No. Arthritis. Here. Aspercreme arthritis. Full prescriptionstrength . Reduces inflammation . Thank the gods. Dont thank them too soon. Kick pain in the aspercreme. Municipal bonds dont usually get the Media Coverage the stock market does. In fact, most people dont find them all that exciting. 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Chr chri kri kristina we saw quarter one revenues grow surging 15 today, and i talked with the cfo yesterday she said this was a turning point. It was a rally in crypto prices and costcutting analysts seemed to be cautious given the s. E. C. Has given warning it might sue coinbase. Monolithic power is giving a beat on the top and bottom line. That has a number of analysts cutting their price on the stock, and sharing the components heading for their worst day since march, 2020. You can see the stock is down over 10 scott . Kristina, thank you Berkshire Hathaways meeting kicking off in omaha mike santoli just caught up with a longtime berkshire investor and he joins us now. What did you learn well, scott, this is tom russo of garden, russo, and quinn. He met Warren Buffett and owned the stock for most of that time. Hes a global Value Investor in the buffett mold himself, and one of the things he looks for is consumer facing, often founder and familycontrolled businesses that have these longterm, durable franchises and then hes got to evaluate when these competitive advantages are depleting or going away we talked about alphabet, and one of his big holdings and i asked him if his ai threat so search concerns him. Heres what he said today. I have to distinguish between volatility and risk. Whats the risk that that google is going to lose out to chat whats the risk of that, and i dont think i dont describe a high likelihood. Its not a big risk. Not a big risk to the longterm Business Opportunity for alphabet is what hes saying, but yeah a lot of volatility in the stock, and obviously the emotion of the moment kind of can carry some stocks pretty far from the direction of intrinsic value, and thats one thing people domcome to omaha on this weekend to be reminded of. I hope, mike, this weekend, and i presume it will happen at some point, that buffetts going to be asked about all of this hype around ai and what he thinks about it, and, you know, look he has at times over the decades scoffed at these new technologies and the hype around them when it comes to how they would invest it was famous obviously with the dot com bubble, and he was proven to be right with the dot com crash. How do you think he would address that issue my guess is that he would certainly defer to the fact that theres a lot of disruption in innovation going on. Clearly hes been close to microsoft, bill gates at times he kind of has a window on that world, and hes also conceded that hes missed some big technologicals my guess is he would say, where is it in terms of a product . Where is it in terms of a profit stream thats going to be developed out of all of this consumer interest, out of all of this investment, and out of all of this buzz, and once were there, you can probably see what companies can take advantage of it, and maybe hell have something to say about his businesses that perhaps are bin f beneficiaries or could be beneficiaries of the technological wave, but waiting to hear an answer as well. Mr. Monger as well, knowing the two of them. Looking forward to seeing all weekend. Thank you. Thats mike santoli out in omaha. For more of his sitdown with thomas russo, go to our website. Do not miss our coverage talking about Berkshire Hathaways annual Shareholder Meeting its live on cnbc. Com, and it starts tomorrow at 10 00 p. M. Eas 10 00 a. M. Eastern time. Up next, the former Federal Reserve, rich clarida here his forecast moving foarrwd, what it means for the markets. 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Visit indeed. Com hire. Regional banks rallying back today, but the sector having its worst month since march. Putting pressure on the Banking System for more on all of that, and the road ahead for the fed and the banks, lets bring in former fed vice chair and economic adviser, richard clarida. Its great to have you with us thank you. You bet did the fed make the right move this week by hiking rates again . I think he did make the right move i dont really think it was a tough far, and i think the inflation was too high i dont think they made the wrong move. Do you think theyre done was that it . 10 and out i think they think theyre done, you know, i think theres risk on both sides if inflation is sticky and stubborn, there could be more hikes down the road. On the other hand, you know, the labor markets typically a lagging indicator if it starts to soften. Inflation falls rapidly, and we could get those cuts, but i think they think theyre done. If you were still in the room, would you be moved by todays jobs report and wages i might add to say june might be on the table well, certainly i would be looking at it. If i think we had not had the disruption in banking, june would be very much on the table, but i do agree with the fed that the tightening and financial conditions were likely to get from the banking disruption is probably going to be equivalent to some additional rate hikes. So no. I think that i would be thinking about a pause at least in june the other side of this obviously is why bother going another 25 as they did this week while you have the regional Banking System so unsettled. You know, theres why give people yet another reason to look at what they can get elsewhere in terms of their investments, money market funds, and what have you. 25 in the big picture isnt much 25 coupled altogether to get to 500 basis points in less than a year or about a year is a lot. I appreciate the point, and i think if inflation werent in the four or fives, that might be persuasive, but again, inflation is just too high the feds overshot its target. Its not been transitory for three years, and i think that is a consideration, but i would also say that i think they are communicating that they think theyve done a lot the policy operates with a lag, so i think that they think they want to pause so the chairman said the other day that the Banking System is, quote, sound and resilient. Do you agree with that assessment would you have used those words given what were still witnessing with the Regional Banks only two hours or so after he finished with those remarks we saw one of the Regional Banks plunge by some 50 yeah. I think the chair did what really the chair can do in that situation. Factually, he is correct, and i agree with him the Banking System as a whole, 4,700 banks has enough capital and liquidity, and its profitable, but there are banks, and several of them have failed and perhaps more will be challenged that are having a real struggle right now. So i think he needs to stay on and keep that focus on the big picture, but i do agree that its probably not over, you know, we had the comment from jamie dimon recently about Something Like that, and probably theres more to come. You know, i find it so interesting that, you know, somebody of your stature would suggest its probably not over theres probably more to come, but yeah, its okay they raised Interest Rates yet again theres no divergence in that . Well, again, im going to sound like a broken record theres excess demand in the economy. It is true that the labor market acts as a lagging indicator, so this is a challenging time in the future, there may be those who look back and say, what were they thinking . Im giving you my sense of what i would be doing if i were in the room now. I dont know. I think we have been asking some of those types of questions with all due respect. What are they thinking over the whole period mr. Bullard who you mentioned also said today of the bank stress, it can be managed, quote, unquote is there a point where it cant be sure. As i said, i think were not facing a situation thats systemic where the entire Banking System is at risk, but yes. I would acknowledge theres definitely theres definitely parts of the Banking System that are not profitable with the current level of Interest Rates and that have unrecorded losses on their books we have a process for doing that its not smooth sometimes as weve seen, but it looks like it looks like thats their focus right now. Do you think that the feds supervision of the banks has been up to the task, and does it in some respects doesnt svbs collapse suggest its not . And why hasnt it been more forthcoming in how theyre thinking about their supervision and what they have done or didnt do for that matter . Steve liesman asked the chair himself and i dont think got a great answer well, i read both the report by by mr. Barr and i read the gao report, and certainly to me it indicated to me a number of instances in which supervisory concerns were not elevated and addressed. I think the chair said the other day he read it and theyre going to take action, and i certainly would support that so clearly something something did not work as it was supposed to in either the supervisory or regulatory piece of this. Theres no doubt about that. What about the general idea that the and this is another point of contention, frankly, that the fed can do both they can adequately fight inflation while having enough tools in the box to deal with whatever flareups you might get inside the Banking System. Do you believe that to be true well, we saw the fed deploy that approach just a couple of months ago with this new term Financing Facility i do believe thats the case i do think though, you have to be, you know, you have to be attuned and attentive to the data and what you are seeing, but i would say as of now, it would be in that camp as well. Are you worried at all about a bigger credit crunch like some others are i think its a risk, and, you know, we have had experiences in past cycles where tightening Monetary Policy and fragile parts of the Banking System have delivered a credit crunch back in 1990 which which i remember that recession was essentially a recession tightening policy in the savings and loans. Well have less Credit Availability well get the socalled sleuth survey on monday, and that will show tighter financial conditions, and that will tr translate into slower activity its a gray area when it goes from being a tighter credit to a credit crunch. The irony in this thing and were having this conversation, and you guys are a bond shop the bond market is at odds with the very committee in which you used to be a vice chair of yeah. Im wondering what rpwere to make of that what do you make of that the fact that only a day or so ago, the bond market was pricing in or at least fed funds were putting in 60 chance of a cut in july. Yeah. Well, its a fact of life. It was a fact of life during my time as vice chair youre correct its even more of a divergence now i think its a combination of the fact that the fed is projecting what it thinks is the most likely scenario markets have to price in, you know, extreme events, and obviously right now i think there is a pretty big disconnect maybe a little bit less today after payrolls, but certainly there has been a disconnect after the fed meeting between what theyre saying and what the markets are thinking, and thats just, you know, those things come and go, but right now we have a pretty big disconnect, i agree. Whos right right now i think the fed is right. Certainly for july, i think a cut in july would certainly not be something where i would be putting a lot of money right now, but well see do you think the fed will cut at some point this year . Well, i think interestingly enough, the fed has indicated in its projections it expects to be cutting next year. Theres not a big difference between december and january i think, look. I think if the inflation data comes down sustainably right now we have had nothing but disappointment or at least we havent had a lot of positive surprises on inflation really since december inflation, it has peaked if it starts coming down, and we start to see some of what the fed has projected which is an increase in the Unemployment Rate, yeah we could get rate cuts towards the end of the year, but i also think if inflation stays sticky in the high threes, that the powell fed will do what it says, keep at it until the job is done, and there could be a second leg up on rate hikes. How does that impact what you would view as a soft landing as possible or not then i think some folks equate soft landing with avoiding a recession. I think we are going to have a recession. It may be a rather mild and modest recession certainly if the scenario that i laid out for you which is not my most likely case, but in an extreme case, thats stubborn and sticky, and we get another leg up in rates, then that will not be a soft landing i would expect. How concerned are you guys about the debt ceiling fight its a good question. 20 years ago i served as citizen treasury secretary soy so i went through one or two of these. We do think somethings going to get dont be the dynamics are a little bit different than they have been in the past, but our bottom line is that the federal government is not going to default on its de debt. I appreciate you joining me today on closing bell. Its good to catch up with you see you soon. Thank you for having me on. Thats richard clarida. Up next, were tracking the bigge big biggest movers as we head to the close. Kristina is here with that despite the angry teens who veatt snap up concert tickets, li nion posted a recordbreaking quarter. Ill break down those numbers right after this break so i moved to sofi checking and savings. Get up to 4. 20 apy, and earn up to 250 when you set up direct deposit. Sofi get your money right. I was born on the south side of chicago. It has been a long road, but now im working for schwab. I love to help people understand the world through their lens and invest accordingly. You can call us Christmas Eve at four oclock in the morning. Were gonna always make sure that you have all of the financial tools and support to secure your financial future. That means a lot for my community and for every community. A bunch of dead guys made up work, way back when. Its our turn now well make it up again. Well build freelance teams with more agility. The old way of working is deader than me. Well scale up, and well scale down before youre six feet underground. Yes, this is how, this is how we work now. Our customers dont do what they do for likes or followers. 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That stock is up 15 , and thats because they didnt get tickets. Scott, i spent 300 on literally the last row of Madison Square garden for beyonce tickets the last row all the way in the back 300 u. S. You got to be in the building maybe you can move up. Maybe you can move up. Working my way. Have a great weekend. Thank you you too. Last chance to weigh in on our twitter question does todays job report put a june hike back on the table . You can head to cnbcclosingbell s ey,tter itas yes or no the results after the break. And this is fernando, searching savings with a click. Online or instore, for your health and your wallet. 85 of scripts are under ten dollars. Cvs pharmacy. Healthier happens together. Heres to all the super moms who make every day an adventure. This mothers day give mom super gifts from weathertech that will make every day better. Protect her vehicle from spills and messes with lasermeasured floorliners or a seat protector. 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Plus, the wall street journals energy is standinbyg to break down the trades as well when we take you inside the market zone. Ready . So it all started when i was at a friends party. Mia, can you send me that . Sure everyone keeps asking even my french neighbor mia green light i mean all the time. Red light can you send me that . Im not making this up. Hey, can you send me that . Everyone. Sure its incredible with gold bond. You can age on your own terms. Retinol overnight means. The smoothing benefits of retinol. Are now for your whole body. Plus, fastworking crepe corrector diminishes wrinkled skin in just two days. Gold bond. Champion your skin. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from morgan stanley. Power e trades easytouse tools make complex trading less complicated. Custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. E trade from morgan stanley. All right. Were now in the closing bell market zone. The wwall street journals journalist is here, and mike santoli is in omaha to break down the crucial moments Contessa Brewers, draftkings surge. We teetered this week. Did we find some stability today . It seems like it, right kind of remarkable that after this incredibly volatile week the nasdaq is close to flat, if not, sitting on gains, and i think zooming out what that tells you is that theres so many headlines about this ongoing banking crisis, but what investors really care about is tech its apple i think you really need to follow the money there kre, the etf, its worth about 350 billion thats driving that market higher today. As long as the Regional Bank issue remains front and center, youre going to have volatility, youre going to be uneasiness, and sentiment is going to be hard to turn, you know, fully positive. I think thats clear. I mean, we are in the worst banking crisis since 2008, and so much remains unclear about how its going to ripple through markets, the economy, the rest of the year. We just dont have visibility into how these things are going to change their lending standards, and the extent to which that pushes us into a recession. Speeaking of, the jobs repor today suggests this imminent alleged recession maybe isnt so imminent. I think so many investors were expecting us to fall into a vegs within the first or second quarters that has not happened yet, and on top of that, corporate earnings are so much better than any investors expected were now looking at a 2 decline for s p 500 profits this quarter. Thats a huge improvement from 6 just around a month ago people were expecting that. You think that apple per se is more important to the market right now than say Regional Banks . I mean, look at how the market is trading. When i was talking to investors, they were so anxious about tech earnings going into this quarter, and theyre breathing a sigh of relief, and thats what were seeing in trading today. Mike santoli, out in omaha. I said, you know, this feeling that we were teetering a bit and maybe today is a dose of stability that weve benneeded, whether thats lasting or not remains to be seen. For sure. I mean, the market has been swinging along the pendulum between the banking issues that are idiosyncratic and systemic people treat them as if theyre uninvestable, and the bond market is throwing a tantrum saying the fed just committed a big mistake by hiking 25 basis points that was yesterday its hard to necessarily say that the Broader Market can stay stable, but you have a day like today when the consumer is not seen as necessarily falling off a cliff. Were in that same mode. The last six weeks i have been saying that weve got likely got an earlier fed pause than we would have otherwise have gotten the issue is whats the cost right now, the terms of spending and incomes has not been onerous that we can see. It goes daytoday, and we technically had a pretty good test of the same levels in the s p, 40, 50. Its also the 50day average twice in one week, the nasdaq might do a second straight weekly closing high. So theres a lot of push pull here, but it has so far not bee the kind of action that pushed out of control at least on a multiday basis. Former fed vice chair clarida told me a little while ago, well, maybe the fed would cut by the end of the year, but any sooner than that, dont get your hopes up of course, then there was professor Jeremy Siegel of the Wharton School who it wotold mes mike lets talk on the other side the result, you know, my original jprediction 10 to 15 , maybe it will come true. I downplayed it when i thought the fed wasnt getting it to 5 to 10 perhaps the fed now sees that its policy has been restrictive and will start on a more neutral course all right well, that was about his market prediction, and where he thinks we can go from here. He does still think, though, the feds going to cut this year yeah. I mean, the bond market is still at least placing its chips on that side of the probability spectrum that there will be a cut. I dont think that a cut happens in the next couple of months or at least even through the summer unless you have really bad market conditions. So its really not about wishing for a cut or the conditions unto which you would get one. I think its still you got another jobs report, two more inflation readings before we get to the june meeting. Happens next the tendency seems to be pause todays jobs number was definitely refreshing. The downward revisions for prior months tell you a slowdown story. So powell said that he still thinks a soft landing is not out of the question, and the market is at least willing to hear that possibility today. What are you thinking about the extreme short end of the yield curve . One month, threemonth, six month, all over 5 the onemonth is like a 20year high as we wonder whats going to take place in the debt ceiling. You want to know where its showing up thats where its showing up. Yes i mean, its completely twisted up the daily moves are definitely too big for comfort. If even if you look at the twoyear note yield, it really should not be so agitated on a daytoday basis it shows you how there are stresses in the system theres perceived or real ill liquidity in the market. Thats all about debt ceiling and not wanting to be caught in that window when you might have a delay in payment so that i can sort of set aside, but its not a condition where you feel comfortable about the bond market you would much prefer the volatility were to ease back a little bit, but i dont think its going to happen when everything seems as if, you know, look the banking issues, the reason we can stomach them for now is because the reason the banks are suffering is because 80 of homeowners have a mortgage under 5 , and then if the banks are underwater on the Mortgage Loans theyre holding, thats good thing for the country that all these consumers have this asset theyre sitting on called a below market Rate Mortgage its just only a problem if the banks are seeming to be insolvent in that context, and that creates, you know, circling the drain type activity in the bond market. Yeah, or a problem if you are trying to move because the rates are going to get high. Thats true. Have a great weekend. Well see you with our special coverage starting tomorrow mike santoli out at the Berkshire Hathaway meeting in omaha. Draftkings having a huge day Contessa Brewer with me. It is now your igaming leader whit comes to market share overtaking bet mgm they are growing their customer base, lowering the cost of acquiring those customers, raising revenue guidance, lowering estimates on how much money draftkings will lose this year ceo jason robin said on the call that, look the product itself is crucial. The customers lukike it they want to play it those players parlays for instance, theyre a hit with the gamblers it has not yet integrated Golden Nugget online yet, and even that coming down the pipe could contribute more synergy. There was a lot here for investors to get their arms around theres a lot of details that might just add some juice to the fire. We just dont have i mean, the market itself given how we are and how unsettled we are, this appetite for unprofitable companies. Where is the roadmap for when they think they been profitable . They think they will break even this quarter. They think that fourth quarter, theyre actually going to be about 150 million positive, whiches the important metric of success in gambling, but for the year, they wont break even. Compare that to other fanduel for instance, is moving forward full steam ahead s caesars just reported they were positive they turned a profit its a horse race for whos making market. You dropped that in there because of the Kentucky Derby and the betting were going to witness this week. Its almost like none other. Contessa, thank you. Sure. Back to you i thought mike santoli said something interesting. This ability of the market in terms of the banking issues. He used the word stomach them for now. That says everything to me stomach them for now for how long though is the question . That is the big question. I think traders really need to buckle up because next week we have cpi and this jobs report this morning seems to complicate the feds task, especially in terms of those Interest Rate cuts many investors are banking on that, and thats key to watch in some of the reports we have coming out next week. Thats going to be the great debate in the weeks ahead certainly is watching what the bond market ispredicting, wher fed funds are in terms of, are they going to cut . Are they not going to cut . What if they dont what if they do, in fact, pause som what if they are done from here, and what that means in the context of where the market can go from here, and what the catalysts are frankly as earnings season starts to wind down. Absolutely, skand i think iti all about the bond market, and tend of the bond market. Especially because investors seem to be, you know, bidding up here in terms of the debt ceiling and a lot of those other catalysts that well have coming up in the next few weeks. Its cinco de mayo. Thats why i see modelo and corona all over the place. You know where im going have a great weekend, everybody. Ill send it to overtime with morgan and john. Our first positive day for the market in a week a big rally today, but thats the scorecard. Wall streets actions just getting started. Im Morgan Brennan with jon jonjon jon fortt. Well talk to Jared Isaacman on his read on consumer spending. And were awaiting the latest data on Bank Balance Sheets from the fed. Yes, which comes after another wild week for th