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April PCE, Skydance ups Paramount bid, Trump fallout: Catalysts

The core Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy components, increased by 0.2% in April. This reading aligned with Wall Street's expectations but marked a slower pace than the 0.3% increase witnessed in March. In addition, Treasury yields (^TNX ^TYX, ^FVX) are on the decline this morning after this inflation data.

Skydance Media submitted a new offer to Paramount Global (PARA) in its bid to acquire the media giant, according to the Wall Street Journal. Former President Donald Trump has become the first US president to ever be convicted of a felony. A New York jury found the former commander-in-chief guilty on all 34 charges related to his hush money trial. Investors are watching the fallout from the case closely, looking for any potential impacts on the broader market (^DJI, ^IXIC, ^GSPC)

For more expert insight and the latest market action, click here

This post was written by Nicholas Jacobino

Video transcript

It's 10 a.m. here in New York City.

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I'm Madison Mills alongside Shana Smith.

We're going to dive into the catalyst moving markets today.

It's PC print showing price growth is slowing the data coming in in line with expectations.

The core reading market marking the slowest month, over month increase that we've seen since the start of the year.

We take a look at the market's reaction right now.

You've got the dow in positive territory but the S and P and NASDAQ both trading slightly to the side and that verdict for former president Donald Trump coming just 100 and 58 days before the presidential election.

We're going to discuss what election volatility could mean for markets moving forward with a mixed earnings season for retailers.

We are going to dive into why some companies are falling behind while others are turning things around.

Let's start with the big story this morning and that is former President Donald Trump found guilty on all 34 counts of falsifying business records in hush money criminal trial.

We want to bring in Steve Schmidt.

He's a political strategist, one of the founders of the Lincoln Project and the founder of the newsletter youtube channel and podcast, The Warning Steve.

It's great to have you here.

So let's take a step back.

Talk to me just about how you think the verdicts that were reached yesterday.

What that tells us about the support that we'll likely see here or lack thereof that we'll see for Trump and whether or not you see the swaying the independent vote at all.

Well, there is a hypothetical question that's been debated now for the better part of a year and a half.

And it is the what if Donald Trump is a convicted felon and the Republican nominee?

So this morning, Donald Trump is a convicted felon.

We will see his news conference reaction at 11 ami think everybody should expect for it to be unhinged.

What comes next then is a sorting out and by Sunday through next Thursday, we'll see the completed polling tracks that by this time next week will answer the hypothetical question about the impact that this has politically on the race for certain.

This will spike intensity amongst Donald Trump's hardcore maga base.

And the second thing it's going to do is it, it's going to incite the narrative frame of the campaign, right?

And take it not a question about the future in the country, country about, but about who's gonna get payback, what who's gonna have revenge visited on them?

Uh What Democrat is going down?

So when you listen to the rhetoric, the assault on the jury process, the assault on the integrity of the courts, the assault on the judicial system, all of these things portend chaos and havoc over the next 158 days when we can talk about all of the details all day long, Steve of this trial and the outcome and the commentary around it.

But for the Biden campaign right now, the big worry is whether or not it's going to move the needle, whether or not it matters but doesn't move the needle.

If his legal battles from former president Trump were already priced in to polls and voter sentiment.

What the data suggests is that there's a fluidity upwards of 20% that have said they would turn against Trump in the case of a felony conviction.

We'll see if that plays out.

Now in this moment, it's also important to remember that Hunter Biden's felony trial starts in a week or so as well.

So we have a debate at the end end of this month, Donald Trump, the convicted felon, the former president will be standing on the stage with his successor who defeated him.

Donald Trump denies that result.

Uh Donald Trump in cited an insurrection.

What I'm trying to suggest is that all of what we have known before is coming to an end.

We are at a cracking up.

There's a lot of talk this morning, a lot of celebration online by Democrats.

He got his due the question at hand is what comes next, what comes after the first cycle of revenge?

The number one political virtue is courage, but the number one political wisdom is restraint.

Great political leaders show restraint.

And this is a moment in time where things are gonna get very, very, very hot.

This is a beginning of an unraveling of something I suspect is pretty terrible to come.

And we'll know by this time next week, how the American people are reacting to this.

But most importantly, how both sides react in the moment to the incitements that come today and come tomorrow from the event that is now concluded with a known outcome, Steve, when we talk about the ripple effects of this for our audience, specifically, how do you see a lot of this uncertainty playing out just in terms of the volatility that we could see in the markets, the instability that we could see uh just in terms of policies or maybe priorities here in the coming months.

Well, when you look at the economy and you factor in a constitutional crisis and that's what we're entering into is a prolonged period of political instability that is beyond the instabilities that we've seen or imagined.

And so right now, if the election were tomorrow, uh Donald Trump would win.

And so markets look at that and they see Donald Trump's capacity uh to cut taxes to deregulate.

And there's a lot of positive response to that the, the problem is when you, when you look at this moment in time in the events as they are transpiring around the world, we're a very dangerous hour.

Uh The hour that statesmen and women for the last 80 years have tried to keep us as far away from as possible.

So all of these events are transpiring together.

They're part of one fluid river uh that is picking up speed, the rapids are getting higher and the instability that follows from that can be profound.

For example, the Biden administration has cleared the use of American weapons uh to operate in Russian territory.

Um What are the implications of that?

Uh Do you take Vladimir Putin at his word?

All of this takes place in a moment of unprecedented instability?

That's just beginning because we don't know what's going to happen next.

For example, is Donald Trump going to be going to prison?

I don't think that will happen, but it could and if it does the chaos that will ensue will be enormous and it will have implications for markets for geopolitics uh for up and down the ladder as much as you can think of, it will have implications.

Steve My question to you is, and you mentioned before that a political leader shows restraint in a time like this.

But what would your advice more specifically be to the Biden administration right now?

A lot of people are out there this morning saying that they have a real opportunity to really capture that independent vote, which is going to be so critical.

Come November, what should be their number one top priority right now?

Talking about the future, talking about what comes next for the country.

The answer to this has to be something better and the American people aren't seeing it.

The, the fundamental reality of this race is 63% of the country which is a big number.

A supermajority do not want the choice that they're about to get between 82 year old Joe Biden and the convicted felon Donald Trump.

And so the independent voter is distressed, outraged and deeply unhappy and the idea that there's some combination of magic words that's going to deliver something new.

Some piece of information that is heretofore not known about either one of these people is nonsensical.

The, the election is fundamentally about now inciting your side to turn out.

And what decided the election last time was about 40,000 votes across a few states and a dozen or so counts.

And it is a game of small numbers.

It will be again.

And so all of this now will be parlayed into a reaction cycle and an outrage cycle aimed at getting that turnout.

All right, Steve, we're gonna have to leave it there.

But thank you so much for joining us this morning with your reaction.

We really appreciate it.

That was Steve Schmidt.

He is a political strategist he's one of the founders of the Lincoln Project.

And you can also catch his work on youtube and on his podcast as well.

Well as we continue to dissect the guilty verdict in former President Trump's hush money trial, a looming question remains, how could the conviction affect voter sentiment in the coming months heading into the election?

From on that we're going to bring in Isaac Boltanski, his BT IGs, Director of Policy Research, Isaac.

Great to speak with you.

As always, I'm sure you heard a little bit of what our last guest, Steve Schmidt was saying about the potential for 20% of those who've already been pulled to have an impact from this verdict from yesterday.

So let's talk about those polls to what extent do you think that this verdict is going to show up in the polling moving forward?

Well, look, I think, I think Steve is absolutely right in that we are going to go from hypothetical to real in about a week and we'll see what the polling tells us.

But here, here's what I've been telling clients when you look at some of the polling that we've seen so far, when respondents are asked how they would respond to a Trump conviction by and large and you have it up here.

Now, what you've seen is he would lose on average about six points.

Trump would of support, but five of those points just move over to the not sure bucket.

They're not going over to Biden.

Only one of those percentage points is going over to Biden.

And that suggests to me that there is going to be a temporary drop in support here that can easily revert back home to Trump over the next 157 days of this election.

There is still a whole lot of time between now and November and so to me, I, I think that ultimately, this is gonna be viewed as a blip in what's otherwise gonna be a much, much longer and probably convoluted story as this election season takes hold.

So I think what does this mean for the investor out there for the market?

How much does something like this?

How much do you expect it to add at least in the short term here to volatility and how much should investors care about a verdict like this?

Yeah.

Well, look, never ask a barber if you need a haircut, never ask a policy analyst if, if policy issues matter.

But, but I will tell you, we got a lot of inbounds last night asking was this expected?

Right?

And trying to understand where sentiment was the next round of questions?

Were, is he going to jail?

And the answer to that is very unlikely.

And today the conversations have been, well, I don't really care about this.

All the focus is going to be on the debate on June 27th.

And I think that's where the market is moving right now.

It's really segmented all the legal issues over here with a distinct focus on the debate because that is seen as, as you know, the first of a two part Super Bowl here, that's really going to have an impact on the six states that should decide this thing.

And Isaac, how is that reflective just to the activity or the uncertainty that we've seen leading up to past elections?

Obviously, the situation right now is unprecedented, but just in terms of that uncertainty, the impact that that has had, what have we seen historically, that maybe we could better prepare for some of the reaction that we could be getting here for the next 4.5, 5 months from now.

Yeah.

So what, what I focus on here is, is trying to let clients know that, you know, these are uncharted waters, right?

And so I think that's first and foremost, but if we do use history as a guide, I think the market starts to care about the election quote unquote, meaning that you see it more in some specific price action around the conventions, right?

And so I'm telling clients, June 27th is a huge date.

We will then have a renewed focus uh later in the summer, August time frame with the conventions and then it's going to be every single day that it matters.

And so the work that our clients have been doing recently is just trying to understand who are the winners and losers under electoral scenario and what are the things that are going to dominate the conversation no matter who wins.

And on that end, it's obviously just been a focus on the $4.5 trillion in taxes that are expiring next year coupled with the debt ceiling that's coming back.

So trying to understand how that fiscal fight in DC is going to impact markets has been something that everyone can do no matter where they are on the political spectrum.

Well, Isaac just to put a bow on it and I know this is the multi multi million dollar question.

Who is the more bearish candidate for markets?

Yeah, look, I think that that ultimately there is there is growing concern about what Trump would mean from a trade policy perspective.

I think everyone in the market says great for for deregulation confirms that the tax cuts that he enacted during his first term would probably be extended.

Oh, that's good.

But there is real fear about what would happen on the trade front.

So to me, I think that's the one cautionary point about Trump.

Otherwise he is seen as the best candidate for markets because of the deregulatory and, and trade agenda.

And so that's where we are.

There is as, as Steve said in the previous segment, there's a reason that 60 plus percent of Americans don't want either candidate.

Um but, but when we peel back some of the layers, we understand the nuanced differences in their policy that can then help you make an investment decision.

All right, Isaac Boltanski, always great to talk to you.

Thanks so much for joining us here this morning.

BT IG is Director of Policy Research.

Thanks.

Let's turn now to the other big story that we're watching today and that is P ce the latest reading on inflation.

When you take a look at the core measure core P ce rising 2/10 of a percent on a monthly basis.

Now, that's actually the slowest rise that we've seen since so far this year.

And super core services inflation, which does exclude housing that actually decelerated in April to about 0.27% that was revised lower from the previous month.

But again, when you take a look at that super core, I think the big notion there, yes, it did improve but is still extremely elevated levels, right?

And that's one of the issues here within this print.

And when you talk about, hey overall, maybe it could be viewed as a bit dovish because it did come in in line with expectations.

Yet there was reason to be a bit optimistic.

We did see a bit of a pullback or cooling here in consumer spending.

But that super core number is really what one of the focal points is for the street here this morning.

The fact that that has remained sticky.

What exactly that could then pretend to hear over the next couple of months when we talk about the feds fight to tame inflation.

It's the idea that no news is good news and that me is the new beat.

When it comes to the inflation data, we are getting a statement and from the National Economic Adviser Leo Brainer on this PC report saying that the cost of living is still too high for a lot of working families.

But the PC report does show continued progress in bringing down inflation.

Now, that's exactly what Jay Powell wants to be hearing from the Federal Reserve.

But it matters if he sees it in the data, more than whether or not the officials who are related to the Biden administration particularly are going to be seen that having said that the big focus in this state when it comes to the actual numbers under the hood, the big surprise was the 0.1% month, over month decline in real consumption.

That is such a tiny number, but it is still what a lot of the notes are already pointing to this morning as the big thing to watch, obviously not leading to a lot of gains in the overall market outside of the dow.

But it's something that I think is going to be fueling a lot of hopes about potential rate cuts moving forward.

That's really good to point out.

And then also we just compare that month over month out to what we see year basis because it can vary just a bit depending on uh, where you're looking in the index point that you're looking at.

But going back to that super core number, it was a year over year that has remained just stubbornly high when you take a look at the range between 3.3% and 3.6% going back since November.

So, yes, we are starting to see some progress but again, very far from what you would think the fed would want to see before it feels a bit more comfortable uh when it cuts.

All right.

Well, coming up, we've got much more of your market action ahead.

Stay tuned.

You're watching catalysts shares are surging after blowing past the street's expectations in its first quarter print, we got the retailer posting sales growth in all four of its brands.

Now, Gap, Ceo Richard Dickon joined Yahoo Finance is executive editor Brian.

So to discuss these results shortly after they were released, here's what he had to say.

It's not a silver bullet rigor is showing up in every part of our branded uh portfolio.

And the productivity that we're driving is obviously the metrics that we're enjoying right now.

But we've got a lot of work to do.

You know, we're, we're very pleased.

We're taking a very quick victory lap, but it's not a sprint.

It's a marathon for on what the signal is.

About the state of retail.

We want to bring in Dana Telsey, Telsey Advisory Group, CEO and Chief Research Officer Dana.

It's great to see you.

So let's start with Gap and then we can talk about where, what, what we're seeing elsewhere, uh industry, why?

But when it comes to gap's results last night, what do you think of what Dixon just had to say just in terms of they're not out of the woods just yet, they have more work to do, but it does seem like their product is resonating a bit better here with the consumer.

I agree with what he had to say.

It, it is a marathon, it's not a sprint.

I think there has been improvement.

The Gap brand and certainly the marketing behind it with Gaps Linen moves has drawn appeal.

Now you have a collaboration with Doen.

I think the Banana Republic brand is still a ways away from showing consistent improvement given there's still search for a new leader there.

It was good to see that the core bottoms improved at Athleta, but it did take promotions in order to move that and always under the hood at gap with expenses and mar margin management.

They've done a good job, consistency of sales and acceleration is what the Wall Street's going to be looking at into the future for Gap.

I'm curious what you think was the single biggest driver in getting shoppers in the door at Gap.

We are seen some reporting that the celebrity endorsements were part of what drove some of the traffic into stores.

To what extent do you think that that is a gap specific story or is that something that is a successful move across multiple retailers?

This cycle?

One of the interesting things that we're seeing coming out of first quarter earnings so far is where the product is new, where there is innovation behind it with this compelling marketing, it's resonating and yes, it was a gap brand.

But take a look at Birkenstock, take a look at Abercrombie and Fitch, take a look at Ralph Lauren and Deckers all were able to drive sales increases because of new marketing muscles put behind the product and the value pricing that some of the these products have with it because consumers today still remain what I call squishy.

They're being very cautious in where they decide to spend their dollars.

So then Dana, what does that tell us about the winners and losers to come here within the retail sector?

And will we see a further divide just in terms of the retailers that are working, that are resonating, that are doing the right thing here in terms of winning that consumer spending dollar versus those who continue to lag behind?

Yes, you you will.

I mean, overall the product's gotta be worthy that the consumer deems valuable in order to add and take dollars out of their wallet.

So it's going to be very interesting given some of the next names that are coming up.

I mean, next week you have Lululemon, you have PV H. We know there's been a lot of brand heat around what PV H is doing with the Calvin Klein and Tommy Hilfiger brand.

We're gonna hear from Lulu, what they're seeing in their business.

Given every, all our checks in the stores that I've done lately, we are seeing color, you are seeing more smaller sizes and one of the things we've heard is active continues to do well.

And so Lulu, obviously at the forefront of active after calling out that the consumer was more sluggish going into the first quarter.

It's gonna be interesting to see the rates of growth that are, that are reported next week when you take a step back and look at several of the names that you cover.

What thesis has this earning cycle helped you drive about the state of the consumer and who is struggling who is able to withstand the impact of inflation?

Has this earning cycle changed your thinking on the consumer at all?

Overall the certain cycle.

What's made me think about the consumer is differentiated, product is helping to win while we're still seeing for the most part, a consumer who's very choiceful.

Look at the trade down.

You've seen to a lot of the off prices, you're getting higher income consumers going to the off prices too.

So with Ross stores, TJ X Burlington all working that worked and did they take share from someone like a Coles who was going up against some more elevated clearance levels last year?

You have VFNVF has work to do in terms of innovating on their brands, whether it's at Vans where they just hired a new president of the Vans brand from Lululemon, whether it's at North Face or whether it's at um Timberland, there's more work certainly to do at the F Corp. And let's see what happens as we go through and take a look next week.

Even some of the other types of companies like the big lots out there are they able to deliver and garner traffic traffic gains are where the muscle is in being able to deliver on that innovative product and drive sell through.

And when you take a look at the stock reaction to some of these reports, we just had gap up on the screen, you're looking at a share gain of just around 20%.

How should investors that are looking to put money to work within the sector?

How should they be looking at some of these outsized?

Uh wins and the losses that we've seen as a result of these earnings, prints those that are trading to the downside.

Do you view that as a buying opportunity?

What does that tell us when you see a jump of the magnitude that we're looking at for gap, which is 21%?

So take, think of the journey we've been on in December.

When Jay Powell, the fed chairman said that interest rates would be coming down.

The consumer group was an early cycle group and the stocks rose and ripped frankly till the end of the year from January through November.

You wouldn't have expected the year to date performance that you got when 23 closed.

All of a sudden you go to 24 interest rates are not coming down as fast weather is unseasonal and you also have inflation that remains a headwind.

Therefore, the stocks gave a great pause and decelerated and came down significantly now with better than expected numbers, whether it's from a gap, whether it was from an Abercrombie, they're all of a sudden jumping back after the big damage.

So at the end of the day, I think watching inventory levels, watching rate of sales increases are gonna be able to help determine the winners from the losers.

All right, Dana, we're gonna have to leave it there.

Thank you so much for joining us with your insights.

As always, we really appreciate it.

That was Dana Chelsea.

She is Chelsea Advisory Group CEO and Chief research Officer.

Now turning to the market action nearly an hour into the trading day, looking at a mixed picture here with the S and P down 3/10 of a percent, the NASDAQ down about 7/10 of a percent.

After that PC print, we are seeing some pressure on yields as well.

The Wall Street may be fixated on the fed's preferred inflation gauge.

A lot of the attention more broadly today is on former President Trump's guilty verdict in that hush money trial.

So which of these two is gonna matter more for investors, economic data or what's going on heading into the election here with more.

We have Ed Yardeni, he is President of Yardeni Research to discuss Ed.

Thank you so much for being here.

Let's start on that Trump trial does a messy election and a necessarily breed a messy market reaction as well.

Uh Not necessarily, I think we've seen over the years that the stock market ha handles political uh turmoil uh fair fairly well.

Uh There, there has always been partisanship in, in Washington.

Uh This, this takes it obviously to a new level.

But uh you know, the initial market reaction has been really quite, quite muted because I guess the perception is this really doesn't change much.

There still will be a presidential election and it'll be Biden versus Trump.

Uh But uh I think uh even when we look at geopolitical crises as we, as we've been experiencing really since Russia invaded Ukraine.

Um initially, uh that that was bad for the market because oil prices went up and there's a perception that that would cause a recession.

But in the bene benefit of hindsight, it turned out to be a great buying opportunity.

So I would say any uh sell off in the market uh related to a geopolitical crisis or a domestic political crisis may actually turn out to be a buying opportunity and the market will continue to focus on what is most important.

That's the economy.

And the only, the only way politics, if politics affects that, then that will obviously have an impact on the stock market.

And do you think it will affect near term volatility?

I don't think so.

I think uh it was a certainly a uh a bombshell uh uh verdict.

But um again, uh there seems to be no repercussions, any serious repercussions in the in the stock market.

So I think we can take uh the initial reaction is probably the ongoing reaction to this development.

And why is that a, a an event like this?

Should that be something that investors put a little bit more stock into?

Should it be something that the market cares about?

At least, at least in the short term until we get a little bit more clarity given some of the uncertainty out there?

No, I, I don't think so.

I don't think the market needs to uh get all bent out of shape about this development.

Uh The market has lots of experience with uh political uh craziness out of Washington DC.

And at the end of the day, the US economy has performed remarkably well through thick and thin.

Um I, I often advise investors not to let their politics get in the way of their investment strategy.

Uh People who did uh not like uh Obama, for example, uh missed out on a very good bull market if that affected their investment strategy.

People who didn't like Trump uh also missed out on a, a great bull market.

And even here under Biden, uh we've seen that the markets come back and is the new record high.

Uh even though half the country may not like him and the other half uh might vote for him.

Ok. Well, since it sounds like you're saying we shouldn't really care, I'm going to bite here and go towards the conversation about the stock market.

I know that you've been sort of bullish to a point.

And earlier today, it seems like your view was really validated by the market, particularly what we saw with sales force, putting a lot of pressure on the dow.

Now the dow is sort of reversing markets.

We're up on PC A now we're seeing a bit of downside movement.

What do you make of the market reaction that we're seeing so far this morning?

And does it validate or invalidate your thesis?

Well, I, I, you know, you can't really tell day day by day.

Uh but uh my sense is that the market has uh done a remarkably good job of uh remaining resilient as the economy has remained remarkably resilient.

Uh, inflation continues to moderate, in my opinion, um especially when you take out rent, uh rent, inflation is still sort of the, the sticky area of inflation, but it is still moderating.

And I think we will be down to 2% by the end of the year.

And I don't see any reason why the fed needs to lower interest rates.

And I think the markets come around to that viewpoint as well and yet it's holding up extremely well.

So I think the markets uh is telling us that the economy can handle these interest rates if so so can the uh the market?

All right, and we're gonna have to leave it there.

But thank you so much.

Really appreciate your insights as always.

That was Ed Yardeni.

He is President of Yardeni Research.

We are going to have all of your markets action ahead.

Still looking a mixed picture across your screen.

The dow the only major index in the US that is to the upside so far today.

Stay tuned for more.

You're watching Catalysts Treasury yields under a little bit of pressure this morning after the Federal Reserve's preferred inflation gauge coming in line with expectations.

Bond yields have been on the rise this week as investors were considering the feds hire for longer stance, but we are seeing a dip following that P ce print.

Joining us in studio to discuss, we have Kh JP Morgan's US cio for fixed income currencies and commodities K. Thank you so much for being with us this morning and I just want to start on your reaction to some of the data that we're getting out today.

It seems like we've been joking that the meat is the new beat when it comes to data.

Do you think that that is going to be continuing here?

What does that look like in your outlook?

I have to confess.

I'm not sure what that means.

The, the, oh the meat me like if you meat, you threw me.

I'm sorry, I need to work on a new good news.

I'm works shop.

Ok. Take your feedback after the hit.

Ok.

So look, the bond market is really focused on three things right now.

Bond markets focused on inflation, which we got to read on this morning on employment, which we're gonna get a read on next week and then the Feds meeting on June 11th and 12.

So let's start with inflation and you're right.

It was basically a meat and a meat is a good thing.

And you mentioned that bond yields are under pressure.

That's a good thing.

That means prices are rising in the bond market.

So yes, a number that's in line with expectations has actually been well received by the bond market and broader financial market.

So please, I was gonna say, what do you think?

Just of the pricing action that we've seen right now in bonds and yields?

When you take a look at the 10 year, you're right around 449.

Are we gonna stay in that range?

Right around four or five here until we get a bit more clarity.

Yeah, I think that's right.

And there are really two things we're looking for in terms of economic data.

And then the third thing we're looking for is the FED.

So let's talk about all three of those things.

The first is inflation.

As I said, we got a good rate on inflation this morning in terms of personal consumption expenditures.

The reason that's so important for the markets is because it's the Fed's preferred measure of inflation.

What we've seen is a step down in inflation.

So on a year over year basis, inflation is now running at 2.75%.

The fed's target is 2.6%.

So there's been a lot of talk inflation re accelerating, but that's basically kind of rounding error.

If you look underneath in some of the details.

If you look on a three month annualized basis, we've gone from a 4.4% number in March down to 3.46 in April.

That's a pretty meaningful step down.

If you look on a month over month in April, that was running 0.334 March, we running 0.249.

So I think it's and then on an average monthly basis in the first quarter, things were about 0.36% for April 0.25 So a reasonable step down moving in line of what the fed fed thinks if we do see the numbers hitting that to handle 2.6 is that enough for the fed to cut?

I know they've said very clearly that they want to get to 2% and that then everything's gonna be great, whatever.

But are they gonna need to see a meaningful crack in something like the labor market to actually cut?

So you got to remember the Feds focused on two things.

They've got a dual mandate and that mandate is stability of prices and full employment.

So we've just talked about inflation coming down and remember the cure for high inflation for high prices is high prices.

You see that in some of the economic data you saw this morning.

So prices for goods were up 1/10 of a percent.

But what you saw was real spending on goods declined 0.38%.

So inflation is moving in the right.

It's what the Fed wants the other piece of it.

And then if you look in even more detail, the real progress in inflation was in, in services, ex housing.

So what is that?

That's health care, that's recreation, that's transportation.

So airline prices, we've seen a lot of progress on that in April.

That was 0.26 it had been running as high as 0.44 in the in the months of the first quarter.

So that's real progress.

Why does the fed look at that, that's correlated with wages.

And that's exactly the next point.

We've had a very strong labor market.

We've actually had 29 consecutive months with unemployment under 4%.

That's the longest string we've seen of strong employment.

Um, since the 19 sixties you have to go back to.

So we get a read on non farm payrolls.

Um, excuse me, we get a read on non farm payrolls next month.

Consensus estimates are about 100 and 85,000 jobs.

Um You know, the cycle low for the unemployment rate was actually 3.4%.

We're all the way back up to 3.9%.

So, I mean, our expectation is that the cumulative and lag effects of fed policy are starting to take a bite.

We're going to start to see a little bit of softness in, in the labor market and, and that, that's going to lead the fed to answer your question in a long winded way.

I'm sorry, but to answer your question, the fed is going to move toward cutting rates.

Yes.

What do you think that softness when you talk about a little bit more softness within the labor market?

To what extent, what are you expecting to see with that weakness?

So that's a great question and that's what the fed is anticipating.

That's why they're watching this decline or this disinflation so closely and they're watching the labor market.

So closely because what they don't want to see is a hard landing.

So the Feds actually engineered something that's extremely difficult to accomplish.

A soft landing in the economy.

We last had one, like one of these like this in 9596.

And what you saw then the fed was worried about inflation.

The fed was worried about the unemployment market being strong.

And nevertheless, they cut in July of 1995.

So we think the fed, the fed knows that history.

They don't want, they want to repeat a soft landing.

They don't want a hard landing.

That's why we think the fed eases really quickly here.

I'm curious about where you see value in the curve.

If we are starting to see some disinflationary trends, does the long end of the curve start to look a little bit more attractive or is it still front end all day?

I think it's the front end and it's the belly of the curve.

We think you get some, you know, if you look at the yield curve is the yield curve is dis inverted, that's typically been a sign of, of a recession and we haven't had a recession yet.

The feds trying to prevent a recession the way they do that, they cut rates, you get the long end to come down, you get the yield curve to dis invert.

Thank you so much.

Kay, this is really fun.

I appreciate you joining us and we'll talk about my catchphrase phrases in the break here.

Really appreciate it.

Thank you so much.

That was Kay her.

She is JP Morgan's us cio for fixed income currencies and commodities.

We're gonna take a look now at some trending, take share of Mongo DB are sliding this morning after the company issued light guidance for the quarter and reduced its forecast for the full fiscal year.

Mongo D BS revenue did grow 22% year over year, but growth slowed for the third consecutive quarter.

It was 57% 2 years ago.

Now, obviously seen a lot of downward pressure on the stock again, plummeting over 26%.

That's their biggest fall since September of 2022 as a reminder just to take a step back, what is this company?

Right?

This is a database software company cutting their four year forecast, putting a lot of downward pressure on this name.

This is one of those tickers that pops up a lot here at Yahoo Finance.

So it's one of those names that we continue to talk about because it is one of those names that tends to move off of the excitement surrounding A I.

But when it comes to the business fundamentals that you're gonna be getting when it's in the middle of earning season.

This is a company that is clearly struggling with that and has had a what RB capital markets calls a disappointing quarter.

The skinniest beat in a long time in terms of revenue and the outlook, Shana they're saying is underwhelming the latest software company company to come out with downbeat guidance.

Yeah.

And I think that's the most important point, right?

When we talk about some of the weakness, it's not only Mongo DB, it's not only some of the names that we've talked about in the last 24 hours when we take into account what we heard from sales force.

But it's really this trend that we have seen industry wide.

When you take a look at some of those other results, you don't have to look any further than the results that we got out from snowflake from U from U I have from even Adobe here.

They are investing in their A I capabilities.

But I think the real question is, how much is that going to move the needle?

And what is that really going to do to demand at least in the short term?

So when it comes to some of those uh weaker than expected results or weaker than expected guidance, obviously, the street taking a bit of issue with what they just heard from a Mango DB.

And we're seeing that reflected in the stock price reaction.

But again, this move of it's off over 20% it was earlier, I believe it's still off yet.

Now, just around 25% this goes back to this, these massive swings that we've seen really over the course of the earning season.

If we're seeing any of these companies, especially ones who have been caught up in some of the hype surrounding A I if they don't meet expectations and many times that they don't significantly exceed expectations when it comes on the most recent quarter and also what they expect to see here in coming quarters.

We're seeing many of these stocks punished and I don't think you have to look any further than some of the losses we're seeing in Mongo DB to really tell the story of this earnings season and where investment sentiment lies investors.

All right, let's talk about Paramount because the battle for Paramount Sky Dance Media reportedly submitting a new offer for merger with Paramount Global and Paramount directors are expected to review the deal soon.

That's according to the journal.

This is the latest twist in what has been feels like over a month long battle here for the entertainment giant Yahoo Finance's Alexandra Canal has the details on that.

Ali it's a new day.

We've got a new offer on the table.

Yeah, it feels like these deals have just been all over the place over the past few months a few weeks ago seem like the Sony Apollo deal was going to win out.

Then it felt like we were entering a period where maybe no deal at all.

And now it seems like the Sky Dance deal is officially back on the table according to the Wall Street Journal Sky Dance submitted a sweetened offer that apparently is more favorable to both those voting shareholders along with those non voting shareholders.

And that was really the crux of the issue here.

When the Sky Dance was first introduced, Shari Redstone, she controls paramount through her family's holding company, National Amusements.

She has consistently been in favor of the Sky deal, but those non voting shareholders felt like the initial offer unfairly benefited Shari and came at the detriment to those other stockholders.

So that's what's led to a lot of this back and forth.

And even though we don't have an official deal yet, we've seen a ton of changes already at this company.

Bob Back is out as CEO for directors are in his place, there have been some industry watchers that believe Paramount should try and fix their problems internally before they go and try and sell them solves.

However, a lot of the issues that Paramount is facing, it's really industry wide problems, the struggle to resting profitability, the decline of linear TV.

These are all issues that are not unique to Paramount.

So, you know, moving ahead here any deal will have to first be approved by an independent committee of directors, then it will ultimately be up to sha so future continues to remain unclear.

The stock is down about 20% since the start of the year, but we are seeing shares up about 2% today.

All right.

Thank you.

So much as always for joining us on this beat.

I know you are covering it very closely for us, so we really appreciate it.

Thank you so much.

Now, moving on to another big story here, billionaire investor Bill Aman reportedly planning to take his investment from Pershing Square public that could come as soon as next year.

According to the Wall Street Journal, now head of the IP O A man reportedly selling the stake in the firm to investors in a funding round that expected to value per square at about 10.5 million dollars with the deal expected to close in the coming days and just some context on this sea, this is the holding that's going to have in terms of the portfolio of stocks.

This is the Ackman favorites of the Chipotle Hilton Universal Music Group, but this is kind of a weird one in the world of hedge funds.

This doesn't typically happen.

At least I have not seen it, seen it happening particularly following the financial crisis.

So it would be kind of unprecedented move but also potentially an opportunity for investors who like to follow someone like Bill Ackman to kind of get in on his holdings.

Yeah, exactly.

We certainly have seen kind of the tide turn just a bit when it comes to the debuts or lack thereof that we've seen the hedge funds.

I think a lot of that just surrounds the uncertainty or unpredictability when it comes to their revenues based on performance fees based on management.

So it's really why we haven't seen a lot of those since Mr Sober really soured on hedge funds following the financial crisis and everything that we all play out through 2008 and through 2009.

But when it comes to this current valuation, at least reportedly that we're going to see here from Pershing Square, Pershing Square telling investors this is all according to the journal again, that its valuation is warranted because it plans to bring in billions more in sticky assets.

And he adds that small concentration of stocks that he thinks is are under performers.

You mentioned Chipotle Universal Music, obviously one of those holdings as well.

So what exactly the reception and demand is going to be like, I think that is very uncertain just given everything that has played out over the last 1617, 18 plus years and exactly how excited investors would be for an IP O like this.

But again, it is notable and we will see whether or not Ackman is able to capitalize on it, obviously a very well known name, more well known just in terms of the headlines that we have seen.

So we'll see how successful this is.

But I think there's lots of questions just about what that demand is going to look like.

Lots of questions and a punctuation point for Ackman who has had a lot of volatility himself.

In the recent year here with regards to commentary on campus protests, also potential support for former President Trump's campaign.

He is likely to back the former president.

So a lot of news for the Bill Ackman followers out there to continue to follow.

Now the Biden administration unveiling guard rails this week for a controversial tool used to offset carbon dioxide emissions, carbon removal technologies extract and sequester CO2 from the atmosphere.

The company buying those carbon credits to offset their overall emissions.

BC G reporting man for those credits has grown 800% since 2020.

As firms are relying on that to reach their net zero goals.

A big tech scene is the biggest buyer with a consortium of investors including meta and alphabet backing a surprisingly low tech solution to scale the market.

A go fita set out to explore just how effective that process is.

For the latest episode of next Fight against climate change begins with one of the most abundant resources on the planet.

With the backing of some of the largest tech companies, Basalt has long been considered the building blocks used in concrete and asphalt but start up lithos carbon is using it to remove Co two from the air.

This material is what's chemically reacting with carbon dioxide to permanently capture and sequester it into a form that takes it out of the atmosphere.

The company is operating with $57 million from a consortium known as Frontier which includes alphabet and meta.

The process called enhanced rock weathering happens naturally over thousands of years.

But lithos is accelerating the timeline by spreading the finest form of rock dust across farm fields and companies are relying on the process to reach their net zero goals.

You can catch that full episode of next on Monday, June 3rd in asking for a trend that is coming at 445 Eastern next week.

We're gonna be right back with more news after the break, Donald Trump becoming the first president to have been convicted of a felony.

Now, the former president found guilty on all 34 counts of falsifying business records to cover up payments ahead of the 2016 election.

We've been talking about this all day.

We want to bring in our very own Rick Newman who has been following this for the last several weeks, months, years.

So Rick, as we sum this up in our biggest takeaways here from what we've learned over the last 20 four hours.

My question to you is this is one of the, it is the less serious of the three other cases that he is facing.

So how does this set us up then ahead for the next time?

We've been talking about this all day, like enough already, but there's only 11 a.m. We got a lot more.

We're barely getting started.

Uh So the three other cases are more serious.

Um And you know that for example, the the sentencing would be a lot more than what we're seeing here.

There's the documents case in Florida where Trump, I mean, we know that after he left the White House in 2021 he took all these classified documents.

There's evidence in that case that he shared some of those documents with other people.

He wasn't supposed to have them, he wasn't supposed to share them.

And that is those are serious offenses if he's convicted.

I mean, people who have done far less in terms of sharing classified information or possessing it when they shouldn't have gone to jail for 10 years or more.

So that's serious.

We don't know when that case is proceeding very slowly.

It definitely not going to happen before the election in Washington DC.

There's a charge against Trump for his role in instigating the riots at the Capitol on January 6th 2021.

Uh We're waiting for a Supreme Court hearing there to say to what extent uh can Trump be charged with that?

That the Supreme Court could rule probably will rule by the end of June.

Um But then that case probably also will not get started before the election.

And then there's the uh Fulton County, Georgia case on Trump's interference in the election where he uh got on the phone with people running the election down there and told him to find something like 12,000 votes so he could win instead of lose Georgia, um, that has also taken a swerve course, uh, with some questions about Fannie Willis appointing her former boyfriend to be the, uh, prosecutor, which was a really, uh, he real head scratching move.

But that, that has now for the most part passed and that trial will get underway eventually, but also probably not until after the 2024 election.

So if Trump wins, he can withdraw the two federal cases.

Um, uh, so that he just doesn't have to go to trial there.

He cannot withdraw the Fulton County, uh uh case which I guess will go, maybe get underway in 2025.

Yeah, I mean, it's, it's definitely a lot of head scratching as you put it, Rick and I know that we are just beginning and as you mentioned, the big question is what is the impact on the election?

And it's just way too early to have an answer on that.

You know, if Trump were a normal person, there's a very high likelihood he would be going to jail.

I'll just leave it like that.

All right, Rick.

Well, we are going to continue to cover this, of course, coming up, we are waiting for former president Trump to begin his scheduled press conference at the top of this hour.

We're going to have all of that and more when we come back.