Plus, the other big piece of the market puzzle right now, earnings. Well trade some big names which reported this morning and preview some of the names due out after the bell, including amazon. But first a check with the markets with two hours to go. The s p 500 trading by 40 points. Small caps the key laggards as we watch the dollar strengthen. Gold is down by 0. 2 . Big mufr to up the side, eli lilly raises guidance thanks to sales of the obesity drug which exceeded half a billion dollars in the quarter. Way ahead of expectations. And here is a few of the other big names were watching for after the bell. One would be amazon, two would be amd and the third would be super micro. Two out of those three are lower but amd is higher by half percent. We begin, however, with the fed as we are just 24 hours away now from the decision on Interest Rates. Widely expected that the fed will keep rates unchanged. Our next guest doesnt see a cut tomorrow but is sticking with his forecast for three rate cuts this year. Starting in july. Michael feroli chief u. S. Economist at jp morgan. Michael, something occurred to me as we were reading that introduction where we talked a little about higher than expected inflation and maybe some slowing in the chicago pmi. Is the feds challenge neither going to be inflation or too fast growth but something we remember called stagflation, perhaps . Well, i think right now the bigger challenge is inflation. Take that much signal from the Growth Numbers we saw this morning. Particularly with the labor market, that continues to add jobs. Pretty robustly, so i do think what we see friday morning will be a lot more important than what we saw this morning with respect to any stagnation of the economy. Absent that, i think job number one continues to be, as it has been for the past two or three years, continues to be inf inflation. Why are you a little against the grain right now in predicting three rate cuts this year, when many are retreating from that number to two, one, some zero, what makes you confident . Well, were a little on our heels particularly after this mornings eci number. But you know, well see if we do see any softening in the jobs data. We had Unemployment Rate that has been unbalanced, drifting higher over the past year. If that continues, i think we could be on track for an easing sometime this summer or fall. But if we see the labor market, you know, continuing to or showing more resilience and less of a move up in unemployment, i think it calls into question whether they are going to be cutting any time in the summer and fall. Michael, how do you think Jerome Powell handles questions on the strength or weakness in the u. S. Economy and how much weakness he is willing to tolerate just to get inflation down to 2 . Well, one thing is hell sound a lot different than he did six weeks ago when he kind of brushed off concerns about the inflation prints we saw in the first two first two months of the year, the third month really seemed to have changed changed the tune. I think on growth, though, however, hes been pretty consistent that they will react to unexpected weakness in the labor market. That has been, you know, part of their story here for a while, except we just havent seen any unexpected weakness in the labor market. I dont think he needs to modulate that message. But i think really where youre going to hear quite a different is how hes talking about inflation. Sounding quite a bit less confident i think than six weeks ago. He started to do that, as if to condition the market and the audience for what he might say tomorrow that his confidence level that were making sort of unimpeded progress toward 2 is less high than it was, right . Yeah. So two weeks ago he made those remarks. He also said because of that, you know, the rate cuts will come later than previously anticipated. So then i think what leaves what the big question for tomorrow is he had in march said the committee expects rate cuts at some point this year, right . Maybe no longer expecting three, but are they expecting any. I think thats another question hell have to is it Interest Rates that have troubled the market this past month . And what do you see heading into the future for equities . Well, im not much of an equity strategist. Clearly the pivot in the fed has been something the market has had to digest over the past i guess really three months now. I think we are at a point here where, you know, taken out a whole lot of pricing for this a whole lot of fed cuts for this year. I still think the bar to hikes is going to be pretty high. And again, coming back to powells remarks two weeks ago, he really said the decision is how long to keep rates elevated, not when to hike rates again. I think for that to happen, you would really need to see a sense that the labor markets are tightening further and that wage pressures are building, Inflation Expectations are moving higher. I think were hopefully still pretty far from that point. What is your take on the consumer right now, michael, just given that youre expecting three rate cuts this year. We look to add the Consumer Confidence data, a 21month blow and report from mcdonalds which showed not only did profits come in light but the Company Really stressed this point that the consumer is looking for a better deal. They may offer discounts on their menu. How do you size this all up . First of all the Consumer Spending data have been very strong, at least through march. Now, thats history. Going forward, there are some reasonable concerns about very low saving rates, credit card balances that are moving higher, and those are legitimate concerns. However, i think whats really going to not to sound like a broken clock, it comes back to the labor market. The wherewithal for the consumers to keep spending like they have in the First Quarter of this year becomes more in question. Absent any slowing in the labor market the consumer can continue humming along like they have been so far. Even if the Housing Market stays so strong and prices remain elevating which we know is pricing out so many people right now. That has been a problem. You are seeing i guess you saw reminder of that again this morning with rental and Homeowner Vacancy rates remaining super low. That is a problem here. I think its a structural problem and will take years to correct. Well leave the conversation there. Look forward to your insights tomorrow. Michael feroli of jp morgan. Our next guest is focus on the fed but says the labor market holds the key in 2024 to sustaining market expansion. Lets bring in chief investment strategist at janney montgomery. We have adp tomorrow anl job openings right before we hear from powell. Well, you mentioned the latter to me is more important. The jolts report, i would be looking inside that number for the quits rate which is holding 2. 2 , which is in line with prepandemic trends. I would also be looking at the job vacancy rate. This is something governor waller had noted as it continues to move lower from current levels of around 5. 3 toward what he believes around 4. 5 rate, which could trigger an acceleration in the rise in the Unemployment Rate. Ill be looking for that. Then obviously later in the week, jobs claims which have been hovering near historic low levels and obviously culminating on friday with the bls number on jobs. And so a lot of activity on the jobsrelated market that will give us a per view into how well thats going to stay conditioned to be able to provide the income stream and the wherewithal for consumers to continue to propel economic activity. Mark, as to how investors should be positioned, youre saying this rotation away from tech into industrials, energy, thats where investors should be looking for opportunity. But you could argue those sectors have all seen that rotation, the runup this month. Well, they have. But thats also relatively fresh. These were the sectors that were really laggards last year. Only more recently that you started to see these other sectors usurp Tech Leadership and Communication Services has only recently given way a little bit to these sectors. And so i still think theres more horsepower embedded in them, particularly given the fact that the u. S. Economy continues to elicit signs, for the most part, that its still quite stout. And were even starting to gather some evidence, albeit somewhat embryonic, nonetheless, that global activity is picking up with better news out of europe and china alike. So important to the big, large cap multinationals that propagate those sectors like materials and energy and industrials. Since you mentioned europe, lets talk about one of your choices which is bnb parabas. Nearly 7 dividend yield on its adr. Huge dividend yield. Attract i have for investors looking for not just current income but total return which starting off with something north of 60 will get you a long way to pretty exceptional prospect for a total return. But, you know, its the largest Financial Institution europe, banking institution. The ninth largest in the world by assets. Trading at about seven times a multiple on earnings and trading at about 30 below book value, with signs of improving conditions in the european economy leads us to believe that bnp is undervalued and a rerating is at hand. We know that data shows home prices remaining at an alltime high. Do you think in a way thats propelling the stock market, mark . Where americans just dont have another place to put money, cant buy a new house, might as well put it into the equity market . Well, that could be a cause for it. You know, certainly cash continues to compete on a lot of levels with the equity market given the enormous piles of cash that are sitting in money market accounts. But, at the same time, yeah. I think the deterrent to committing capital that otherwise might go into say investment if not necessarily a primary home, real estate as an Investment Property may be finding its way into the stock market because cap rates on real estate, whether you were talking about residential for renting purposes or for commercial purposes are exceedingly low, leaving a very low mar john for safety there. Maybes that capital has been freed up for riskbased investment that would be otherwise earmarked for real estate helping to again put a bid into equity prices and sustaining them at somewhat elevated levels. Your previous guest talked about some of the chop we have seen here recently, which we expect likely to continue for a little while as investors realize that perhaps rates will stay elevated for longer than what was originally expected. But ultimately we think the advance will resume. Why did stocks stumble in april . And what do you expect through the summer . Well, tyler, i think it was an intersection of somewhat overbought conditions. Intersecting, if you will, colliding with rates. And this you know, fundamental shift in the outlook for what the Federal Reserves reactions function will be to high inflation, that weve had three cpi readings, a pce reading and obviously culminating with the exclamation point the employment cost index came out with today is shaving those rate cut expectations. So, i think investors were out a little over their skis with regard to the prospects for an imminent and multiple rate cuts. Thats been reflected in reevaluation of stocks lower. We had a correction that maybe were not through the complete mist of it this juncture. So whats next . Well rally into yearend. You think well rally into yearend . I do. What sets that up . Well, the president ial election cycle. If as an analog, passes prologue what we typically see in Election Year is consternation over the summer, sell in may and go away and rally emerges later in the year which could coincide with still sturdy Economic Data and the Federal Reserve getting away with maybe one or two cuts before the end of the year. Possibly even three, like michael had expressed. But, nonetheless, that would be enough i think to put a bid into equity prices as long as, again, consensus estimates for earnings stay reasonably sound. Yeah. I guess the answer there is if the republican doers, thats good for stocks. Mark, thank you very much. Youre welcome. Coming up, musk announcing another round of tesla layoffs. This coming after a watershed moment for the company as it gets self driving when the dust settles. What can we expect for the future of tesla . We need to talk about tesla everyday. Well do that next. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Its time to feed the dogs real food in the right amount. A healthy weight can help dogs live a longer and happier life. The farmers dog makes Weight Management easy with fresh food preportioned for your dogs needs. Its an idea whose time has come. ive always been driven to get my money right. As a kid, i watched my mom struggle financially. 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Senior director of the super charger business as well as the head of the new Vehicles Program and the employees in those divisions, some numbers have put that at about 500 employees, bottom line is, more cuts at tesla. The company, as you mentioned, had already said, hey, look, were going to be laying off 10 of the staff. Thats approximately 14,000 employees. Those were cuts that were announced a week, week and a half ago. Elon musk, however, after those came out, there were a number of reports that he wanted even more cuts. Than 10 . Whether you believe that or not, it is clear from the latest moves that he is serious about cutting as much as possible to bring the companys finances in order because they are facing the ev winner that everybody else is facing, which we saw with the numbers that were reported last week. As you take a look at shares of tesla, keep in mind, that the earnings were down 47 versus last year in the First Quarter. That will get any ceo and certainly elon musk to say, how much more can we cut and where can we cut . Thats why you had these latest moves that caught so much attention last night. My question is you mentioned that the executive in charm of the super charge division the executive in charge of new Car Development were being cut. I think maybe i misunderstood, are those divisions being eliminated . Because those seem like pretty important unclear. Unclear. Unclear if its divisions eliminated or be consolidated into other divisions or if theres going to be some type of a restructuring. You know how this works with tesla. Even when you reach out and ask for a comment, what you often you dont hear anything often in response. So that thats up to your interpretation, tyler, in terms of what will happen there. And lets be clear, the super Charger Network is one of the shining stars, if you will, within tesla. Yes, yes. In terms of what attracts buyers and we know that they basically have it has become the Gold Standard within the ev business here in north america with other automakers saying, yeah, were going with teslas service and were going to have access to the super Charger Network. Inner operability between their chargers and tesla. We want to ask you about stellantis. What was the stumble there . Little bit of the stumble was accelerated not just by the numbers that came out early this morning regarding q1 deliveries and revenues. Remember, we dont get the First Quarter earnings. They do half year and full year. Look at the deliveries, not great. Total down 10 . Europe down 7 . U. S. Almost 6 increase which is relatively speaking a bright spot for the company. But keep in mind, they have made the decision that they will not be taking any hits in terms of pricing. That theyre going to hold pricing as much as possible. That said, that means you have lower volumes. And that was reflected in their q1 revenues dropping 12 . But again, the real pressure that came on the stock, it happened after the executives gave an outlook in terms of what theyre expecting. It was not a very optimistic outlook, even though they have reaffirmed their Earnings Guidance for 2024. Bottom line is, tyler, youre looking at an industry right now that is facing pricing pressure. And you have one of two choices, if youre an auto company right now, you either cut volume or youre going to have to cut prices. And thats why you see inventory levels, whether its at stellantis or at other automakers continuing to increase because they have not cut pricing as much as many believe they should. Phil, thank you very much. Phil lebeau on stellantis and tesla. After the break, copper is rallying to a twoyear high. Well take a look at the commoditys space when power lunch returns. at enterprise mobility, we never stop looking for new mobility solutions. 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