Makes him so bullish. This name just delivered a strong quarter, strong guidance, the stock is up 3 , but its a crowded space. The closest competitor just entered the public market. The ceo is not worried, not pulling any punches, either. Hell join us live ahead. We begin with the markets with dom chu. Its red and getting worse. Were just near session lows right now, and the dow industrials, that means a 414 point decline, 1 to the downside. 37,971. The broader based s p 500, 5,065 the last trade there, down about 1 , as well. And to give you perspective, at the highs, were down 353 53 poi at the low. The nasdaq, down about a percent or so, 15,798. Big technology trade, amazon is going to be the big focus because the earnings report. Were putting a big circle around that 1 decline around amazon shares. But broadly speaking, big technology, microsoft down 1. 75 . Apple, the standout to the upside, its up 0. 1 . Nvidia down 1 . Alphabet down 1 , as well. So that Mega Cap Technology trade, its usually nvidia we highlight as the upside mover in that broader based decline. But apple, interesting move there to the upside. And then the stock of the day, the industrial congromlomerate thats two different companies. Generally speaking, a good quarter for 3m. Theyre going to cut their dividend. Not a surprise for a lot of folks out there when you cut off a big part of the company, so theyll cut the dividend after paying an increasing one for 64 straight years. Theyve paid a dividend of 100 years of some sort. But some investors think this could be the turn around story, something happening in the works. Positivity there, well see if it sticks around for 3m shares. Back over to you. Dom, thuk. Its not just the fed officials that have taken a hawkish tone. Lets get to Steve Liesman for more. Steve . John, the outlook on the survey has turned more hawkish with respondents delaying the bulk of rate cuts amid a forecast for higher growth but higher inflation this year. Take a look at the numbers. Only one cut fully priced in for this year, thats in december. And that was compared to june being the pick in the prior survey. The group split on the possibility of that september cut. The 29 respondents see a 22 of a hike in the next year. 3. 8 Feds Fund Rate in 2025. So still cuts in the forecast, butnow next year and a bit less than had been forecast, that neutral rate ticking up by 0. 2 , suggesting the fed is maybe not as tight as believed before when the fed started hiking. You can see right there, follow the blue bars for the current forecast, all up from the prior forecast by a cut or two. But it adds up over time. You can see there now 3. 8 , seen as the neutral as the next years number, the neutral 3. 1 versus 3. 3. One writes in thats more or less how the market is priced. Respondents are hawkish on the futures market, reflecting better growth but higher inflation. That comes with a growing belief and debate right now about whether the economy has to slow down and unemployment has to rise for the fed to hit its 2 inflation target, john. Chance of a hike there, 22 . Is that much of a change of what we saw earlier . Well, we didnt ask that question before, john, because it wasnt much of a hike on the table. The feds bias was cutting, and, you know, you hindsight 2020. We ask this time, by itself, what is the probability that the fed reverses course and hikes rates . I guess you could think of that as some possibility that powell tomorrow or in some speech down the show, if these Inflation Numbers keep going the way that they are, that powell introduces twosided risk to the direction of rates. Steve, stick around. Our next guest says we could be in for a hawkish surprise tomorrow from the fed, posing the biggest risk to the markets. Joining me now are Paul Christopher from wells fargo and stephanie roth, chief economist at wolf research. Welcome, guys. Youre both thank you. Paul, expecting more than one cut, unlike sort of the medium in the survey, three still . No, only two. Yeah, two for us, as well. So paul, talk through the risks here and how much your probabilities have to shift as this data has come in . Yeah, the fed will always tell you that theyre watching data, so the risk is to the downside on cuts for this year. But we really believe that inflation will start to resume its downward march, the disinflation. Its just been sticky for a while. Thats not unusual for inflation over time. And we think as inflation falls, the economy will slow moderately, modestly. That will give the fed enough of a window. We think somewhere with between 2. 5 , 3 inflation the fed will cut and well see some of those borrows who have been contrained by fed policy but not by availability of other sources of credit, people like consumers, regional banks. They will have better access to credit, helping really push the economy forward at the end of the year. Stephanie, you expect as we start to get april data over the next few weeks, this narrative is going to shift. What are those key moments you think that will make the difference . Yeah. What we have seen is a lot of the data in q1 have been subject to a lot of volatility. Cpi is just another example of that. It was seasonally depressed in q4, seasonally boosted in q1. And then in qu2, you should seea normalization from that presentation. On friday, one of those important april data points well be getting on payroll. The number could come in firm. But wages growth, were looking for 0. 18 versus consensus of 0. 3 , that can stick off the more dovish surprises. The housing data should start to soften, and when were getting the cpi prints starting in april and looking forward, they should start to come in a bit cooler. We think the trend in inflation is somehow closer to 2. 5 , held up by seasonal volatility, going the other way starting in april. Steve, how much relative attention does go to the wage data on friday, and maybe even to revisions . You know, a little bit less than people think. This morning was the important wage data for the Federal Reserve. Powell has made clear, and i think it makes a lot of sense what powell has done, hes really shifted to the focus to employment cost index, which is an all indicator of benefits and wages, as well as being not really corrupted by the constituents of the wages of the employees in there. Its just its a better way of looking at it and it was higher than expected. I hope stephanie is right about the wage data on friday, and theres a whole lot of other inflation related data well be following. The anticipation rate, are we still getting influxes into the workforce . But i think the Unemployment Rate is the one to watch. If you want to think about rate cuts this year, and multiple rate cuts, i think it may only come with the development of slack in the economy, meaning an economy that runs below potential and one where the Unemployment Rate is seen rising. Maybe not precipitously, but enough to say you know what . Were going the other way on employment here. Paul, you like energy, industrials, and health care in this market. Spend a little time on health care. What in particular is important there . We just had lily report. What names are you watching closely to see how its playing out . Well, we like all of those sectors that you mentioned for longer term investors. Our clients are primarily longterm focused. For the longterm, the pandemic demonstrated really that the capacity, the Health Care Capacity in this country is not where it needs to be for another kind of that event. So we look for more public spending, more private spending. Managed care would be a focus going forward. Less so pharmaceuticals. Maybe devices, maybe more neutral there. So thats kind of our way of thinking about health care. Are you looking for upside in particular sectors, stephanie, or just looking at the market overall in general . We had somebody say dont try to play particular sectors. Yeah, were definitely optimistic on the economy as a whole, leading to higher earnings this year. But im thinking from a sector perspective, things related to the industrial cycle should do fairly well this year. Were having a bit of a bottoming in the manufacturing pmi. Well see more details on that tomorrow. The trend we think is positive. On top of that, you have a decent amount of infrastructure spending, a lot of the public spending rolls out this year. And then youre getting a bit of a loosening of financial conditions compared to a year ago, and a better outlook when youre thinking about the chances of recession. The companies are going to be a little more interested in doing capital spending, which is the capex side of the economy. So its the cyclical sectors of the economy that we like here thinking ahead to the next six months or so. Steve liesman, theres been some reticence on the part of businesses to borrow money and spend. How closely is the fed watching that . Part of that look for sure. I think they would like to see a little cooling in that market. Its very interesting to me, john, that we have seen a kind of a little bit of a renaissance in ipos. It feels like theres been some loosening of financial conditions. Remember, were not that far off the highs, so Equity Financing is actually relatively cheap the higher the market is, the cheaper that financing is. While Debt Financing has remained relatively expensive. So what we might be seeing here, john, something worth talking about and bob fasani has been all over with the ipo boom that weve had here, or maybe a return to more normal numbers, that people are referring equity to debt because of the price of debt, which is a question whether or not those rates are going to be coming down. I think there was an expectation of a lot of cfos in the beginning of the year, this would be a good year to refinance because debt yields are going to come down. While spreads may be relatively tight, actual yields have not fallen very much, and even gone the other way. So there might be a preference out there for equity, given that the market is off less than perhaps yields have risen. Interesting. Okay, steve, thank you. Also, thank you Paul Christopher and stephanie roth. Turning to the Housing Market where demand is still strong, even in a higher rate environment. Home prices on a tear again. Diana olick joins with us the la latest. Strong demand and tight supply continue to push prices higher, even though rates are moving higher again. Home prices in february jumped 6. 4 , up from januarys increase of 6 according to the National Home price index. It was the fastest rate of price growth since november 2022. Now, after cooling last year, home prices are again near alltime highs nationally, and already they are in certain markets. For the Third Straight month, all 20 cities in the index saw annual increases. Four of them at those alltime highs. San diego, los angeles, washington, d. C. , and new york. San diego saw the biggest gain overall. Prices there up 11 year over year, followed by chicago and detroit, which saw 9 price gains. Portland oregon, the smallest gains but still up 2 . Sit a threemonth moving average, so it goes back to december when rates hit their recent lows. They are, of course, way back up again, now over 7. 5 today. There was a strong expectation back then that the Federal Reserve would lower Interest Rates, and that may have driven buyers to jump in then, but that is not the case now. Very much not the case. We also saw some strong earnings this morning from taylor morrison, one of the nations largest Home Builders. How did that really pan out, given this higher rate environment . Yeah, it was not only a nice beat, but they also raised guidance because Home Builders have a big toolbox to get those buyers in the door. They reported a big jump in firsttime home buyers. Theyre helping to buy down the rates or use other incentives to help firsttime home buyers get in the door. One thing the ceo, cherylnoted doesnt expect prices to come down. They did see price gains on the sales as well as smaller incentives. So the builders are in the hotseat because there isnt enough supply on the existing side, and that supply is just not coming on the market. Sellers are still stuck with 3 rate. So builders can raise prices as long as they can get the rates down a bit. If you are a young professional entering the market right now for so many things, it is just tough. Any sense of when people might be forced to sell and open things up . Because weve been talking about that for a while and it hasnt happened. Look, there are always life circumstances that maybe somebody have to sell. A death in the family, down sizing, a divorce, theres a job change. There are just regular life reasons that people have to move. Its just that were not seeing that moveup buyer who normally fuels the market from that entry level into a stepup home. Thats what we need to see. The reason thats not happening is because they have rock bottom Mortgage Rates and the moveup home is so expensive right now. I dont know how that gets solved. Diana, thank you. Coming up, the expectations for amazons earnings could hardly be higher according to one portfolio manager, but sees the stock rallying 25 from here. Hell join us next to make his case. Fidelitys Cloud Computing etf is on pace for its worst month since september 2022. One name in the group is hitting an alltime high today on the back of an earnings beat. Well speak with the ceo exclusively ahead. And the dea reportedly plans to reclassify marijuana as a less dangerous drug. The exchange is back after this. This is the exchange on cnbc. vo what does it mean to be rich . Maybe rich is less about reaching a magic number. And more about discovering magic. And theyre all coming . Those who are still with us, yes. Grandpa whats this . Your wings. Light em up gentlemen, its a beautiful. Day to fly. Capital spending among mega tech Cap Companies surging as microsoft, alphabet and meta outline plans for tens of billions for ai investments. So whats in store for amazon as it reports tonight. Deidre bosa is looking at that for todays tech check. We are in the midst of a new path x souper cycle driven by te ai computing ramp. This chart puts it in perspective. It shows capex spending with amazon, which reports tonight. So for 2024, spend was expected to grow 26 year over year collectively. The orange part of that line. But look at the yellow part, thats the revision, revised up to 44 , getting closer to the last super cycle around 2018. Now, i want to show you what it looks like when you overlay revenue growth. Its less than half of what it was back in 2018 when the mega caps were growing at a much faster clip. Its been revised up this year by just 3 , sure. But thats a drop in the bucket versus the 40 Percentage Plus capex growth. What does help the case for amazon is profitability. It is expected tohave spent more than anyone else this quarter on capex, but the net income has improved significantly under andy jassys leadership, which could soften the blow of higher spending like it did for google earlier this week. Its just amazon and tesla without capital return programs. So a little more intense on amazon, particularly because it can afford to give capital back to investors. I guess in a way it makes sense that the ai spending is ramping more than the revenue. You usually have to invest before you get paid. But i guess this also underlines the strategic investment in these custom chips because they hope to off load more of those ai workloads over time, not necessarily use as many nvidia chips as perhaps use their own, right . Which are scarce and more expensive. Thats why you see amazon, microsoft, alphabet, developing their own chips so it can take some of that workload. But they still that demand for the nvidia gps still high, keeping costs up. But its about the future tra jek try. That is expected to ramp later. Amazon, remember, it doubled its logistics capacity over the pandemic and now its really reaping the rewards oh of that. Do you have any sense whether the expectations, the bar set for aws shifted after the strong cloud reports from google and microsoft . I mean, you know as well as i do a larger base to am off of, right . But were in this new era of the cloud wars, where what can you offer in terms of ai tools and amazon has been trying hard to say they give their customers a ton of option. Certainly, investors want to see that aws growth grow bigger, but its certainly smaller than what we have seen, smaller in terms of growth on a percentage based on what we have seen from microsoft and google. But i think its got to be over that 14 , 15 level. Dei, thank you. Further into amazon, the street is expecting big things from the quarter one results, including aws revenue of 24. 5 billion, the segments best growth in four quarters. The stage is set for amazon to deliver. Lets bring in my next guest, portfolio manager. James, youre confident that amazons going to do what it has to do here. How much has to do with the overall cloud market strength that we saw from competitors . Yeah, im as confident as you can be in this. I think its great the fact that theyre reporting last, so a lot of those expectations have been reset. I think what amazon has going for them now is that a lot of these mag seven names are coming off really great rates of growth in 2023 and are starting to moderate. Whereas amazon suffered in 2023 with optimization efforts and tough comps on retail, but theyre on the upward trajectory in terms of estimates. So were still in the early days as far as the efficiency efforts on the retail front. The cloud spending is starting to ramp at a more meaningful way with the optimizations behind them, and then on the margin. Those efficiencies will trickle down. And for the first time, were going to be able to start to value this company in a much more meaningful way on an earnings basis than just on a sales basis. Theres a narrative for much of last year, and microsoft did a good job fueling it, that google and amazon are behind, like way behind in ai. Anything amazon can do on earnings to counter that . Well, andy jassy pointed out this morning on a tweet that ai efforts and developments that theyre making for tools for developers. So i think a lot of the ai efforts that youre going to see out of amazon are going to be more behind the scenes, a look at developers utilizing it, as well as on the logistics and fulfillment and the Predictive Analytics on t