Closing Bell - Closing Bell: Fed Leaves Rates Unchanged, Bond King Gundlach reacts 5/1/24

Episode Date: May 1, 2024

Stocks rallied on the back of Fed Chair Jerome Powell’s news conference. DoubeLine’s Jeffrey Gundlach gives his exclusive reaction and breaks down what he thinks the Fed’s next move might be. Plus, Sofi’s Liz Young reacts to Gundlach’s big calls – and tells us what she is expecting from stocks in the months ahead. And, we break down what to watch from Apple tomorrow and Qualcomm in Overtime today. 

You're listening to Closing Bell in Progress. And welcome to Closing Bell. I'm Scott Wobner here, Post 9, New York Stock Exchange. And as we hit this final stretch, seems pretty clear the markets did not get the more hawkish Fed chair that it had feared and perhaps even prepared for in the days leading up to this moment. Though Chair Powell cited a, quote, lack of progress on inflation in recent months, he said longer term inflation expectations remain, quote, well anchored. He said he still expects inflation to move down as the year progresses, especially in housing. And importantly, he all but took a hike off the table, calling those prospects, quote unquote, unlikely unless something dramatic were to happen. We check the markets now. Clearly,

the market's taking this as a bullish event today, at least for this moment. You see the Dow there. Almost everything is higher by at least one percent. Interest rates coming down a touch. No surprise that you would see the Russell 2000 doing quite well. Dollar sold off. There's your interest rate picture. Those are falling a bit as well. So let's bring in Jeffrey Gundlach now, the CEO, CIO, co-founder of Double Line Capital. Jeffrey, it's good to see you. Welcome back. Nice to be back on Fed Day, Scott. Yep. And it's good to have you. First and foremost, your reaction to what we just saw. Well, I think you just said the most important word, which was unlikely.

Unlikely the next policy move will be a hike. And he went quite out of his way to make it sound like they're not contemplating a hike at all based upon the data that's come out, even though he's being a little bit disingenuous by claiming that inflation is below 3%. Remember back at Jackson Hole in 2022, I think it was, we came up with super core inflation, super core CPI, super core PCE. And super core PCE, which is excluding food, energy and housing, is up 3.3 percent year over year. And what no one wants to talk about is super core CPI is up 4.8 percent year over year. In fact, the CPI for the first quarter here in 2024 at year end was projected to be 2.7 on an annualized basis. Instead, it's 3.5 year over year on the headline. So it almost feels to me like he's hoping that the inflation data comes down without a rate hike. And I guess he feels that the lack of progress, as he framed it, during the first quarter is going to be transitory. So we'll see. With oil

prices at $80 a barrel, I'm not really sure we're going to see the inflation numbers come down in a sustainable way below 3%, particularly not on the core numbers. So the markets, as you correctly pointed out, love this because there was fear of a lurch toward some suggestion of maybe contemplating a rate hike. And that absolutely did not happen. And so you just saw everything go vertical to the upside. Stocks went up a lot. Junk bonds went up a lot. I mean, we had corporate bonds and emerging market bonds down earlier in the day, and they're now significantly in the green. So this is an interesting thing because the big pivot that started everybody getting happier was November 1st. And interestingly, rates are up a little bit since then,

but not very much since then. So we've basically had rates go up and then come back down and go back up again. We've definitely been in a trading range for the fixed income markets and more recently sort of the equity markets as well. And this meeting and this press conference suggests to me that that's going to be sustained. It certainly sounded like a, I guess we could say, a not yet chair versus a not at all chair, at least when it comes to rate cuts. I want to note going in that Goldman is still sticking to its view of two cuts because they say the two pillars of disinflation are intact, those being lagging housing data and the fact that we don't have any more supply shocks. I'm curious as to what your take is now. When do we get the first cut and how many will we get this year? It seems unlikely that we're going to get three. That was in the Fed's dot plot back in March.

I actually, based on what we're seeing in the inflation market and commodity prices, which have been weak recently, but they're pretty much at their 200-day moving average. Oil is up. I kind of feel that the base case now is one rate hike for this year. Cut. You mean cut. Sorry, yeah, cut. Yeah, yeah. It's a Freudian slip. Got it backwards. But I don't think it's coming in June. I just don't see how that could possibly happen. There's not just not enough data. And he certainly respects the fact that I mean, lack of progress on inflation. That was not not unanticipated. He would say that because he can't disrespect the data. I mean, it is what it is. But I thought one interesting takeaway that I got was he mentioned that a couple tenths in the unemployment rate would not be a catalyst for easing. I had the feeling that he needs the unemployment rate to get up to four, maybe 4.2 even.

And so we'll see what happens there. The unemployment rate has been up a little bit, but clearly it's not to the point where the inflation fight is less important as the dual mandate, because the jobs part is behaving quite well and the inflation rate clearly is the one that is lacking progress, as you put it. So I'm going to lean on one rate cut this year. I certainly don't think three seems very likely at all. So that's where it is. I think that higher for longer seems like the mantra continues, but without a rate hike. So this is a pretty good environment. The type of strategy that we've been advocating and implementing seems like it's going to keep working. It's been working really well for the past six months. And that is that you can get

pretty good yields by investing in securities in the fixed income market that aren't that risky. I'm not talking about triple C junk bonds or even single B junk bonds. I'm talking about things like single A, triple B, maybe high double B that are priced off of the short end of the curve or say off the two year or the three year part of the curve where you can get yields that are in the mid sevens without a lot of risk. And that seems like it's going to be a very comfortable-sevens without a lot of risk. And that seems like it's going to be a very comfortable place to invest without a lot of volatility. And so you want to

take advantage of this inverted curve, which has been inverted for a very long time now. It's one of the longest inversions in the history of the bond market in modern times. And it looks like it's going to continue for a while. So that means that you can get decent returns without a lot of lost sleep by staying in some credit securities, but really pricing off the short end of the curve. So we've liked bank loans in the BB area. They continue to do well. We like consumer receivables, parts of the commercial real estate market, away from office. These types of things can all generate 7.5%, even 8%, depending on how much risk you're willing to take. And once again, commercial real estate market, away from office. These types of things can all generate seven and a half, even 8%, depending on how much risk you're willing to take. And once again, with some

uncertainty having developed, maybe it's going away now with this Fed meeting today. But for retail investors, closed end funds have gone back to trading at discounts broadly. And with some leverage involved there, there's double digit yields available without taking a ton of credit risk. So this seems like a pretty good environment for moderate risk assets. And it seems like we should probably not have a terribly volatile environment before the next Fed meeting, which I know you're coming out to double line for the next Fed meeting. It'll be fun to do it in person. Yeah, I'm looking forward to that. What about the shorter end of the curve, maybe the belly of the curve, even if you think that I mean, Powell's all but telling you without saying it that they think the next move's a cut. Right. I mean, they're pretty much

alluding to that. It's just a matter of when. So if you think that rates are going to go down later in the year, what about treasuries now? Well, I don't really like the long end of the treasury curve right now. We had been owning some long-term treasuries. They rallied a fair amount from October. And now we're more interested in, say, the 10-year than the 30-year treasury and liking the belly of the curve, as you say, pretty well. And assets that are priced off of the two-year and the three-year, you don't have to go into junky, junky credits. You can get the yield of the high-yield bond market to a no-default scenario basically in single-A securities that are priced off of the two and three-year part of the curve. So that's what we really like. We haven't had a lot of changes in our portfolios since last we spoke, Scott. We've shortened our duration a little bit because we thought rates

were a little bit too low and the 10-year got into the threes as we suspected was going to happen. But now that we're up at 4.6 and well, we lost the five handle on the two year after the Fed meeting. But those are those are pretty attractive, attractive returns for the risk that you're taking. And the volatility just hasn't really been there since November. The volatility in the bond market has pretty much dissipated. I mean, a couple of years ago, rates were 200 basis points lower than they are today, but they've certainly plateaued. I mean, we're basically, in many parts of the curve, very close to where we were, really been in the range for the past six, seven months. So it's a low risk environment and it's appropriate that we got a big equity rally

because everyone was scared that the Fed might mention a rate hike. And that absolutely did not happen. So I think we have to characterize the Fed might mention a rate hike. And that absolutely did not happen. So I think we have to characterize the Fed today versus expectations perhaps yesterday as being incrementally dovish. I'm going to come back to you in just a second, Jeffrey, because on that note, Steve Leisman's out of the room now, and I quickly want to go to him.

That really is the takeaway, Steve, right? An incrementally more dovish Fed chair than I think the market was clenched up in fear of. Yeah, I think there was probably some pricing, Scott, for a Fed that was maybe, you know, more likely to talk about rate hikes. And that's not the case. And I think it was critical when Powell answered my question and said, you know what? I still have confidence in inflation coming down. Let's listen to that. My expectation is that we will, over the course of this year, see inflation move back down. That's my forecast.

I think my confidence in that is lower than it was because of the data that we've seen. So the idea being that I think, as you said earlier, Scott, he said the next move being a hike is unlikely. It means rate cuts are still possible. I think it's worth talking about, Scott, when you asked Jeff about whether three cuts this year are likely. Well, we're in April now, right? So you know what? 30% of the year is gone. So that question is 30% less significant. I think what you want to be thinking about is over the course of a 12-month period, I don't think Jeff stops his books on January 1 or December 31st. And it's interesting to me to look down at a one year that's trading at 519. You know what? If we get on the trajectory on

the path that Powell says we're going to be on, that may be a rich bond right there right now in terms of how it's priced in terms of the yield being so high. So, and I'm looking down the curve at like a 480 in Fed Funds futures for next year. So anyway, it's time to start thinking about a longer period of time than just this year. Yeah, we probably lost one or two cuts this year, but over the cycle here, over the next period of time, it's still within investors' horizon. Certainly there are terms for it out in the bond market. It's something worth thinking about.

That said, let's listen to everything Powell is saying. You know, he's not, I think the word that was used by Jeff incrementally, that's the right word. There are still some pretty hawkish comments out there about the lack of progress. And our cuts are not for sure dialed in. Yeah, good points, as always, of course. Steve, thank you. That's Steve Leisman, our senior economics reporter. Jeffrey, I turn back to you. You know, the other moment I think that people are calling a moment was Powell addressing the S word stagflation, to which he said, I don't really understand where that's coming from. I don't see the stag or the flation. What's your take on that?

I agree with him. I really don't understand people talking about stagflation at this moment. I actually heard somebody on the radio earlier this week actually say that the economy is shrinking and inflation is going up, you know, in real time and in a measurable way. I mean, obviously the economy is not shrinking. 1.6 GDP isn't great, but it's certainly not shrinking. And we see that the GDP now for the second quarter, although it's very early, so it'll probably get revised substantially, but it's up in the high threes. So the economy is not shrinking. And the inflation rate, it might be at 3.5%, but that's not exactly Jimmy Carter inflation. That's not 2022 inflation.

Inflation is clearly less. Now, the thing that is I think Paul is on to correctly is I think everybody, myself included, thought that shelter inflation, rent inflation would come down faster than it did because the like the Zillow index and the apartment rent indices, they came down multiple, multiple percentage points. And they're down in the twos, threes, and fours, having been up in the eights and nines. But yet the owner's equivalent rent stays remarkably high. We got some home data yesterday, and it said that home prices were up, depending on what zip code and what district you're in, but something like 5% to 8%, which sounds surprisingly high high given the low volume of turnover and the interest rates. But maybe it's a mix shift. Maybe the data, maybe it's higher price homes are selling. That would actually make sense because it's the lower middle class and the middle class

that's really getting buried by this inflation. And these prices, while the inflation rate isn't that high, the absolute prices are still high. And we have weird things going on, like insurance prices are up massively, which are one of the reasons why the CPI is so much worse looking than the PCE, because we don't have in the core area these insurance prices and the sheltering prices in the PCE are substantially lower weighting. So where I am right now relative to the Fed is I'm going to be looking very, very closely, more closely, as closely as you can possibly look at monthly inflation data. And I'm going to be following the oil prices and I'll be following commodity prices broadly,

which had shown some strength, but are now easing off. And it's nice to see oil back below $80. going to be following the oil prices and I'll be following commodity prices broadly, which had shown some strength, but are now easing off. And it's nice to see oil back below $80. But if we see if we see three and four tenths inflation prints, it's going to be very difficult for Jay Powell to make the statement at the next meeting that he's going to get inflation down for two down by down to two percent. And yet there's no need for any rate hikes. It's going to get inflation down to 2%, and yet there's no need for any rate hikes. It's going to be difficult to call this inflation reversal or lack of progress transitory come the June meeting and certainly the one after that. So that's going to be the story, I think, for the second part of the spring into the summer of 2024. You know, if you listen to Powell's tone

and sort of you try to read into the demeanor and such, he definitely comes off exuding this confidence that he still thinks they can pull this off. And this being the soft landing, because he does expect that growth is gonna remain strong enough and inflation later in the year is going to get down closer to target. You've been looking for a recession,

albeit suggesting it was getting pushed out. Do you still hold to that call or are you changing that? I am on the fence as to whether we'll get a recession in 2024, largely because the unemployment rate has been so stable. I would be very concerned if the unemployment rate went up by another three or four tenths. I think that would lead to a recession sooner rather than later. But we haven't had that happen yet. In spite of the fact there's been all these layoff announcements, it is weird that the weekly unemployment claims never change. Here we have this economy that has its ebbs and flows, and yet we get the same on Thursday. We get the unemployment claims, and they come out almost exactly the same every week. My friend Jim Bianco wrote a piece on this saying this is almost statistically impossible. What is going on here? That it's always 212,000

unemployment claims every week. But, you know, those are the numbers. And unless there's something wrong and they're going to be adjusted very substantially, and there is some evidence for that. I mean, there is data that's a lot weaker. The household data is a lot weaker than the establishment data. There's this BED data that tends to lead the establishment survey. And that's looking strangely weak compared to what's been to lead the establishment survey. And that's looking strangely weak compared to what's been happening in the establishment survey. But for now, those layoffs don't seem to be, they seem to be offset by hiring. So we have a labor market that's in balance, even though it seems with the inverted curve and how long it's been inverted and these

higher interest rates, you would think the economy would have weakened. But we still have all of those distortions from the COVID response. There's still a huge M2 supply. It's still way above the trend that it would have been if we hadn't bulged up the M2 in 2020, 2021, 2022. We'd have had much lower M2 supply than we have right now, even though it's not really growing robustly anymore. So a lot of these things got way out of whack, and it's taking longer. And Powell acknowledged it himself, and I give him credit for that, that this normalization is taking longer than anybody expected, including myself and including Jay Powell. So I don't think, I think we need the unemployment rate to go up.

And it's and it hasn't really happened yet. So that's number two. Number one is the inflation data that needs to come down. And I don't I don't really have Jay's confidence that the that the inflation rate is going anywhere close to two percent by the end of 2024 on a year over year basis. I don't care what you look at, whether you look at, you know, core or super core or PCE. I don't see any of them going to 2% this year. I mean, on that note, do you take the Fed chair at his word that it's 2% or bust? Or do you think that they'd actually be willing,

even though they're not going to say it, to accept a higher target now rather than what the alternative might be. And that is to ruin a good story that they'd like to be able to tell. I think that he's doing a little sleight of hand with his inflation numbers, as I said earlier. He's making the claim that the inflation rate is in the 2 percent, 2.7. He cites the PCE. And many other inflation measures are in the threes or fours. And you'll remember the three-month annualized trick that was behind the rhetorical pivot back November 1st. I mean, no one wants to talk about three months annualized now, because it's not pretty at all. We had CPI had CPI come in eight tenths higher in the first

quarter on an annualized basis than what was what what was anticipated just three months ago. So I think that he's going to have to hike rates unless this transitory lack of progress reverses. And I don't have the same level of confidence that he has that that's going to happen. And even with all of that, I think one of the headlines, my takeaway, at least from my conversation with you, is that Jeffrey Gundlach is bullish on risk assets, at least in the near term. Moderate risk assets. I don't like really risky stuff because I think higher for longer is going to start taking some of the bodies out. But I do think that in the medium risk assets, I am positive for at least into the next meeting. Okay. Where would you put equities, for example, on your scale?

I think I'm sort of neutral on equities, but I have a very, I don't like index fund approaching, index fund approach at this time. I continue to like sort of Japan, Mexico, India as long-term holds. And I like, I don't like, I'm not a momentum guy. And I know that momentum has been a winner for the past 18 months at least, but I think it's not really leading the way anymore. And I just think valuations, while not excessive, I think they're on the rich side and they really kind of need this Fed story to play out. wait and see. We have the time on our side because the Fed has supported a lower volatility environment, I think, for the next several weeks at a minimum. Speaking of momentum things, gold, you talked about oil for a minute, right? We seem to be on this march towards 90. And then the dollar. How about your outlook for all three before I let you go? Well, I've been bullish on gold. I talked about it in our roundtable prime here at Double Line the first week of January.

I didn't think we'd go up so quickly. I mean, it went up to twenty four hundred in the blink of an eye. That's a pretty big run. But I would I would hang on to gold. I wouldn't be a seller. I would probably wait for more like $2,200 to be a buyer. But I think that's fine. I think the dollar is going to weaken, but it needs the recession to weaken. And in the near term, the dollar appears to be stable, very stable, versus most other developed currencies. So I don't have much of an opinion on the dollar. And then what was the other you wanted to? Oil. Oil seems very, very stable at about $80. I think that if oil went to $90, as you suggested it might, or certainly to $100, the Fed's going to have a really big

problem. So that's the biggest wild card out there in kind of the uncontrollable commodity markets. If oil puts on another 10, 15, 20 dollars, there's no chance you're going to get to a 2 percent inflation rate, as Jay Powell is hopeful for. Jeffrey, we'll leave it there. And the next time we meet, we'll be in person, as you say, at Double Line in Los Angeles after the next meeting. I look forward to that. Okay. Sounds great.

We'll have a good time. All right. Good luck, everybody. Thank you. We'll see you then. Jeffrey Gundlach. Let's bring in SoFi's head of investment strategy, Liz Young. Welcome.

Thank you. So the markets, let's say, halved the gains on the Dow. Remember, the S&P was good for a pretty good chunk of 1%. It's given a lot of that back, if not almost all of it. What do you think is going on and what do you make of what you heard today? Well, what I think happened before this meeting is the market had priced in Powell's comments from a couple of weeks ago. And he had very clearly stated what he reiterated today, which was we've seen a lack of progress. This is going to take longer than we previously

expected. But then what we heard today was it's going to take longer, but we're still going to get there. I'm confident that it's working. Restrictive policy is restrictive enough, and the effects of it are finally being seen. So the calmness that the market has right now, that yields have and that equities have, largely are due to the fact that I think we did start pricing in the possibility of a hike sooner rather than later. You're starting to get worried about that, right? Absolutely. Are those fears now gone? For the time being, I think the other thing that we haven't really talked about yet, he pointed out that he wanted to wait for an entire quarter of data before they really made a statement on inflation. So now, instead of thinking about this on a

monthly basis for what the Fed is going to do, I now, instead of thinking about this on a monthly basis for what the Fed is going to do, I think we have to think about it on a quarterly basis. They want to see trends in the data. So if they're going to get confident to cut or hike, they're going to need to see three months at a time of data to feel that way. Well, I think it was more exciting the fact that they've had, you know, you've had the three CPI prints that were hotter than expected, as he termed that basically a quarter's worth of data, which is which is why it was concerning. Now, they're also working against the clock and the calendar because the election, they're not going to be phased, he says, by necessarily the time frame of that. They're not going to be political. And he made the point yet again, as he has consistently done. But you, as I said to Jeffrey, you do have the feeling that this is just a not yet, not a not at all Fed chair in terms of cuts. I think today that's the case.

And I think today that's the right way to put it because they're just now getting what they wanted. They wanted to see slower growth. If you remember back to the things that he was saying all of last year, at some point we need below-trend growth in order to achieve our goal on inflation. So now we got our first quarter of below-trend growth, and I think that's a good thing. That's what they want to see. But he did point out that the underlying growth rate is still pretty strong. So if things continue at this pace, all he did today was reiterate, we have no reason to cut yet. And I do think that the bar is very, very high for them to hike. But I am with Gundlach that I'm not as confident as he is that it's going to, that

inflation is going to fall precipitously throughout the rest of the year. Is what you heard today, we'll take a quick break after I ask you this question, is what you heard today, does that make you more bullish on, let's just say, risk assets, equities and other things than you were going in because you were fearful that he was going to be more hawkish? It does for the near term. Yes. Because I think he he allowed us a little bit more time to wait in this pause and markets do well during a pause. OK, quick break. Liz Young is going to stay with me and we'll come back right after this. More reaction to today's Fed decision and Chair Powell's news conference. Plus, we do have Qualcomm and DoorDash. They're among the key names reporting at the top of the hour. Let's not

forget about Apple tomorrow, too. It's a very busy week. We go in the market zone next. Now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here with SoFi's Liz Young to break down these crucial moments of the trading day. Plus two earnings in overtime. Christina Partsinevelos on Qualcomm, George Bosa on DoorDash. Mike, I'll come to you because you're the one who had used that phrase, right? We were clenched up coming into this meeting.

Are we okay now? Yeah, well, certainly we unclenched and it showed you that people were positioned for something potentially more hawkish. The Fed's message, Powell's message could scarcely have changed less versus six weeks ago at the last meeting, given the data we've had in the interim. And so there was no explicit need to kind of put a hike out there as a likely possibility. But what you did see is a really quick unwind, right? You got two-year yields, get squeezed down from 502 to 493, and then bounce. 10 years, same exact thing.

So you have the unwind of the, what if we have a hike on the table trade? And then you kind of are where you were, which is we're data dependent. Therefore, we're going to have to go month to month, week to week in terms of the inflation numbers. Yields, if they are kind of steady here, I think you can you can make some room. And, you know, you do have the Russell kind of popping as a clear potential victim of any hawkish policy move. And now they're just getting a little bit of relaxation out of that.

So beyond that, I'm not sure we resolve much. Popping and holding, which is key also for the Russell, whereas let's say the S&P 500 was up 50. Well, it was up twice as much as it is right now. S&P 500 was up a full percent. Yeah. Now we're barely hanging on to what we have, you know. Yeah, but I mean, the Russell was almost up 2% a little while ago. So, you know, it's obviously just sort of been this, you know, sometimes it's the day after the Fed meeting where you finally clear the decks and say, OK, here's the real reaction. Yeah. OK, Liz, what do we do? What's the most attractive thing that we like right now in the investment space? You know what I find interesting? And Mike,

I'd be interested in your take on this, too, is that a sector like utilities is leading today. So we've got yields down, utes popping. Yields had also been up and utes were popping. So it's interesting the definition of maybe defensive and what investors are looking for. Well, are they looking for dividends? Are they looking for safety? And I think that is something that's a little bit of a conundrum and I can't quite square it yet in the market. Well, utilities have actually been in this bit of a rebound phase and kind of impervious to where yields were. And some people will almost see that as a leading indicator of maybe yields are topping here. I also just think it was so washed out. Massive negative flows a couple of months ago in utilities. And I thought it was really interesting at the time because all the kind of power generation industrials were ripping to new highs.

They could not buy enough of them. And the utilities that are going to have to supply the power were getting killed. So I think maybe it's more of a mean reversion trade. And maybe it is the market's way of saying yields have had their move for now. By the way, NASDAQ now red, S&P now red. Dow's still good for 130, but we have, you know, seven minutes or so before the show ends. So I guess you don't know. And let's just look ahead in the time that we have to Apple, Mike, tomorrow. It's going to be the last of the megas to drop a report. Now, the others have been pretty good. Most of them have been quite good in terms of what was reported. Guidance has been mixed. I think the good news for the market about Apple, and I make this case constantly, which is it's not really a bellwether in terms of what its business performance

says about other companies, certainly not more than we already know about challenges in China. It's really about expectations and positioning leading into the report. I don't think expectations are particularly high here. So I guess we'll have to see. I'm a little more focused on Microsoft, which is bouncing today, but has absolutely kind of had a backsliding move away from leadership. Meta doing quite well, as is Amazon. You're looking at 2% gains are respectively there. What do you think about Apple tomorrow and just the significance of getting these mega cap reports that were good, but then getting them out of the way. Yep. Well, I mean, as we know, the first quarter earnings was heavily dependent on the Meg 7,

up 78 percent, the Fab 5 up 78 percent. Yeah, that's where the earnings growth is coming from, right? All of it. That's where all of the earnings growth is coming from. So it was really important that those still stayed strong, and I think that's a good thing. What I think will be interesting to watch and what I think investors need to take heed of is that for a little while here when everybody got nervous, we put all the money back into the Mag7 because that's what had worked.

As we go forward and as policy stays as tight as it is and it doesn't seem like that's changing anytime soon, I think what you have to look for are companies that can internally finance their growth, not ones that have to go outside. So that's important from a quality perspective. But I also think it's important to look for companies that are giving you cash back. So I do think dividends are important here because you do want to have some of that steadier stream, whereas it's not the same reactions anymore where yields fall and you've got this huge risk-on behavior. It's risky-ish-on. It's not completely risk-on anymore.

Okay. We'll stay with that. We might borrow that. Give you credit for it. Thank you. Thank you. We'll trademark it. So, I mean, you can't put all your money in that anymore. It's no longer, okay, risk-off, risk-on. I think it's sort of middling through and you want to watch valuations. Okay. I say we have some earnings that are front and center in overtime today, one of which is Qualcomm. Christina Partsenevalos.

Yeah, well, global smartphone shipments were up at 8% year over year in the March quarter, and that's according to IDC. So you had many on the street talking about this smartphone recovery until competitor Skyworks posted their earnings just last night. So Skyworks makes mobile chips and warned of a weaker Android market. Specifically, Samsung also indicated some smartphone inventory digestion in the current June quarter as well.

So that's likely hitting some wireless suppliers like Qualcomm and Corvo. Skyworks also revealed that they lost market share in the upcoming iPhone 16, considering Apple's such a big customer. It's not good for Skyworks, but could be good for Qualcomm because Qualcomm is also a customer. So if Qualcomm stole that market share, that's going to be something that analysts will be looking for on the earnings call. Jordan Klein,

though, at Mizuho says this is a risk, though, of owning wireless semis and why they trade at massive discounts to the sector. It's highly competitive with high customer concentration. So, you know, if Apple drops Qualcomm or one of them, then you can see massive moves in the company. Lastly, Texas Instruments' NXPI warned auto is still weak, so investors will be looking for any Qualcomm commentary on inventory levels and demand. Appreciate that, Christina. Thank you. Dear Jabosa, DoorDash, tell us.

Hey, Scott. Yep, expected after the bell. Outperforming Uber year today, but underperforming Instacart on a 12-month basis. So pretty close to in line with Uber. It'll give us an indication of consumer health, something that is top of mind for market participants right now. How much people are ordering delivery, but also grocery as it grows that business. It's non-restaurant delivery business, which has a lot of street analysts a little more excited. The street is also expecting better margins and profitability in the back half of the year. So watch guidance. This quarter, however, expecting a slower pace of sales and

GOV, that's gross order volume growth, driver supply, regulatory environment, all was top of mind as well. The company does not break out DashPass subscriber numbers, but often does provide some color. So we'll be listening out for that subscription revenue that the street does tend to love. Back to you. All right, Dee Bosa, thank you for that. We'll see you in OT when those numbers hit. Micah, come back to you. You know, this day began, let's not forget, with Starbucks and this shocker in terms of comps and that whole conversation beginning. Okay, is this a critical sign, a canary, if you will, in the consumer coal mine? Then maybe we need to pay attention to a more slow consumer than we've expected. Now, DoorDash may give us some more read through, as Dee said, but we end with Chair Powell talking up the strength of the consumer, even in the face of sticky inflation.

Sure. And look, employment is what they're mainly looking at. They're looking at first quarter total personal consumption expenditures, which held up nicely. It's messy, I think, incrementally on the consumer side. It's not just Starbucks. You have had this buildup, especially in food away from home type plays, where they've said there's a lot more discernment, people trading down. I think it is almost a net positive because we're worried about sticky inflation. We're worried about an overheating economy. That's kind of gone by the wayside. So I think in the end, when the dust settles, in aggregate, earnings are probably going to be seen to be fine. They're beating by a huge margin. It seems like the market expects them

every quarter to beat by a huge margin. So the net market move on them is not that great. The question I think to me is, you know, are we going to have to really revise our expectations for the stamina of the consumer in the six months looking ahead? And I don't think we know that. Nothing the market's doing right now is anything much more at this point than a standard consolidation after five straight up months. It just doesn't mean it's over yet. Because I'm not sure we've kind of flushed out that sense that it could just be a really quick and painless 5% setback, and then we're off to the races. You want to opine as well, while I have you, on sort of one of the many moments from the Fed chair today on the stagflation question. I don't see the stag or the flation, said Chair Powell.

That's the only rational conclusion here, in terms that was a phrase created retroactively to describe a really unusual set of conditions, which was super high inflation and really no growth. And I think that makes sense. I mean, look, he's still got to remain open to a soft landing prospect. He's hoping to get lucky. They're all hoping to get lucky that it can actually take shape. And he's not going to foreclose on the possibility, certainly not by raising alarms that the economy somehow is going to start failing on both of their mandate items. We've only had about 45-ish minutes to react to the end of the FedChairs news conference. He's got to make a bit of a use for it. Dow's going to go green, but not the S&P, which is going to be off about 15, 16 when we settle. NASDAQ red.

Russell's still hanging in there by a third of a percent. I'll see you tomorrow. I'll send you to know the truth.