good afternoon welcome to power lunch glad you could be with us. stocks losing steam. but dow still holding on to gain which is would make an eight

session winning streak so what could potentially derail it >> could it be the fed we'll hear from two fed presidents in a couple minutes when might the first rate cut be come something we'll see if they answer that. but first a check on the markets. dow trying to make an eight day streak nasdaq still down a bit. and let's take a look at changes of zeekr, a chinese e vv maker going public opening at 26, trading at 27 and change >> and novavax reaching a deal that involves developing covid and flu vaccines is an any. >> and let's begin with the market and what the fed does and says from here

mike santoli is joining us >> and i think first thing i'd observe is that interest rates by the feds are stable for ten months, i think that you'd have to say the policy setting is in a pretty good spot when you've had the economy growing and inflation mostly continued to go down so to me that is the basis for whatever win discuss here. but what the fed does next, it is clear that there is an orientation toward trying to get in some easing action. might not be multiple cuts but the gesture of easing i think that is out there. and they are really looking to see if the inflation numbers can cool enough to open that window wide enough for them to get perhaps that easing in but they have shown that they will be patient along the way to making that call >> and you have a fun take on this is this -- i think it is a great point. an echo of 2015 but in reverse

back then, they were so desperate 20to do the first hike and now they are desperate to do the first cut. >> i think that is right i've been talking about this about a month. not everybody walks around with the macro narrative of previous calendar years in their head like i do. so in the end of 2014, suggestions that there would be multiple rate hikes off of zero. they didn't do it. the data did not cooperate it was slow growth inflation almost nonexistent markets were choppy. industrial recession but in december of that year after a close call in september, there was one rate hike and then nothing for a year so i don't know that we'll necessarily take it down to the wire like that, but also the case that the economic data not really helping out the fed and its intention to get less restrictive. i think that is also a key point. but the fed's own framework, they are restrictive no matter how the economy is behaving with

the short term rate at $5.25 >> and back then we were eager to move on and we couldn't i wonder if it is a longer wait. >> img that is the case. people want to turn the page on this i think there is an acknowledgement if inflation remains sticky, is one quarter point the difference in other words, policy maybe has done what it can do for the moment we'll see where it goes from there. >> mike santoli, thanks very much and with the dow on track for its eighth winning session in a row, is the stealth rally back for the thirdsecutive quarter? our next guest is not convinced.

he expects another leg down for this market. phil orlando is joining us good to have you with us >> thanks for having me back >> you called for a 5% to 10% correction in stock and we got that, like a 6% correction but i guess you don't think that is quite the correction that is enough to correct the market why another 5% decline potentially? >> we've rallied back almost to the old highs. and i think you touched upon it, we've had a pretty good earnings season we're 990% of the way through earnings revenues up about 6% and those are better than expected but with earnings behind us, market has to shift its focus to something else and i think that the question of

stagflation that chair powell oig addressed last week is one that will come to the forefront. look at that michigan numb. inflation expectation increased. and we'll get updates on wholesale inflation and sales. our guess is that retail sales will be soft and inflation will be sticky and persistent and perhaps that seeds this further correction that we might expect over the course of the second quarter >> and i'll spot you the idea that inflation seems to be moving in maybe not the right direction. maybe not -- maybe moving a little bit higher. but on the stagflation question, we had quite a conversation

about it last week during the fed meeting. most people felt we were no remember near stag operation bec - stagflation. and so are we talking about the stagflation that we knew a couple decades ago or another more benign form of it potentially? >> and what i'm referring to is directional. you look at gdp the last three quarters, and we were at 4.9% in the third quarter of last year 3.4% in the fourth quarter and more recently 1.6% so the economy is slowing. yet inflation measured by the

cpi, nominal cpi has actually gone up the last three months. er we're seeing higher levels of i inflation with electricity, food, house. and so we could be looking at slower economic growth and higher levels of inflation but we're not looking at early '80s levels of inflation >> so great answer and let me just say given that where might a pullback take the biggest bite >> the reality is that the stock market is up 10% in the first quarter of this year, up 28% since of end of october through the end of march largely driven

by ai fomo so let's say we were to get hypothetically a 10% correction from these levels. i'd say the ma g7 stocks have done well. maybe they will be down 20% and the other stocks, domestic large cap value, small cap growth, international stocks which are not participated to the same degree, maybe those stocks will be down marginally to 5% so i think that we have to play defense here until we get a better sense of what the trends are. >> all right big shots not slams. phil, thank you. >> was that pickle bault refebaultball reference? wow. and now let's go to megan.

>> and new treasury data shows us the u.s. government is spending $102 billion on interest costs last month. a 35% energy and fiscal year to date interest payments are up similar 36%. rising faster than any other line item in the treasury budget other increases last month, social security spipding was up 11% because of higher cost of livinge adjustments and hhs is up 64%. and so across the report, you can see impacts showing up of high inflation and high interest rates on the government's budget. >> a tough situation megan, thank you

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. and we'll see if the winning streak holds on. but the fate of the rally could hinge on what the fed does and when for some key insight on that, we go to steve liesman with not one but two fed presidents >> and we have an extraordinary two guests here. neel kashkari and austan

goo goolsbee >> we're like the two on the muppet show. >> and so i did some research. vikings over the bears 55-67 and vikings have a real good home advantage 38-24 but the bulls have an advantage over the timberwolves. so we'll see how we score this at the end and you talked about the idea of using the ten year as how restrictive the fed is so give us explanation >> and in a sense we have six policy tools the expected path of the federal funds rate and expected path of the balance sheet. and how do you put that all together what i like, ten year incorporated all the factors and outlook for inflation.

and we know that investors base their investment decisions on longer term interest rates not on overnight interest rates. so for me if i depict one measure on how restrictive the policy is, it is the ten year. >> and that has come down a bit. is that good enough for you? >> we've raised it by 200 basis points since before the pandemic which is about equivalent to as much tightening in the 1994 cycle. that suggests that policy should be pretty tight. but when i look at real activity such as in the housing market, we are not seeing as much of a pullback as i would have expected and that makes me cautious that maybe we're not having as much downward pressure as 200 basis points of long tightening would have implied. >> are you as autious? maybe the fed is not as tight as we thought given how much rates have come up >> i would say we're both in a spot where we've had dcross

currents we've had the inflation data and especially the housing part of it is forefront on my mind we had great progress in 2023 and bumps in the beginning of 2024 and it feels like we're both saying we need to gather more information and wait and see. on the question of are we restrictive, the fed doesn't really control long rates. there is a lot take goes in on longer rates so i tend to look at the fed funds rate minus the inflation real fed funds rate. and to me the level of that is as high as it has been in some time, so i feel like we're in a -- >> so let me respond to my agood milliken conference, major

comment was that they are not tight. we think monday tar policy works through financial conditions pan if the business community feels like we're not as tight, maybe we are not as estrictive >> so do you want to go higher then >> i'm in a wait and see mode. let's get more data. >> but not reeling it out. >> nobody can real it out. >> nothing is never not on the table. and the job of the central banker is to be paranoid in everything >> i don't like tying our hands even partially getting a lot of

data and more information before the next meeting much less for the rest of the year i think that -- i don't want to speculate about the conditions what we need that the data dogs need to do some sniffing and figure out are we kind of beat on the path like what we saw last year where inflation fell almost as much as it has fallen without a vrecession or did we up all our good luck and this bump is actually a sign of overheating. that is the sign we're -- >> and he called this bumps. how do you think about it? >> i don't know. we saw massive -- we agree we saw tremendous gains in the supply side of the economy last year that drove a lot of the disinflation the question i have, are getting more supply side gains i'm a little suspect of that and now up to monetary policy to

bring inflation from 3% to 2%, so my question of how tight are conditions right now to me that is paramount because if it is all up to us and not the supply side, we need to see whether the conditions are tight enough and i don't know right now. >> how do you respond to what your colleagues said about the glad maybe we don't need to cut this year? >> and we're in the same place we need more data. we have a dual mandate that will guide us so i don't know. i'd rather speak in scenarios than in saying this is necessarily what i think is going to happen. >> and kelly evans in hq has a question >> i really appreciate it. if i may, i'd like to ask why we haven't seen more of an effect by what would seem to be tight monetary policy the past year or so do we have to keep waiting for the lags or is there something else going on?

because you would have thought the fed would have backed off or eased. so how do we use the measure in real time if it appears that all this tightening is not yet having a bigger impact >> it is a great question. i'm wondering -- in the piece that i wrote i'm wondering is theren a argument that the notion of a neutral rate has at least temporarily gone up. i think that we agree things like demographics and long term pro pro rate drives. but there is a temporarily elevated neutral rate. right now i don't know >> and so we can only use it if we know what the level should be if it is two and change -- >> that is the rub

>> and obviously are we talking about 3% being restrictive or what is the level, how much further might we have to forgive? might we have to raise the fed funds rate >> well, look, once we get into the question of what is our star, when we can't observe it, i fear we can get into a chasing our tail situation and even the question of financial conditions as an element of restrictiveness, i'm more old school. i worked with paul volger and i believe his statement, let's remember the order our job is to act. the market's job is to reabarea. let's not get it mixed up. >> and i guess you could call this an alley-oop if we're playing basketball spin for me the way that inflation comes down

when you look at the different segments of the economy. and you have the idea of the deglobalization thing so you have upward pressure on infl inflation. you have an economy running high spin the disinflationary story >> i think that it would go, a, look at the last seven months of 2023 we were at or below our 2% target and that came from goods going back to milder deflation services coming down to something like what it was before and more progress on housing that is why i keep saying for me, the very forefront indicator is this puzzle that housing inflation has remained well above what it was pre-covid. if we got benefits in 2024, i think that it would be that the labor supply increases that we

saw in 2023 continue to benefit through the economy even if they don't continue growing those benefits have a lag. and then too you see progress on the housing front. >> can you get behind that or are you still skeptical? >> i agree with the scenarios. if you look at new leases, they are ticking up which again goes back to why is that i under we think we understand the mechanism by which new leases eventually roll over into cpi inflation. but it new leases are trending up, that is a concerning signal. >> can rates higher for longer fix the problem? >> eventually, yes first thing that will happen, i think that we're all mostly in agreement that if we get concerning inflation data, we'll sit where we are for an extended period of time i think that that is the

default. that we don't feel compelled -- if the labor market stays strong, we can stay here as long as needed. i think the bar is much thir we have to say that we need to go higher here. >> and we often agree if we saw a snare yoes of this form, how do we react. so just a question of which of those scenarios do you think is likely >> thank you both for joining us always happen to come here in may. back to you, tyler >> minneapolis is pretty good anytime of the year. takes really nice city thanks for joining us. further ahead, apple facing global labor unrest at his retail stores.

employees voting whether to unionize we'll ask ydiscuss what it mean the company. and shares of alphabet popping after sam altman tweeted that openai won't announce a search engine on monday. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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welcome back to "power lunch. let's get reaction for the discussion with neel kashkari and austan goolsbee and see how the bond market is reacting let's turn to rick santelli. >> i'd like to tell you that the market had a large response to that wonderful interview, but really the market didn't move much and it makes sense. there wasn't anything there that you could bite into that would give you a more accurate time line of what the fed may or may not do in the future but to me, that is the whole point. they don't know. and that is the way it is. but one thing we did learn at the top of the hour is if you are looking at how much it costs to service the debt on a monthly basis, it is up 35%. to $102 billion.

let's annualize that over 12 months maybe that is one of the reasons interest rates have turned up a bit. but i'm getting ahead of myself. let's look at the early morning data here is a look at one year inflation as evidenced by the university of michigan survey. this shows that we are now turned back up to levels we've seen in november of last year. which is not that far back that is not the point. the point is and the in the context of the interview steve just had, inflation is turning back up a bit. and granted on the left of that chart it is much higher, but it needs to be lower on the right as well. on the week, two year note yields are actually up on the week they settled yesterday and last friday at the same level 482. up four basis points on the at a time four on the week that is the maturity most closely associated with fed activity but when you look at the ten

year, right side is not higher than the left side ten year closed at 451 after the information came out, we have seen a more long end. but long maturities right now are not leading the way. what is leading the way is anything associated with the fed and that is the shorter maturities on the treasury curve. kelly, back to you and have a great weekend. glad you are back. >> thank you, rick and great point you made there let's get to the cnbc news update >> and prosecutors in the trump hush money trial told the judge this afternoon that it is entirely possible that they will wrap their side of the case by the end of next year and they are expected to call just two more witnesses with michael cohen set to take the stand monday he is expected to testify for several days

the trial in recess until monday more than. a federal judge in texas is expected to rule on whether new rules on credit card late fees can take effect next week. it was reallied had most companies can now only charge up to $8 for late fees per incident governor newsom announced a proposed budget to cut 10,000 vacant state jobs and suspending tax deductions for businesses. the state needs to pass a spending plan by the middle of june and still to come, some cracks forming in the restaurant space. the climbing spaces finally driving lower income customers away more on that next.

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certainly the consumer who is at the lower income appears to be making more choices around how they spend their money we're not seeing a lot of that right now. we tend to play higher income and we don't see a lot of trade down at this point >> we've seen segments where customers have moved from some items trading down to others removing from one category to another. >> questwe see no evidence of eg at lower end restaurants retention is up. we're not seeing the signs of weakness other folks are talking about. >> the consume remains resilient.

>> and a lot of growth in spending has been with the affluent customer. we're seeing a much more cautious low income consumer they are feeling more of the pressure of the cost of living which has been high for them >> the average american cares a lot more about gasoline prices thatten they do about stock prices and they are getting hurt. >> as to signs of cracking but also resilience. let's get more from kate rogers. >> and we're seeing restraint in how consumers spend their time and money particularly in the restaurant cycle they are noting that low income consumers are starting to spend less and we've learned mcdonald's a working on plans for a $5 value marine corps meal that will

potentially include a mcchicken or mcdouble with a four pete nugget or soft drink and there is growth in all cohort which goes is a rarity. and also sweetgreen is up more than 30% and i spoke with their ceo who said that they are not seeing a consumer pullback. >> and what we offer compared to the competition especially if you think about over the past four years answer d amount of inflation we've seen, fast food has gotten very expensive. a lot of things have so i think sweetgreen is doing much better as we've taken less price than most of our competitors. >> and pricing is up about 4% year on year for them and the average meal about $15, and their dinner business is

growing. and time for three stock launch and today we concentrate on consumer facing names of course. and here with the trades is malcolm etheridge. welcome. let's start with mcdonald's. we heard kate talk about this would not. the stock up about 2%. and your trade here is mcdonald's >> yeah, with the number of new restaurants mcdonald's has slated to open up this year, i heard the package there with them talking about going more value, but i think with the 2,000 or so new restaurants they expect to open this year, about 8,000 before the end of the deck cade, i think that mcdonald's will better more than anything from the franchise fees. and so i think that this is setting up to be buy for shareholders >> and so looking forward to some of those menu

introductions. and walmart, they are reiterating shares at a buy. and what a leadup for walmart. which way will they go, which way will the stock go do you think? >> yeah, i think that it will be hard for them to beat and you are is price without a holiday season as the tail wind. those shares -- they have done well to start the year, but i expect them to be a casualty of the fed's higher for longer stance on rates. you talk about how stretched the consumer is and how high credit card balances continue to reach record highs day after day i think that hits the average walmart customer first so that is a hold at best. >> and you picked amazon >> i love their diversified

revenue stream with them having the ability to stave off any potential recession, with revenues coming in from aws and now digital advertising, those are better than the ecommerce side. so i think that they can weather any potential storm going into the back half of this year as we talk about rates staying higher for longer >> and so maybe i'm just an amazon fan but i really do love the fact that their ecommerce platform is as strong as it is and they also have the ability to cut prices

in a way other retailers do. walmart can't do that. so i just think that amazon is the better way still to play the consumer trend >> rare is the week that something does not come to our house from amazon. >> rare is the day >> and that speaks to the strength in the consumer area. malcolm, thank you very much all next week we're taking an x-ray of the consumer economy and checking up on the health of each and every part. spending, retail, travel, heads, shoulders, knees or toes tune in. and coming up, alphabet shares are getting a boost it you weres out openai won't be announcing a search engine monday after all much more on this story. when you own a small business every second counts. save time marketing with constant contact. with email, sms and social posts all in one place. so you still have time

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welcome back look at shares of apple which are slight ly lower but the company now apologizing for the controversial ipad ad. we'll get to that. but first let's start with something that could be more

troubling. steve kovach is joining us >> yeah, apple store employees in new jersey will vote whether to become the third retail location to unionize it has been a while since we've seen such a vote there appeared to be an effort around the unionization. but it plenty of labor organization activity still going on including several complaints of unfair labor practices to the nlrb and just this week where they said apple illegal hely stopped employees from itdistributing union activy flyers and tomorrow the apple storehels from distributing union activity flyers and tomorrow the apple storeely from distributing union activity flyers and tomorrow the apple storely o distributing union activity

flyers and tomorrow the apple store will vote to authorize a strike. and when all this organizing started over two years ago, apple raised the starting rage to $22 but they said it was part of the annual performance review.age t $22 but they said it was part of the annual performance review.we to $22 but they said it was part of the annual performance review but also a time when the extra market was tight and so they will see if that is enough to satisfy employees. >> is this mostly about wages? >> wages, cost of living and what is really interesting, when we look back, that is when people really started feeling inflation. just this massive amounts of inflation compounding on top of each other and these unionizations efforts between amazon and at starbucks and apple. not the only reason, but that was a big factor as well and covid of course played a part >> and what about the policy for the ipad ad, what does it tell you? >> it tells me it is over. it is really interesting that

the way that they messaged even just the apology they just gave it to the one trade publication. and they said just go read the article. >> and what was the -- sorry, i completely missed it >> yeah, one creative item after another. and even some senators thought that it looked -- what word should we pick >> offputting. >> apocalyptic. good yeah, and so it won't run. but we have to talk about another headline that came out, "new york times" siri will get a super charged version coming up we'll finally hear the ac iflts plans

they say that they will be revamping siri to better compete where what we've seen from chatgpt and all the other companies. it is way overdue. >> no offense, but -- >> you can offense siri. it is fine >> what is most yeefl is the voice activation and if it worked better at answering simple questions, i do think that they could -- i don't know what they will have to make any acquisitions, but if they fold it into -- >> and they have it, but it doesn't work super well. i've had it go off when i'm on air. it just starts talking to me so that is not ideal but hopefully it gets super charged now. >> so no ai search announcement coming >> yeah, that is the other thing. yesterday reuters reported that openai will reveal a search

product tapping into its large language model we've seen microsoft do it, we've seen google do it. and today sam altman saying nope, not a search thing, we'll announce something on monday, tune into find out what it is. not search and as a result -- >> so we people will love. >> exactly we saw google shares bounce up a little bit on that because there's a big threat there. >> you'll be all over that one on monday. >> going to be a busy day. >> our 2024 cnbc stock draft is underway coming up, we'll hear from one of our key competitors washington commanders' running back austin ekeler will join us in two minutes

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2024 cnbc stock draft competition and the mentalist oz pearlman has the lead up 21% he's got big gains from his second pick. that was carvana, not the best start for team eksperience, in football and stock drafts the game is not over until the final whistle. there's a lot more time left on the clock. austin ekeler welcome back, running back, washington commanders glad to have you with us. >> thanks for having me back on. and hey, look, this is a game of investing, not trading here, so i know we're looking at the scoreboard, but it's a little too early for me >> i take your point completely. i mean, this is a long-term game and a lot can happen between now and the friday before the super bowl and a lot of people like caterpillar. intel has had its troubles, but you know, they may be due for a run right here you never know let's talk a little bit about changes in your life you've come from the l.a. chargers all the way across the country to the team that i grew

up watching, the washington commanders, and of course known by another name at that time how exciting is it, how challenging is it to start in a new city under a new organization with actually also a new head coach >> yeah, i think really the thing that is exciting is the challenge, so it's not easy moving your entire life from west coast to east coast when you really never spent time on the east coast, so that was an adjustment that i've been making and really getting acclimated into a new team, building a new culture with a lot of faces. from top down, ownership, head coach to a lot of new teammates as well. it's been a lot of camaraderie and getting to know each other and learning to work hard and setting a standard we can hold throughout the season. >> have you had a chance to meet the first round draft choice, the quarterback from lsu who is an exciting player >> yeah, so the rookies just got in, and the vets, you know, we just got out, so we'll be

acquainted with each other on monday looking forward to getting these young guys in the building and showing them how we operate. >> austin, i love what you're trying to do to use technology to build community around sports a lot of people blame technology for destroying said communities. how are you going to fix that? >> yeah, so i appreciate you asking so i've been building an app called eksperience that's what drove me to be around intel i love the tech environment. ho there's no place where you can engage with your favorite athletes on a meaningful level i was wanting to build a technology that allows that to be upkept. athletes we have a lot of stuff going on but also easy for the fan as well. looking to implement this into different institutions and professional sports where fans can go and have an interaction and engage and get that memory with their favorite players.

>> it almost looks like a stock, and maybe if you do this the right way, maybe it will be one day. >> you never know. that's the goal. we'll continue to build value not only in our stock price but also within society and bringing communities together that's what we're trying to do >> good luck with the commanders this year, looking to living in my hometown, arlington, virginia, it's a great place great place. austin ekeler, good luck to you this year. thanks for watching "power lunch," everybody. >> "closing bell" starts right now. welcome to "closing bell" on this friday, i'm scott wapner live from post 9 at the new york stock exchange, and this make or break hour begins with the run to record high probably won't get there today, but sure looks like that's the direction which we are heading we're going to ask our experts over this final stretch how far this bull run can go in the meantime, your score card with 60 minutes to go in regulation looks just like that. it's been a mixed day for the majors we are green across the board for the week that's the important part. we closed above 5,200 for the first time in a year yesterday