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Ceasefire Under Pressure, The Fed's Next Move, and Tokenmaxxing 4/9/26
00:43:48
Former White House energy advisor Bob McNally sees an 85% chance the Iran ceasefire doesn't hold. The Fed's preferred inflation gauge climbed in February, even before oil's spike, does that lock in a rate hike this year? Plus, the internal practice at some big tech firms that could undermine the AI trade.
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- [00:01]
Kelly Evans
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- [00:30]
Schwab Representative
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more at schwab.com/trading.
- [00:58]
Kelly Evans
You're listening to the Exchange. Here's today's show. Scott thank you very much and welcome to the Exchange. I'm Kelly Evans and stocks have just turned positive in the past hour or so. The Dow is now up 336points after delivering its best session in a year yesterday. The NASDAQ leading the gains. Well, actually it's about to be surpassed by the Dow. All three major averages up about 2/3, 3/4 of 1%. Several AI related nature teams are on the move as well. With Medicare committing an additional $21 billion to Core Weave. Those shares are up 3% after a big move yesterday. Amazon investing $25 billion in Mississippi data centers. Those shares are up 4% and it comes even as Maine could become the first state to say no to data centers altogether. We'll have more on that ahead. Software is also still under pressure as new AI models continue to roll out another 4% decline in the IGV. The tracks that we'll get to all of that in a bit. But let's begin with the very latest on the cease fire hopes Iran as we watch WTI crude prices hovering around $97 a barrel, up only 3% off the session highs we saw earlier today on some new headlines out of Israel. Megan Casella at the White House with the latest.
- [02:11]
Meghan Casella
Meghan Kelly, this fragile truce between the US And Iran has been on shaky ground since it was announced this week. But some news over the last hour suggesting that at least one big sticking point could be moving towards resolution and that's the ongoing conflict between Israel and Lebanon. Israeli Prime Minister Benjamin Netanyahu announcing that he has instructed his cabinet to open direct negotiations with Lebanon at the earliest possible time. He says the negotiations will focus in part on the regulation of peace relations between Israel and Lebanon. And that comes after Israel yesterday launched its heaviest wave of attacks yet in Lebanon, which Iran said violated the U. S. Iran cease fire. So earlier this morning, Iran's parliamentary speaker, he's expected to lead Iran's negotiations with the US this weekend. He said on social media that there is no room for denial and backtracking over Lebanon and that cease fire violations carry explicit costs and strong responses. So news of fresh talks could solve one issue threatening this cease fire. But there does remain ongoing disagreement over the Strait of Hormuz. President Trump and top officials here say they still expect to see a complete reopening of the strait, which the cease fire, of course, was contingent on. But traffic for now is way down. Kepler says just two tankers, one of which was Iranian, and a handful of bolt carriers have passed through the waterway since the cease fire was announced Tuesday night. So, Kelly, much more to watch still. And if we start to see more traffic through that strait.
- [03:30]
Kelly Evans
So the significance today, though is that Israel is saying it will engage in direct talks, correct? That. That's what the headline that had the Dow go from negative to now to plus 200 to now plus 300 and change. So it seems that when everyone steps back and looks at possibilities for a real cease fire, something meaningful. And I don't know whether that will even result in the kind of quote unquote reopening of the strait. But that, that seems like the most significant development.
- [03:56]
Meghan Casella
Absolutely. Especially because we had seen so much back and forth over Lebanon that the Iranians said from the start, this cease fire, what it was agreed to was that cease fire everywhere, including in Lebanon, Israel was out very quickly saying they didn't agree with that. And then we saw the president siding with Israel yesterday, late yesterday, saying, yes, that was going to be ongoing fighting there. So then we saw the Iranians come out this morning and say that was a cease fire violation. They said negotiations might be off the table. So to see Netanyahu come out with this announcement, notice he didn't say anything explicit in that social media post about attacks and whether those would be ongoing or on pause as they try to get these negotiations scheduled. But even the idea of negotiations, you can see bringing some hope to the markets and some hope to all sides here that maybe there could be some sort of an agreement that at least allows this shaky two week cease fire to hold for a little bit longer.
- [04:42]
Kelly Evans
All right, Megan, thanks very much. Meghan Casella, our next guest, says while the cease fire is fragile, he's hopeful it will hold. Michael o' Hanlon is director of research for the Foreign Policy Program at the Brookings Institution. Michael, welcome. What do you think the significance is of Israel agreeing to these talks?
- [04:56]
Michael O'Hanlon
Hi, Kelly. Well, I'm a little bit less enthused about that in the sense that Israel has obviously seen it in its interest to declare or negotiate cease fires that really only represent a partial relenting and then just permit ongoing fighting. And we've seen that in regard to Gaza, we've seen that in regard to Hezbollah. I understand the rationale. I'm not saying there's no basis for it. But talk of a possible cease fire is pretty far fetched approximation to an actual peace. And there are so many ways these cease fires can break down even if they occur, as you point out. I'm a little bit more hopeful on the Iran cease fire relative to the conventional wisdom that seems to be that it's going to probably not work. I think there are reasons why it might. I'm not predicting that it will. But when Israel talks cease fires, it doesn't always mean that in the literal
- [05:46]
Kelly Evans
sense when we talk about there's sort of two layers here. There's the layer of the quote, unquote cease fire and then the layer of what are the acting actions, the conclusions that come out of that. In other words, the final agreement. And I'm curious what shape you think that final agreement is going to take in the market may be saying it doesn't so much matter about the specifics, you know. Do you think that's true, does it? When we look through the 10 points here in the 15 points here and where exactly they are on each one of those, is the point that they're going to come to some kind of conclusion that precludes further fighting, or do you think that what they conclude on and what they agree to is vitally important?
- [06:29]
Michael O'Hanlon
Well, on the Israel Lebanon case, I think that what Israel wants, of course, is the elimination of Hezbollah as a fighting force and as a part of the government. And those are pretty high bars. Again, they're reasonable. Hezbollah is a terrible organization that does no good for Israel or for most of Lebanon for that matter. But nonetheless, we are where we are and this is a creation of the Iranian theocracy. Now both Hezbollah and Iran are much weaker now than they used to be. Of course but that doesn't mean either one is going to willfully go away. So I expect that Israel will make that point and set its standards pretty high and its demand's pretty high, and that Lebanon won't be able necessarily to comply or won't be willing. And so we'll probably see an uneasy, ongoing low level of hostilities.
- [07:20]
Kelly Evans
That being the case, what do you imagine will be the sort of condition of the Strait of Hormuz? And how would you describe it now, Michael? Maybe perhaps of more interest for we will talk more about this specifically with oil, but I mean, it is a vital international interest and the current state of affairs remains worse than it was before the war broke out.
- [07:38]
Michael O'Hanlon
Well, there's no doubt about that. I completely agree with you, but I think there is some hope. If you had asked me a week ago to predict when there might be a cease fire, I would not have said this week. I would have said maybe late April, because I think Iran wants to make us hurt for a while longer to show that it's angry that people who have lost family and friends to Israeli decapitation strikes are not really in a mood to negotiate. And also Iran wants to indicate that if this kind of attack were to happen in the future, it can hurt us just like we can hurt them. So for all those reasons, I would have thought that the hostilities would have continued a bit longer. And that's perhaps why Iran is now putting some conditions on its willingness even to have the temporary cease fire that we thought we had negotiated. And they're going to control to some extent the flow. They still think they have a bit of the upper hand, or at least they want to pursue the the upper hand. But having said all of that, Iran has no interest in a permanent war with the world or even with the United States and Israel. And so at some point you would expect it to say enough's enough, especially if we're not demanding regime change and we're perhaps not going to come in and take the uranium. And so, you know, we're all just sort of getting our feel for where the Iranian thinking is right now. My guess is that they're going to still push back on a number of fronts for a while. But there's a chance this particular cease fire may hold, or at least be followed pretty quickly by one that does hold, because again, Iran wants to push back, wants to reassert itself, wants to make us pay a price, but it doesn't want to cut off Strait of Hormuz traffic indefinitely, although I want so
- [09:14]
Kelly Evans
going back to the fact that they now de facto control the Strait, which was not the case, you know, a month or two months ago. Where are the rest of our Gulf allies likely to go with that? You know, sort of being the case. I mean, they're the ones who are trying to export all this product, whose economies depend on that, who are now perhaps going to have to pay these tolls, their customers going to have to pay these tolls. Am I correct in assuming these tolls could last and could be, you know, could. What is going to change that state of affairs? You think they're going to back down on that based on some negotiations with
- [09:44]
Michael O'Hanlon
the U.S. it's a great question. And I acknowledge that this is a reason why the cease fire may fail. Because the current Iranian practice of trying to charge tolls as if it somehow owns the Strait of Hormuz is ridiculous and unacceptable. And so if Iran really holds to that, then I think we're going to see a breakdown in the cease fire. And at some point the United States can start to prevent Iran from letting the ships through that it wants to let through. I mean, we've got naval forces that are capable of shutting down the broader region's waterways even if Iran is the closest to the Strait of Hormuz. So I think you're right. That is a fundamental uncertainty that one has not yet really been adequately addressed by the terms of the ceasefire. And it needs to be addressed pretty quickly. If Iran really holds to this notion that they're in charge of the Strait of Hormuz even in the cease fire period, then I think it could break down very fast.
- [10:34]
Bob McNally
Okay.
- [10:34]
Kelly Evans
All right, Michael, thank you very much, really appreciate it. Michael Hamlin joining us there from Brookings. By the way, WTI now under 97 a barrel. We had a 30 year bond auction that also went off top of the hour. Want to turn to Rick Santelli for the results of that. Rick, what can you tell us?
- [10:49]
Rick Santelli
Yeah, 22 billion. This is the last of 119 billion of supply. It's the third tranche 30 year bonds. The yield 4.876 which is a half a basis point higher than the when issued market which was at 487 and change higher yield, lower price governments to sellers. So right off the bat we take a little offer pricing and if you look at all the metrics, whether it's the bid to cover slightly weak, weakest since decent last year. If you look at the dealers, they took about a half a percent from 11 to 11.6 more than they did on the 10 auction average, highest percentage since just Jan of this year. So we're going to give it a Charlie minus, a C minus, very similar to yesterday's 10 year. It doesn't surprise me it didn't go extremely well because the market, as you look at the charts, yields have dropped rather dramatically. Oil has a big presence in the market for the equities. The equities turned green and one of the things that went along with it was interest rates dropped rather dramatically. As you pointed out, we are now hovering in that, what, 97 region. How long ago was it we were at 117. Markets are paying attention. So not a bad auction. It's now in the rearview mirror. Maybe what we want to concentrate most is the continued technical areas on the biggest maturity to pay attention to and that's tens. Kelly, as long as we stay below 4.3 on a closing basis, I think there's a good will type trade that could push yields down a bit. But as I said yesterday, this chapter of how the conflict is affecting yields may give away at some point in the future to more bearish and higher yields just due to debt and deficits. Right back to you.
- [12:34]
Kelly Evans
I know it's a sort of underlying subtext of all of this. Rick, thank you very much. Rick Santelli, our next guest, says even if a cease fire holds, the real issue is that activity through the Strait of Hormuz remains near a halt and the state of affairs with Iran in charge is worse now than before the war began. Let's bring in Bob McNally, the founder and president, Rapidan Group Energy. Bob, do you expect a big difference in this in the coming days that we're should we see it? Does cease fire mean more activity, more international trade, more crude flowing through the strait?
- [13:05]
Bob McNally
Hi, Kelly. No, we don't think so. The strait remains largely closed. The only thing we know for sure is that the president called off what looked to be a pretty big attack on Iran the other night. There also has been some diminution in Iran's attacks on its neighbors. That's gone down except for Bahrain. However, since this cease fire, announcements were made and they were conditional, it wasn't a final We've seen the east west pipeline in Saudi Arabia attacked and there was a large fire at the most important oil facility in the world, the ABC stabilization plant. So not only is traffic not going through, but we're seeing ongoing attacks and the US and the Iranians seem to be talking past each other on the most important thing, and that is will there be a complete immediate and Safe resumption of Strait of Hormuz flows as the president promised? Or will Iran keep its grip, only allow a few out after paying tolls and other things as the Iranians appear to do? That's what it's all about. And we're not confident we're going to see the US Preference there prevail.
- [14:13]
Kelly Evans
Yeah. We spoke with Amrita Sen yesterday who is also concerned about the shortages of products in the market for gasoline, diesel and jet fuel. She said it could equal, it could take two years basically to come back into balance. And so the only option left is for high prices to engender some demand destruction. She didn't rule out $5 for gasoline here in the next couple of months.
- [14:33]
Bob McNally
Right now we've had $5 in view as well. If this prolongs will make new highs in gasoline. We're already at new highs in terms of, in terms of diesel. So absolutely we could be headed to new highs. We don't, we think it's the end of April at the earliest before we'll see real cease fire talks. There is a point, there is a point at which, and your previous guest from CSIS mentioned this, you know, there's a point where Iran decides it's at the apex of its cost benefit curve. It's, it's taught a lesson. It survived very important, it survived a lesson and it's ready to sort of cut a deal here. I think the US has to do more work to degrade Iran's ability to threaten Hormuz. We're still flowing military forces in. We're restocking our depleted interceptors ammunitions there. I think we're kind of getting ready for a round two. But as we work on Iran's ability to disrupt Hormuz, which we unfortunately started way too late, but we're doing that now, Iran's leverage starts to erode and I think the conditions for a real cease fire and a reopening of the Strait of Hormuz, a full reopening will be stronger later this month than they are right now.
- [15:37]
Kelly Evans
Talk about that. What do you know about the extent to which, Bob, we're degrading their capability to interfere with the strait because again, whatever else might happen, and there's been obviously destruction of their nuclear capabilities, there's been destruction of a lot of their, you know, missile launch capabilities and civilian infrastructure, all of those things. But the one thing that remains worse now than it was four or five weeks ago is what's happening through the Strait of Hormuz. So unless they fully Capitulate on that. It seems like that's a major problem that the US still has to somehow force them to back down on. So maybe you can trace out something that we're not yet seeing here, which is that behind the scenes we're working to kind of loosen their grip on the strait and they ultimately might agree, quote, unquote, slash, might not further be able to maintain power over it.
- [16:29]
Bob McNally
Right. So the work that's going on, again, it started many weeks too late in my view, is to, if you will, whack those moles. We talked about thousands of moles. What do I mean? Anti ship cruise missile launchers, boats, small fast attack craft that can attack these, these ships, drone bases, submarines, even artillery emplacements. They have long range artillery that have ranged into the strait. So if you look, we've been putting munitions there, the A10 attack craft, really slow, really good for ground attack. And the Pentagon has also been announced that they have been prioritizing that in the last couple of weeks, I'm, I'm told, I believe we've reduced their mine stockpile. Fortunately, they didn't get to sow thousands of mines. Hopefully we've reduced that and remove that threat. There are some mines in there, not thousands, hopefully. So it may not be widely reported, but I believe the US military in the last week or so has been focusing on whacking those moles. Degrading Iran's ability. You may not perfectly get rid of it, but degrading Iran's ability to interdict shipping down to a manageable level. And that's when insurance can come into play and escorts and folks can start to move through. But we've got to whack those moles and I believe it's happening.
- [17:44]
Kelly Evans
Well, the only last question, Bob, I would ask you is have we halted that activity because of the cease fire?
- [17:51]
Bob McNally
Yes, so it apparently we have. We ourselves have ceased fire. It's not clear Iran has ceased fire against its neighbors or Israel, but we apparently for the time being are holding our fire. We'll see if it sticks. The betting at Rapidan is that it will not.
- [18:07]
Kelly Evans
Right. I guess my point is if we are in the process of degrading there, they control the strait. We're trying to degrade that capability, but as of right now, our degradation is halted and they control the strait.
- [18:18]
Bob McNally
Right. But we're flowing more forces in from California. So everybody's taking a breath here and a break. The Iranians are hunkering down and getting ready and we're flowing more forces in My sense is both sides know a second round is coming and that degradation work will continue with more forces that we will moved into the region, possibly including land forces, you know, taking out some of those islands and raiding the coast. So I think it's just a pause in the degradation work that probably won't last too long.
- [18:47]
Kelly Evans
Very, very interesting. Bob McNally, thank you so much for joining us to talk through all of that today. Appreciate it. Joining us from Rapidan Energy, coming up, fundraise Tom Lee says the bottom is in for stocks and we're headed to all time highs. But our next guest is flagging one potential headwind. It's not the Iran war, although it's slightly related. Plus emerging markets are rallying on the cease fire, far outperforming the US this week. And our trader says that will continue. He joins us with what exactly he's buying International ahead.
- [19:18]
Exchange Announcer
This is the exchange on cnbc.
- [19:24]
Schwab Representative
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help and access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading she loves it hot,
- [19:53]
Kelly Evans
he loves it cold.
- [19:55]
Meghan Casella
However you sleep, the pod by eight
- [19:58]
Kelly Evans
sleep adapts to you.
- [20:00]
Meghan Casella
Personalized temperatures keep you in deep sleep longer so you wake up refreshed. Learn more@8sleep.com Close your eyes.
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- [20:24]
Kelly Evans
We got some welcome news on the inflation front, if we can call it that. This morning at least it wasn't worse than expected. The core PCE was in line. But our next guest is still worried on that front and warns we could be repeating the 1970s inflation spiral. Let's bring in Richard Bernstein, the global head of macro at Janice Henderson Advisors. Wait, JANICE Henderson, Rich, is this, is this a breaking news here?
- [20:46]
Richard Bernstein
No, no, no. April 1, Janice Henderson bought Richard Bernstein Advisors. So it's something that's been in the works for a while. And the marriage was was made on April 1st.
- [20:58]
Kelly Evans
Very congratulations. So thank you. Let's not, you know, just kick this off on a sour note. You still like stocks. You're fully invested, the whole thing. I mean. And is that the case? Because you're looking a little bit more at kind of the tilt of your portfolio portfolio as opposed to anything super dramatic here, like going to all gold. Although there's probably some people in the audience who think that wouldn't be a bad strategy right now.
- [21:18]
Richard Bernstein
Right now. So, Kelly, there's, there's kind of a little tug of war going on here. The fundamentals in the US Economy, if you look at corporate profits, if you look at employment, look at various things in the US Economy, they're, they're at least reasonably healthy. One could argue in certain cases they're very healthy, but you're not seeing signs of recession. But on the other hand, you've got this poll coming from the war. You've got higher energy prices, you've got the impact of higher energy prices on the rest of the economy, which works like the Fed raising interest rates, although much more dramatic and much faster. And so what we did with our portfolio several weeks ago was keep the fundamental positioning of our equity portfolios the same. We haven't changed that one bit, but we did, across the board, raise a little bit of cash for this uncertainty. And the way I would think about it is, you know, if one isn't raising cash in a period of uncertainty like this, when would one exactly raise cash? You know, I mean, people tend to do it at a market bottom as opposed to when the uncertainty is, is really flourishing. And that's kind of what we're, what we're trying to do is just tone down the risk in our portfolios because as a money manager kill, we have to not only worry about returns, we have to worry about the risk as well. We want to try and mute the volatility a little here, which I think everybody knows has been going on.
- [22:38]
Kelly Evans
Understood. But I, you know, I feel like I'm conditioned like a meme stock trader the past couple of years, rich to just, you know, you buy the dips. You just, you always buy. Why would you ever get out of the market? You know, so when you say you're raising cash, I'd think, well, why do that? Why not just, you know, go in and get the market? I mean, the chance to buy 10% off is now virtually completely disappeared.
- [22:59]
Richard Bernstein
Well, Kelly, the real time to go pedal to the metal in equities is not only when there's uncertainty, but there's unified bearishness. In other words, people are too bearish relative to the level of uncertainty. I think what you just said is a Good indication. Not blaming you, but a good thing that you just said was like a meme stock trader, you're ready to go back in at market bottoms. You don't get people ready to go back in and the data don't show that people are that bearish relative to what we've seen. So the uncertainty is there. I think if you, if you listen to the speakers you've had as I've been waiting here, they're very uncertain. You can get one side and get the other. I think the uncertainty is a little bit here to stay. You know, whether the market, look, if everything turns out to be fine, our portfolios will do fine because of the fundamental positioning of our equities. But overall, you know, if you, if you're in charge of managing somewhat of a risk averse portfolio, you can't go pedal to the metal here.
- [23:56]
Kelly Evans
And you also mentioned the small, I love watching the small caps because they're so volatile and they're such a tell, you know, and you like them. You mentioned that in the 1970s they were huge winners. But then we move to a period of today, and I know you're more concerned about inflation, but I look a little bit maybe at the economic weakness that could be coming with low consumer confidence and high gas prices. And those are also very economically sensitive. They tend to collapse first when you, you know, when periods of, I'm not going to use the R word, but you know, economic concern rear their head.
- [24:25]
Richard Bernstein
Yeah, no, Kelly, there's no doubt that smaller cap stocks, lower quality stocks in general, whether they're large or small, lower quality stocks in general are the canaries in the mine shaft. Right. Their, their operating leverage relative the financial leverage. When you get an economic upswing, the operating leverage overwhelms the financial leverage. When you get a downswing, the reverse happens. So they're the canaries in the mine shaft and that is the risk we are taking in our portfolios right now. As I said, the fundamental aspects of the economy and even of the global economy are reasonably healthy. So I think you want that risk in your portfolio. One thing I would just differentiate here is most people, when they talk about small caps, talk about small cap growth stocks. What really, when you look at small caps and you look at the opportunities, the cyclicality, all the things we've just discussed, that's really small cap value stocks and that's a little bit where we're placing our emphasis.
- [25:20]
Kelly Evans
All right, I like the half zip. I got to get used to saying it. But, but congrats again, Richard. Thanks for making the time. Really appreciate it.
- [25:27]
Richard Bernstein
Thanks, Kelly.
- [25:28]
Kelly Evans
Richard Bernstein with Janus Henderson Investors coming up, a ban on data centers. It's now a possibility in the state of Maine. Could other states follow suit? We'll dig into the potential ripple effects next. Plus how some internal practices at big tech firms could be inflating AI demand. That's right. We'll explain what that's all about. Still ahead,
- [25:52]
Schwab Representative
Trading at Schwab is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desk. Our team of passionate traders ready to tackle anything from the most complex trading questions to a simple strategy. Gut check. Need assistance? No problem. Get 24. 7 professional answers and live help. And access support by phone, email and in platform chat. That's how Schwab is here for you to help you trade brilliantly. Learn more@schwab.com trading.
- [26:20]
Kelly Evans
You know that thing where you get an amazing pair of shoes at a really great price and want to tell everyone about it?
- [26:26]
Meghan Casella
Yeah.
- [26:27]
Kelly Evans
So do we here at Designer Shoe Warehouse. We'll give you something to brag about, like the latest styles from brands you love or the trends everyone's obsessing over or shoes that make you feel like, well, you.
- [26:39]
Julia Boorstin
So go ahead, show off a little.
- [26:41]
Kelly Evans
Buying shoes that get you at prices that get your budget. Head to your DSW store or dsw.com today. DSW. Let us surprise you.
- [26:50]
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Close your eyes. Focus. Listen to work getting done with Monday.com relax as AI does the manual work while your teams are aligned on a single source of truth. Feel the sensation of an AI work platform so flexible and intuitive it feels like it was built just for you. Notice. You're limitless. Limitless. Now open your eyes. Go to Monday.com, start for free. And finally, breathe.
- [27:21]
Kelly Evans
Welcome back to the Exchange. One US State just passed a bill that would pause building on data centers, and other states may soon follow suit. Emily Wilkins has the story. Emily.
- [27:32]
Emily Wilkins
Hey, Kelly. Well, look, Maine is set to become the first state to hit pause on data center construction. That bill, it passed the House yesterday with bipartisan support, is expected to get a vote in the Senate today. High chance it's going to pass. The measure would halt bills until November of 2027. And it would also create a group to review and propose some guardrails for any incoming data centers in the state. Now, investment in data centers, of course, has boomed, but so has opposition as more and more Americans have worried about surging electricity prices as well as environmental impacts. More than a dozen State legislatures introduced bills this year to press pause on new data center builds. And some of those states, like Virginia, Georgia, they are home to data centers being built by companies like Metta, Google and Microsoft. Glenn Adams, whose main based company, Sargent Corporation is building some data centers across the country, says that if states put up bans, companies will go elsewhere, including potentially overseas.
- [28:32]
Kelly Evans
An opportunity like a data center is just such a big opportunity for us to go after. We'd hate to see that slip by by us as a state telling these developers, no, go away. Go find somewhere else to work. Like, the time for action is now.
- [28:48]
Rick Santelli
We got to do it or someone else is going to jump on it.
- [28:51]
Emily Wilkins
Once the bill clears the Senate, it's going to be heading to Governor Janet Mills, who is locked in a fierce primary race for Maine's Senate seat. Mills asked the legislation for an exemption for certain sites, but was denied. Sources tell me that if she decides to veto this bill, it could hurt her chances in the race. But of course, she could also approve it, making Maine the first but perhaps not the only state that will have this ban in place.
- [29:15]
Kelly Evans
Kelly so I'd be curious to hear more about what people in Maine think about this. If it's just power costs, there were reports in Texas about possible disturbances caused by data centers causing migraines and so forth. At the same time, you have Mississippi partnering to build one that would involve 2,000 extra jobs. So there's benefits to some extent. Northern Virginia seems to be full of them. I haven't heard a lot about adverse effects on the population, and yet there's a lot of confusion still, I think, about all of the various impacts these will have.
- [29:45]
Emily Wilkins
I think you hit the mark right there, Kelly, that it's the confusion piece of it, because when I asked those who supported this temporary cause, why are you against data centers? They said, look, we're not. We're happy to welcome data centers into the state of Maine, but we just need to take a minute. We need to figure out what the actual impacts are. We need to figure out energy prices and maybe come up with some things where, hey, if you're going to be here as a data center, you need to pay for the cost of energy so it doesn't hit the consumer or there needs to be other certain protections. And so I think that's what they're kind of ideally hoping for here. But again, as the business community has pointed out, even a short band of just a year or so, that could really set a state back in terms of investor and development.
- [30:27]
Kelly Evans
Interesting. Still, it seems to make sense that to get the power piece of it sorted out at a minimum. Emily, thanks very much. Appreciate it. Emily Wilkins, over to Julia Boorstin now for the CNBC news update. Hi, Julia.
- [30:40]
Julia Boorstin
Hi, Kelly. OpenAI is pausing its Stargate project in the UK the major infrastructure buildout was announced last year and was expected to deploy up to 8,000 GPUs in partnership with N Scale and Nvidia. The startup says rising energy costs and strict regulations are behind the pause, but they expect to move forward with the project when the time is right. The US fertility rate fell to a new low in 2025. According to New federal data out today. The number of births per 1,000 women of childbearing age dropped to just over 50 53%. That's down slightly from 2024. US fertility rates have been declining since 2007. Much of last year's drop can be attributed to teenagers who saw a 7% decline. Women in their 30s and 40s saw a rise in fertility rates. And an unlikely partnership. Electric vehicle maker BYD announced they will partner with China's largest fast food chain, kfc, to develop a network of drive thru charging stations across the country. Customers will be able to recharge and refuel in under 10 minutes as part of an effort to highlight how quickly the carmakers new EVs can charge. Pretty clever back over.
- [31:52]
Kelly Evans
Do they say nine minutes? Julia
- [31:56]
Julia Boorstin
yeah, under 10 minutes.
- [31:57]
Tim Seymour
Wow.
- [31:58]
Kelly Evans
Look. International attention on that state of affairs. Julia, thanks. Julia boorstin, still ahead, the continuing debate over interest rates. Does today's economic data change the Fed's trajectory and what is that trajectory exactly? We'll discuss that after the break. Welcome back. A sticky read on inflation this morning, which precedes the Iran war, by the way. This was the February PC. The Fed's preferred inflation gauge climbed for a third straight month while new jobless claims, we learned, also jumped to 219,000 last week. It's not huge, but it is the highest level since February. The government revised its fourth quarter GDP estimate down by 2, 10 to just 0.5%. Here to discuss the meaning of all this, Joe Lavornia, SNBC America's chief economist, former counselor to Treasury Secretary Scott Besant. Joe, you know, I have to admit when I look at I understand that gasoline prices are not where they were a few years ago and that they're a smaller share of wallet and all of that. But I mean, this is something that's hitting at least the daily consumer confidence readings Piper Sandler tracks those are at year to date lows. I, you know, I just wonder if this is going to end up being more serious as a possible growth hit if it's not quickly reversed. And I don't know if it can be quickly reversed.
- [33:27]
Joe Lavornia
It can Kelly, you're right. There is certainly demand destruction at the middle and lower end consumer. The one positive, there are several, many positives from last year's one big beautiful bill but one of which is no tax on tips and overtime. And the refunds that we're getting certainly are going to put a floor under consumer spending. Unfortunately if gas and oil stays where it is, that will absorb a good chunk of that refund. Fundamentally the economy is healthy. There's many pro growth supply side initiatives in place you know, through lower tax rates and tax incentives especially for building of data centers but factories more broadly in addition to prudent business friendly deregulation that the outlook for 26 is still quite good. Fundamentally there's, there's a solid foundation but as you allude to how long are these energy prices going to stay high because if they don't come down that will hurt demand and the economy will not reach its true potential.
- [34:22]
Kelly Evans
Yeah, it's just, it seems hard to imagine. Look at yesterday we had a big drop in the oil price, that's fine. But it was back to I think somewhere in the mid-90s and still around those levels today. Do you see a situation in which it gets back down into the 80s or 70? I think one trader told us maybe 85, you can get below that. Maybe that's more, more of an all clear.
- [34:44]
Joe Lavornia
It will depend. I sound, I mean to sound like an economist but it's a very tricky environment because it's geopolitics and there's different players involved and it's not easy to gameplay or game theorize how this is going to work. $80 would seem reasonable. It's just first guess that's where prices were when President Trump took office. They were moving down significantly lower and I was optimistic that we get much lower gas prices that be a huge tax cut for working class families. That right now doesn't appear to be the case. It will depend Kelly, as you know, is the straight opened. Is there security concerns with ships moving through? These are just unknowables. I do think again it's important to highlight the fact that the foundational underpinnings of the economy are healthy. That's why credit spreads are tight, why equity prices are still relatively high and the corporate earnings news is positive. But we have to back out. What happens in the Middle east and from there we figure out where oil prices are. And of course, the sooner there's some resolution, the better. Hopefully the cease fire holds, but it's anybody's guess of how this plays out.
- [35:45]
Kelly Evans
Speaking of being on hold, that seems to be where the Fed is right now, not least because I don't know if we call it a delay with war, but you know, the analyst notes I read seem to suggest that that might not move along very quickly. Where does that. Is the Fed going to end up effectively kind of leaderless for a period of time? And maybe it doesn't matter if they're so close to hiking or cutting that, you know, they're going to just stand pat. But I'm curious how you would read the, you know, the next steps for them.
- [36:11]
Joe Lavornia
The Fed does not want to raise rates. I think that's obvious. At least the consensus view. Interest rates are above neutral, Kelly. They've highlighted that. We look at interest sensitive areas of the economy such as residential. They've been soft prior to the Iran war. I was a big advocate as many others, I think, arguing the Fed needs to cut rates, need to cut rates significantly. I do believe that rates, the Fed's next move will be a rate cut, but right now they're on hold. You mentioned some hot inflation data this morning. The next few months are going to be elevated further. The Fed's missed its target for five years. I don't think there's much of a consensus to do anything right now on the Fed. Whatever Kevin Warsh is ultimately confirmed. Kevin, I think will do a fantastic job. He'll be able to bring the consensus to his view, I believe. But right now that's on hold because Thom Tillis has said as long as the case against Jerome Poor Powell or investigation is proceeding, he will not let that confirmation whenever it's done, I guess it's supposed to be April 16th. He will not have that vote come out of committee. So again, that depends on what the President does. So it's very possible that Jay Powell stays on as pro tempore Fed chair.
- [37:18]
Kelly Evans
And what would that mean for policy?
- [37:21]
Joe Lavornia
We're in our chartered territory. I mean, right now I don't think the Fed's doing anything. So the, the positive might be, Kelly, that it wouldn't matter if, if Kevin Marsh is the Fed chair in June because if we're sitting here in June with the economy the way it is right now, decent cap, strong capital spending, generally healthy consumer spending, still income that's rising at a reasonably fast clip, I'M not sure the Wash Fed would do anything anyway, so we might take the benefit of the fact comfortably on hold until the Middle east situation plays out. So maybe it doesn't matter in some sense if Kevin Wash is the chair or Jay Powell is there at least over the next month or two.
- [37:59]
Kelly Evans
All right. I think those confirmation hearings do kick off soon. All of that notwithstanding. Joe, thanks very much. Appreciate it.
- [38:06]
Joe Lavornia
Thanks.
- [38:06]
Kelly Evans
Joe Lavornia with SBC coming up. Have you heard of maxing Gen Z? Trend expert Casey Lewis defines it as obsessively optimizing something so one can looks max water max, even smell max. But some Silicon Valley engineers are token maxing, and that could have big implications for the trade. We'll explain next. Believe it or not, Silicon Valley engineers are now being scored on how many AI tokens they use, the problem that may end up inflating overall demand. Deirdre Bosa has more in today's Tech Check.
- [38:48]
Deirdre Bosa
Deirdre so Kelly, I loved your description of maxing before the break. This is called token maxing. So tokens are essentially the currency of AI Every query or action it costs them. And engineers are now competing to burn through as many as possible. Companies are dangling token budgets as recruiting perks, and Shopify even tells me that usage is now a performance performance signal for employees. But as one investor tells me, when you focus on a metric, the metric stops being useful. The over $1 trillion in planned infrastructure spending that is priced on the assumption that AI demand is real and accelerating. If some of that demand is performative, though the math behind the entire trade, it might be shaky. So when a hyperscaler like Andy Jassy at Amazon in his annual letter this morning or that deal this morning tells Wall street that demand is outstripping supply, you got to ask how much of that is real enterprise adoption and how much is engineers juicing a leaderboard? The market is already asking this question seen through the trade, which continues to go sideways even as spending keeps climbing and new partnerships are announced. The core issue is that nobody has good visibility is one of the fastest growing line items in corporate budgets and and also the least understood. So ramp a fintech that tracks AI spending across enterprise calls this a $1 trillion blind spot. And two of the biggest AI labs, they're making very different bets on whether the demand is real. Open Air is spending hundreds of billions assuming that it is real, while Anthropic is putting limits on how much users can consume and cutting off third party tools that were burning through compute or tokens. Now that doesn't mean, Kelly, that demand isn't real. It's just that the market might be pricing in demand that is partially artificial or unsustainable.
- [40:34]
Kelly Evans
I'm so glad you're talking about this. I've heard about it from friends and I feel bad. They it's, you know, they're exhausted and in some ways they were more effective before being held to these quotas. And who would have seen this chapter coming that hey, go use this tool and now you're being measured against how much you use it. Deirdre, thanks. Appreciate it. Deirdre Bosa, Coming up, emerging markets soaring, warring on the Iran cease fire. But could the potential expiration of a trade provision cut that rally short? We'll discuss after this. Welcome back. Oil experts warning of the long road ahead to price and supply normalization. Even if the Iran cease fire sticks for some Asian countries, it could be even worse if the US doesn't extend a trade provision. Sima Modi is here on set to explain. Hello, Seema. What now?
- [41:19]
Sima Modi
Well, we're watching to see if this extension continues. Kelly. When the war initially started and we saw oil prices rise sharply, Washington revealed a 30 day sanctions waiver that allowed countries to buy oil from Russia. That waiver now is set to expire tomorrow. Importing oil from Russia has been a key lifeline for emerging economies that have been severely impacted by the closure of the Strait of Hormuz. Over 70% or more of their energy energy needs come through this key passageway. And with the cease fire talks ongoing, analysts remain unsure when ships will be able to pass through. Lobbyists from both India and Japan are said to have been in contact with the White House the this week. And sources we spoke to in New Delhi say they are expecting this waiver to be extended. Without the waiver, countries across Asia will be faced with a difficult decision. Continue buying oil from Russia and pay up on sanctions. Find other pathways like the Red Sea, although that strategy hasn't been effective as of yet, or rely on strategic reserves. Either way, these countries are being put in a precarious situation. It's playing out in the stock market with analysts forecasting energy and food exports, export controls, among other economic measures. Should this waiver not be granted? Now, if we look at Japan, specifically, 10 year intelligence analyst James Brady, he says the situation is already pushing the country to think more long term about diversification, not only renewable energy, but nuclear. But even then, that's not something that is expected to come online for at least four years.
- [42:39]
Kelly Evans
And what a round trip for them on that front. And so they're, they're inadvertently, I guess and this is the larger issue people have to ponder helping fund Russia's war on Ukraine.
- [42:49]
Sima Modi
This is the battle of the lesser of evils. Right. Because at this, at this point they need to figure out how they service their country and their citizens and get the energy they need. I mean many of these countries are already facing a shortage. There is a shortage of cooking oil right now across India, 1.4 billion people. So if you're the prime minister of a country like that, you're doing whatever it takes to protect your country. Putting other concerns things to the side for now.
- [43:13]
Kelly Evans
All right, Seema, thank you very much. Sima Modi so what is the best reaction here in the emerging markets for investors? Let's ask Tim Seymour. He's the CEO of Seymour Asset Management and a CNBC contributor. Tim, it's good to see you. A lot of relief in these emerging markets which have been hard hit by all of these fallouts from the Iran war when it looks like the cease fire is going to take place. Do you trust it?
- [43:35]
Tim Seymour
Well, energy reliance for Asian emerging markets is extraordinary. Although Latam and Emea is, are probably net exporters, certainly Russia is, but they don't count at this point. But I do think if investors are looking at the short term, I'm not going to play politics here.
- [43:51]
Joe Lavornia
I'm going to tell you that the
- [43:52]
Tim Seymour
medium to longer term dynamics for investing in EM are very encouraging. And you know we've outperformed for probably 15, 16 months for these outperformance cycles for at least looking historically have lasted years, not months. And if I look at some of the drivers for that, I expect the dollar ultimately will continue to weaken somewhat. I think Asian currencies, I think rmb, I think South Korean yuan and even the Japanese if we're talking develop though. I mean I think Asian currencies look very cheap to the dollar. I think the currency dynamic is fine. If we continue again to get cease fire and the follow through from that, I think the Fed gets back into their front foot towards at least easier policy, not tighter policy. That's great for emerging markets. What do you always have being cheap? You always have the dividends better. But there are longer term elements of this trade.
- [44:46]
Kelly Evans
Yeah, and you've talked about Korea and Latin America and those countries Tim, that you favor here before and kind of staying with that. What about Japan? I mean obviously not an emerging markets a little bit different story. You know, you look at the high levels of debt there, what's going on with the currency, the bond yields. Now you add again this energy price shock. That said, they have been trying to do these big reforms to make the markets more shareholder friendly and better performers. So which of those forces went out, do you think?
- [45:11]
Tim Seymour
I think the forces that are for most of the folks watching the show, good for the day traders. But if you're investing in Japan, you love, first of all, take and fiscal stimulus and spending, deficit spending, at least in Japan's case, who can fund a lot of it, not too much of it. Look, we watch JGB yields all the time. We should be concerned about how quickly they move higher. But I do think corporate governance reform, EPS payouts, the dynamics for corporate and getting rid of what really were the big corporate conglomerate. Frankly, the governance that was a problem in Japan has been why it's been one of the best markets to invest in. It's. It's an overweight for us. And I devo my international ETF and I worry about the yen and I worry about JGB yields. But right now it's been a great environment for Japanese equities.
- [46:00]
Kelly Evans
Yeah, yeah. So, final question on China as we're going to see everyone's attention now drawn towards this meeting between the President and Xi Jinping. We've speaking with Brendan Ahern yesterday. There have been some pockets of outperformance, but how would you describe the markets there?
- [46:13]
Tim Seymour
Broadly, I think, look, China Tech, after being a great trade for some of 24 and a lot of 25, has really struggled. Whether you're looking at Alibaba, you're looking at Kwab or the dynamics there, I think we're also very keenly aware of that, at least in the air front and in the semiconductor front. The question is whether the deep sea moment was a blip or whether there's more of that. I think China is slowly stimulating. I think the upside is, is the surprise in China, not the downside.
- [46:43]
Kelly Evans
Yeah.
- [46:43]
Tim Seymour
And I think you have to get China right to get emerging right. But I believe that both sides are playing their hand pretty well here.
- [46:50]
Kelly Evans
All right. And even after yesterday's pop, Alibaba, like you said, still down 13% year to date. Tim, thanks. Tim Seymour. And that's it for us. Thank you for watching the Exchange. I'll go join Brian Sullivan for Power Lunch right after this quick break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [47:13]
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