Closing Bell - Closing Bell: Countdown to Apple Earnings 5/2/24

Episode Date: May 2, 2024

Apple was once the biggest and most important stock in this market. But that was then … and this is now. And “now” tells a very different story with shares the worst performing in the group this year. Will tonight get the stock back on track? CIC Wealth’s Malcolm Ethridge, Virtus’ Joe Terranova and Bryn Talkington of Requisite Capital break down what they’re expecting. Plus, John Spallanzani from Miller Family Office tells us where he is putting his money to work right now. And, Evercore ISI’s Roger Altman maps out his forecast for the Fed and the economy at large. 

Welcome to Closing Bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with all eyes on Apple. That company readies to report earnings in overtime tonight, and our experts are on the case with what to watch for when this stock might exit its slump. That is the big question. In the meantime, your scorecard with 60 minutes to go in regulation looks like that. We are green across the board. Stocks making a little bit of a post Powell bump and it's getting even better as we enter this final stretch. The Fed chair wasn't as hawkish as some had feared. Market clearly likes that interest rates. Well, they're moving lower and that's helping the overall environment as well. Good day for small caps. No big surprise.

Yields are down, as we said. Tech up to all the big names in the space getting a nice lift. And speaking of the mega cap names, it does take us to our talk of the tape. You know where this is going. Assessing Apple, once the biggest and most important stock in this market. That was then. This is now. Now tells a very different story, doesn't it? Shares the worst performing in the group this year.

So we'll tonight get the stock back on track. Let's ask our panel, Malcolm Etheridge of CIC Wealth, Bryn Talkington of Requisite Capital Management, and Joe Terranova of Virtus Investment Partners, Bryn and Joe, CNBC contributors. Good to see everybody here. Bryn, you get the ball first. What do you think about tonight? I'll take the ball and run with it. You know, I think that a lot is priced into the stock here. So first of all, if you actually look at this chart technically over the last one year, as Joe could attest to, it's making lower highs and lower lows. But if you stretch out and go

back to 2022, 172 is really strong support. I think that so much news is priced in. I think in addition, people can't forget this is the stickiest platform in the world, but I think that's going to continue to grow. I think there's low expectations. So I'm going to stick with Tim Cook and team and think that a lot of bad news is priced in and the stock's trying to make a bounce here off that long-term support at 172. All right. So Bryn's on Team Tim, as in Tim Cook. The other two gentlemen on the program seem to be walking away from that table. Joe Terranova sitting right next to me just rebalanced his Joe T ETF, as most of you know. And we documented yesterday on halftime one of the big moves, if not the biggest.

No more Apple. You sold it. I did. Tell our viewers why. Based on technicals and based on revenue decline, based on the fact that if, in fact, revenue growth comes in negative five percent this quarter, that's the fifth quarter out of the last six that you've seen that type of decline. So I cannot remember a quarter where the expectations were so low for this stock. I want to cite a statistic which is absolutely remarkable. The percentage of analysts that have a buy rating on Apple relative to the other mega caps, 57%. 57% of the analysts have a buy rating on Apple. If you look at the MAG-5, let's put Tesla to the side. That's 38%. If you look at the other Mag 5, there's not one name where the buy percentage is lower than 85%. Amazon's at 97%.

So the expectations are remarkably low. And I think given those low expectations, what Apple's going to do tonight is follow the meta and alphabet playbook and use the capital allocation strategy, buybacks and dividends to soften the blow. OK, well, this is generally the quarter in which you get the capital allocation, dividend buyback, et cetera. We made a couple of walls, Malcolm, and I'm going to show the headwinds first because it seems apropos to the questions that I'm going to ask you and the ones that Joe just answered for me here, whether it's total revenues expected to decline 4.7 percent year over year, Joe said, down five of the last six quarters. We're not used to that. Justice Department antitrust suit. China concerns where China revenues are expected down 14 percent. Weaker iPhone sales. Remember, you can talk all you want about the services business of Apple. It is an iPhone company, first and foremost. It accounts for half of the revenues of this

company. Revenues there expected to fall 10 percent from a year ago. And then what some fear is going to be a weaker June guide. Now, I'm going to show you the tailwinds after I hear your answer, because you sold some of your position to almost a year ago, I think half of it. So you're moving in the opposite direction as well. Why? So, yes and no, Scott. I'm glad you actually came to me after Bryn and Joe, because I think I sit somewhere in between both of them. I think expectations are extremely high for Apple today and extremely low simultaneously. They're high because the street is so excited for AI and so thirsty for AI. If they sprinkle a couple of breadcrumbs and tell

us something, they may be working into the iPhone 16. That probably will be enough to make shareholders say, I want to hang in there. But I think at the same time, my concern was that the stock had gotten overheated a year ago back in May, and I probably wasn't wrong. I sold around 174, and here we are today, somewhere in the same range. But I am starting to think, with analysts becoming as negative as they are, as Joe pointed out, I'm starting to think that this is probably setting up to be a great opportunity to buy into this name.

Now, I'm not saying that anybody buying into this name should be expecting another 2007 moment, where they go kick off a whole new wave of innovation tomorrow. But I do think that usually when sentiment shifts like that against these mega cap tech names specifically, that's usually when something great starts to happen in those companies, a la Amazon two years ago. So that's my thinking here. I'm really starting to have two competing thoughts at the same time. And I might want to be buying those shares back here depending on what happens after earnings tonight what a difference a couple of years makes joe i mean this is a stock we've gotten used to the fact it usually runs up into the number not so much this time maybe that takes the pressure off a little bit malcolm mentions what's to come and maybe we get some little breadcrumbs dropped on

the trail uh tonight relative to ai that's one of the tailwinds. Obviously, we can show up the tailwinds now because, yeah, we do expect something AI related to come at WWDC in calendar month June. There you go. Do they get dividend boost today? This is when they would likely do it if they did. More buybacks. They already buy back more stock than anybody else. That is one of the floors underneath

this stock, too. And then, of course, there, well, is the worst over. We know about all the negativity, but that's why Tony Sacanaglia Bernstein last week upgraded the stock for the first time in six years and said, buy the fear. So is it time to buy the fear rather than sell it? You know, it's remarkable is that I know that the strategy will be back into Apple again at some point. I know that. Your strategy, which is growth, is quality and momentum. Yes, it will be back into Apple at some point. And I think collectively, Malcolm, Bryn, and I would all acknowledge, if you have a clear understanding of the fundamental history of this company, never bet against Apple because they always deliver at some point. Now, with all that said, from a risk management perspective,

I'm comfortable with what the quality momentum strategy did. I think the capital allocation strategy tonight is going to be incredibly aggressive. If you're looking for a wild card this evening, China is 19 percent of Apple's 2023 revenue. We know that they are losing market share to Huawei. Maybe Tony is right. Maybe we are at a trough moment for China. And that's the wild card that also contributes to buffering the decline in this stock. But I just think collectively overall, I think you hear it embedded in all of our comments. I think we'd be surprised if Apple tonight delivers a weak quarter and there's

significant follow through selling. I think each of us would be very surprised with that because that is so counter to what the fundamental history of this company is. You've got to hope it's a trough moment in some respects for almost everything. Now, we should say one of the tailwinds, by the way, is the services growth is expected to be strong. And as I suggest, OK, this is an iPhone company. And they do have, as you said, the most powerful installed base probably in the history of consumer products.

Let's be honest. But that hasn't been enough lately. Well, look, so also if you take a page from Qualcomm, who came out with numbers, they said that, you know, Qualcomm called out strong demand for premium tier and AI phones. So obviously Apple's not an AI phone, but it's 100 percent a premium tier. And so we're seeing Qualcomm obviously has a great day. That could be a read through to Apple as well. And I think that with China, don't forget Tim Cook last quarter reminded everybody in mainland China, the iPhone is four of the top six positions in terms of a seller.

So, yeah, Huawei is definitely making a base, but they're still selling a lot of phones. So I think all three of us are in agreement, right? It's got a base here, long term, strong, strong fundamentals. We think Tim Cook will do it. But I also think with a disciplined strategy like Joe, it still is making lower highs and lower lows. So hopefully that stops here and we get a pop after the earnings tonight. Malcolm, I think, I don't know, maybe the greatest fear as it relates to China would be whether we're undergoing a secular change there and that what was, you know, thought to be at the beginning cyclical and that that business was going to come back around is actually more structural and more secular in that there are

just things and dynamics in that market, more national buying, if you will. Huawei taking market share, as Joe alluded to. What if that issue is a greater issue than we once realized? Yeah, I think it is a greater issue than we're willing to accept. I'll say we realize it. We just don't want to accept it. iPhone sales are declining and they're going to continue to decline. They're ceding ground to Samsung, Huawei, whoever else that we don't even know is a competitor for them today that is working on something impressive.

And I think that it's worth pointing out that I know this horse has been beat to death and then beat some more. But their lack of growth in the name has been directly attributable to the lack of innovation over the last couple of years. They are going to have to innovate their way out of this rut. And I don't mean incorporating AI into the iPhone 16 and saying, there you go, guys, you already dominate in hardware. That's not anything new for us. So what really matters to us is a new product set, specifically something in the services space where margins are so fat, something in the services arena that takes us completely in a different direction than you, the four of us sitting here recognize as even an option today, that's what really is going to pull Apple out of the dark

ages that I'm looking at right now and into our imagination and make us willing to bet the ranch on them again. And I don't see that coming in the next couple of quarters. I think that's probably a 2025 setup. I wonder, Joe, if one of the issues, too, is, by the way, Apple part of the Dow. Dow's up near 400 today as well. And this is one of the better performers on the day in terms of the Dow, at least it was before we started having this conversation. They don't necessarily have a rabbit to pull out of their collective hat today. They're not going to tell you what's really coming from AI, right? They're going to unveil it. And we think they're going to do it next month. We don't really know anything. We're making the assumption that we're not going to get anything substantive on that idea until later. I guess my point is they're

not monetizing AI at all right now. So they can't pull that rabbit out of the hat and say they are. And they can't show you that they are like NVIDIA can or a Microsoft can or some of these other companies that have, you know, narrative wise, jumped to the front of that race. The other way to say it is they're not exciting the potential investor base by dangling that word AI. We know AI may dangle the word, but they may dangle it. But are they going to give us are they they going to clear up this cloudiness that exists surrounding what their AI strategy is? I'm a believer that yes. In fact, if you're able to incorporate AI into the products, if you're able to incorporate specifically into iPhone 16, you could have something similar to what you had with the iPhone 6. Remember, that's where you got

the bigger size iPhone, and that was where you delivered record numbers in had with the iPhone 6. Remember, that's where you got the bigger size iPhone, and that was where you delivered record numbers in sales for the iPhone itself. I don't know if it gets to that magnitude, but I think you would create a lot of excitement that would get the existing customer base to upgrade at that moment. So I hope we get the news sooner rather than later. I hope that it comes before June. To your point, I don't think it will.

And I also hope that, you know, I don't know if anyone else agrees with this, but is tonight a read on the consumer in any regard? I'm not so sure that it is, but I do think it gives you a little bit of insight on the overall economic environment. Let's speaking of the overall economic environment, Bryn and Joe used the words clear up the cloudiness around this particular name. Do you think the Fed share yesterday cleared up the cloudiness around this market? Well, I mean, I think he was definitely dovish. He he hopes that, you know, the next move is a decline, not a rate hike. But remember also, was it March of 2022 when he said we don't see any reason to have 75 basis point rate hikes? And then we had four that year. So he's a human being.

I think he calmed the market. But I think that the jury's still out if we actually get housing inflation and the way that they track it to come down, which I think is what he's banking on. So for today, he did great for the market. But we'll see over the next few months if what he's predicting actually comes true. Well, I mean, he has this confidence about him, Malcolm, and he exhibited that yesterday. I think everybody would agree that the story is going to play out how he hopes it will, that inflation is going to continue to come down as the year progresses, that the economy and the labor market are going to remain as strong as they are. And even if they cool, that's good. That's good. That means it's

a soft landing. My chief concern, though, when it comes to Chair Powell is that six months from now, we're going to look back six months and say that's where he should have started cutting. Whatever the mess is that we find ourselves in in the back half of this year is a direct result of them maintaining higher for longer. And we only know that because we've rode all the way through to the end of the year and can see that in hindsight. I think probably we could say that we're at a place where we can reasonably expect rates can start to ease and we can start to get the consumer back. We can start to get small businesses back investing, those sorts of things. But unfortunately, he's backed himself into a bit of a corner where he can't reasonably cut because he's saying so much about inflation spiking back up and we don't want to have to raise again and go back and forth that I'm really concerned that we'll we'll get there toward the end of the year. The thing that about inflation spiking back up and we don't want to have to raise again and go back and forth that i'm really concerned that we'll we'll get there toward the end of the year the thing that we're

all looking for to have broken will break and then we'll look and say yeah march april may that was probably where you should have started the easing but it'll be too late to do anything about it at that point joe he took the fire off of rates i'll'll tell you that. Tenure right now is 457, right? Remember yesterday, the two-year was at 5%. We've been talking about the two-year getting back to 5% all week long. That's at 487. So he took the simmer big time off of the rate market, at least for today. I have to tell you, I really appreciate, as you said, his confidence.

I think he was very consistent in the message that he's been delivering. They believe they are too restrictive and they are looking for the reason to adjust monetary policy. And at the very same meeting, they announced the reduction of the amount of securities that are going to be allowed to mature off the balance sheet. That in its nature is an easier monetary policy. So to Malcolm's point, I've always said this, and I think we're at the precipice of it. I don't think it's the hard landing. I don't think it's a soft landing. I think it's this firm landing somewhere in the middle where the economy actually does the work for the Federal Reserve. It softens enough where

they're able to actually cut rates, to your point yesterday, for the wrong reason. Well, I mean, he still thinks he can cut for the right reason. You don't you? I think he's going to I think he's going to be cutting for the wrong reason. I think he's going to be cutting not so much because inflation is receding so significantly, like it is, by the way, in the rest of the world. If you go outside and look at Europe, it's got two handles. And in Asia, you've got outright deflation. But I think it's because the economy here begins to soften enough where ultimately he makes that first rate cut. Do you do you think, Joe, that what he said yesterday and what they what they did, I mean, they didn't do anything, but really what he said clears the way for for the all clear

in some respects for the rally to continue? Because there was significant doubt over the last few weeks as to where we were, right? We pulled back 5% on the S&P. I think in the totality of 2024, the answer is yes. In the near term, I said this, I see some risk adverse behavior underneath the market and in some areas of the market, you've gotten past earnings. So now you're in this period, Scott, where really what's the catalyst? So the market kind of just vacillates where we are right here over the next several weeks or coming months. I wouldn't be surprised with that. But the prevailing bullish trend is absolutely in place. And I think the confidence and consistency of Chairman Powell yesterday to a large degree is one of the reasons. He hammered the bear case down almost point by point, didn't he, Bryn?

And then he did his mic drop moment where he's like stagflation. I don't know why people keep talking about that. I don't see the stag or the flation. Well, I mean, I'm not trying to snargy here, but in the 80s, we actually used to have interest expense in the cost of living embedded in CPI. They've taken it out. And the measurements between the 70s and 80s and today aren't even comparable. So if you put interest expense back in, well, we're probably in double digits. So, right. We don't have stagflation in quotes because we've changed how we calculate the numbers. And so, once again, I think the jury is still out.

He did a great job. I just don't think taking the stag out of inflation is accurate when you change how you calculate the math equation. Let's hammer this point more because I think people would take the other side. Why is the jury still out? The jury rendered the verdict. I mean, there's no there is no stagflation. The economy is not stag. OK, it's not stagnant. It's growing. But what happens is that what happens is stagflation, which really was like a made up turn in the 70s,

is when you have high inflation and low growth. So you had 15 percent inflation and then three or four percent. It's high inflation and no growth and also really high unemployment. We have a solid job market. Yeah, we have. You know, OK, so the last the last read on GDP was a touch below trend growth. But I think the prevailing thought is that that was likely a blip. I mean, by the by the definition that most would want to use and the Fed chair himself hammered yesterday. Yeah, there's no stagflation. So stop talking about it.

Yeah, yeah. No, you're correct on that. They're stagflation with something of the 70s. I'm just saying that the way they look at CDI is very is very different. I think we're in this unique period that we've had so much government stimulus. We are still, the jolts numbers are still strong. We have a good economy. We have workers. And as long as everyone's working, the worker is the consumer and we're a consumption economy. And so I think that, but we are in this uncharted territory because back in the 80s and in the 90s, Scott, when we had the rates at this level, we didn't have QE 1, 2, 3, and 4. So I just think there's a different set of circumstances today.

And it's too simple just to try to compare it to another decade of what's going to happen over the next couple of years. Malcolm, last thought to you. Yeah, I'm focused on Apple again tonight. I'm taking it back there for a second. And my big concern, I know that we give Apple a very long runway because of what they've been able to do over the last five to 10 year period. I think if you own it for the last five years, you're up something like 200 percent because of dividends. And if you own it for the last 10 years, you're up something like 900 percent on a total return basis. I am genuinely concerned of whether Apple has enough innovation in it right here for the next five to 10 years to

look the same way. And so I'm really focused on what's gonna diversify us away from the iPhone and get us to stop talking so much about the install based on the iPhone. Cause I think that trick has already been played out. Well, I got one word for you, services. Services, we'll see. And you brought it full circle, which is good.

And I appreciate you for that. Malcolm, thank you. Bryn to you as well, Joe T., full circle because I want to remind you, tomorrow we have top analyst Eric Woodring on this program. He's going to react to tonight's big results, and we can't wait for that interview as well. Let's send it to Christina Partsenevelos now for a look at the biggest names moving into the close.

Christina. Well, we've got a slew of bad news for fitness provider Peloton. First, an earnings miss and lowered guidance. 400 job cuts worldwide as part of a restructuring effort, and lastly, CEO Barry McCarthy stepping down. The board is going to continue to do a search to name a replacement for a company that really hasn't turned a profit since December 2020 and carries over $1 billion in debt, shares down almost 4%. Shares of Moderna moving in the opposite direction after posting a smaller than expected loss in the first quarter,

even though sales for its COVID vaccine fell 91% from a year ago. The company, though, reiterating its full year sales guidance as it expects COVID vaccine sales to pick up in the back half of this year. I don't even want to think about that. Shares up 14 percent. All right, Christina, thank you. Up next, weighing the fate of the rally, Miller family offices. John Spallanzani is back with us post nine. Tell us if he's expecting a broader pullback ahead or if this rally is going to keep going, where he's putting his money to work. Join me next. Welcome back. We are green across the board. The major averages are rising following a less hawkish Fed chair than feared. But the S&P 500 still on track for its fourth negative

week in five. Joining me now, Post 9, John Spallanzani of the Miller family office. Welcome back. Hey, thanks for having me. You've been bullish. Yep. You still? Still bullish, yep. AI, bullish AI since for about a year now, coming up in June. It's a secular trend that's not going to end anytime soon. It's got great legs and it's going to be a long runway. We're just in probably the first few innings of the AI boom and revolution. So it's going to take a lot of chips, a lot of energy, and a lot of patience. Okay. All that said, if the Fed chair had come out yesterday and was more hawkish as some had feared he was going to be, I don't think this market would look like it does.

And I don't think a lot of these AI names, even with the transformational technology you talk about, would be green. So what about yesterday? Was that a game changer sort of back to the way it was, so to speak? We can stop thinking about a correction. Yeah, I think the hawkish rhetoric, I mean, we had two corrections of 7% so far this year. I think the hawkish rhetoric leading into the meeting was kind of good because everybody was like, he's going to be so hawkish. He's going to say the next move is a hike. And that really kind of set him up well. And as I said yesterday, I think you said today, he was very confident and pretty precise in what he said, that the next move is not going to be a hike,

most likely. It's going to be a cut. When that's going to happen, he doesn't know. But in terms of dual mandate, they're back in balance right now. And the more things get out of balance, meaning if unemployment sticks up, then he'll pretty much get off his horse and ease. And I think with the ECB easing, the yen getting up to 160, you know, those are macro factors that are pretty much reversed the last, you know, yen's down five, even though the BOJ was talking it down and may have intervened. The fact that the yen's down, oil's down back under 80. We saw Starbucks warning that people are, you know, being less aggressive in terms of buying, purchasing their coffee.

You know, the lower level consumer, even the mid-level consumers kind of stretch with inflation as well as rates. And some of the things that the Fed targets, they can't target car insurance and they can't target health insurance. So you have a lot of things that the Fed can't target. I think Jay Powell knows that, you know, it's a meat cleaver type approach. You can't precisely target where the inflation is coming from. Sure. But let me ask you this. The longer they wait to cut, does that increase the risks of something bad happening to the economy or whatever else? Yeah, of course it does. And I think I think that's pretty evident. You know, the longer they wait, the chance of a policy mistake goes higher.

You know, we had this tug of war between $5 trillion of fiscal spending and 500 basis points of tightening. And the fiscal spending seems to be waning as we end this cycle, this presidential cycle. And obviously, the Fed's been really tight. as we end this cycle, this presidential cycle. And obviously, the Fed's been really tight. We saw, obviously, original banks cracked last spring. That led to a flight to safety to the big cap, make max seven names, really. And that was because they had large balance sheets.

They didn't need funding. And the AI story was just beginning. Massive cap backs, buybacks. Now you're getting dividends on top of the whole thing. Dividends, yep. Which is always nice. They just put a little cherry on top for the sundae for you. And if you go back and you read just Mark Zuckerberg, just the fact that the compression that's going on with these large language malas where they're going from Lama 2 to Lama

3 and Lama 3 is now just starting to be uh done and then they're already anticipating llama four llama five and that's all open source for free ai so where it used to be you know like whatever it was per token to train these things the cost curve is being bent so rapidly that it's going to be ubiquitous across all attack are you are you a believer as you've been adding by the way just for full disclosure you've been adding, by the way, just for full disclosure, you've been adding to your NVIDIA, adding to Microsoft, adding to Meta, adding to AMD. But are you also a believer in the broadening story? Yeah, there's going to be second and third derivatives of all this stuff. Obviously, Amazon is our biggest holding. We think the run rate there is crazy. Jassy is in the right spot at the right time

and the right leader. I mean, back in 2003, AWS was already experimenting with large language models to bend the cost curve within Amazon to get cheaper delivery, cheaper prices, faster delivery. And they've been doing that for a while. So AWS is only going to generate more and more revenue. The free cash flow, I think they're talking about $100 billion in free cash flow. So in terms of AI names that are probably the cheapest, I think, obviously, that's one of our biggest holdings, along with Bitcoin, MSTR, and Clear. But Amazon is really in the driver's seat right now. And I think that in terms of where they can go and the TAM and what the trillions of dollars of revenue that potentially is out there for them to get is really just the tip of the iceberg. Let me ask you about Bitcoin since you brought it up. We haven't talked

about it in days on this program. It would seem pretty obvious at this point, just relative to the moves. You saw it on the screen, OK? It's below 60. Yeah. That it is so still tied to risk sentiment. It seems like that. Speculative sentiment. It seems like that.

Does that change? And why would it change? I think one of the interesting stories that's going on right now is there, you know, obviously there was this debate or maybe some front running in terms of the etfs and that kind of thing everybody knew the etfs were coming out now blackrock's got an etf fidelity there's all this money that flowed into these etfs basically taking some margin away from gbtc that kind of thing uh we also had the uh the halving right which is coming up so that means it's going to take more power but the the one

thing is i think right now what people are trying to figure out is there's this tug of war between A.I. and kind of like Bitcoin energy. Right. So A.I. is going to take a tremendous amount of energy to run these chips. You're talking about maybe nuclear power plants. Tell me that Bitcoin's an A story, too? No. What I'm saying is there's some of the some of the the the downdraft here from 74000 is obviously guys trying to calculate. Well, hey, if it's going to cost the miners this much more to to to to mine the bitcoins and you have the AI story on this side. Well, maybe some of that energy that people are using for mining might have to go to AI. So now you've got this push-pull between that. And I think that's some of the things that, one of the reasons why it's below $60,000 right now.

But again, yeah, it is kind of a risk-reward type thing in terms of risk-on, risk-off. It is the way it feels. You have a correction in the stock market. Now you're at $59,000. The volatility, yeah. But as we see, the volatility has actually gone down the longer it's been in existence. So, you know, when we were looking at it, obviously it was below 1,000. But, you know, now it's 74,000.

The volatility was a lot greater when it was at 1,500, 2,000, 3,000. Of course. All right. All right. We'll see you soon. Good seeing you. Thanks for being here. John Svazani, the Miller Family Office.

Up next, the road ahead for the Fed. Evercore's Roger Altman is back with us as we await tomorrow's all important jobs report. Don't forget about that. Give us more clues on what could be in store for this economy and what the Fed's next move might actually be. Just after this break. Welcome back. Fed Chair Powell all but taking a rate hike off the table yesterday. Yields falling today. That's helping to lift the major averages, as you see right there in this final stretch. Investors now looking to tomorrow's jobs report for more clues on the economy and possible cuts later this year. Here to discuss Roger Altman, Evercore founder and senior chairman. Welcome back. It's nice to see you. scott thanks for having me what was your takeaway from chair powell yesterday i thought it was both correct and uh comparatively optimistic

because expectations yesterday morning and somewhat earlier were pretty down uh all that talk about a possible rate hike and possibly uh even if you didn't see that, nothing in 2024. And essentially what he said was, we need more time to see some more progress on inflation, but there won't be a rate hike. And he's still planning, it was obvious, on the next move being a move to ease. And probably, probably this year, although that remains to be seen. Broadly speaking, I think there's some very good economic data here. On the one hand, the economy is showing itself once again to be remarkably resilient, both compared to the rest of the world and this late in the economic recovery cycle. It's pretty amazing.

On the other hand, there are signs of slowing, which are early signs, but they're pretty unmistakable. And that should be conducive. They take a little bit to getting to lower inflation and in turn conducive to the Fed being able to ease before the end of the year. And that slowing, I think investors are starting to see, whether it's the commentary from the fast food CEOs, McDonald's, whether it's the slightly weaker job openings and job quits rate, some other surveys, trucking and so forth that are showing a little more weakness. And that's positive from the point of view of the medium term Fed outlook. And also, I think, for investors broadly. I mean, I thought Steve Leisman just put it into perfect context yesterday when he described what you were saying as the definition of a soft landing, right? The economy is going too slow,

enabling you to have a soft landing rather than a hard landing of a recession. Now, who knows down the road what's going to happen? You mentioned cuts. Some people would say the soft landing is already here. Well, they would, but we'll see. We'll see. I don't know whether one GDP read below trend means that or not. But on the idea of cuts, how many cuts are you personally expecting this year? Well, you know, we could all be talking differently tomorrow after the jobs figure and the wage data, which will be very important. But absent that one. One. And I think the election cycle, people will deny it till the cows come home. But the election cycle plays a role. I don't think the Fed is going to want to cut too close to the election. So you don't think, well, do you consider July too close to the election?

No, I don't. Actually, I don't think September is too close to the election. But I think the Fed is inevitably sensitive to the election uh but i think the fed is uh inevitably sensitive to that and perceptions of it so my answer would be one but as as powell's been saying it is in fact data dependent and should we suddenly see um which we might uh slowing wage growth uh and just some improved inflation data, then that number could go up maybe to two. But at the moment, I would say one. Are you bullish on risk assets in, you know, in the here and now? I mean, even look, I interviewed Jeffrey Gundlach yesterday of DoubleLine, obviously, right after the Fed chair was finished speaking. And for, you know, moderate risk assets, parts of credit,

he he's pretty bullish, at least in the near term, and in part because of what the Fed chair wasn't yesterday. Well, I am pretty bullish. And if you look at indices like the VIX or credit to swap spreads or futures markets in terms of the funds rate, federal funds rate, I think there's reason to be bullish. And even more broadly, coming back to the first point I tried to make, the United States economy is just a marble. For the U.S. economy to be growing like this, if you strip out trade and inventory effects from the first quarter, we're growing the underlying sense of about 2.5 percent. That's amazing. This late in the cycle, I mean, we're about four years into the recovery.

And you look at the job creation machine that the United States is, 3.8 percent unemployment rate and so forth. You look at fixed investment. We're the envy of the entire world. And there's just nothing like the U.S. economy. So I am bullish. I'm going to make that the last word. That's a great place to end. Roger, I appreciate it as always. We'll see you soon. All right, Scott. Thank you. Evercore's Roger Altman. Up next, tracking the biggest movers as we head into the close. Closing Bell is coming right back. We're 15 out from the Bell.

Let's get back to Christina Partsenevelis now for the stock she's watching. Christina. We'll start with used car retailer Carvana, posting a record result this past quarter and actually turning a profit during this first quarter. The two years of restructuring paying off after bankruptcy concerns back in 2022. J.P. Morgan upping its price target to $130 for the stock and moves to overweight, citing confidence in Carvana's expansion and improved margin. Shares are up almost 34% right now. Despite a sales drop driven by big ticket furniture, Wayfair was able to reduce losses in the quarter by cutting 13% of its workforce earlier this year.

But the CEO tried to remain optimistic on the call and said, year-over-year active customer growth was once again positive and accelerating compared to last year. Shares are up over 14%, Scott. All right. Thank you very much, Christina Partinovlo. Still ahead, Coinbase reporting top of the hour. That stock gaining more than 30% this year. It has seen some weakness over the last month.

We'll tell you what to watch out for when those numbers hit the tape in OT. The bell is right back. Up next, your big earnings setup. We are inching towards Apple's earnings, those hitting the tape 4.30 p.m. Eastern time. We'll tell you what we're watching out for ahead of that report, plus other earnings to watch for. Coinbase, Booking Holdings, and Expedia, top of the hour for those. We're going to take you inside the Market Zone next. We're now in the Closing Bell Market Zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, it's not just Apple earnings we're watching for in overtime. Kate Rooney on Coinbase and Sima Modi on Booking Holdings and Expedia. All right, Mike Santoli, the big events as I see them for investors, Apple tonight, Knicks tonight, the Knicks game tonight. Jobs tomorrow, CPI May 15th,

NVIDIA May 22nd. Now the Powell's out of the way. You want a lot of things out of the way. I think you want the Knicks Sixers series out of the way tonight, hopefully. Look, first thing we have to do is avoid another final 10 minute fade in this market. Two days in a row, we had that. I think the market, taking its lead from bonds, which managed to relax after the Fed yesterday, have said, OK, not that much has changed, necessarily, versus what we thought before. We're sitting here with earnings accruing to saying the estimates are fine for the next few quarters. Apple's a big piece of it, maybe, in terms of overall numbers and whether they can, you know, dazzle at all as opposed to just steady as she goes.

I think expectations are just for steady as she goes. We do have to get through the jobs report. It feels like there's still some hesitation ahead of that. 50-50 on the S&P. We're sitting there again. We first got there in February. I keep talking about it. It was before the inflation spike and before NVIDIA's earnings. So it's sort of a ready position for the next significant move.

I mean, rates have obviously come off the boil. Is that the most significant thing to sort of ease off the pressure on the market? Yeah. In the immediate term, that's what's taking the lead. Banks up 3% over two days. Small caps up today. That shows you the effect there. So the market is still in consolidation mode, but in a somewhat healthy way, we're only 4% off the highs. All right. Kay Rooney, what should we expect from Coinbase? Hi, Scott. Yeah, so crypto prices really are expected to help Coinbase in the quarter. They hit an all-time high in the first quarter, so that is expected to help revenue at least. Dan Dolove over at Mizuho expects about 40 percent upside to consensus revenue estimates, as he says crypto investors were drawn into the rising price environment.

Also notes that Bitcoin has started to actually see outflows in recent weeks. So both in ETFs and spot markets, Coinbase should give us an update on volume in April, which tends to give a sense of how things are trending. They don't give traditional guidance. And then trading fees, that's the main revenue driver for Coinbase. Wall Street's watching the take rate, which is essentially how much it makes on each transaction, especially for the retail side of the business. And then the mix of institutional trading as well, since they tend to charge lower fees for professional traders. Any sort of revenue diversification would be seen as a positive. That would be through subscription services, revenue progress on cost-cutting profitability. That's something a lot of Silicon Valley tech investors want to see. And then the regulatory outlook. Coinbase

is fighting a lawsuit against CSUC. We'll see if we get any commentary or updates on that, Scott. All right. We'll see in just a bit. Kay Rooney, thank you very much. By the way, stay tuned. Coinbase's CEO will be sitting down for an exclusive interview in overtime today, so don't miss that. Seema Modi with us at Post 9, ready for booking and Expedia. You're ready. The post-pandemic surge in travel, Scott, that story is changing. The question is, this earnings season, is to what extent and how does that impact growth? What's interesting is that the messaging from airline CEOs, hotel CEOs over the last two weeks is one of optimism, but what's helping them is the resurgence that we're seeing in business travel. The challenge at hand for booking Expedia, they're very reliant on their leisure traveler,

whereas we know cracks are starting to emerge, specifically booking holdings. BTIG has some propriety data that show that booking and room nights are starting to soften. So that's going to be a key thing to look for with these two companies reporting tonight. The outlook on management will be key as well. In 12 days, Expedia gets a new CEO, Peter Kern, stepping down. This is a company that's been in sort of a recovery with the stock down this year. So that's going to be a big topic of interest as well. Home rental, we had to talk about that category because we're seeing increased competition amongst booking Airbnb and Expedia. And one speculation amongst analysts is that Expedia is losing market share. That also explains the divergence we're seeing in that stock

versus Airbnb up 16% this year. I mean, Mike, our antenna are now up for anything about the consumer after the Starbucks shocker. For sure. And it's specifically price sensitivity on the consumer. So I do wonder if somebody is trying to build a case for why inflation might resume its decline. Are we seeing anything like that in hotels, airlines, a little more competition? So great is a fantastic point to make because hotels are able to keep their

average daily rate higher, home rentals not so much. So how that plays into earnings is interesting as well. All right, Seema, we'll see you in overtime with those results. Seema Modi here at Post 9 with us. All right. You heard the two minute warning. So here we go. Jobs report. I guess all eyes are going to be that on in the morning. I know Apple's important, but in terms of the story right now, it's the jobs report. Yes. So Apple, big index effects still. I do think the jobs report, we're still in the mode where we want good news to be good news. There's some acute raw nerve about wage inflation, but it's still wage inflation can run well above target inflation and still not necessarily move things in the wrong direction. So we'll see how that does hold up. But aside from

that, I really do think it's about whether we can kind of tally up the week's earnings, say, where are we quarter to date and say, you know, yields at four and a half or so. If yields are topping here, you can have clearance to sort of hold the valuation on the market. That's, to me, where we've been for a little while right now. And we are going to probably start getting away with Fed speak, too. So that's the other thing that always happens. So you're going to get the jobs report and you're going to have the, you know, sort of the echo effect of the fed meeting that's coming into next week if anything like you know the employment cost index this week obviously gave people pause sure and that was a big reason why we had a decline the day that it dropped

because you know unit labor costs today and a bad productivity number this morning didn't really upset the bond market so i don't know we're picking our spots in terms of the inflation readings we really care about we We'll go out pretty strong. Dow's going to give you more than 300 here at the close. S&P will be a touch below 1%, but still a strong day. All eyes on AAPL. That's Apple. It reports soon in OT with Don Kort.