Closing Bell - Closing Bell Overtime: Emerging Markets Investors’ ABC’s: Anything But China; Tradeweb Markets CEO On Deal Spree 4/8/24

Episode Date: April 8, 2024

Ruchir Sharma on his best ideas for emerging markets. He says investors are following their ABC’s: Anything But China. Neuberger Berman’s Joe Amato on the investment giant’s outlook and what the Fed will do next. Plus, Tradeweb Markets CEO Billy Hult on his recent spree of acquisitions.  

Well, interest rates keep rising, taking a late day toll on stocks. It was a choppy session. It looks like the Dow finishing just about flat. The S&P, a similar move, and the Nasdaq as well. That's the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off. It was a volatile session for the major averages. We closed well off the highs as investors do keep an eye, close eye, on the 10-year treasury yield, which hits the highest level of the year. Coming up, the CEO of fixed income trading platform TradeWeb on whether he thinks rates will keep rising. Plus, Neuberger Berman, President Joe Amato on where stocks are heading now and the biggest opportunities

for investors right now. Let's break down today's market action, though, with our market panel. Joining us now is Keith Lerner from Chewist and Nicole Inouye from HSBC. It's great to have you both here. This was literally a middling day for stocks. I mean, we were higher, we were lower, and we basically have finished the session flat here. Keith, is this the calm before the storm when we have inflation data, Fed minutes, and then earnings kicking off with the banks later this week? Well, first, yeah, Morgan, great to be with you on this eclipse day. You know, I think a lot of people maybe were watching the eclipse and they want to focus on the market. It's kind of boring, but I would say boring is good. I think you're right. There's a lot of catalysts coming up.

But if we also think about where this market's come, right, we've had five straight months that we've been up. The first quarter was up over 10 percent. So to me, just digesting and being born is actually a good thing. And most of these studies that we look at when we see this really strong momentum that we've seen over the last five months, when you look at six, 12 months later, the market tends to be up with a high probability. It's not unusual to digest those gains on a short-term basis. That's what I think we're doing. I think the underlying trends are still positive. I think bull market rules apply. I mean, you stick with the underlying trend and you look at pullbacks as opportunities, and we're likely to see an increase in volatility as the week progresses, as you mentioned. Okay. Nicole, how do you see

this market, especially at a time where strategists have really been playing catch up with their S&P targets, given the strong starts of the year we had with Q1, despite the pullback we've seen in recent sessions? Well, I agree. I think the underlying trends are still very positive for the S&P and for equities in the U.S. You know, we're coming up to this first quarter earnings season. Expectations are very low. If you look at consensus, they're only expecting 4 percent EPS growth for the first quarter. So that's actually a deceleration from what we saw in the fourth quarter. And that really doesn't, you know, combine with what we're seeing on the macro outlook. You know, U.S. GDP continues to be very resilient. Labor markets are very strong.

And I think we're having this perfect scenario where we're having strong labor markets. And actually, you're not seeing that stoking in inflation pressures. Obviously, this inflation print on Wednesday will be a key focus. But we've always had the view that it's not important when the Fed cuts, but if the Fed cuts. So if we get an inflation print that's slightly higher and that pushes out rate expectations, it's not June, it's July, a little bit later, we think that's still OK for equities. But we'd be concerned on if we get a resurgence in inflation. And then the question comes down to not when, but if the Fed will cut. And we think

we're still pretty far from that right now. OK, so just to dig a little deeper into that, Nicole, it sounds like cuts are still part of your base case here for the markets in 2024, but it's going to you're data dependent. I mean, we're data dependent. The Fed's data dependent. Everybody's data dependent. You know, we still have three Fed cuts expected for 2024 and another three in 2025. Again, this will depend on where we see these inflation prints. I think the Fed has said that they expect the road for inflation to go down will be bumpy. So I think, you know, if we get a little few more bumps on the road, it's OK. It pushes out rate cuts, but it doesn't completely take out rate cuts. And I think that is is the big difference for the equity markets. And that's why we continue to stay positive,

even with the strong performance we've seen here today. OK, Keith, what do you think matters more, what the Fed does in terms of cuts and what's priced into the market here or multiple or at a time where we've seen multiple expansion earnings actually catching up to what investors have been doing with stocks? Yeah, well, our model most of this year has been we would prefer a stronger economy with less Fed cuts than more Fed cuts because the economy is weakening. Now, at this point, the market is pricing a little bit less than three rate cuts. We've been saying since last year, we thought it was three. When the market was at six cuts, we thought it was three. Maybe it's two or three. We still think it's more likely to happen. But I think the more important thing is if the economy

stays strong. Because what you've seen is the GDP estimates, if you think about coming into this year, was around 1%. Now they're closer to 2%. And that's translating into forward earning estimates for this market that are at an all-time high. So I think the one thing, though, just to be kind, is that valuations are rich. It's hard to say what level matters from an equity valuation level. But, you know, if the 10-year does start moving at a more volatile pace and moving up, I do think that will create some headwinds, at least shorter term for the market. So even above 450, I mean, we still think more likely the peak of 5% is a good high for this cycle. But if you start moving up there, I think there will be this tension between those better earnings, which is actually helped by inflation versus the valuation cap,

which will lead to some digestion. But overall, I think a solid economy is a good thing, not a bad thing. Okay. Keith Lerner and Nicole Inouye, thank you for joining me. Thank you. Well, the S&P basically finishing at 5202, so just above that level and down fractionally. JPMorgan Chase chairman and CEO Jamie Dimon, though, releasing his annual letter to shareholders today, issuing a warning on the economy. He's definitely seemed to, Leslie Picker, have gotten a little more cautious in terms of his commentary as of late. Break it down. I don't know. I think he may be a little bit more positive on the economy because in the 61-page letter to shareholders published today, Diamond calls the economy resilient. But here is the difference. He notes that it's being fueled by large amounts of government deficit

spending and past stimulus. He reiterated his view that this may lead to stickier inflation and higher rates than the market expects. Now, that was something that he had laid out during the company's earnings back in January. But he adds that small changes in interest rates today may have less impact on inflation in the future than many people believe, noting that the firm is prepared for a broad range of interest rates from 2% to 8% and economic outcomes. He said if, quote, long-end rates go up over 6% and that increase is accompanied by a recession, there will be plenty of stress, not just in the banking system, but with leveraged companies and others. Diamond says AI is what may

be the foremost important issue facing the firm. He says, quote, we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years. He said J.P. Morgan has 2,000 AI experts and data scientists, and the firm created a new position called Chief Data and Analytics Officer that sits on the operating committee. He said the firm has more than 400 use cases in production spanning areas like marketing and fraud and risk. And he adds that AI comes with many risks, which need to be rigorously managed, Morgan. So kind of an interesting 61-page document spanning

the gamut there. A lot of speed reading by you today, Leslie Picker. I guess the part that got my attention, and I realize he said this a couple weeks ago as well. But the idea that the markets are pricing a 70 to 80 percent chance of a soft landing, and he believes the odds are a lot lower than that. I mean, when you're talking about something like a two to eight percent range in yields on the 10 year, how do you prepare for that as a bank? That's a that's a huge spread right there. Yeah. And that's kind of the key point there, Morgan, that you bring up is the fact that as the CEO of the largest bank by market cap in the world, it is kind of your job to be thinking about the worst case scenarios. So they have to be prepared for anywhere from 2%

to 8% because they have to manage their balance sheet appropriately, given kind of the uncertainty that is out there. And, you know, he did say that the market's pricing in a 70 to 80 percent chance of a soft landing. When I sat down with him in Miami back in February, he said that he thinks the odds are actually half of that. So say 35 to 40 percent chance of a soft landing. But part of that is like his vantage point where he's sitting, who he's talking to, all of the risk factors that he sees out there, whether it's related to quantitative tightening, whether it's related to fiscal spending, whether it's related to just the overall stickiness and inflation and geopolitics,

all of that is his job as kind of the caretaker of this bank to make sure that he is focused on the worst case scenario and then hoping for the best. But he does note the resilience in the economy, the resilience in the consumer. So, you know, he just has to be kind of prepared in case something goes south. All right. Leslie Picker, thanks. And we'll be watching bank earnings come Friday, including from J.P. Morgan, where I would suspect maybe we get some more of this type of commentary. We'll have to see. It's time now to bring in Senior Markets Commentator Mike Santoli for his dashboard.

Hi, Mike. Hey, Morgan. Well, keeping economic expectations in check, that's kind of what economic forecasters have been doing. And as a result, or at least partly as a result, the economic data have been continuing to outpace expectations. So this is both the global and domestic city U.S. economic or city economic surprise indexes. And the blue line here is the global number, which is actually pretty impressive. There's different scales. So it's much more about just relative to where we've been. And it's the best number in about a year, best pace of economic performance relative to forecast, that is. And now the U.S. is still holding up pretty well as well. It's just that we already had, I think, a little bit of an upgrade in our forecast. And so, therefore, it doesn't look as dramatic.

So it raises a lot of questions about what sort of landing, if it's going to be a landing, how we're defining a landing, over what time period, and, of course, what it means for central banks. What's interesting is how it's manifesting in currency markets. Look at the U.S. dollar index over a two-year. It seems like it's made another one of these little downturns. We'll see if it happens. But just under the 105 level, that is sort of represented, you know, what a very, very strong dollar has meant over the last couple of years. This is the aftermath of the Russia-Ukraine invasion and a lot of the commodity meltdown and some risk aversion. So far, it's staying, I guess, within the range that's been relatively comfortable for the other markets here, even as the Japanese yen continues to be very weak relative to the dollar, to the point where a lot of folks are expecting the Bank of Japan potentially to start to intervene to support it at some point, Morgan. Yeah, there's been a lot. I mean, you've

seen a lot of the reports and write-ups about traders' bets on the yen right now, given what's going on with the central bank in that country. Just in terms of the dollar, though, if you were to see a scenario where the Fed maybe doesn't cut or doesn't cut as much as the markets are pricing in right now, and you do see some of these other banks, like the ECB, like others, begin to actually ease in that sense, does it change the dynamic on this?

Is this a level that you're going to have to watch again for a possible breakout? Yeah, I do think, in fact, part of that might even have been in the market in terms of its recent rebound, this idea that the ECB seems ready to go in terms of rate cuts, whether the Fed leads there or not. So I do think that's going to be sensitive to, you know, relative central bank posturing without a doubt. Now, that being said, if you then make the leap and say, hey, if the Fed stays too tight for too long, does that mean U.S. economic growth on a relative basis starts to suffer as well? So you have to kind of think a few kind of links down the chain sometimes. But I agree with the premise, though, is that if the Fed is going to be higher for longer,

there's probably an upward bias to the dollar. OK, we'll have to see how much the dollar comes up to in earnings this season. Mike, we'll see a little bit later this hour. Up next, Treasury Secretary Janet Yellen not rolling out new tariffs on China. Rockefeller International Chairman Rashir Sharma will join us to discuss how that could impact the economy and your investments. And later, we will discuss the outlook for spiking treasury yields with the CEO of fixed income trading platform TradeWeb. Overtime is back in two. Welcome back to Overtime. We have a news alert out of the energy sector. Kate Rooney has the details. Hi, Kate. Hi there, Morgan. So Bloom Energy will get a $75 million federal tax credit.

This is for its Fremont, California, manufacturing plant. Bloom manufactures fuel cell electricity. This is going to expand that manufacturing capacity and advance operational efficiency over at that facility in Fremont. This is according to a press release here. These tax credits, Morgan, are from the Department of Energy, Department of Treasury and IRS. They say the funding is part of the $4 billion in tax credits recently announced by the White House. This is under the qualifying Advanced Energy Project tax credit. But Bloom Energy shares higher on the back of this news.

Morgan, back over to you. All right. Thank you. Certainly speaks to all the money that is coming out of this administration as well in this election year tied to all of these different stimulus and manufacturing and energy initiatives. So speaking of that, shares of Taiwan Semi getting a pop today after being awarded more than $6 billion in chip sack funding from the White House. Megan Casella joins us with all the details. Hi, Megan. Hey, Morgan. So this is a roughly $11.6 billion package overall. There's going to be up to $5 billion in loans on top of the grant money that you mentioned.

Now, in exchange, TSMC is expected to invest more than $65 billion, building three fabs in Arizona. They're going to be focused on manufacturing the most highly advanced two nanometer chips, the ones that are used to power and train AI systems. AI is a game changer. The demand for chips, not just from TSNC, from Intel, from Samsung, is going to go through the roof. And now more than ever, we need this produced in the United States. Now, with TSMC's award, commerce has doled out nearly half of the money it had to give out. And like the recent money that went to Intel, this grant's focus is on leading edge chips. It's designed to position the U.S. to be more competitive with China and other countries.

But commerce officials have said they want to help upstream suppliers as well. So with just over $22 billion left in grant money set to go out, we're expecting some of those announcements in the coming weeks. Morgan? Okay. It's also worth noting that when we see these, when we see these announcements made, that there's a certain amount of federal funding that's available to these companies above and beyond the deals themselves.

I just wonder how quickly you can see some of this more advanced manufacturing actually materialize here on U.S. soil when we know time is of the essence. And certainly that's the way the Commerce Department and Secretary Raimondo has been thinking of it. Look no further than the earthquake in Taiwan recently to know how important supply chains are in this current environment. Absolutely. That's a top goal is to boost supply chain resiliency. And they really do want to move as quickly as they can. They've said that TSMC's first fab in Arizona is set to come online in the first half of next year. But for those two nanometer chips, it's a few more years down

the line in the second fab. And then the third fab that will be dedicated to that, they say, should come online by the end of the decade. I do want to note, though, that there's worthy questions about whether they can meet that goal. There's a lot of questions about whether they'll have the labor that they need. TSMC and Intel and others have had to announce delays in the past because they haven't had the trained workforce that they needed. So there's some money built in here to try to combat that, but it does mean that maybe we'll see some slowdowns. We'll have to watch. Labor's such a key part of this. Megan Casella, thanks. Turning to China, our Sarah Eisen sat down with Treasury Secretary Janet Yellen just earlier today in Beijing. They discussed

China's techniques to subsidize their green technology industries like EVs, lithium ion batteries and solar panels and concerns about flooding the market with cheap exports. And she asked Secretary Yellen if China doesn't shift its policies, is there potential for tariffs or more tariffs? Here's what Secretary Yellen said. SECRETARY YELLEN, U.S. We need to keep everything on the table. We want to work with the Chinese to see if we can find a solution. We are engaging in a four-year review of Section 301 tariffs. That's not complete,

so I can't really speak to what will come of it. I wouldn't rule anything out, but I think we need to deal with this issue. Well, joining us now, Rockefeller International Chairman Rashir Sharma. Rashir, it's great to have you back on the show. And I want to start right there with you because this has been part of the Chinese playbook for many years now to build up industries and then flood the market, the global market with those exports, particularly when they've reached capacity, if you will, within their own domestic market. Whether it's EVs, whether it's some of these other types of green technologies that the White House is currently very focused on, as well as, I might add, Europe when it comes to EVs. How does this play out? How does this speak to this new geopolitical environment we find ourselves operating in? Well, it's clearly unsustainable. Firstly, this traditional model of exporting your way to prosperity is something that works

for smaller nations or nations at the early stages of their economic development. It's not something that's going to work for China. Undoubtedly, this year, last few months, exports have been a very important prop for the Chinese economy because the domestic investment and even the consumption side of the economy has been very weak. But I think that's reaching its limits now. You're seeing the reaction. And as you pointed out, this is not just the United States. Even places like Europe that tend to be less hawkish on China are also reacting to this. So the strategy of exporting away to prosperity is not going to work for China.

It's hitting its natural limits. And I think there'll be a back to as to what's going to happen on the domestic Chinese economy. And even Janet Yellen being there, the markets haven't really paid much attention to it, if you notice. And that's because they realize that this is going to be a constant threat now, the imposition of tariffs or pushing back against China. And Janet Yellen is supposed to be one of the less hawkish persons as far as the White House and the U.S. administration is currently concerned. Investors do seem to be focused on some of the other markets that are beginning to reap the benefits of supply chain diversification and companies thinking about about setting up manufacturing hubs above and beyond China as well. India being a key example. I know that's a market and a country you're focused on as we do come into an election there. Yeah, I think that, you know, there are so many countries out there which are, in fact, benefiting from this ABC policy of anything but

China. India is one of them, obviously. You have Vietnam, Indonesia. Mexico has been the big conduit both for China and for other companies right across our border. So, I think that's really been the play. As far as China is concerned, it's too large an economy to ignore. So, we can't completely shut it out of the investment case. It's still got the second largest economy in the world and the second largest combined market cap if you include China and Hong Kong together. So can't ignore that. But really, the world has moved on. The emerging markets have moved on. Everyone's looking for investment opportunities outside. And they're finding that there are plenty of those. The pace

of outsourcing, reshoring, all that continues. And the impact of China slowly deflating its way has been much less severe than what people would have expected. Three or four years ago, had you told anyone that, listen, the Chinese economy is going to be in such trouble, what do you expect the impact to be on other markets? You have expected a much more negative reaction. In fact, we have had a fair amount of resilience across emerging markets. And even the commodity markets have been pretty well bid given the supply issues there in the face of all the weakness we've seen in China. So does that mean, and we've had folks that have come on the air and made this case, that emerging markets look compelling as an investment right now,

but you have to think about them ex-China? Well, I think that we still have to think of emerging markets in terms of geographically which countries you want to be in. And I'm not in big favor of these EMX China strategies either, because if China, you know, like I said, it's too big a market to ignore. And that's really giving up the responsibility back to the investment plan, whoever, and abdicating that responsibility, I think it should be very much an active fund manager's duty to figure out what to do with China in an emerging market construct and to figure out that, listen, are there opportunities in China? And there will be opportunities in China. So I think that these strategies which have become fashionable are unlikely to last too long. One is EMX China. The second is, you know, like, or people talking about India becoming an independent

asset class. And I've just been around this block too much, maybe seen emerging markets for the last three decades, to know that to have very firm views on one country, positive or negative, never really works. These are ways they come and go, these ebbs and flows, and every five to 10 years, this changes. Five years ago, in every company meeting in the US, the only question people would want to ask is, what's your China strategy? Now that's gone. And now they're trying to prop India up in a similar way. I'm a big fan of India, and we've always invested in India, but I would advise against concentrating any strategy too heavily in favor of one country. And there are a smattering of countries out there

which I think offer opportunities, some of which I mentioned. And I think it's even beyond the mainstream emerging markets. Some of the frontier markets like Argentina, Kenya, Nigeria, these countries are also turning around just because they have no choice. They've been carrying out significant economic reforms over the last few months. OK, Roshir Sharma, the fact that you've been around the block a couple of times is exactly why we love having you on to share your insights and your wisdom. Thanks for joining me. Thanks, Morgan. Up next, Neuberger-Berman President Joe Amato on the biggest opportunities in this market and why he supported Nelson Peltz in his boardroom battle against Disney. And finally, some good news for Tesla.

The stock a big winner today, one of the best performers in the S&P after Elon Musk said late Friday the EV maker will unveil its robotaxi in August. Despite today's gains, Tesla shares are still down roughly 30% this year. Stay with us. Welcome back. The major averages closing well below their session highs as investors await the latest CPI and PPI data for further clarity on the Fed's fight against inflation and what it could mean for the future of rate cuts. Joining me now to discuss where he's finding opportunity in this current market environment is Joseph Amato, Neuberger Berman's president and chief investment officer. Joe, it's great to have you back on the show. I'm going to start right there with you because we saw the 10-year Treasury yield move higher today. And even as that has been happening

here, we've had this run up in the last couple of weeks. Stocks have been hanging in there. They've been very resilient. Is this a dynamic that can continue? I think it can, because I think rates are moving up for what one might say are the right reasons. Your rates have moved up because the economy has proven to be a bit stronger. And so the question is whether you're going to move into a period of higher nominal growth. Growth at the beginning of the quarter, the consensus was probably for 1% growth in the U.S. economy. And by now, you're probably going to be at 2% to 2.5% for the first quarter. So that, combined with where inflation is, gives you a pretty decent nominal growth environment, which, again, should push rates

higher for, again, what we think are the right reasons. Okay. How real, though, is the risk that you see inflation push higher or even just stay really sticky at these current levels if the economy continues to stay as strong as it is? We think it's a fair risk in the sense that, you know, a lot of the forces driving the economy are going to keep wage rates up higher, which is one of the key components of why inflation's been a bit higher. So, you know, our sense is by the fourth quarter of this year, you're going to be in the two and a half percent range. So we think the direction of travel is still pretty clear with respect to inflation, but it's probably going to be coming down a bit slower than one would have expected. And that's one of the reasons why that the market is now assuming that maybe you get two rate cuts this

year, not three, which is actually where the Fed is in its own estimates. OK, so I'm looking at my notes here. It says you're neutral overall on equities, but overweight on U.S. small and medium sized companies. Why and how does that speak to the broadening out of the rally that we have seen here? Well, I think the I think the rally is going to broaden out even further. I mean, if the economy is, in fact, moving up for a higher level of growth, small caps should do well. Small caps have generally underperformed large caps over the course of the last number of years.

The relative valuations are as wide as we've seen in a long, long time. And a stronger U.S. economy will drive higher levels of growth for small caps. And we're very excited about that. Generally, we're overweight U.S. And the other place that we're excited about is in Japan, where I think there's a lot of good things going on from a corporate governance standpoint. So those are two areas that we took. We were overweight. OK, I do want to shift gears here because we've seen this very active proxy season playing out. There's been a lot of activist investor pressure across a number of names.

Disney, definitely the most high profile profile last week. Neuberger, Berman supported Tryon and Nelson Peltz in that proxy fight. Also, and I realize it's just a small position in Norfolk Southern, but saying on Friday it would support Ancora in that activist investors fight against the CEO and the board there. Break it down for me. Why? Well, we take our role as an owner very, very seriously. So we get deeply engaged with companies and where we think it's important for either progress to be made, whether it relates to a succession plan in the context of the Disney situation or other corporate issues. And that's, I think, one of the roles that is critical for active managers to play. One of the

dynamics you've seen in U.S. corporate governance is with passive ownership in companies approaching 30, 40 percent in some cases, the dynamics with your shareholder base changes quite dramatically, right? Which is an interesting contrast. If you see, I referenced Japan earlier, like Japan's moving in a more constructive direction from a corporate governance standpoint, right? They're taking their shareholders more seriously. They're pushing for higher returns on equity, whereas in the U.S., you're almost going in the opposite direction because of the passive ownership. And so, you know, we feel strongly about something. We're going to step up and be counted. And in the case of Disney, we felt that the succession plan had not been executed particularly well last time.

And with essentially the same board, we felt a set of independent eyes and ears would be helpful for that process. In this case, we're wrong as it relates to the vote. But, you know, we certainly hope the board gets it right this time. OK, Joe Amato, thanks for joining me. Thanks, Morgan. Well, it's time now for CNBC News Update with Bertha Coombs. Hi, Bertha. Hey, Morgan. The U.N. Security Council has referred the Palestinian Authority's application to become a full member to the admissions committee, hoping that a decision will be made at an April 18th meeting on the Middle

East. The Palestinian Authority is now a non-member observer state. It first applied for admission back in 2011. An appeals court today granted Disney's request to pause, at least for two months, its federal lawsuit against Florida Governor Ron DeSantis and his appointees to the Disney World Governing District. That delay in the federal trial expected after the two sides reached a settlement last month on separate litigation in state court. And Ferrari opened a new lab today that will research battery cells as it prepares to build its first full electric supercar. It is being run in partnership with scientists from the University of Bologna and will research safety and fast charging for lithium

batteries. And it comes after Ferrari announced a partnership last month to develop batteries for its eventual supercar. I just wonder, Morgan, though, is it going to have that roar of the engine? I just had the same thought. I just had the same thought. Really curious to see how that plays out. Yeah. All right, Bertha Coombs, thank you. Up next, Mike Santoli takes a closer look at the momentum trade

and whether there are any signs that that momentum may be slowing down. Stay with us. Welcome back to Overtime. Mike Santoli returns with a closer look at the momentum trade. Mike. Yeah, Morgan, and specifically how some manifestations of this trade seem to match up over certain time periods. Take a look at NVIDIA versus Bitcoin. This is one I've highlighted before. It doesn't quite hold up over every span of time. If you go back two or three years, it doesn't look the same. But here you had an acceleration higher to a very similar magnitude of gain. This goes back to the middle of last year, and it happened pretty much in tandem. And you see now Bitcoin outperforming Nvidia as Nvidia has kind of flattened out

and had this little pullback. I'm not saying we have to have convergence, but they do seem to feed off of a similar source of investor energy, people willing to kind of think multiple years in the future and just kind of keep paying up even as the stock rises or the asset rises in this case. Now, another version of this, maybe the more risky leverage take on either each of these phenomena is super micro and micro strategy. And they again have bigger moves. Same thing back to June 30th of last year. And they seem to surge around the same time. This is early this year when a lot of these types of assets risk appetite seem to go up. And this has been a trade. By the way, I see sometimes

on social media, on X, people have both these tickers in the same tweet. So they're being played by a similar group. And you see here just a little bit of a breakdown, but certainly not eating into much of these recent gains with this pullback. I love these comparisons. I love these micro comparisons. I am curious, though, are these also whether we're talking about Bitcoin, whether we're talking about some of the companies specifically like MicroStrategy or Supermicro and NVIDIA? Are we talking about areas of the market where it's very heavy retail investing and retail trading? Or is it just, to your point, indicative of a chase after the momentum trade more broadly? Yeah, what I would say is it's absolutely areas of the market that have full retail participation. But I think that's different from saying that they are purely retail instruments.

I mean, NVIDIA, it's, you know, it's like the number, what is it, number three or four market cap in the market at this point. It's clearly owned by many, many massive institutions. In fact, one of the most important hedge fund holdings. But in terms of the marginal buyer, in terms of the kind of aggression that you see every day in the options market related to these things, yeah, there's no doubt about it. They're some of the favorite ways that retail investors are playing the higher energy parts of the market, I'll say. Yeah. And of course, it's been one of the bold thesis for Bitcoin, too, is that you're going to start to see more of the institutional money flow into there, even if it's just a little bit, could make a big difference. We'll see. Mike Santoli, thank you. Fixed income trading platform TradeWeb, making its biggest ever deal to expand beyond its core business. Up next, the company's CEO breaks down the acquisition and the outlook for fixed income. Welcome back to Overtime. TradeWeb Markets announcing a $785 million deal for

institutional cash distributors. ICD is a tech platform for companies to manage short-term investments, especially money market funds. Joining us now is TradeWebMarket's CEO, Billy Holt. And we should note CNBC sources its Treasury data from TradeWeb. Billy, it's great to have you on the show. You've been very acquisitive since you started as the CEO at the beginning of last year. This is your third deal to date. Rates businesses about half of your revenue, but you've been really moving towards diversifying

into other asset classes. How does this acquisition continue that trend? Yeah, that's a great question. Nice to see you, Morgan. Hope you're doing great. Five years ago, we had our IPOs ringing the bell last week. You guys had me on TV. My family was very happy about that, by the way, so thank you. We've doubled our revenue in the last five years 50 of that growth coming from non-rates platforms so you're right this has been a real sort of transformation of the company from a rates trading platform into a real global marketplace the thesis behind it very very simple the markets are more connected than ever multi-asset class trading is going to be continually shaped through technology and customers want a one-stop shop to do business so we continue to place bets you know on

that thesis the acquisition we announced today is a straightforward one for us we love access into the into the corporate treasurer marketplace we're continuing to look for new channels of clients this has has been, I think from our perspective, historically underserved client base in terms of access to securities. And we love the ability to cross sell with this great company. So feeling really good.

I think it's good to do deals when the organic business is doing as well as it is. I feel like there's a lot of momentum behind what we're doing. So working hard and trying to keep a good humor about things. Yeah. And certainly asset managers, hedge funds, et cetera. This has been an area where you where you've done a lot of business over the years. But this really brings you further into corporates as well. When I think of trade web, I think of electronic trading. I think of automation in the context of fixed income and rates. How has that, I guess, digitization or that technological shift for TradeWeb

expanded the market and expanded your ability to reach some of these new end users and end markets and potential revenue sources? Well, the client base is getting more and more sophisticated, not surprisingly. I think COVID and everything that happened through the pandemic, sources well the client piece is getting more and more sophisticated not surprisingly i think i think covid and everything that happened through the pandemic i think made a very strong point around if you were under resourced around you know the the forward march of technology paid the price so my instinct is the marketplace in general has gotten so much more sophisticated around technology and for sure the biggest macro hedge funds, the largest asset managers,

our biggest clients have gotten way more sophisticated around the search for liquidity in the marketplace. My instinct is global debt markets continue to grow. That's a good thing for a company like TradeWeb. Private sector intermediation in the marketplace is back. The central banks are playing a lesser role in the marketplace. And these are good times for fixed income and for sure to be a fixed income trading platform where there's still so much more room around the further electronification of these markets. It's an interesting moment. So what is your outlook for rates? And given the fact that we have seen investors being able to earn so much more back on their money in the last couple of years amid this Fed tightening cycle, when the Fed does begin to cut rates, you do begin to see those yields come down.

Is that going to affect those volumes? Yeah, it's interesting. I was watching your coverage a little bit ago. I think you were mentioning, I know Jamie Dimon came out with his letter this morning. I think he had the 2% to 8% bid ask on the tenure note. Bond traders can make a lot of money with that kind of bid ask, but I think it goes to show there's a wide range of opinions on where this is going. My instinct is obviously, I think somewhere between two to three cuts this year. I think the markets in general are functioning really well. We're seeing a real natural cadence of volatility in our core businesses, government bonds, mortgages,

interest rate swaps. So I think the volume outlook for fixed income, particularly on the institutional side, is going to continue to be quite strong. Okay. Billy Holt, CEO of TradeWeb. Great to have you on. Thanks for having me. Appreciate it. Up next, another big deal to tell you about. Blackstone, the world's largest commercial real estate owner, making a huge bet on the apartment rental industry. We've got those details when Overtime returns. Here's a shot from earlier of Holton, Maine. This is the last spot experiencing the eclipse in the U.S.

Holton is on the border of Canada. Tens of millions of Americans witnessing this historic event today, which won't happen again in the continental U.S. for another 20 years. 15 states experiencing totality throughout the afternoon. And it's not just a big day for science and astral enthusiasts either. It's also a significant event for the economy. According to the Perryman Group, the eclipse could generate up to $6 billion in direct tourist spending and other knock-on consumption. Lodging is expected to see the greatest benefit. As of Thursday, for example, 90% of Airbnbs in the path of totality in the U.S. were booked. With searches for Airbnb listings in that path in North America from April 5th to April 8th,

up 1,000% compared to the same weekend in 2023, according to that company. Airlines also disclosing a jump in flight bookings along the Eclipse Path 2. And while we didn't get full totality here in the U.S., we did get to view it as well at CNBC HQ. I have my glasses to prove it. Well, check out check out shares of apartment income REIT. Meantime, those are up more than 20 percent today after Blackstone said it would take the company private for about $10 billion or $39.12 per share in an all-cash transaction. Now, I spoke with Blackstone's global co-head of real estate, Kathleen McCarthy, just last week about the current market. And I asked her if this was a good environment for dealmaking. With all that dry powder, this is the kind of environment when we do some of our best work.

And that's because we can combine this capital with the expertise and experience of our team. So if you just look at even the last couple of months, we've announced some really signature Blackstone transactions. We started the year announcing our 51st take private of a company called Tricon Residential, which focuses on high quality residential development and management in Canada and the U.S. So this is Blackstone's largest ever purchase in the multifamily market. It could signal a sign that the world's largest real estate investors do see a bottoming in real estate value values. That is something Blackstone's McCarthy did suggest in that interview with me last week, where she also noted at the time that Blackstone had $65 billion in dry powder to make acquisitions. So shares of this apartment REIT surging on this news today.

Up next, we will discuss whether investors should expect more hawkish talk from Minneapolis Fed President Neal Kashkari tonight during a highly anticipated speech in a week full of inflation data. Welcome back. Wall Street will be paying close attention to a speech by Minneapolis Fed President Neil Kashkari tonight after he made some very hawkish comments last week. Steve Leisman joins me now with what to expect. Yeah, Morgan, the Fed president who went just a little bit further, said just a little bit more than the rest when it came to a hawkish speech, speaks this evening. And Wall Street listens to see if he

walks it back, clarifies or maybe double down. In March, I had jotted down two rate cuts this year. Inflation continues to fall back towards our 2 percent target. But if we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all. There is a lot of momentum in the economy right now. OK, talk about momentum. We get just such a read on inflation momentum on Wednesday with the CPI report could show some incremental improvement in both the headline and core gauges. While this will result in an increase in the year-over-year headline rate, a one-tenth improvement is expected in the core. Kashkari may have been alone in saying the Fed might not cut, but other Fed officials have, to varying degrees, raised doubts on their own. It would not be

surprising to see several of them back off their forecast for rate cuts if the inflation numbers move sideways over the next several months. The market has its doubts, too, on June, with the probability of a cut at just 50 percent down from 65 percent before the jobs number. Kashkari was questioning whether the Fed would cut it off if the inflation didn't cooperate. We'll be listening to him and other Fed officials watching to see if those questions harden into policy. CPI, PPI and Fed minutes. What's going to matter the most this week? I actually think the PPI has become the most watched report. We get the CPI, you need it, but the PPI is the thing that cements the forecast for the PCE.

I know it's a little complicated, but parts of the PCE work into the PPI, and that allows us to come up with a pretty good forecast for what the Fed's preferred inflation indicator will say later, usually at the end of the month is when it comes. OK, the fact that you are seeing bond yields move higher here, you have seen the stocks take a little bit of a breather. The fact that maybe, maybe the easing of financial conditions we've seen in recent weeks and recent months is at least hitting the pause button right now. How much does that matter to the Fed, even though they say that's not part of it? And we know it's not part of their mandate. I mean, they look at financial conditions. I think they look less at the stock market than the market thinks they look at them. But they look more at the bond market and financial conditions.

It's part of the equation. But you see, the thing is, it's like you can look at that. But really, what you want to know is the effect of it. Is our higher bond yields causing or creating a break on the economy and helping out the inflation cause. That's really the key. I think we're past comments now. Now it's the data, and then that's going to lead to the policy. I mean, we know what people think now, and now it's a matter of what the data does, and that creates the policy. Yeah, and you mentioned 50-50 in terms of how the market's pricing in.

For June. For June. So, really, we could see that swing either way depending on the data this week. Yeah, and it's pretty volatile. Right. I mean, so you they've been criticized, Muhammad Al-Aryan, among others, for being sort of too data dependent. I don't think they're dependent on one month, but they do want to see the momentum over several months in order to be what they call confident. Inflation is moving down. You don't got to hit two, but you got to be kind of inexorably on the route to two to get those rate cuts. OK, we'll be watching. We know you're breaking it all down for us, Steve. Pleasure. Good to have you here. Thanks. Good to be here. All right. Well, markets basically finishing off the highs of the session as we do await a heavy week in terms of all this

data. That's going to do it for us here at Overtime. Fast money begins right now.