Closing Bell - A Market Breather … or Something Bigger Bubbling? 4/20/26

Episode Date: April 20, 2026

Is the market taking a quick breather or is something bubbling beneath the surface? We discuss with Solus’ Dan Greenhaus, JPMorgan Private Bank’s Abby Yoder and Ayako Yoshioka from Wealth Enhancement Group. Plus, Federal Reserve Chair Nominee Kevin Warsh made some headlines this afternoon. The details – and what it could mean for the economy with Allianz’ Mohamed El-Erian. And, Alex Kantrowitz from Big Technology breaks down all things big tech – from Adobe’s summit to a new report on Marvell. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to closing bell. I'm Leslie Picker in for Scott Wapner. Today we are live from Post 9 at the New York Stock Exchange. Stock's preparing to snap. There are 13-day winning streak tensions escalating between the U.S. and Iran. However, investors are betting that two countries will reach a compromise. Here's a look at the scorecard with 60 to go in regulation. The Dow is down about 0.1. The S&P down. point three percent. The NASDAQ down by about the same magnitude. Take a look at oil, crude surging following the latest developments out of Iran. WTI up about 6 percent. Ice Brent of about 5.6 percent. And software bouncing once again today up about 1.1 on the IGV with Adobe moving higher after announcing the launch of its new AI agent platform will take you live to the company's summit

in Las Vegas. And Fed chair nominee Kevin Moore testifying before the the Senate Banking Committee tomorrow morning. We'll have a report on what he's preparing to say about future Fed independence and more in just a moment. And that, of course, takes us to the talk of the tape. Is the market taking a quick breather or something bubbling beneath the surface? Let's ask our panel, so as Dan Greenhouse, JPMorgan, Private Banks, Abby Yoder, and wealth enhancement groups Ayako Yoshioka are all here today for the panel. Dan, let's start with you. I know you have kind of urged investors to ignore the puts and takes of the various geopolitical conflict on a daily basis. How risky is it, though, to do that?

I mean, especially given just the overall tail risk environment and so many unknowns out there. Well, I guess based on the fact that the market is now higher than when the war started, I'll say not very risky. But the point about, I was talking about it, sometimes the best thing to do is nothing, which is sort of how I described it over the last couple of weeks, is this is really difficult to trade. On any given day, the straight is open. It's closed. Ships are being taken. They're not.

They're getting through. It's just impossible to ascertain exactly where we are at any given moment. And so the best thing to do is just to look through it. Now, here we are, obviously, a couple of weeks later, we find ourselves. The stock market's up, call it 2, 3% above pre-Iran levels. Obviously, interest rates are a bit higher, called 25 basis points higher. Oil, about $20 higher. So there's a bit of a disconnect on that front.

But, again, from an investor standpoint, at this point, you probably have to look through a lot of this, seeing as how the worst-case outcomes, which is like a regional war that was really going to destabilize the world, seems to be a much lower probability now than even two or three weeks ago. Do you feel like being able to look through it is something that's just possible in the short term, but the longer this goes on, the more of an impact to the supply chain we see with oil, that maybe over the long term it is something that investors need to be paying close. To be clear, that's absolutely true. So the problem that I've expressed, and that there's a lot of optimism espoused by a number of people who come on the network and invest that those worst-case

outcomes don't come to pass, I think the problem that the guys and the girls who are in the oil market more specifically, and as I've said repeatedly, Solace has spent a good amount of time investing in energy-related names, the math really starts mathing against you in the not-too-distant future. And what I mean by that is we went into this with an oversupplied market on the order of call it two million barrels. Inventories were very high. Oil on water was abundant. And so there was a bit of a cushion there to ameliorate the worst effects of a closing of the Strait of Hormuz. We've worked down inventories considerably. Oil on water is basically non-existent. Yes, you have some alternative pipeline to Fujaira across Saudi Arabia down to the straight over there.

So there's things you can do to ameliorate this, but inventories can't go to zero, pipelines can't be shut down. At some point, supply demand means prices are going to have to go up. I don't know whether that's today, tomorrow, or the next day, but unless you get that straight open, the hundreds of millions of barrels of oil that are shut in are probably going to start to show up in the form of higher prices. Abby, from the demand side, do you think we get to the point? where there is real demand destruction for the level of oil,

the level of gas. I mean, $4 gas, there was a point in time where that was a real big shock. Obviously, we've had significant inflation, you know, since that period of time, $4. It seems like consumers are so far weathering it okay. They're taking, you know, spending away from certain other areas to compensate, perhaps, but not necessarily recessionary quite yet. No, not at all. I would say important in that backdrop is that you also have tax refunds.

that are up, you know, 15% year every year. And so that's creating a windfall for, you know, the consumer in terms of gas spend. And if you look to what, you know, the bank said last week in terms of their results for earnings, it was very much that the consumer is still strong, right? Like spending volumes are mid-single digits, 6%. There's still that case-shaped economy that's happening in the sense that, you know, the high-end consumer is continuing to prevail that spend. But for the most part, I mean, everything that we heard last week in terms of earnings is,

fundamentals remain strong. So to Dan's point, if you did do nothing, that was the right call, right? And that really is why the market moved as quickly as it did, right? Positioning got really off sides because of the geopolitical events. But underneath, like, if you really look at what was happening with earnings revisions, they were positive, right? So if you have any indication that this war might end sooner rather than later, then you want to get back involved in the market, and that's exactly what happened. Yeah, and to your point about oil, B of A had, you know, a chart in its earnings, which showed the spend, and it showed that, yes, the spending on gas ticked up from about three of someone's wallet to 4%. It was a 16% increase during the month of March, which is a lot. Yeah. But it's still such a small proportion of their total wallet spend over the course of that month. So that brings us to Aya. You do think that we could see some slowing in overall growth. Is that driven?

You think ultimately buy oil prices or something else? Sure. I think from, you know, just the overall increase in costs related to energy costs. going higher, it's going to dampen overall growth. But we do think that's going to be offset to a certain degree by all of the growth that we're seeing in technology and AI-related names. And I think that's what the market's really reflecting, just with this recent run-up. I want to turn to some sector specifics. Iya, you have been focused on earning season and kind of what you've seen so far. We've had, you know, numbers from the banks and, and,

other sectors. Do you feel like the fundamental growth story as it pertains to earnings is in pretty good shape right now? Absolutely. And we've really seen that with the earnings revisions that Abby mentioned. And we do think that we're going to continue to see this mid-teens type of earnings growth for the S&P 500 companies, at least in 2026. And that might be revised back down just again because of higher energy costs as this sort of prolongs to, to, to, to, you know, Dan's point. But for the most part, you know, it's such a small portion in terms of the overall costs related to, you know, everything else in terms of the revenue growth that we're going to be seeing from AI and tech companies as well as industrials. We've continued to see strong

earnings revisions in those two sectors. And Abby, I see you now like health care after years of underperformance. What's the change? What's the inflection point here? Well, the inflection point It really had to do with both valuation and fundamentals. Last summer, you kind of hit a bottom in terms of the relative valuation around, you know, let's call it biotech and large-cap pharma. And you had a removal of that overhang from a valuation perspective when we had these most most favored nation drug pricing agreements with the administration. So that was like kind of the first leg.

And then the second leg really started with three Q earnings where you started to see a stabilization in a lot of the cyclical end markets that are within health care. I know cyclical doesn't usually tend to go with health care. But if you think about life sciences, for example, that was, you know, COVID was very disruptive to a lot of these industries. So you saw it, you saw a cyclical bottoming in terms of earnings. And that's really where we shaped up in terms of, you know, a removal of a policy overhang and then a more stabilized fundamental picture that got us more excited about it. Interesting. Dan, Abby and I, I, thank you so much for joining us today. Really appreciate it.

In the meantime, Federal Reserve Chair nominee Kevin Warsh making headlines this afternoon. our senior economics reporter, Steve Leesman, here with those details. Hey, Steve. Hey, Leslie, yeah, Fed's here, nominee Kevin Warsh, will strike a note of optimism about the outlook for the U.S. economy in his Senate hearing today while at the same time criticizing the Federal Reserve that he hopes to join. In his testimony that was released today, he says it's a time of great consequence for the economy. Calls it the most significant hinge point in a couple of generations and that economic growth potential is rising. That optimism comes from his belief in the promise of AI and other technologies is born

of a strong background that he has in tech investment, alongside some leading tech investors. That includes Peter Thiel, Mark Andreessen and Jerry Yang, founder of Yahoo, along with Alex Karp from Palantir. People either got to college with or done business with. Warsh's testimony also struck a familiar theme of criticism of the central bank since he left as a Fed governor in 2011, including that it's straight in the fiscal and social policies. Balance sheet was too big. He'll say Fed independence is essential, but best achieved by achieving its dual mandate of stable prices and low unemployment. He adds at the Fed, that independence is not threatened when elected officials state their views on rates, a reference to the president's consistent and often harsh criticism of the Fed chair and the Fed.

Leslie will see if Warsh ends up taking the brunt of some of that criticism. Yeah. What currently remains in terms of political roadblocks for this confirmation? The administration seems confident. He'll be confirmed. Yeah. It's just a small matter of a criminal investigation to Fed Chair Jay Powell that is on top. going. We will see if the Justice Department files an appeal to the judge's quashing of subpoenas by Janine Piro of the Fed. We'll see if that's qua. If she appeals that, she has a May 3rd or fourth deadline for that to happen. I think it's May 3rd. And Senator Tom Tillis has said he will not allow nominations to go forward as long as this criminal investigation is in place. So Piero backs down or Jay Powell remains chief.

And I'm reading, there's a report out from Pimco about this, Cantree Libby of Pimco saying that this could go on into the fall. Wow. Yeah, and Libby Cantrell does amazing work there for Pimco. Yes, no, she's been right on a lot of things there. Steve, thank you. Right. We know you'll be all over it tomorrow.

Steve Leasman for us. Joining me now is the Wharton School professor and Alian's chief economic advisor, Al-Aarian. Muhammad, I'm curious, given Steve's report, given what we've seen so far with regard to Warsh's commentary, do you think he is able to make a strong case for Fed independence and whether it would be under threat or not under his leadership? So I think he does make a strong case in his statement. And thanks for having me, Leslie.

You know, he says Fed independence is essential. He goes on to say it is protected if the Fed delivers on his due. mandate, particularly inflation. He encourages the Fed to be more open-minded, to be more humble in his approach, and then he draws a very clear line between monetary policy and other responsibilities, stressing that the Fed should stay in its sling. I think that statement is very well balanced. Most people will agree with. I don't think anybody would take a huge exception to it. The question is going to be what other things are raised in his nomination hearing. Right. Speaking of those other things, the Wall Street Journal had a report

showing that Warsh's finances are likely to play a big role in the confirmation hearings tomorrow, specifically the opacity around whether his investments include banks or not. How big of a deal do you think that is? Obviously, the Fed is one of the key regulators for the banking system. So, Senator Elizabeth Warren has already expressed displeasure and the fact that in the financial filing, there are two 50 million buckets which don't contain detail because according to the filing, they are subject to non-disclosure agreement. And she said, we need to see what's in it to make sure that he divests like he says he will. So I suspect that those two holdings are going to be an issue in the conversation that he will have with the senators. And the other thing is going to be

asked is what would you do today? And as you know, monetary policy today is very finely balanced and it's a matter of judgment as to what he will do. I think he will err on the side of lowering rates earlier than this Fed would because he believes in the productivity enhancement of AI. Well, and he said so much. Do you think that Fed independence extends to the balance sheet as well? Yes, the balance sheet is part of monetary policy. It's part of essentially how much liquidity is in the system. What he's made very clear, and again, people agree with him, is that we need to have some theoretical underpinnings to QE to the balance sheet. We have a notion of the neutral interest rates when it comes to rates, but when it comes to the quantity, the size of the balance sheet, we don't have anything of that. So we expand our from $2 trillion to $9 trillion, then bring it back a bit, then bring it up again. We don't have a notion of what is equilibrium. And he has stressed that.

He has also stressed, and he doesn't go into details, a lot of other reforms that are needed to the Fed. And I think that, again, we would end up with a better Fed if Walsh is able to implement what he's talking about. And you mentioned that he will still likely err toward the side of lowering interest rates. I want to play you with soundbite from Charlie Schar, the chair and CEO of Wells Fargo. He spoke at the Economic Club of Washington earlier today and was asked whether he thinks the Fed should cut rates. Right now, there's a pretty clear consensus that would be the wrong

thing to do. You know, until the Iran conflict is in terms of, you know, it's clear what the end is in sight, there's real risk out there. What do you make of that? Do you think it would be more prudent to wait until the geopolitical conflict has a bit more line of sight? Whoever is in the chair right now will have no choice but to wait because you have a highly divided FOMC. You have biases. Some are very sensitive to employment. Some are very sensitive to inflation.

And they are data dependent. So whoever is at the OofMC right now, I can guarantee you they're going to wait, and they're going to wait. The question is going to come later, probably in September, as to what you do then. But if you look at the next meeting, if you look at the meeting after that,

the Fed will just wait and not do anything at all. And it believes that is a quote well-positioned. We've heard that phrase over and over again. So that's just going to stay there because any other avenue requires, support that whoever the chair is, they simply won't get it. How big of a risk, Mohamed, do you think, is stagflation amid this geopolitical conflict, especially, you know, we were talking earlier in the hour about the potential for demand

destruction amid oil prices. Do you think that ultimately there's some kind of equilibrium that's reached with supply and demand of oil prices, or do you think it gets to the point where the economy does worsened because of the high oil prices, and then they do come down in order to appease that demand destruction. Yeah, and that's a really important question. This is when international perspective is important. If you're sitting in Asia, it's a real concern.

You're looking not just at higher prices, but you're looking at the potential, the near potential for physical shortages. So there you're going to get hit twice on price. you're going to get hit hard on economic activity. In fact, governments are already trying to slow down the consumption of energy. If you're in Europe, you would be worried. You have a few more weeks, but if this war continues, you too will have physical shortages. If you're in the U.S., we don't have that issue.

We have ample supplies. In fact, as the president said, we now export more to other countries. So we will have it on the price side, and we will have much less. on the growth side than other countries will have. Yeah, no, it's an important distinction that there is a disparity by market based on who is most affected by this. The U.S. being in a better position than many.

Mohammed, thank you so much for your time today. Appreciate it on this Monday. Thank you, Leslie. We are just getting started. Up next, tech investors, closely watching the Adobe Summit out in Las Vegas will take you there live. Plus, a big chip surge will tell you

What's sending shares of Marvell higher once again today, currently up 6.6%. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back to Closing Bell. Adobe's Summit, 2026, is underway in Las Vegas. Our John Ford joins us now with all the highlights. Hi, John. Hey, Leslie, in particular, we're seeing Adobe expand a partnership they announced just a few

weeks ago with Nvidia on some of the infrastructure underneath their firefly. video and image model here at Summit where it's really about marketing at scale measurement at scale the experience business we're seeing them talk about expanding that into digital twins into 3D objects at scale and I spoke with Adobe CEO Shantanu Narayan earlier about what invity is bringing to that developing this frontier model together and really looking at it in as you point out an intellectually safe way that's something unique that we're doing when you think about about what Nvidia brings, whether it's the Kuda technology, whether it's the new graphics chips.

The second thing that we're really working on is the omniverse. And I think we share this vision that every physical object is also going to be represented digitally. And if we can enable all of this, as you think about what's happening in the physical world with AI, and represent that digitally for creators to create with. Jensen Wong's going to be here.

I'm going to speak with him with Shantanu again a little bit later about exactly how that partnership works and how much of the benefit is going to perhaps accrue to software since we can see the pressure that Adobe stock and others in the software universe have been under in this AI environment, Leslie. Yeah, that one is definitely one not to miss. John, I'm curious if there's any talk there about any changes that are necessary to the software business model. Someone I spoke with last week was discussing this need to make software more usage-based, as you see with AI versus user-based, kind of like a per seat model. Is that something that's under consideration or this is essentially the first step for them? Oh, for sure. That's already underway. It's not just about how many seats you have, how many people you have using a piece of software, how much of it are you consuming. But then there are so many rapid changes. We just saw Anthropic have this.

different approach for design released at the end of last week. We see Canva and Adobe competitor coming fast on their heels trying to enter the enterprise space. So there's so much that has to change about how software operates, how it's built, and how it's priced and sold. Yeah, so much convergence there. John, thank you for being on the ground and bringing us that great reporting, John Ford.

For more on What to Watch, we're joined by Big Technology founder and CEO contributor, Alex Cantruitz. Alex, I'm curious what you make of this. Adobe announcement today. You don't think AI will replace companies like Adobe, but what is the specific moat that these companies will maintain that AI just can't replicate on their own? Well, for Adobe, there's two different businesses, right? There's the making the stuff and distributing it. And for making the stuff, yes, AI has been generating images and even videos, but I'll say a couple things about that. First of all, opening I just gave up on the creation of videos. So

creating videos, I think, is going to remain a more human thing versus an artificial. thing. Why did they give up by that? So they have limited compute, right? They are not able to give enough all, every one of their bets, enough computes to see that bet through. And so they've decided to double down on the text version of the AI models and not the video models. So, and I think that's going to be a thing that we're going to see because the text models are showing so much promise. So and then on images, you can create an image with the same text. It's weird, but it's the same tree as opposed to the video models, which is this more world model approach. But If you're going to want more control and the best designers are going to want more control,

there's going to have to be a conversation between you and the tools. And so one of the things that I heard when I was in OpenAI a little bit earlier this year is what they expect is people to build plugins with the AI for the type of technology they use to, let's say, edit videos or create images. So it's worked with the AI working with the existing tools as opposed to replacing them overall. And then you have the distribution and you can have AI agents then working to optimize the creative delivery, and that stuff is going to go into overdrive, and Adobe is really talking about that a lot today.

But how long does that last? Obviously, computers are a very big issue now. Is that a permanent issue that you think would keep OpenAI out of video forever? That's the real question over time, because these models are getting much more efficient. But I'll tell you, I was with Greg Brockman, the president of Open AI, and I asked him straight away, like you're giving up on these world models, at least outside of robotics.

Aren't you going to lose something by giving up on them? And he said for sure, but what we're seeing with the GPT series models is strong enough that we're willing to take that, you know, take that step back and overindex where we see the promise. And I think you're seeing that everywhere within OpenAI, within Anthropic, within Google to some degree, they see these coding agents that can go out and take control of programs as the future, as opposed to the creative generation that we saw with something like SOAR. And, you know, we hear time and time again, too, that data, customer data, at least from now, the serves as. a bit of a competitive advantage for certain software companies. Do you see that is something that's permanent, or do we get to the point where, you know, AI has learned enough that it is far superior than the customer data

that the software companies currently have? It's defensible. I mean, what you're going to see is this is the distribution side, AI agents going into Adobe programs and saying, okay, we set a goal, we want to make a plan, we want to create the creative, and then we want to distribute it through all these channels. And so to build that from the ground up is very difficult,

especially when you're not in the programs that the brands are working for, working within already. Like you want to go and you want to port that over to your chat chippedy instance because you might have some degree of control over there. I don't think that's going to happen. I think you're going to see the purpose-built stuff. And that is a plus for Adobe. Yeah.

Personally, I was able to design a new dining room with an image on OpenAI. And so far, we'll see how it ultimately turns out when it's finished. but it worked pretty well. Those tools are great. Yeah, I'm in them all the time. For businesses, it's different. Exactly. Alex, stay with me.

Let's send it over to Christina Parts of Nevelas for a look at the report, sending shares of Marvell higher today. Christina. Yeah, they're jumping about 6% while Broadcom down about 200 information report that Google's in talks to build two new AI chips with Marvell. One is a memory chip designed to work alongside Google's existing AI processors, the TPUs. The other is a new chip built specifically for running AI models. I reached out a few times to Marvell, haven't heard back.

But this deal isn't a Broadcom loss. And I say that because Google just locked in with Broadcom through 2031. There was an 8K even filed. Marvell has yet to even file one. This is about demand just getting too big for any one vendor. Google is reportedly planning nearly 2 million of these new memory chips, which work alongside TPUs, not instead of them. Google is still expected to build roughly 6 million TPUs in 2027.

So that's additive spending, not necessarily a swap. For NVIDIA, it's always compared to NVIDIA. Same read. more custom chips doesn't necessarily mean less invidia. It means AI infrastructure spending is still accelerating, especially as these hyper-scalers keep increasing their CAP-X. One thing to watch, though, Marvell now screaming overbought on the charts and shares are up, what, 75% year-to-date?

The question is just how much of this is just already priced in, guys? Yeah, it's a good question. They've been doing a bunch of these tie-ups. Christina, thank you. Alex, what do you make of this lack of zero-sum gain that we're seeing, at least in terms of the chips right now? Well, first of all, I think this is a good answer to the compute restrictions question. Right. Exactly. Clearly, there's not enough compute. There doesn't seem like there's going to be enough compute for a while, even if progress is made on the algorithmic side.

The other thing is, yes, we might see a rising tide, lift all boats where you can see the broad comms of the world and invidia of the world's gain share. But we're actually in this moment where invidia is seeing real competition. If you think about the best LLMs in the world, two of them were built outside of the NVIDIA infrastructure. Google's Gemini and Anthropics Clawed. So, you know, Jensen has been doing the rounds and talking about how NVIDIA has a very defensible business, and I agree that it will, as long as the momentum keeps moving in AI. But it's not invincible.

And we're starting to see proof that you can set up an alternative infrastructure. Google's doing it, Anthropics doing it, and they're showing results, and I don't think that's an accident. What do you think that means ultimately for pricing? Well, they're going to be challenged. And we know that semiconductors cyclical business. So right now

there's so much demand and there's going to be demand for a while that they can't meet. But we're going to get into this generation of more powerful chips, of better algorithms, and all of a sudden there's going to be a moment where people look around and they say, why are we spending this much? I don't think it's coming anytime

soon, but I think that's definitely in the future. How could it not be? Are there certain players in this space that have yet to do one of these tie-ups that you think is kind of a one to watch? And are the one I would have said was GROC, not Elon Musk's GROC, but the chip maker, and NVIDIA made such a good move.

Aquahiresitioned is the word I use. You never know what these AI deals. But NVIDIA made such a good decision deciding to pair up with GROC's leadership and make a decision to lease their technology. So that is, on one hand, it's proof that Jensen sees that this is where it's going. On the other hand, this is where it's going, right? And so this is, it's what makes this business so interesting is we're about to see great competition between giant companies in a way that we haven't seen before.

And I think it's just going to be exciting to watch it play out. It's like frenemies. Everyone's going to be a frenemies. All of tech is frenemies. It's amazing. I mean, think about all the companies that Anthropic and OpenAI and Nvidia have decided to link up with. And in some ways, everybody is competing with everybody and everybody's benefiting everywhere.

Everybody. And, you know, they really don't care as long as this AI inflection point continues to go the way that it has. And maybe it will continue forever. see it continuing forever. Eventually, there's going to be a shakeout and there will be some winners. Yeah, absolutely. Well, we look forward to that eventuality. Alex, thank you. Thank you so much. Still ahead. An airline double play, American falling in today's session. What's behind that move. Plus, what to watch from Alaska's report. In overtime, closing bell will be right back.

We are keeping an eye on shares of American airlines currently down about 4.2%. Phila Bo here with what's driving that today, Phil. Well, you got a couple of things, Leslie. Obviously, As oil moves a little bit higher, all the airline stocks move lower. And there's also the dimension of whether or not American is truly in play. Keep in mind that after United Airlines said last week, or there were reports that United Airlines CEO, Scott Kirby, had mentioned to the White House that he was interested in potentially buying American. Well, that's sort of played out now that American, or at least initially has played out, now that American has said very publicly, we're not interested in any type of a merger with United. And you see the pop last week. when the reports first came out, and we've confirmed that Scott Kirby did talk to people in the

White House about this. And that's the move you see Thursday and Friday, where the stock moved higher, starting to pull back a little bit now, as it's clear that this is not anywhere close to happening. By the way, a couple of senators have sent a letter to both United and American saying, if there are any negotiations, we want to know about those talks because we're not so sure this would be a good idea for the consumer. Keep in mind with jet fuel costs, essentially doubling in the first quarter, you're going to see an impact in the Q. one results that we're going to see this week. In fact, we'll see the first ones coming up in about a half hour, 45 minutes from Alaska Airlines. Look at how the estimates have changed just for the first

quarter since February 1st, understandable given the fact that jet fuel is the second highest cost after labor. And as I mentioned, Alaska reporting its Q1 results after the bell. And don't forget tomorrow on the exchange, we're going to be talking with Ben Minnacucci, CEO of Alaska Airlines. We'll talk to him about jet fuel prices and how you deal with the situation. right now because I can tell you this, Leslie, from talking with everyone in the industry, nobody, and I'm being clear here, nobody expects Jeff Fuel prices to come down anytime soon. There is, for all the talk of people saying it's short term, that's not the expectation within the industry. Yeah, I was going to ask, Phil, is there a way for them to hedge some of those future costs

or has hedging gotten too expensive given that expectation? Not now. Yeah, once, if you wait too long, Hedging costs too much and the impact is minimal in terms of what it can save you. You really need to be doing a continual hedging preparing for that out of the blue shock, and that's what we have. Okay, so then if you get to the point where hedging is too expensive, does a merger become more appealing, just in terms of being able to extract those synergies? Well, that's the argument Scott Kirby has been making, which is essentially, if you look at American, they are projected to lose money this year.

the folks that American would counter, you can't say that we're going to lose money this year. We think that we're going to be profitable. Scott Kirby's feeling is these guys are not profitable. It would be more advantageous for the industry overall if American and United were to combine. And once you combine, you have scale globally in order to drive greater efficiencies. All of those arguments play out, especially if you see jet fuel stay high. And airlines continue to struggle to turn a profit. Yeah, it sounds like there's been some senator.

opposition there, but if a deal like American and United were to have political blessing, I guess the world is anyone's oyster in terms of the type of M&A that could transpire in this environment. Phil, thank you so much, Phila Bow. Up next, we are tracking the biggest movers as we head

into the close. Christina Parts Nevel is standing by. With that, Christina. Construction and space stocks on the move this afternoon, a major acquisition reshaping building materials, while a satellite mishap since another stock floor. Plus, we'll also have a rare earth deal. They could shift global supply chains. Details next.

Welcome back. 14 minutes or so until the closing bell. Let's get back to Christina Parts Nevelas for the look at the key stocks to watch. Christina. Thank you, Leslie. Well, shares of construction supply distributor QXO dropping, while top bill, you can see shares are soaring about 19% after QXO agreed to buy the insulation installer in a $17 billion deal. QXO says the deal will create the second largest publicly traded building products distributor in North America. AST space mobile shares falling 6% after a setback in the company's plans for

space-based broadband. A rocket designed by blue origin placed an AST satellite into the wrong orbit over the weekend. AST said the cost of the satellite loss is expected to be covered by an insurance policy. Couldn't find the insurance policy provider's name, though. And last but not least, shares of USA rare earth rising roughly 13% after the miner agreed to acquire Sarah Verde, A Brazilian miner in a cash and stock deal valued about roughly $2.8 billion under the deal. USAR will gain control of the one of the only mines outside of China with a high concentration of heavy, rare earth. So we know how important that is. Yeah, big move there.

All right, Christina, thank you. Thanks. Up next, Bitcoin bouncing. What's behind that action and how the rest of the crypto space is faring today? Plus, you're set up on UNH. What to watch from that company's report coming up. The Market Zone is next. Welcome back. We are now in the closing bell market zone. Mike Santoli and Northwestern Mutuals, Matt Stuckey, are here to break down these crucial moments of the trading day.

Today, I'm McKeel tracking the action in crypto. And John Ransom from Raymond James gets us set up for United Health results tomorrow. Mike, we'll start with you. Yeah, Leslie, I mean, I guess after 11 or 12 percent sprint higher in the S&P 500 over less than three weeks, this is really a minimal kind of consolidation we're seeing here today. Very benign action. You have the equal-weighted SP outperforming, banks doing nicely, alternative asset managers. So all of which says there's some level of comfort that is now built up based on exactly how dramatic this comeback from the lows are, which is the market's way of at least hinting that, you know, the moment of peak uncertainty is passed and everybody's consoling themselves or encouraging themselves with the historical numbers that say when you do have this kind of a rapid rebound and it's this persistent rally that tends to mean the bull market

it's a benefit of the doubt back. We'll see how it goes from here. Obviously, it's now time for earnings and the economic numbers to substantiate this and to actually prove that the market was right in trying to put the war and oil concerns behind it. And so much of it at the trough was about positioning and sentiment. Has that shifted at all? And does the positioning now suggest further moves to the upside? It has certainly shifted. I would say we're at least back to neutral in terms of how equity exposures look among most investors. But there is room higher to rebuild, I think, positioning and get people a little bit more aggressive. Given that we're at all-time highs, you wouldn't necessarily expect most investors to be merely neutral as opposed to over bullish in their positioning.

I think sentiment is going to lag. That's always the case. Retail investor sentiment, all the survey work looks like we built up a little bit of a wall of worry. So I don't know that that means it's a real strong, to the upside from these levels after this move higher. But it does seem like, you know, we're still in the zone where you don't have to worry about that stuff overshooting. Yeah, gross leverage taken way down.

We'll see where it ends up. Mike Santoli, thank you so much. Let's send it over to Tena McKeel for a look at crypto. Yeah, Leslie, well, Bitcoin and Ether are higher here to start the week while crypto stocks are a little bit more mixed. The stocks were lower earlier, catching up to Bitcoin's decline over the weekend amid heightened U.S. Iran tensions. strategy in Coinbase, kind of leading the sector here into the closed strategy today,

reporting it bought $2.5 billion worth of Bitcoin last week. That's one of the company's largest, if not the largest reported Bitcoin purchase to date. And you know, Leslie, war uncertainty. It creates a funny kind of split here. It's not uncommon to see behavior just like this, where some capital rotates into Bitcoin itself as a hedge, while Bitcoin-related stocks and crypto stocks, which trade like high-beta-tech equities, tend to sell off in times of uncertainty. So just some things to think about, $78,000 is a level to watch here. Bitcoin hit it on Friday for the first time since February. Bitcoin ETFs, same day, also saw their largest single-day net inflows since January.

So still healthy demand from institutions, but it's that war uncertainty that's going to keep driving things in the near term. Leslie? Yeah, still risk on to start the week. Tanea, thank you. United Health results out tomorrow morning before the bell. Let's bring in Raymond James analyst, John Ransom. It appears from your channel checks that things are flashing green for the quarter. Why?

Good afternoon. There's no drama about the guidance this year that's given pretty tight guidance and people are adhering to it. But what we think you might see in the first quarter, and as a reminder, the first quarter is when the most earnings happen because of a lot of seasonal reasons. You know, some of the indicators such as hospital utilization, prescription drug utilization, and other channel checks, weather, for example, indicate that at least in the first quarter, maybe medical trend has come off the boil a little bit. And, you know, what remains to be seen, it was this just a one-quarter fluke or is this the start of a trend? United Health Care in their MA book, Medicare Advantage, price for a 10% trend.

Last year, it was 7.5. So they priced for an acceleration. And we might see some at least tenets. signs that at least in the first quarter, it's come off the boreal attack. If it does have a solid print tomorrow, where do you see the company reinvesting? Is it AI technology for the reserves? Yeah, it's investing or reserve padding. You know, what they probably will do is if there are some excess margin in the medical book,

they probably will take a lot of that into reserve. So that should be fairly transparent. So the question is, what gets shown in actual earnings or what gets put into reserve is the first question. So that's more of a reallocation. In terms of longer-term investing, you've hit on it. The AI really is the story here. They've said in meetings that they can drive down their G&A percentage of revenue, which is currently 12.8% of revenue, to something much lower than that.

Our numbers are about 8% above the street because we have G&A to total revenue declining about 20 basis once a year, which I think is pretty modest. They said at a conference in March that they talk about points versus basis points, meaning at least 100 basis points for probably more. And that's really the story. Every 1% of G&A savings is about $3.80 a share or more than 30% or 25% of the earnings today. So that's, yeah, the medical trend is a short-term story. AI and G&A should be the story in 27 and beyond. Well, looking forward to those earnings tomorrow morning. Thank you for the preview, John.

Appreciate it. As we head toward the bells, let's bring it Matt Stucky for more on just today's print. I know that you are overweight investment grade and U.S. small and midcaps. I see today the equal weight S&P outperforming the cap-weighted index by, say, 50 basis points or so. Why do you think that trend is one that could continue? Well, I think what we're seeing is more widespread areas across different parts of the market, including small caps, including the equal rate S&P. That really wasn't the case from 2023 till about this halfway through the second quarter of 2025.

But since then, earnings growth has really been led by those parts of the market, specifically in small caps. You're just going to case in point so far this year, the blended forward growth in earning for small caps are up over 8%. That's kind of in the same category of the cap-rated S&P. And, you know, you're paying 16 times earnings for that. You're not kind of stretching out, you know, 21 times forward in that area code for the S&P. I think of them. So catch up in valuations, as long as this earnings growth persists, and I think it's getting a lot of investors excited. So were you not too concerned about inflation? Recently, large caps of, at least large cap tech stocks have been somewhat of a hedge against

inflation. Do you see that in any way? I know you're underweight large cap. You know, we do think that there are lingering inflationary risks out there. You know, the case in point just most recently with oil prices being higher does, you know, help to keep those inflation numbers lingering, probably longer than a lot of policymakers would like. However, if you look at the aggregate labor market, that's not really pulling inflation higher. And that's to us one of the key kind of components of having that persistent inflation risk is we can look over the next year or two. And so I think if we're looking out two or three quarters from now, we're probably a little bit more comfortable with the inflation story versus where we sit today.

And I think that's probably one of the reasons why the small caps continue to work in this environment because those inflation types of headwinds might be starting to dissipate as we look out into the future. Yeah, no, that absolutely makes sense. Overweight investment grade and U.S. small and mid-caps, underweight large caps in this environment. Matt, thank you so much for your time today. Just looking at kind of the leaders and laggards as we head into the close. Communication services, the biggest sector lagger, down about 1.4 percent. Materials leading the way up about 0.6%. It has definitely a meter,

and the NASDAC down about 0.25.