Closing Bell - Closing Bell: What Will Tip the Teetering Rally? 5/5/23

Episode Date: May 5, 2023

Can this teetering rally go much further in the weeks ahead – especially if the Fed is finished? Professor Jeremy Siegel of the Wharton School gives his take. Plus, Former Federal Reserve Vice Chairman Richard Clarida weighs in on the road ahead for the Fed and the odds of a recession. And, the WSJ’s Gunjan Banerji breaks down the crucial moments of the trading week.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9, right here at the New York Stock Exchange. We have a very important interview coming up this hour. Former Fed Vice Chair Rich Clarida will be with us in just a little bit on whether the Fed should have raised rates this week, and even more importantly, what it will do next. In the meantime, this Make or Break hour begins with a big Friday rally on Wall Street. There's your scorecard with 60 minutes to go in regulation. The Dow was up 400-plus points throughout much of the day.

Right now, it's up better than 600, led by Apple following its better-than-expected earnings report and another pretty strong employment read. The jobs number did push interest rates higher. Not enough, though, to derail stocks today, even tech, which is rallying as well. It leads us to our talk of the tape. Whether this teetering rally can go much further in the weeks ahead, especially if the Fed is finished. Let's

ask Professor Jeremy Siegel of the Wharton School. He's back with us. Professor, it is so good to see you. So we have a nice rally on our hands today. How does the market look to you now in what has been a very big and interesting and important week? The markets look very strong, Scott, without question. I think the bar is very high for the Fed to do another increase. I think you would have to see the next employment report to be very strong, even stronger than this one. I think Tuesday's inflation report would have to be much above expectation. And by the way, the first day of their June meeting, they get

the May inflation report. And that would have to be, I think it would have to be a triple strong, in my opinion, for them to raise again. I know we just reported that James Bullard, who has been a super hawk, thinks that one more 25 basis point increase is called for, but he actually hedged it and suggested that we are in the zone of the maximum tightening of the Fed. And I think that's where the market is taking its cue. Remember, I mean, Bullard even threw out the seven handle for the terminal rate. Remember that? It wasn't that long ago when he was talking about maybe going to 7 percent. So the needle has moved a little bit. Just let me ask you point blank. Do you think the Fed's done? Was it 10 and that's it? Yeah, I think I think it is, as I say, you know, if things really get much stronger,

but the unemployment rate goes down to three point two, three one. And and we begin to see commodities pick up and everything like that, which I absolutely think is a very low probability. I think the Fed is done. Now, that being said, at this point, you know, the bar is also very high for a decrease in rates. I think that would only come with a negative payroll number, which, by the way, I don't think we can rule out at all in the middle or second half of this year. But certainly, you know, that certainly doesn't look imminent, but that would start the conversation. Don't forget, Scott, we are entering into the political part of the 2024 race.

You know, certainly the Democrats and Biden don't want to go in with a recession. And if they see those payrolls turn negative and unemployment rate go up, there will be a lot of pressure on Chairman Powell to say, hey, listen, maybe you should think about cutting those rates. I still think they will be cut by year end. And I think more than really what the Fed is saying and what the market is saying. Do you think the Fed made a mistake this week by raising rates again? I wouldn't have because I think there's a lot to play out with the cumulative effect

of monetary policy. But, you know, it's 25 basis points in and of itself going to tank the economy? No. The cumulative effect of the 500 basis points plus the lending restriction, which I think is equivalent to two, three, maybe even four 25 basis point hikes, I think is more than enough. I don't like to see 11 consecutive monthly declines in the money supply. You know, I voice concern about that. I think we need to start expanding that part of the credit system again, because I think without it, I think we, the risk of recession go up. But nonetheless, no, it was a it was a stronger report than than I expected, even though we had downward revisions to February and March. Yeah, I mean, Chairman Powell this week of the banking system, for example,

declared it, quote, sound and resilient. Do you agree with that assessment by the chair? Well, I think he was, I think the regional banks that are into commercial lending certainly are, I'm not going to say in trouble, but I think their profits are definitely going to be impaired and maybe wiped out. I don't think there's a banking crisis. I think the loan spigot from the Fed is open, although that's at 5 percent. You know, it's not like the zero to one percent that they get on deposits. So if deposits leave these banks, the banks will have recourse to the Fed, but at a much higher rate. So, you know, if they're lending long term mortgages, well, as we thought first, the Republic at two, two and a half, and they're

borrowing from the Fed is five. I mean, this is one of the problems of inverting the Phillips, excuse me, inverting the term structure of interest rates is that you're going to get some of those low profits in the bank. But I agree with him in terms of runs, in terms of impairment of the banking system. You know, I'm not concerned. So if you think that the Fed is in fact done or the very, very minimum that the bar is now increasingly high to raise rates again, what does it mean for stocks now? Let's just say over the next few months, do you think?

Well, I think that I think the stocks also, just like the Fed, is going to be data dependent. Don't forget, you know, payroll can turn quickly. And what I hope is when it turns, the Fed starts thinking about, OK, let's start restoring a more natural rate. Let's talk about maybe increasing the money supply credit. Again, we've seen in the last 11 months the biggest decline in 85 years in the M2 money supply, which is something that I watch carefully. I hope that they respond that way. I think that certainly today's reaction is they're done. They will respond to a downturn. And as a result, you know, my original prediction, 10 to 15 percent on the S&P, maybe it will come true. Now, I kind of downplayed it to five to 10 when I thought the Fed wasn't getting it. But, you know, perhaps the Fed now sees

that its policy has been restrictive and will start on a more neutral course. Wow. Professor, let's expand the conversation if we could. Bring in Malcolm Etheridge of CIC Wealth. He's sitting next to me here at Post 9. And Bryn Talkington of Requisite Capital. Both are CNBC contributors. Malcolm, I turn to you. Your reaction first to what the professor is just telling us now. Yeah, so I think the professor is making an interesting point, and I wish I shared his optimism that the Fed is absolutely done here and not planning already their next hike in June. And I say that because wage inflation in this last report

was the biggest, most important piece of it. The fact that wage inflation is still on the rise means that real inflation is probably on the rise too. Let me ask you this. If he's right, if the Fed's done, is that bullish? Does that make you feel more positive? Because you haven't really been that positive on stocks. So it makes me more bullish that by the end of this year, we're definitely still going to be in positive territory. I don't think we're going to get that cut that the market is hoping for,

but I don't think that that's going to matter as far as whether we end in negative or positive territory. I think just knowing where we're going to stop is what really gives the all clear signal to the markets that now we can start to make our bets and actually feel good about buying into companies. So, Bryn, you've made the argument all along, don't fight the Fed. If there's nothing left to fight, are you more positive on where we go from here? So I've always felt this year that there's such a wide range of outcomes. And I think that a good example today, obviously there was a tremendous amount of short covering finally in the regional banks where you saw companies like PacWest up, what, 80, 85 percent.

And so I just think we have these cracks in the system. And so I definitely think it have these cracks in the system. And so I definitely think it's positive if they stop. I don't think they needed to do the 25 basis points. I also think that he said this banking crisis is over. I hope those words don't come back to haunt him later on because we really need this regional bank, the whole sector, the 4,200 banks, 4,300 banks to be solid. But I just think that I still am in the camp that there are other little landmines out there. And if the Fed stops here, at least everyone can just like start doing math equations again about lending, about mortgages and not

consistently trying to do resetting their interest rates because the Fed is going to over tighten. I also think I'd be interested in Professor Siegel. The only reason I feel like they would lower rates later this year is if an event occurs strong enough to say they need to pivot. And so to me, that would be a negative. The markets would go lower. You'd have this event for. So I think the narrative of we're just going to just start cutting rates for no reason is is is not is not correct. And there would be a massive event. You know, you could go to the regional banks and pick one of those. So I'm still in that cautious camps of a wide range of outcomes. And that's why, as I've talked about, I have a lot of covered

calls on the portfolios because I don't think stocks are going to run away from me. Great points you make. Professor, what do you say about that? Wouldn't the idea that the Fed has to cut? That's not a how could that be viewed as a positive? Well, I don't know if there has to be a major banking event. I think if you get payrolls negative, you are going to get pressure to cut and the unemployment rate rising. Either of those two factors, I think, will put cut onto the plate of the Federal Reserve. Because I do think now let's talk about I mean, Malcolm mentioned wage inflation. One thing that surprised me, I listened very closely to the news conference afterwards, and I heard Powell say, I don't think wages are higher wages are a cause of inflation.

That surprised me because I thought that that was his position earlier on. I've taken the position that we have to have a rise in real wages because there was a structural shift after the pandemic. One that Jay Powell mentioned in his November conference. You've got to have real wages rise somewhat relative to prices to bring people back into the labor market. I think that has happened. I think there's a little bit more than happened. And I think to be obsessed when, you know, wages go up by 4 percent. Don't forget, over these last three years since the pandemic, wages have lagged inflation by every measure. So it's hard for me to sort of say, oh, my goodness, now we should press them down even more so people are further behind. There's got to be an adjustment. And yes, that will make service inflation a little bit higher.

But as I say, we need those people in that service sector, except that will normalize that labor force. And I think inflation on the good side is already under control. Malcolm, you want to respond? I just want to point out the fact that on the flip side, the professor's talking about payrolls being able to come in line pretty quickly and adjust back to where they should be. But we have to also consider the fact that along with wage inflation, we've now seen unemployment hit the lowest level it has since the late 60s.

And so we can't just gloss over the fact that even while we're talking about dire situation with lending and small businesses can't do their business and they're loathe to hire the next person. We're also seeing unemployment continue to go downward at the same time that the Fed is doing its work. And so I think that pressure is moving against where they actually want to land, which is two percent. Hey, Professor, do you think the the chances of a soft landing are increasing or decreasing? I mean, you could say, well, look at the jobs report. Maybe they're increasing. But the flip side is, well, the Fed did so much, maybe they're decreasing.

I mean, actually, you could say by the body language that Powell had, you know, hey, you know what? Don't forget the Fed late last year thought we were going to have a one percentage point rise in the unemployment rate. So far, we've had a slight decline. And I agree with Malcolm that I was shocked at 3.4. I mean, that ties the low. And let me tell you, if that continues to go down, 3.3, 3.2, 3.1, you know that a year and a half ago i interviewed james bullard he thought it was going down to two and a half by the end of uh 2022 well that didn't happen but if it if it continues to go down that would be ammunition for continued rise of interest rates by the fed now i don't think that's going to happen, but that is one thing

that I'm certainly watching and certainly did surprise me. Three point four percent today. I mean, let's let's be I mean, Bryn, the unemployment rate is falling. The Fed is not exactly getting what it wants when it comes to my word, not theirs, cracking the the labor market. It depends how much and how intent they are in getting to the point. And it may take longer than anybody thought. Well, the problem they have is that we're still short, what, four, four and a half million workers. And so I don't think outside of California with Silicon Valley, I don't think unless we have some event, you're going to see some structural move higher in unemployment just because we're still short those workers and people are still trying to hire. And so

from the Fed's perspective, with a very, very blunt instrument of raising rates, if unemployment is their key, they will definitely overtighten. And so I just think we're in just such a unique environment in the job market because we are so short those workers. But I will say by June, by the end of June, even if CPI grows month of a month at 4.4%, we're going to have a three handle on CPI just because of the drop off of the first half of 2022. So I think once we see CPIs in the threes later on this summer, I think that gives the Fed further ammunition not to move higher and be more data dependent. All right. We're going to leave it there. Brynn, thank you. Malcolm, to you as well. It's good to have you here on set. And Professor, it's always great to

talk to you, especially after what's been an incredibly busy week. That's Professor Jeremy Siegel at the Wharton School. Let's get to our Twitter question of the day. We ask, does today's jobs report put June back on the table for a hike? Yes or no? Head to at CNBC closing bell on Twitter to vote. We'll share the results a little bit later on in the hour. And speaking of the Fed coming up, former Federal Reserve Vice Chair Rich Clarida is with us. We get his take on the Fed's next steps and what it might mean for the economy and the markets. First, though, we head out to Omaha, Berkshire's annual meeting getting underway. Mike Santoli just caught up with a longtime Berkshire investor

where he is seeing growth in the tech space. We'll do it next. You're watching Closing Bell on CNBC. Welcome back. 40 minutes to go in the trading day. A big day at that. Near 600 points for the Dow. Let's get a check now on some top stocks to watch as we head towards the close.

Christina Parts and Nevelos is here with that. Christina. Happy Friday. Let's talk about crypto exchange Coinbase that saw Q1 revenues grow 23% quarter over quarter, and the stock surging 15% today. I caught up with the CFO yesterday post-earnings, and she told me this quarter was a turning point for the firm. The performance was helped by the rally in crypto prices that we saw in Q1 and cost cutting. But analysts seem to be a little cautious given the SEC has issued warning it might sue Coinbase for securities fraud.

So that's an overhang. Switching gears, monolithic power is getting hammered today as weak outlook for the current quarter outweighs a beat on the top and bottom line. That has a number of analysts cutting their price targets on the stock. Shares of the power components maker heading for their worst day since March 2020.

You can see the stock is down over 10 percent. Scott. All right, Christina, thank you. Christina Partsanova, Berkshire Hathaway's annual meeting kicking off in Omaha. Senior markets commentator Mike Santoli just caught up with a longtime Berkshire investor. He joins us now. What'd you learn? Well, Scott, this is Tom Russo of Gardner Russo and Quinn. And for some context, he first met

Warren Buffett some 40 years ago, has owned the stock most of that time, owns it for client portfolios. He's a global value investor in the Buffett mold himself. And one of the things he looks for is consumer facing, often founder and family control businesses that have these long term durable franchises. And then he's got to evaluate when maybe those competitive advantages are depleting or going away. And we were talking about Alphabet, one of his big holdings. And I asked him whether the AI threat to search concerns him. Here's what he had to say when I spoke to him for CNBC Pro Talks today.

No, I mean, and I think you have to distinguish between volatility and risk. What's the risk that Google is going to lose out to chat? What's the risk of that? And I don't think it's a high likelihood, so it's not a big risk. Not a big risk to the long-term business opportunity for Alphabet is what he's saying. But yeah, a lot of volatility in the stock and obviously the emotion of the moment kind of can carry some stocks pretty far from the direction of intrinsic value. And that's

one of those things people come to Omaha on this weekend to be reminded of. You know, I hope, Mike, this weekend, and I presume that it will happen at some point, that Buffett's going to be asked about all of this hype around AI and what he thinks about it. And, you know, look, he has at times over the decades scoffed at these new technologies and the hype around them when it comes to how they would invest. It was famous, obviously, with the dot-com bubble, and he was proven to be right with the dot-com crash. How do you think he would address that issue?

My guess is that he would certainly defer to the fact that there's a lot of disruption and innovation going on. Clearly, he's been close to Microsoft, Bill Gates at times. He kind of has a window on that world, and he's also conceded that he's missed close to. You know Microsoft Bill Gates at times he kind of has a window. On that world he's also conceded that he's missed. Some big technological shift my guess is. He would say. Where is it. To end terms of a product. Where is it in terms of. A profit stream that's going to be developed out of all of this consumer interest

out of all of this. Investment and out of all this buzz and once we're there. You could probably see what companies can take advantage of it. And maybe he's going to have a little something to say about some of his businesses that perhaps are beneficiaries or could be beneficiaries of the entire technological wave. But I'm eager to hear the specifics of an answer like that myself. Yeah. For Mr. Munger as well. Definitely. Knowing, knowing the two of them. Mike, I look forward to seeing you all weekend. Thank you. That's Mike Santoli out in Omaha. For more of Mike's sit down with Thomas Russo, you can head to CNBC.com

forward slash pro talks and do not miss our coverage talking about Berkshire Hathaway's annual shareholder meeting. It's live on CNBC and CNBC.com. And it all starts tomorrow at 10 a.m. Eastern time. Up next, the road ahead for the Fed. Former Federal Reserve Vice Chair Rich Clarity here breaking down today's jobs report, his forecast moving forward, where he sees the economy going, what it all means for the markets. We'll do it next on Closing Bell. Regional banks rallying back today, but the sector is still having its worst week since mid-March. As the latest Fed interest rate hike puts more potential pressure on the banking system. For more on all of that and the road ahead for the Fed and the banks,

let's bring in former Fed Vice Chair and PIMCO Global Economic Advisor, Richard Claret. Mr. Claret, it's great to have you with us. Thank you. You bet. Did the Fed make the right move this week by hiking rates again? I think they did make the right move. I don't really think it was a tough fall. Inflation is too darn high. And I think the committee was united. It was unanimous votes. I don't think they made the wrong move. Do you think they're done? Was that it? Ten and out? I think they think they're done. You know, I think there's risk on both sides.

If inflation's sticky and stubborn, there could be more hikes down the road. You know, Jim Bullock was sort of hinting at that today. On the other hand, you know, the labor market's typically a lagging indicator. If it starts to soften, inflation falls rapidly. We could get those cuts. But I do think they think they're done. Yeah. If you were still in the room, would you be moved by today's jobs report and wages, I might add, to say that June might be on the table? Well, certainly I would be looking at it. I think if we had not had the disruption

in banking, June would be very much on the table. But I do agree with the Fed that that the tightening in financial conditions we're likely to get from the banking disruption is probably going to be equivalent to some additional rate hike. So, no, I think I think that I would be thinking about a pause, at least in June. The other side of all this, obviously, is why bother going another 25 as they did this week while you have the regional banking system so unsettled. In other words, why give people yet another reason to look at what they can get elsewhere in terms of their investments, money market funds and what have you? 25 in the big picture isn't

much. 25 coupled all together to get to 500 basis points in less than a year or about a year is a lot. I appreciate the point. And I think if inflation weren't in the four or fives, that might be persuasive. But again, inflation is just too high. The Fed's overshot its targets, not been transitory for three years. I think that is a consideration. But I would also say that I think they are communicating that they they think they've done a lot of policy operates with a lag. So I think that they think they want to pause. You know, the chairman said the other day that the banking system is, quote, sound and resilient. Do you agree with that assessment? Would you have used those words given what we're still witnessing with the regional banks?

Only two hours or so after he finished with those remarks, we saw one of the regional banks plunge by some 50 percent. Yeah, I think the chair did what what really the chair can do in that in that situation. Factually, he is correct. And I agree with him. The banking system as a whole, it's forty,700 banks, has enough capital, liquidity, and is profitable. But there are banks, and several of them have failed, and perhaps more will be challenged, that are having a real struggle right now. So I think he needs to stay on that, keep that focus on the big picture. But I do agree that it's probably not over. You know, we had the comment from Jamie Diamond recently about about something like that.

And probably there's more to come. See, I just find it so interesting that, you know, somebody of your stature would suggest that it's probably not over. There's probably more to come. But, yeah, it's OK that we raised or that they raised interest rates yet again. There's no divergence in that? Well, again, I'm going to sound like a broken record. There's excess demand in the economy. Now, it is true that the Labor Market Act is a lagging indicator, so this is a challenging time.

In the future, there may be those who look back and say, what were they thinking? But I'm just giving you my sense of what I would be doing if I were in the room now. I don't know. I think we've been asking some of those types of questions with all due respect. What are they thinking over this whole period? Mr. Bullard, who you mentioned, also said today of the bank stress, it can be managed, quote unquote. Is there a point where it can't be? Sure. As I said, I think we're not facing a situation that's systemic where the

entire banking system is at risk. But yes, I would acknowledge there's definitely parts of the banking system that are not profitable at the current level of interest rates and that have unrecorded losses on their books. We have a process for doing that. It's not smooth sometimes, as we've seen, but it looks like that's their focus right now. Do you think that the Fed's supervision of the banks has been up to the task? And doesn't, in some respects, SVB's collapse suggest that it's not? And also, why hasn't the Fed been more forthcoming in how they are thinking about their supervision and what they've done or didn't do for that matter? Steve Leisman asked the chair himself, and I don't think got a great answer. Well, I read both the report by Mr. Barr and I read the GAO report.

And certainly to me, it indicated a number of instances in which supervisory concerns were not elevated and addressed. I think the chair said the other day that he read it and they're going to take action. And I certainly would support that. So clearly something did not work as it was supposed to in either the supervisory or regulatory piece of this. There's no doubt about that. What about the general idea that, and this is another point of contention, frankly, that the Fed can do both. They can adequately fight inflation while having enough tools in the box to deal with whatever flare ups you might get inside the banking system. Do you believe that to be true?

Well, we saw the Fed deploy that approach just a couple of months ago with this new term financing facility. I do. I do believe that's the case. I do think, though, you have to be attuned and attentive to the data and what you're seeing. But I would say, as of now, I would be in that camp as well. Are you worried at all about a bigger credit crunch like some others are? I think it's a risk. And, you know, we have had experiences in past cycles where tightening monetary policy and fragile parts of the banking system have delivered a credit crunch back in 1990, which I remember that that recession was essentially a credit crush recession type monetary policy in the savings and loans. So certainly we're going to have less credit availability. We see evidence of that. We'll get the so-called sluice survey on Monday,

and that I think will certainly show tighter financial conditions, and that will translate into slower activity. You know, it's sort of a gray area when it goes from being tighter credit to being a credit crunch, but that is a risk, yes. You know, the irony of this whole thing, and we're having this conversation, you're doing it at PIMCO, you guys are a bond shop. The bond market is at odds with the very committee in which you used to be a vice chair of. I'm wondering what we're to make of that. What do you make of that? The fact that only a day or so ago,

the bond market was pricing in or at least Fed Funds futures were at 60 percent chance of a cut in July. Yeah. Well, it's a fact of life. It was a fact of life during my time as vice chair. It's even but you're correct. It's even more of a divergence now. I think it's a combination of the fact that the Fed is projecting what it thinks is the most likely scenario. Markets have to price in extreme events. And obviously, right now, I think there is a pretty big disconnect, maybe a little bit less today after payrolls. But certainly, there has been a disconnect after the Fed meeting between what they're saying and what the markets are thinking. And that's just, you know, those things come and go. But right now, we have a pretty big disconnect. I agree.

Who's right? Right now, I think I think the Fed is right. Certainly for July. I think a cut in July would certainly not be something where I would be putting a lot of money right now. But we'll see. Do you think the Fed will cut at some point this year? Well, interestingly enough, the Fed has indicated in its projections that it expects to be cutting next year. So, you know, there's not a big difference between December and January. I think, look, I think if the inflation data comes down sustainably right now, we've had nothing but disappointment or at least we haven't had a lot of positive surprises on inflation really since December. Inflation, I think it has peaked. If it starts coming down and we start to see some of what the Fed has projected, which is an increase in the unemployment rate, yeah, we could get rate

cuts towards the end of the year. But I also think if inflation stays sticky in the high threes, that the power Fed will do what it says. It'll keep at it till the job is done. And then there could be a second leg up on rate hikes. How does that impact how you would view the question of whether you believe a soft landing is possible or not then? Yeah. Well, I think some folks equate soft landing with avoiding a recession. I think we are going to have a recession. It may be a rather mild and modest recession. Certainly, if the scenario that I laid out for you, which is not my most likely case, but in the extreme case where inflation is very stubborn and sticky and we get another leg up in rates, then that will not be a soft landing, I wouldn't expect.

How concerned are you guys about the debt ceiling fight it's good question on 20 years ago I served as assistant Treasury Secretary so I went through one or two of these we do think something's going to get done the dynamics are a little bit different now than they have been in the past but our bottom line is that the federal government is not going to default on its debt. Mr. Vice Chair, I appreciate you joining me today on Closing Bell. It's good to catch up with you. We'll see you soon. Thank you for having me on.

All right. That's the former Fed Vice Chair Richard Clarida. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevalos is back with that. Christina? Despite all of the angry T-Swift fans who didn't snap up concert tickets, Live Nation still posted a record-breaking quarter. Just shake it off because I'll break down those numbers after this break. Got 20 to go until the closing bell. Christina Parts and Nevelos is back with the stocks we are watching

as we head towards the exits for the weekend. Yes, Friday, Cinco de Mayo. But let's talk about Atlassian first because it's firmly in negative territory despite beating estimates. It's the outlook that's hitting the stock today as Atlassian becomes the latest tech giant with signs of slowing cloud revenue growth, which is surprising. The stock is down 10% right now. And Live Nation is heading for its best day since 2021 after reporting a smaller than expected loss on revenues that also beat expectations.

The company says demand remains incredibly strong for live events and is showing no signs of letting up. Even though there were a lot of T-Swift fans that may have had a little bit of bad blood, that stock is up 15 percent. And that's because they didn't get tickets. Scott, I spent $300 on literally the last row of Madison Square Garden for Beyonce tickets. The last row, all the way in the back. 300 U.S. You got to be in the building. Maybe you can move up. Maybe you can move up. Working my way. Have a great weekend. Thank you. Thank you, Christina. Christina Parts of Nevelos. Last chance to weigh in on our Twitter question. We asked, does today's jobs report put a June hike back on the table? You can hit at CNBC closing bell on Twitter. It's easy. Yes or no.

The results after the break. Let's get the results of our Twitter question. Now we ask, does today's jobs report put a June hike back on the table? The majority of you said yes. Wow. Fifty nine to forty one. All right. Up next, DraftKings shares are soaring. What's driving that move higher? We will explain. Plus, The Wall Street Journal's Gunjan Banerjee is standing by to break down the final moments of the trading week as well when we take you inside the market zone.

All right, we're now in the closing bell market zone. The Wall Street Journal's Gunjan Banerjee is here to weigh in on the volatile week for the markets. Plus, CNBC senior markets commentator Mike Santoli is in Omaha to break down the crucial moments of the trading day. Contessa Brewer running through the numbers behind DraftKings' stock surge after its earnings. Good to see everybody. Gunjan, I begin with you. We teetered this week. Did we find some stability today?

It seems like it, right? Kind of remarkable that after this incredibly volatile week, the Nasdaq is close to flat, if not sitting on gains. And I think zooming out, what that tells you is that there's so many headlines about this ongoing banking crisis. But what investors really care about is tech, is Apple. I think you really need to follow the money there. KRE, the regional banking ETF, it's worth around $300, $350 billion. Apple, $2 trillion. And that's driving the market higher today. But still, as long as the regional bank issue remains front and center, you're going to have volatility, you're going to have uneasiness, and sentiment's going to be hard to turn

fully positive. I think that's clear. I mean, we are in the worst banking crisis since 2008, and so much remains unclear about how it's going to ripple through markets, the economy, the rest of the year. You know, we just don't have visibility into how these banks are going to change their lending standards and the extent to which that pushes us into a recession. Yeah. Speaking of, I mean, you know, the jobs report today would suggest that this imminent alleged recession is maybe not so imminent. And that's right. I mean, I think going into this year, so many investors were expecting us to fall into a recession within the first or second quarters. That has not happened yet. And on top of that, corporate earnings are also just so much better than many investors expected.

We're now looking at a 2 percent decline for S&P 500 profits this quarter. That's a huge improvement from 6% just around a month ago that people were expecting. And you really think that Apple, per se, is more important to the market right now than, say, regional banks? I mean, look at how the market is trading. You know, when I was talking to investors, they were so anxious about tech earnings going into this quarter and they're breathing a sigh of relief. And that's what we're seeing in trading today. Yeah. Mike Santoli out in Omaha. I said, you know, this feeling that we were teetering a bit and maybe today is a dose of stability that we've needed, whether it's lasting or not remains

to be seen. For sure. I mean the the market has been swinging along this pendulum between the banking issues are idiosyncratic to they are systemic and on a day when you know the regional banks just are in liquidation mode and people treat them as if they're uninvestable and the bond market is throwing a tantrum saying that the fed just committed a big mistake by hiking 25 basis points. That was yesterday. It's hard to necessarily say that the broader market can stay stable.

But you have a day like today when the consumer is not seen as necessarily falling off a cliff. We're in that same mode. Last six weeks, I've been saying that we got an likely got an earlier Fed pause than we would otherwise have gotten if not for the banking issues. The question is, what's the cost right now? The cost in terms of jobs, in terms of retail spending and incomes has not been onerous that we can see. It might turn out that way. It goes day to day. We also technically had a pretty good test of the same levels on the S&P 40, 50. It's also the 50-day average, twice in one week. The NASDAQ might do a second straight weekly closing high.

So there's a lot of push-pull here, but it has so far not been the kind of action that's gone spiraled out of control, at least on a multi-day basis. Former Fed Vice Chair Clarida told me a little while ago, well, maybe the Fed would cut by the end of the year. But any sooner than that, don't get your hopes up. Of course, then there was Professor Jeremy Siegel of the Wharton School who told me this, Mike, let's listen. We could talk on the other side. To result, you know, my original prediction, 10 to 15 percent on the S&P, maybe it will come

through. Now, I kind of downplayed it to five to 10 when I thought the Fed wasn't getting it. But, you know, perhaps the Fed now sees that its policy has been restrictive and will start on a more neutral course. All right. Well, that was about his market prediction and where he thinks we can go from here. He does still think, though, the Fed's going to cut this year. Yeah, I mean, look, the bond market is still at least placing its chips on that side of the probability spectrum that there will be a cut. I don't think that a cut happens in the next couple of months or at least even through the summer, unless you have really bad market conditions. So it's really not about wishing for a cut or the

conditions under which you would get one. I think it's still you got another jobs report, two more inflation readings before we get to the June meeting. To me, it's guesswork what happens next. The central tendency seems to be pause. Today's jobs number was definitely a refreshing upside surprise on the headline. But the downward revisions for prior months still tell you a slowdown story. So Powell said that he still thinks a soft landing is not out of the question. And the market is at least willing to hear that possibility today. What are you thinking about the extreme short end of the yield curve? One month, three months, six months, all over 5%.

The one month is like a 20-year high as we wonder what's going to take place in the debt ceiling. And you want to know where it's showing up? That's where it's showing up. Yes. I mean, it's completely twisted up. The daily moves are definitely too big for comfort. If you even have looked at the two-year note yield, it really should not be as so agitated on a day-to-day day basis it shows you how there are stresses in the system there's perceived or real illiquidity in pockets of this market and in terms of the one month yeah that's all about debt ceiling and people just not wanting to be caught in that window when you might have a delay in payment so that i can sort of set aside

but it's it's not a a condition condition where you'd feel comfortable about. The bond market, you would much prefer if the volatility were to ease back a little bit. But I don't think it's going to happen when everything seems as if, you know, look, the banking issues, the reason we can stomach them for now is because the reason the banks are suffering is because 80 percent of homeowners have a mortgage under 5%. And therefore, the banks are underwater on the mortgage loans they're holding and the mortgage-backed securities. That's a good thing for the country that all these consumers have this asset they're sitting

on called a below-market rate mortgage. It just only is a problem if the banks seem to be insolvent in that context. And that creates, you know, circling the drain type activity in the bond market. Or a problem if you're trying to move because the rates you're going to get is not what you have. Have a great weekend. We'll see you with our special coverage starting tomorrow. Mike Santoli out at the Berkshire Hathaway meeting out in Omaha. All right.

DraftKings having a huge day today. Contessa Brewer is sitting here with us at Post 9 as well. Last I saw, what, up 15 percent? They hit a new 52-week high today, those shares, and DraftKings reports. It is now your new iGaming leader when it comes to market share, overtaking BetMGM. They are growing their customer base, lowering the cost of acquiring those customers, raising revenue guidance, lowering estimates on how much money DraftKings will lose this year. CEO Jason Robin said on the call that, look, the product itself is crucial.

The customers like it. They want to play it. Those player parlays, for instance, they're a hit with the gamblers. It has not yet integrated Golden Nugget online yet. And even that coming down the pike would contribute more synergy. So there was a lot here for investors to get their arms around. There's a lot of details that might just add some juice to the fire. We just don't have, I mean, the market itself, just given where we are and how unsettled we are, this appetite for

non-profitable companies. Do they have a, where's their roadmap of when they think they're going to be profitable? They think that they're going to be break-even this quarter. They think that fourth quarter, they're actually going to be about $150 million positive for EBITDA, which is the important metric of success in gambling. But for the full year, they're still not going to break even. Now, compare that to some other fan duel, for instance, is moving forward full steam ahead. Caesars just reported this week they only lost $5 million in their interactive in the first quarter. They said had it not been for hold and for new state launches, they could have turned a profit. So really, it's a horse race here for who's making money and who's grabbing market share. I know you dropped that horse racing thing in there because

of the Kentucky Derby and the betting we're going to witness this weekend. It's like almost none other. Contessa, thank you. Gunjan, back to you. I thought Mike Santoli said something really interesting. This ability of the market in terms of the banking issues, he used the word stomach them for now. That says everything to me. Stomach them for now for how long, though, is the question. That is the big question. I think traders really need to buckle up because next week we have CPI. And already this jobs report this morning seems to complicate the Fed's task, especially in terms of those interest rate cuts many investors are banking on. So I think that's key to watch in some of the reports that we have coming out next week.

That's going to be the great debate in the weeks ahead, certainly, is watching what the bond market is predicting, where Fed funds are in terms of, are they going to cut? Are they not going to cut? What if they don't? What if they do, in fact, pause? What if they are done from here? They're not going to go in June. And what all of that means to the context of where the market can go from here

and what the catalysts are, frankly, as earnings season starts to wind down. Absolutely. And I think it is all about the bond market, particularly the shorter end of the bond market, especially because investors seem to be bidding up here in terms of the debt ceiling and a lot of those other catalysts that we have coming up the next few weeks. All right. This thing's got a mile. That's why Constellation Brands is here. I see Modelo and Corona all over the place. You know where I'm going. Have a great weekend, everybody.