Two Rate Hikes, Tensions Ahead of China Summit, and AI Economic Distortions 5/8/26

Summary

Podcast Summary: The Exchange – "Two Rate Hikes, Tensions Ahead of China Summit, and AI Economic Distortions"

Date: May 8, 2026
Host: Kelly Evans (CNBC)
Key Guests: Diane Swonk (KPMG Chief Economist), Steve Liesman (CNBC), Stephen Whiting (CIO Group), Michael O’Hanlon (Brookings), Greg Gibb (WSJ), Jeff Kilberg (KKM Financial), Christina Partsinevelos (CNBC Tech), others

---

Episode Overview

The May 8, 2026 episode of The Exchange dives into three dynamic themes shaping markets:

• The surprising strength in the U.S. job market and implications for Federal Reserve policy, including the contentious prospect of two rate hikes.
• Escalating U.S–Iran tensions around the Strait of Hormuz, their effect on global energy markets, and the global geopolitical landscape ahead of a critical U.S.–China summit.
• An exploration into how the AI investment boom is distorting economic and market signals, with a focus on NVIDIA’s far-reaching role and the broader implications for growth, corporate earnings, and labor.

---

Segment 1: Labor Market & Fed Policy – Inflation’s Sticky Dilemma

[00:58 – 11:32]

Key Discussion Points

• Mixed Jobs Numbers: April’s jobs report exceeded expectations, but underlying data on household employment and underemployment (U6) pointed to weakness. Diane Swonk warns against being “thrilled by the headline figures” (01:58).
• Persistent & Sticky Inflation: Multiple contributors: war in Iran, supply chain aftershocks of the pandemic, ongoing fiscal stimulus (like tax cuts).
• Fed's Quandary: Diane Swonk argues inflation is at risk of becoming entrenched, with the Fed’s credibility “getting shredded.” Calls for two rate hikes, seeing “the Fed's inflation-fighting resolve will be tested by financial markets” (04:27).
• Services vs. Goods Inflation: Steve Liesman highlights the troubling rise in core service inflation:

  “It's not that it's 3% now – it normally was running at 2% before the pandemic… now it's three and change. And that’s the problem.” (05:21)
  Even stripping out energy and housing, service inflation “remains elevated.”

• Labor Market Slack vs. Headline Jobs: Layoffs persist even at high-performing firms. Liesman notes “the U6 picking up for the second straight month” and “that participation rate being down” (07:56), suggesting hidden slack.
• Limits of Fed Policy: Swonk (10:01):

  “The most regressive tax that hits 100% of the population? Inflation. That’s all there is to it.”

• Political Pressure: Steve Liesman speculates the new Fed Chair, Kevin Warshaw, may want to deliver a rate cut to President Trump but likely “a hawk at heart” (10:33).
• Summary: The consensus holds that sticky, persistent inflation may force the Fed's hand, regardless of jobs data ambiguity.

---

Segment 2: Boom and Bust – The Market Caught Between AI and Global Energy Shocks

[11:32 – 18:07]

Key Discussion Points

• AI and Semiconductors Dominate Market Gains: Stephen Whiting (CIO Group) explains "the American stock market is... built now around the semiconductor sector. 19 companies are expected to grow EPS 91% this year" (13:22).
• Earnings Surge Fueled by AI:

  “Tech hardware, semiconductors, memory chips… going to account for about 30% of S&P 500 profit growth this year… not even counting hyperscalers.” – Whiting (13:50)

• Is the Boom Sustainable?: Whiting notes prior busts: “We've had four corrections of 40% or more for semiconductors in the last 25 years. They're going to happen again... now it's at a really high market cap.” (15:18)
• Cautious Bullishness: Whiting expects “2026 is in the bag,” but warns about sustaining current growth rates. He continues to favor not just semis, but also software and energy infrastructure as necessary portfolio plays.
• Energy Shock ‘Temporary’? Markets are pricing the oil surge as a one-off, “looking through it as a temporary thing,” but long-term energy costs are “creeping up” (16:40).

---

Segment 3: Geopolitics – Strait of Hormuz Crisis, US-Iran Escalation, China Summit

[20:04 – 29:09]

Key Discussion Points

• Escalating Naval Conflict: U.S. strikes on Iranian oil tankers enforcing a blockade. Ongoing exchanges amid a fragile ceasefire with Iran, with formal steps from Iran to control the Strait of Hormuz (20:43).
• Red Lines and Market Adaptation:

  “Normalizing of their controlling of [an] international waterway is both illegal and... unacceptable.” – Kelly Evans (21:36)

• Michael O’Hanlon (Brookings):
  • Doubts U.S. will “tolerate” Iran formalizing control of the strait, but “markets could probably learn to live with it” as “one more added cost” to global shipping (23:28).
  • U.S.–Saudi friction seen as “a gesture of pushback,” but O’Hanlon expects the Saudi-U.S. alliance to ultimately prevail (25:47).
  • China Summit Outlook: Abundant sources for disagreement between Trump and Xi, making the summit “fascinating to watch the play by play” (26:37).
  • Russia’s Position: Despite war toll, Putin unlikely to bend, as China’s support continues (27:50).

Notable Quotes & Moments

• Evans on Geopolitical Norms:

  “The normalizing of their controlling of international waterway is both illegal and... unacceptable.” (21:36)

• O’Hanlon on Markets:

  “Markets adapt to everything... from Houthis shooting missiles at Red Sea traffic...” (23:28)

---

Segment 4: AI’s ‘Reality Distortion Field’ for Markets and Economic Data

[32:48 – 38:55]

Key Discussion Points

• “Reality Distortion Field”: WSJ’s Greg Gibb likens AI’s impact to Steve Jobs’ famous “reality distortion field”:

  “You have a 1% economy [ex-AI]... but growth is distorted higher by AI, itself distorted by imports.” (33:33)

• AI Wealth Highly Concentrated: AI’s market boom heavily benefits a small number of companies (“the Mag 7”) and shareholders, while “everybody else is kind of like, well, not so great.” (34:56)
• Stock Market Shields Against Shocks: Market resilience to oil price spikes and tariffs attributed to A.I. profits overshadowing these negatives.
• Labor Weakness and AI:

  “Wages were only up 0.2%... after you subtract inflation, they're around zero... Is it any shock that consumer sentiment is so low?” (36:21)

• Fed Conundrum – to Hike or Not?:
  • New Fed Chair’s bet: AI could boost productivity and allow rate cuts.
  • Gibb: The risk is “workers are so afraid of losing their jobs to robots, they won’t ask for” raises—“so yeah, Kevin Warshaw will get his lower inflation, but... not just because of productivity but because people are afraid of it.” (36:27)
  • Net verdict: “I don't see a strong case for the Fed hiking, but I also don't see a case for them cutting rates.” (38:45)

---

Segment 5: Deep Dive – Nvidia’s Unprecedented AI Investment and the Supply Chain

[39:41 – 42:22]

Key Discussion Points

• Nvidia’s Aggressive Investment: “Nvidia has poured billions of dollars into every layer of the infrastructure stack just over the last four months… not just with purchase orders, but with equity stakes in its own partners.” – Christina Partsinevelos (39:41)
• AI Ecosystem ‘Moat’ or Risk?: Nvidia invests in companies who in turn buy Nvidia’s chips; raises questions whether demand is “organic vs. supported by Nvidia's own balance sheet.” (40:30)
• Market Implications:
  • Intel and Apple rumored partnership would be a “huge win for Intel’s foundry business.” (41:18)
  • Nvidia’s strategic reach is pulling other tech high-fliers along (“Micron up 35% since Monday… best week since 2008”, 31:05)

---

Segment 6: Investor Takeaways – Where to Find Opportunity, How to Think About Tech

[42:22 – 47:09]

Key Discussion Points

• Historic Tech Gains:
  • Dell up nearly 12% after Trump plug, “Intel up 146%” in a month, largest weighting in Kilberg’s ETF (43:34).
  • “Let your winners win,” Kilberg advises (43:34).
  • Intel’s “foundry business… became the template” for its surge; deal rumors with Apple could add another “$40 billion in revenue” (43:34).
• Palantir and Pershing Square:
  • Despite volatility, Kilberg is bullish on Palantir post-earnings, likening it to Tesla’s recovery (45:39).
  • Strategic structure of Pershing Square’s closed-end IPOs detailed as key for understanding returns (46:23).

---

Notable Quotes and Moments

Inflation & Fed

• Diane Swonk:

  “We are in a five-year bout of inflation and the Fed's credibility is getting shredded.” (08:17)

• Steve Liesman:

  “It’s not that it’s 3% [inflation] now – it normally was running at 2% before the pandemic... now it’s three and change.” (05:21)

AI Distortion

• Greg Gibb:

  "I was thinking about this expression... Steve Jobs... a reality distortion field... that's kind of what AI is like, right?" (33:33)

Geopolitics

• Michael O’Hanlon:

  “I just don't think it's a precedent [Strait of Hormuz control] the United States... would be willing to go along.” (23:28)

---

Key Timestamps

• 00:58 – Market update, jobs data, inflation/interest rate setup
• 01:58 – Diane Swonk critiques job report; details inflation concerns
• 05:08 – Steve Liesman on services inflation and monetary policy dilemma
• 13:22 – Stephen Whiting on AI, semiconductors, and S&P earnings
• 20:43 – U.S.-Iran naval conflict; Strait of Hormuz blockade coverage (Megan Casella)
• 23:28 – Michael O’Hanlon on U.S. response and market adaptation
• 33:33 – Greg Gibb on AI’s effect on GDP and market narratives
• 39:41 – Christina Partsinevelos on Nvidia’s vertical investment, ecosystem impact
• 43:34 – Jeff Kilberg on Intel rally, portfolio strategy, and tech opportunities

---

Tone & Style

The tone is analytical but urgent, blending real-time market assessment with deep policy and macroeconomic analysis. Guests push back respectfully, voice policy concerns, and pepper their insights with analogies and memorable phrasing ("the most regressive tax is inflation," "AI's reality distortion field"). The dialogue remains focused and data-driven but accessible for an informed market audience.

---

Conclusion

This packed episode weaves together labor data, inflation anxiety, Fed speculation, energy/geopolitics, and a near-unprecedented tech boom—each shaping the next phase for investors and policymakers alike. With AI’s impact dominating profit growth and equity markets, even persisting global risks and sticky inflation are, for now, unable to derail stock performance. The coming weeks (Fed decision, Iran crisis, Xi-Trump summit, Nvidia earnings) promise more volatility and potentially decisive pivots for each of the episode's headline themes.

For Investors:
Stay wary of market distortion from AI euphoria, keep an eye on macro shocks as well as political crosscurrents (both U.S. and global), and ponder whether the current earnings boom is sustainable—or setting up for a correction.

---

Transcript

[Discover Advertiser]

It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show, see [e-mail] credit card.

[Fidelity Customer]

Hey, Fidelity, how can I remember to invest every month?

[Fidelity Representative]

With the Fidelity app, you can choose

[Kelly Evans]

a schedule and set up recurring investments

[Fidelity Representative]

in stocks and ETFs.

[Fidelity Customer]

Huh, that sounds easier than I thought.

[Diane Swonk]

You got this?

[Kelly Evans]

Yeah, I do. Now, where did I put my keys? You will find them where you left them.

[Stephen Whiting]

Investing involves risk, including risk of loss. Fidelity Brokerage Services LLC Member NYSE SIPC.

[Kelly Evans]

Thank you very much, Scott, and welcome to the exchange. I'm Kelly Evans. Doubt just dipped lower, but stocks are broadly still higher today with the NASDAQ and S and P hitting fresh highs. Best performer is the NASDAQ, up 1.4%. Both the S and P and the Nasdaq are on track for a six week win streak as well. And today's moves come after a strong April jobs report. The economy adding 115,000 jobs last month. That's about twice as strong as expected. Markets think it will leave the Federal Reserve on hold with no clear move to hike or lower rates expected through the end of next year. Now, and that's where my first guest disagrees. She now sees two hikes on the horizon as inflation becomes a bigger issue. Let's bring in Diane Swonk, the chief economist at kpmg, along with CNBC senior economics reporter Steve Liesman. They're both here for our opening exchange. Welcome, Diane. I'll give you the mic first, so to speak, but what jumps out to you about this report? I mean, literally so strong you think that we should now be talking about hikes?

[Diane Swonk]

It's not the report itself. I don't think that the job market is actually underlying. I think it is still very weak under the hood. The report was still very weak on the household side of the survey. And the U6, that sort of underemployment number jumped up to 8.2%. That's the highest level since December. So I'm not exactly thrilled about the headline figures. I don't think they match what most people's experience are. That doesn't mean that that rate cuts by the Fed can do anything to cure what ails the labor market. And we do have a much more sticky inflation situation that I think is going to persist much longer in response to the war in Iran as well. I think this is going to be a much harder situation for the Fed to deal with as we get into the summer. And that's something I'm very concerned about going forward. We've seen inflation expectations even in the New York Fed survey move up on the longer term land of the inflation expectations as well as in the near term. And that's something that you don't want to see. We've really got a muscle memory out there of raising prices now that we haven't had. And the Fed's missed its target now for five years.

[Kelly Evans]

Dean Mackey, I think it was yesterday, said we have 3.2% core inflation which is the highest reading for 30 years going into the pandemic, which is, you know, not anything to look past. But at the same time, if this is a price shock and not an inflationary environment where we've seen monetary stimulus, stimulus and fiscal stimulus, should we treat it more as a tax hike? Even something to be kind of where you'd loosen policy? I think it was the Bernanke research that said this, Diane, that said the Fed's mistake in response to oil shocks of the pass of the past was to be too contractionary with monetary policy.

[Diane Swonk]

Well, this one I think is different and I don't think it falls under that category. What I worry about is that we're seeing multiple shocks at once and there are ripple effects. This is not just an oil shock. It's, it is a supply chain shock that echoes the pandemic and we do have some fiscal stimulus still. We are having extra expansions to tax cuts that are showing up in tax refunds which are blunting the blow on in terms of retail sales. That also is a double edged sword because it helps to make inflation stick at a time when we already know inflation has gotten sticky. I really do think that the new Fed chairman's inflation fighting resolve will be tested by financial markets. And I think the Fed has been little too dovish in terms of inflation given how sticky we've seen it, particularly in super core services stripping out just even the core number going into that super core services accelerating prior to the shock from Iran. So I don't think this is just an oil shock. I think it's much larger. We also know that research from the pandemic shows that persistent shocks amidst elevated levels of uncertainty makes for more persistent bouts of inflation that central banks should be taking notice of and not making the same mistake they did coming out of the pandemic.

[Kelly Evans]

And Steve, this wasn't this why we saw at least three of the four dissents? Weren't they in favor?

[Steve Liesman]

Yeah, yeah, yeah. Hey, guys in the back were yelling me for being late coming down. The reason is because in serendipitous anticipation of Diane Swonk bringing up services ex inflation. We made a chart on that one here.

[Kelly Evans]

So you were fine.

[Steve Liesman]

I was on time. I was fine. But take a look at the chart that has the its services ex energy and food and shelter as well. And you can see it's a little bit elevated. Maybe they don't have it. But in any event, it shows a tick up here. I want to go back to something that Diane said at the top, which is important. There we go. PC services. And that's the one year bar. And then go back and take a look. We have a longer term chart of this and it shows what the problem is. It's not that it's 3% now, is that it normally was running at 2% before the, before the pandemic and it was. Now it's three and change. And that's the problem putting that upward pressure. And that's what Goolsbee talked about with me this morning. Said it's not just the energy side of things. When I take it out, I'm still worried about inflation. The important distinction that Diane made at the top is you may not want to raise rates because of the job market. There isn't a sense right now that the job market is creating inflationary pressure, especially when you have wages 0.2% yet a slight uptick in hours work. But there still seems to be the ability to work the existing workforce more and of course paying them more and not have inflationary pressure or get into a tight labor market. The reason you would raise rates is you be the Fed. You're like, okay, I got two mandates. I got the jobs mandate, I got the inflation mandate. I look at jobs. I don't have a problem over here. I don't have anything I need to

[Kelly Evans]

do even by the way. And we can show the recent recap. We've had headlines even in the past 24 hours about all these layoffs. And I'm not trying to be one to use anecdote, right, it's obvious the jobless claims levels are low, right? It's obvious all. But it does seem like even the companies that are the best performers right now seem to be making their workforces smaller to support that more efficient. I don't know.

[Steve Liesman]

We're Going to have to keep a tally because it seems like they come out a thousand here, five thousand there. And it seems like more and more I'm a little bit nervous that they're kind of making stuff up. Like what they're saying is we're cutting jobs because of AI. When they're cutting jobs because they're not performing well, they're not perform well. Careful that. But it's a nice way of saying it. But in any event, you want to be a little careful. I think it might be early days for people who have the big concern about I don't think we're quite there yet. There could be a little bit on the margin that investment's happening. I think it's more. It's the low fire, no higher. But look, we did 100,000. It's the second month in a row of over 100,000. The unemployment rate stable. We're seeing construction doing well. That's the data center stuff. That's okay. What I didn't like in the report were the weak wages and this labor slack. The U, the U6 picking up for the second straight month that participation rate being down. So there's still slack out there.

[Kelly Evans]

Aging. I've seen people saying that's because of the aging of the workforce. Do you think that's true or. It's hard to tell.

[Steve Liesman]

I don't think it works that way. Diane is more of an expert on this. But I think if you drop out of the labor force because you've retired, you don't count in the labor force

[Stephen Whiting]

for the participation, you're not going to be unemployed.

[Steve Liesman]

Did I do that right, Diane?

[Diane Swonk]

Right.

[Steve Liesman]

All right, let's end the segment then, because you can only go down from here.

[Diane Swonk]

No, you got it right. And I think the important issue is that, yes, the labor market has been in this sort of state of suspended animation kind of frozen for some time now. And I don't think what the Fed does up or down on rates can do anything about that. What I am concerned about is we are in a five year bout of inflation and the Fed's credibility is getting shredded. I'm very concerned about that. And I think the Fed is needs to be very cognizant about the persistence of inflation and that will likely justify a rate hike by the summer. Whether or not the Fed goes forward with that, we'll see. But I'm very worried that this is not actually going to constrain inflation enough or derail inflation enough with the additional shocks that we're seeing and the uncertainty Surrounding when the end of the closure of the straight or Hormuz and the lags that happen after that. This is something that's much larger than that. And I do think this will be a problem for the Fed as stickier inflation for longer. We keep seeing the Fed forecasting next year. It's going to be okay. That's been going on for a long time now.

[Kelly Evans]

Let me ask you this, Diane. In a reality, definitely a devil's advocate sort of thing here, so bear with me. But it's going to be hard because so much inflation is so persistent. I mean we're, you should read the headlines in my county about how many school layoffs are due to the rising cost of health care. Okay, can the health care utility bills. Right. I don't know how Fed policy fixes those issues. And if the Fed tightens here and ends up slowing the labor market, that would seem to make everything worse.

[Diane Swonk]

Well, the issue is what's the most regressive tax that hits 100% of the population? Inflation. That's all there is to it. There's no question that the level of prices are out of reach for most Americans and you cannot over time sustain or attain full employment unless you beat inflation down. And I think that's a key issue the Fed has not dealt with. And it's not all their fault. A lot of extra shocks came into the system, but it's on their shoulders to fix it.

[Steve Liesman]

Steve, I think Kevin Wash wants to deliver a rate cut to President Trump. I think he wants to do that. I think though Kevin was, he may want to. I don't that will be probably, that

[Diane Swonk]

would be very hard to do.

[Steve Liesman]

I think he's probably a hawk at heart and he's looking at this. Kevin has famously said inflation is a choice. So he, and he, by the way, he excoriated Powell for saying that I have this tariff problem. He says there's a, there's a Wall Street Journal, I bet he wrote where he said look at the Fed blaming Trump for the inflation. So in Kevin's own words, it's his responsibility.

[Kelly Evans]

He reiterated that in his recent statement.

[Steve Liesman]

Yeah, it's his responsibility. So he's going to have to make a choice. And Diane could be right that that's going to be the response. Sorry, Dan.

[Diane Swonk]

He's going to be tested. Steve. This is, you know, I mean, this is something the markets will want to be looking for. And the bond market doesn't want inflation over the long haul. And we've had it now for a

[Kelly Evans]

long haul for the Long haul? Yeah, I absolutely. Diane, thanks for joining us today. Really appreciate it. Diane Swonk. Steve, thank you. STEVE liesman, Our investors While we discuss all of this ignoring geopolitical risks, my next guest is investing for both a boom and a shock to the economy at the same time. Here to explain is Stephen Whiting. He's the chief investment strategist at CIO Group. Steve, let's just pick up on the inflation point kind of broadly that this discussion we were just having. Where do you come down on this? On this?

[Stephen Whiting]

Well, look, the longer the streets stay closed, the longer there's going to be a binding constraint on economic activity that we're going to reach around a good part of the world. It's a little bit like it's our war. It's your problem. Now in the United States, we have an energy trade surplus, but obviously we're going to contribute to the world's energy supplies and that's pulling up our costs. The thing about the Fed on this whole issue is that we really don't have much experience with the Federal Reserve knocking the economy down to be small enough to fit through a supply shock. And you know, the reality is we're going to have negative real rates, we're going to have high inflation for the period as long as the straits stay closed. So I think markets have been wanting to look through this particular issue. They're always seeing the fact that if we can reopen the straits, price levels will come down. I think that's true. But when and it's not just ending the hostility is it's really a resuming energy trade through the Persian Gulf.

[Kelly Evans]

I guess, to put it differently, whatever drag that's going to happen, the stock market's point of view on some consumer areas, we still have 25% earnings growth in the first quarter, even helped by the performance of energy stocks amid some other so with earnings growth like that, how do you take the market down?

[Stephen Whiting]

Well, that's the thing. The American stock market is really not geared to the American consumer. It's not geared to energy or the world's problems. It is built now around the semiconductor sector. 19 companies is expected to grow EPS 91% this year. The companies that are their customers, the hyperscalers, are telling us that their spending on AI infrastructure is going to grow 70% this year, an average 60% for the last two years. Yet if I were to take that growth rate and extrapolate it forward, it would be bigger than the whole economy by 2035. So we know it's going to end at some point. But right now we are seeing incredibly powerful growth in tech, hardware, really, semiconductors, memory chips. This is going to account for about 30% of S&P 500 profit growth this year. That's not counting again the AI companies, the hyperscalers that are selling the services, which are also contributing to a boom. So this is going to be a much stronger earnings year than I anticipated, even with a better outlook that we really see in the economy right now because of the energy shock.

[Kelly Evans]

Right to your great stats here. Just 19 companies in the semiconductor space are estimated to account for 30% of S& P earnings growth this year. Do you believe that earnings growth will stay elevated as Yardeni and the markets in these forecasts now, we're looking at possibly 20% earnings growth for the year.

[Stephen Whiting]

I think that's very likely under most scenarios for 2026 this year. The real question is when you have semiconductor companies. And again we, we love all of this for the longer run. This is one of the hearts of innovation. This drives long term stock returns. But if you take a look at semiconductors, it's 16% of S&P 500 market cap. Nvidia's half of that. And you take a look at where we were with comm equipment and semis back in the year 2000. It's a lot bigger than that. And it is really endemic of this AI boom that we have right now. What's interesting, I think is that AI is going to power incredible activity. It's going to save us labor. We know about all of these good and bad things, but it can't all accrue to just building infrastructure. So if you look as recently as the end of 2020, sorry, the beginning of 2023, I mean, semiconductor companies as recently as just a few years ago had earnings declines. We've had four corrections of 40% or more for semiconductors in the last 25 years. They're going to happen again and now it's at a really high market cap.

[Kelly Evans]

But are you leaning against it or. Yeah, I mean that would be a very difficult top to call.

[Stephen Whiting]

It's. Well, it's going to be important. You know, I think 2026 is in the bag 27 and beyond. We're going to have to watch these customers as to whether or not they're all going to stay competing, whether they really need to spend as much as they do. But we got to manage through this one and it's going to be tough, but we're going to have to manage really what the semiconductor reading is we are sticking with it, but we like other areas of tech. We like software, which everyone says we won't need anymore. We obviously won't have to worry about cybersecurity. Well, we think that that's wrong, but we've got to also have other areas of exposure. When you think about how this oil price is shocked, it's as if we're okay, we're looking through it as a one off, temporary thing. And the reality is that the long price of oil is creeping up. Energy companies, energy infrastructure companies, which are also going to be critical to air important part of this ingredient. And we're including that in the portfolio even though that is not an ideal long term holding.

[Kelly Evans]

Okay. Got it, Stephen, thanks. We'll leave it there for now. It's good to see you today. Steve Whiting with the CIO Group. We've got some breaking news on the fda. Angelica Peebles with the story. Angelica?

[Angelica Peebles]

Hey, Kelly. Well, the Wall Street Journal is reporting that President Trump has signed off on a plan to fire FDA Commissioner Marty Makary. Now they are saying that this is not yet a plan. It still could change. But Kelly, as you know, Marty Makary has been in the hot seat for quite some time now over some of the recent FDA decisions apparently going back and some of the guidance that they've given companies. And supposedly there's been a lot of back and forth on what's been happening at the FDA with those companies and these specific drug approvals. Just the other day our own David Faber interviewed Marty Makary at the Milken Conference and they talked, you know, about one of these recent rejections for this company called Repl Immune. And that was a very contentious interview. And you've seen this heat increasing on him also this week back and forth over flavored vapes and also some of the abortion, abortion groups also calling for his ouster. So he's just been under fire from all sides. We've reached out to hhs, have not gotten a comment. And we will be back, Kelly, as soon as we have more on that story.

[Kelly Evans]

All right, Angelica, thank you. For now, Angelica Peebles. Coming up, testing the truce. US Central Command says it disabled two Iranian oil tankers trying to pull into a plan port on the Gulf of Oman. We'll have the latest from Washington. Plus in video hitting a new all time high. But as a spending soars, does it distort our view on the whole economy? We'll ask the Wall Street Journal's Greg about that ahead on the exchange. This is the exchange on cnbc.

[Discover Advertiser]

It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover you can get this Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show see [e-mail] credit card trading at Schwab

[Charles Schwab Representative]

is powered by Ameritrade, giving you even more specialized support than ever before, like access to the trade desktop. 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 [e-mail] trading folks knew the colonel

[Steve Liesman]

approved of his new honey, Chili crisp and Jalapeno ranch sauces the moment he tasted them and said, that's right. No notes, just absolute silence. Turns out some flavors don't need explaining, they just need dipping. It's saucy season at KFC with new Honey Chili Crisp and Jalapeno Ranch. Get dipping with a boneless bucket today.

[Kelly Evans]

Prices and participation vary. Significant weekly decline for crude oil. They're down 6%. It would actually break. It would be the first time it's down in a couple of weeks. The US Says it struck two Iran flagged oil tankers in the Gulf of Oman, preventing the vessels from entering an Iranian port in violation of the US Naval blockade. Now this comes as the US Awaits a response from Tehran on negotiations to end the war. I want to bring in Megan Casella this hour with the very latest from the White House.

[Megan Casella]

MEGHAN Kelly, a second straight day now of the U.S. and Iran exchanging fire amid the ceasefire. CENTCOM said that today's U.S. attacks on Iranian tankers were necessary to fully enforce the blockade on vessels entering or leaving Iran. Now that goes a bit further than the attacks last night, which the US Said were made in self defense. At the time President Trump said the ceasefire was still in effect. He described those strikes as just a love tap. Now all of this comes as the United States is expecting a response from Iran sometime today to its one page peace proposal. Secretary of State Marco Rubio telling reporters earlier today that he hopes it was a serious offer that could put negotiations into a more serious stage. But there is one more point of friction that's emerging Today, Iran overnight began taking steps to formalize control over the Strait of Hormuz, potentially with a new government agency. And for the US That's a red line.

[Steve Liesman]

That would be very problem.

[Kelly Evans]

That would actually be unacceptable. I mean, we're. The normalizing of their controlling of international waterway is both illegal and it's just something that's unacceptable.

[Steve Liesman]

And the world has to start asking itself what is it willing to do

[Kelly Evans]

if Iran tries to normalize control of an international waterway? I think that's unacceptable.

[Megan Casella]

So as of now, Kelly, the US Is waiting on Iran both to see its response to the peace proposal and to see whether it will look to retaliate to this latest round of U.S. attacks.

[Fidelity Customer]

Attacks.

[Megan Casella]

Kelly?

[Kelly Evans]

Megan, when, when you say Iran is taking steps to formalize its control, what do we know about that?

[Megan Casella]

What it looks like right now the Associated Press is citing Lloyd's List, a shipping intelligence company, on this, but they say that they're looking to create a new government agency. They would that would tax and vet vessels that are going through the strait. So really just taking more steps to formalize it. Iranian state media is also reporting that they're looking to put this into law to really formalize it further. It almost doesn't matter just how far Iran would go to make this more concrete. But even just taking these steps is already something that the US does not want to see. Things like vetting and taxing vessels, as you heard Marco Rubio say there, that goes to further legitimize the idea on the global stage that Iran controls this strait and that is not what the US Wants to see.

[Kelly Evans]

All right, Megan, thanks very much. For now. Megan Casella, for more, let's bring in Michael o', Hanlon, senior fellow at the Brookings Institution. Michael, formalizing control, is that an acceptable outcome of the and I ask the knee jerk response would be no, but I wonder if the market is telling us that it is in fact an acceptable response. You know, a situation that we would have previously thought was a non starter for, you know, global affairs. But perhaps, as we've seen with other waterways in the past, sometimes these things can become institutionalized. Do you think we're at that juncture?

[Fidelity Customer]

Hi, Kelly. I'm dubious the United States would tolerate that, but maybe there's a way to finesse it. Maybe there's a way to talk about this as a temporary approach and justify it in terms of, you know, accounting for the cost of cleanup and of course, the damage to Iran's economy over the last few months. And maybe that's one way you could imagine getting around it, I otherwise don't see how the United States is going to challenge or rethink its long standing commitment to open transit, whether it's in the Turkish Straits or Singapore or Malacca, you name it. I just don't think it's a precedent. The United States as a country that's defended freedom of navigation now for decades, even though we're not formally a party to the Law of the Sea Convention, I just don't see us being willing to go along. But I think markets could probably learn to live with it. Sure. It just becomes one more added cost on top of ocean transit. And we see that markets adapt to everything from the Houthis shooting missiles at Red Sea traffic to a number of other permutations. And so I don't worry so much about the economics world. I worry about or I think the United States at a strategic level will resist.

[Kelly Evans]

Do you think it would be acceptable to Gulf allies?

[Fidelity Customer]

Well, it's a good question because of course you could say why should Iran charge and they not charge? And I think they're going to say it's not acceptable. The question is also, however, what could they do about it? And if most shipping winds up going closer to Iranian shores, I don't know if it would. But, you know, maybe there's some way for Iran to justify it. Maybe Iran organizes some kind of a, a safety or a convenience kind of system along the little islands it has in the Strait of Hormuz, where it can somehow say it's providing a service beyond simply allowing people to go, that it's watching out for their welfare in a way the Gulf states are not. I don't know. You know, there'd have to be some kind of a justification for why you have this asymmetry. But the Gulf states often complain about things that they expect us to solve for them. And so I'm not sure they really have the recourse of doing that much about it in the short term.

[Kelly Evans]

What do you make of this spat between the US And Saudi Arabia all week long over the, over the truce and the ceasefire and the Project Freedom and all of that?

[Fidelity Customer]

I think it's probably a signal by the Saudis that they are feeling a little bit like our European allies, a little bit neglected and getting a little tired of improvisation when improvisation leads to unexpected bombardment of some of their facilities and even cities. And so I think it was a gesture of, you know, pushback, but I don't really think it's likely to be the durable outcome here. I think The Saudis are going to want to work with us because they really know they have no other choice. They have no other great power they can appeal to to help in this showdown. Even if it's largely a showdown of America's making, it's also going to have to be a showdown that America helps resolve.

[Kelly Evans]

Well, that great powers reference raises the question of China just into this Trump Xi meeting. What are the politics now like between these two after the Iran conflict?

[Fidelity Customer]

Well, I'm going to be watching this meeting with a lot of interest. This could just be something where the two sides have already agreed. No matter what the issues, we're going to make it look good. But there are so many issues, not to mention, you know, that each side considers the other its major military rival and the long term status of Taiwan, all the trade disputes, all the intellectual property disputes, and now the war in the Persian Gulf. There are so many things that Xi and Trump could disagree about and wind up with an acrimonious or at least a difficult summit that I'm going to be fascinated to watch the play by play.

[Kelly Evans]

Indeed. And finally, on the question of Russia, there was a great piece you probably saw in the Wall Street Journal today talking about how Ukraine is beginning to take a toll on Putin's popularity, on the Russian economy, on the population. They've lost a million people now. There was a huge Ukrainian drone attack. They had to fend off the, you know, near their important cities. They have this big anniversary coming up. They're not able to kind of celebrate, I guess, the way they had hoped because of, you know, threats of disruption and that kind of thing. So we haven't really talked a lot about it. I'm just curious how or if that scrambles the calculus between the US And China and how it might relate to, you know, what comes of the end quote, unquote, of the Iran war.

[Fidelity Customer]

It's a good question. I don't know that Russia's economic and political difficulties will feature prominently in the Xi Trump meeting. But certainly the ongoing Ukraine war is a big difference between the United States and China. And China's role in that conflict, providing a lot of machinery, a lot of industrial machinery to Russia, which then makes weapons and keeps the war effort going. It is a good moment to think about squeezing Russia harder. And if China would help us even modestly in that effort, it would be a good reason to collaborate. I'm just skeptical we're going to see that. And I'm also skeptical that Putin really is going to bend at this juncture. You know, rational analysis would have said that he should have stopped this war a long time ago. But I think he's in at a very emotional level. And he's also still hopeful that President Trump will abandon Ukraine because there have been so many times where Trump has almost done so. So put me down as a skeptic that Russia is really on the ropes to the point where they look for a way out. And therefore, it's going to be a hard thing to persuade President Xi and China to, you know, to take some big new decisive step. I don't really know what that decisive step would be.

[Kelly Evans]

All right, Michael, always good to hear from you. You know, can I tell people he racing from Meals on Wheels to come talk to us here this afternoon? Seriously, I hope it's okay.

[Fidelity Customer]

I appreciate that at Meals on Wheels. Thank you.

[Kelly Evans]

Yes. No, thank you. And it's great to have you on. Really appreciate it. Michael o' Handle with Brookings. Coming up, we're going to take a deep dive into in video's AI spending. With billions of dollars worth of equity stakes across more than half a dozen companies in all different industries, Nvidia is directly financing a lot of the AI supply chain. Does that create a moat or a liability? We'll dig into that ahead. When I lost my sight, I had

[Charles Schwab Representative]

to answer some big questions like what

[Kelly Evans]

would you like the power to do? My answers help me discover blind spots soccer. And now I get to share it

[Steve Liesman]

with the next generation bank of America

[Kelly Evans]

champions, blind soccer player and coach Antoine Craig. And everyone who dares to ask, what would you like the power to do? Bank of America proud to be the Official bank of FIFA World Cup 2026 bank of America NA Member FDSE trading

[Charles Schwab Representative]

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 [e-mail] trading hanaday presents.

[Steve Liesman]

In the red corner, the undisputed, undefeated weed whacker guy. Champion of hurling grass and pollen everywhere. And in the blue corner, the challenger, Extra strength Hanaday eye drops that work all day to prevent the release of histamines that cause itchy allergy eyes. And the winner by knockout is Patternay. Patternay. Bring it on.

[Kelly Evans]

As we close out the week here for the S and P and Nasdaq and in fact all the major averages are set to end the week higher. The Nasdaq the outperformer, the Nasdaq and S and P are on track for their first six week win streak in a year and a half. Seven weeks by the way, for the Russell, first time we're seeing that since October. Memory stocks are leading the Nasdaq again today. Look at these gains. Micron up 14% SanDisk similar Seagate up a couple Western Digital Many of these names hitting new all time highs. Micron is up 35% since Monday. It's on track for its best week since 2008 and all of the memory names are tracking for their sixth straight week of gains. Let's get to Sima Modi now for the CNBC news update.

[Seema Modi]

Seema Kelly, here's what we are watching. North Korea testing a new nuclear capable warship. It's all part of Kim Jong Un's bid to modernize his naval forces and establish nuclear strike capabilities at sea. The North Korean leaders stepped out to inspect the vessel and other ammunition Friday. The new warship is set to deploy in June. According to state media, Pope Leo marked his first anniversary as the leader of the Catholic Church in the ancient city of Pompeii. Leo was greeted by large groups of cheering Italians, many who waited overnight to greet him. He also spent part of his visit to the city meeting with sick and disabled people in a local charity center. And miners in Myanmar have discovered a rare giant ruby. The massive 11,000 carat ruby weighs nearly 5 pounds and is considered to be the second largest ruby ever discovered in the country. According to state media. It was discovered in mid April and considered highly valuable due to its superior color and quality. Kelly Myanmar, by the way, formerly Burma, makes about 90% of all rubies.

[Kelly Evans]

It looks like a heart. Does it need to be shined?

[Seema Modi]

I think so. I think they need to cut it up a little bit and give us some rings.

[Kelly Evans]

The heart surgeon maybe could do that. Seema thank you very much. Sima Modi. Coming up, CapEx is projected to surpass defense spending next year. Year as a percentage of gdp. Is that level of investment permanently altering our view of the economy? We'll dive into that next. There's AI and then there's everything else. My next guest, writing in a new column in the Wall Street Journal today that is distorting practically everything about the economy. So what are the implications for markets, interest rates and the labor force? Greg Gibb is chief economics commentator at The Wall Street Journal. Greg, it's great to see you two. Speed. Is it safe to use that term to describe this?

[Greg Gibb]

That's one way of saying it, Kelly. I mean, I was thinking about this expression that used to be associated with Steve Jobs, that he had a reality distortion field. He would walk around and just change perceptions of reality by his mere presence. And that's kind of what AI is like, right? I mean, if you look at GDP growth, it looks really good, 2% or so on the surface. But over half of that is AI, or at least that's how you measure it. If you take only say consumers, we're only growing around one, one and a half percent. So the economy and housing, by the way, is declining. So you have a 1% economy without high. But even that is a little bit distorted, Kelly, because as you may recall, we subtract imports from GDP and a lot of that spending is imported. So you actually have to haircut the contribution to account for the import. So the contribution is actually a little bit smaller. So there's kind of like a double distortion going on there at the same time. Number one, growth is distorted higher by AI, but itself is distorted higher by imports.

[Seema Modi]

Hmm.

[Kelly Evans]

And I always think about this going back to 2022, Greg, is thank God that I came along because otherwise we would have just been talking about probably a recession post pandemic, high interest rates, high inflation, all of these problems, weak consumer, as we're seeing. So there are those who would say if you exclude the economy is weak. But is the point just that, well, since we have AI, hopefully at some point it can do the heavy lifting, broaden this out and kind of carry the economy on its back.

[Greg Gibb]

Well, first of all, it's already. So first of all, it's not theoretical, right? So let's look at the stock market, for example. I mean, a lot of us have wondered why hasn't the rise in oil prices since the war with Iran began hurt the stock market more? Or why didn't Trump's tariffs hurt the stock market more? And it is because of AI, right? I mean, profits this quarter will be up like 27%. But if you take it the Mag 7, which are up like 60%, you only you come up with a more sort of normal number in the low teens, Right? And then you have like this reality distortion field which is going beyond the Mag 7 to like Micron and AMD and intel, right? So that's real money coming in. But you asked sort of like, well, what does it mean if it does it spread to the rest of the economy? Well, I don't really think it will. I mean that's one of the amazing things about the AI boom. It's so concentrated, right? Like the, the wealth is held by a small number of people. The market cap gain is around a small number of companies. The profit benefit is, well, if you're a shareholder you're lucky. If you're a company, you're lucky. But the vast, but look at today's jobs report, Kelly. Wages were only up like 0.2%. They're up 3.6% from a year earlier. They're only, they're going to be around zero after you subtract inflation. So you have an economy now where the, anybody who's basically within the reality distortion field of AI is just doing great and everybody else is kind of like, well that's so great. I mean, is it any shock that consumer sentiment is so low?

[Kelly Evans]

So what does the incoming Fed chair do about all of this?

[Greg Gibb]

So Kevin Warshaw's theory that AI is going to basically boost productivity and hold down costs and that will help them cut rates, he might be right. But there's a negative side to that, Kelly, which is that one of the risks with AI is that people, workers are so afraid of losing their jobs to robots is they won't ask for. So yeah, Kevin, work will get his lower inflation, but not because, just because of the productivity, but because people are afraid of it. Now you didn't ask this, but I am going to go ahead and ask. Well, what if the AI boom goes back bust economy is weaker. Yes. Okay, so then the economy is weaker. And that I suppose would be also a reason to be to go a little easy on, on, on, on interest rates too. But I also think that we can exaggerate how bad such a bust would be, as I sort of described earlier, since some of that bust would be borne by the companies, the countries that are exporting their stuff to us. It wouldn't be so bad for us. And honestly, the profit and wealth dory has been so concentrated, I honestly think that the vast majority of workers would barely notice. In fact, maybe if their bosses would stop talking about replacing them with robots, maybe they'd feel better.

[Kelly Evans]

Well, or the leading AI companies as well real quickly. I mean, it's a hard topic, but we were having this debate with Diane Swank in the top of the program. She thinks the Fed should think about hiking in response to all this persistent inflation pressure. I worry that would damage the economy without fixing the inflation problem. As I said, a Lot of what's going on kind of in my neck of the woods is high health care costs, high utility bills and so forth. Do you think they should hike or even ease possibly in response to these

[Greg Gibb]

price shocks Right now? I think I do what they're doing, which is essentially moving towards a neutral stance. Kelly. And the reason why is that you're absolutely right. We've had one supply shock after another. It was Covid, then it was tariffs, and now it's oil. And these are persistently kept inflation well above the Fed's 2% target. But if you look beneath the surface, is there anything going on other than these one offs that we've had a lot of one offs? And going back to my point about wages, I mean, if we thought that demand was overheating, we'd see it in the labor market and we're just not seeing it. So in a weird way, this AI boom, which is creating all this wealth and giving us the appearance of an overheating economy, may also be as a sort of a side effect, holding down sort of wage pressures that are usually the trigger point for wage price spiral. So you net those two things against each other. I don't see a strong case for the Fed hiking, but I also don't see a case for them cutting rates.

[Kelly Evans]

I mean, my big takeaway is everyone should go ask for a raise and that would be helpful, I think, maybe

[Greg Gibb]

what if the answer is, what if the answer is fine, I'm going to replace you with Claude or something like

[Kelly Evans]

that, then we're coming to you. Greg, no, thanks very much. We appreciate it. It's a great piece. Greg, thanks for joining us. Greg from the Wall Street Journal. Coming up, speaking of outsized AI spend, the data center builder Iran is on pace for its best week in nearly two years after announcing a partnership with Nvidia. Familiar referral brain there just how much Nvidia plans to pay to own every layer of the infrastructure stack. That's next. Nvidia shares are up almost 9% this week, a week in which they have announced another $3 billion in new investments. Is the company investing in or propping up the AI ecosystem? Ecosystem Christina Parts and evil. She has more in today's tech chat stack.

[Fidelity Representative]

Yes, to your point, Nvidia has poured billions of dollars into every layer of the infrastructure stack just over the last four months. Not just with purchase orders, but with equity stakes in its own partners. The latest is Iran, a deal that gives Nvidia the right to invest up to a little bit over $2 billion in the data center operator plus a separate $3.4 billion contract where Nvidia leases GPU cloud services. Right back you can see Iron shares are up about 6, 7% right now. That follows equity positions in Core, Weave, Coherent, Lumentum, Marvell, Nebius and Corning, all just within the last four months. The NeoCloud deals have raised the most questions though. Nvidia investing in companies that turn around and buy its chips or lease it back. But I spoke to Jordan Klein at Mizuho and he argues they solve a real problem. Microsoft, Meta and others cannot build fast enough to meet accelerating token demand. And this is according to him. He says the Neo clouds have available power and data center capacity that just hyperscalers don't. Still, the risk is quite real. Ben Bahar in a Creative Strategies puts it this way, if the cycle turns, the market will start questioning how much of that demand was organic versus supported by Nvidia's own balance sheet. On the last earnings call for Nvidia, CEO Jensen Huang said it plainly. Nvidia's investments are focused on quote, expanding and deepening our ecosystem reach. Investors will definitely get their next chance to pressure test that on May 20th when earnings come out.

[Kelly Evans]

Impressive although or perhaps necessary. Meantime, intel getting some big news. More headlines about this possible Apple partnership.

[Fidelity Representative]

Yes, the latest headline from the Wall Street Journal saying that Apple and Intel have actually entered into an agreement for intel to make chips for Apple. However, we don't know how big the deal is. We don't know what kind of chips it could be, you know, for computers. Mac iPhone, if it was for the iPhone, that would be a huge win for Intel's foundry business because that's normally Taiwan semis world. They are the ones that make all of the Apple Mac iPhone chips I should say. So this is another big mover for Intel. We heard earlier in the week that these talks are ongoing. This has actually been a rumor for quite some time. Investors buy side across the street, Wall street just expect this to come out. I reached out to intel. They told me that they're not commenting on rumors right now, but you could see the reaction. This would be a huge win for the foundry business, especially under CEO Liputan who's been trying to turn things around. And for those that are wondering, the government got in at $20.47 a share. It's a paper gain, right? Yeah, they haven't sold out of that, but it's quite a substantial gain from where they got in.

[Kelly Evans]

Here we are 25 bucks exactly. 125 best week since 1975. Christina, thanks very much. Christina. Parts and Evolis. Speaking of which, take a look at shares of Dell computer, up almost 12% this afternoon. President Trump saying during a Mother's Day event in just the last half hour, quote, go out and buy a Dell.

[Greg Gibb]

They're great.

[Kelly Evans]

I wonder if that was a reference to Michael and Susan. Pause. I have no idea why that would come up. But nevertheless, the Stock is up 12% after those remarks and it has more than doubled year to date, up 105%. It's been a month, one month exactly, since Jeff Kilberg said right here on the exchange that he was buying intel and the shares are up 146% since then. Now he's finally buying this name. We'll reveal it and ask if he's going to sell his intel after the break. Welcome back in with the broad markets now up for six weeks in a row, let's take a look at some of the places that you could find opportunity right now. Sounds like everywhere. Jeff Kilberg joins us to make some trades. He's the CEO and founder of KKM Financial and a CNBC contributor. Jeff, welcome. Got to start with intel before we get to all of that. Another significant move here up to 125, I think I was asking you in the 90s if you were going to sell it.

[Jeff Kilberg]

Yeah, Kelly, it's just a remarkable move. And I think this is a theme of 2026. You have to let your winners win. And this historic move higher in intel we talked about when we bought it down in the $20 level, the same as the US government did. Here we are $100 higher. And what was the template, what was the catalyst, Kelly, that took intel from 55, $60 to where we are now? It was the foundry business. That foundry business, which was a $10 billion loss a year. Think about externally. Last year in 2025, they had about $300 million of revenue in their external foundry business, Tarifab. All of a sudden Tesla comes in with their Austin gigafactory. Now there's $3.5 billion in new revenue. That became a template. And we don't have facts, we just have rumors. But if this Apple component comes and lands, this could be a $40 billion revenue for their foundry business. So that's why you're seeing this sucker just rip higher in the shorts. If for some reason you're shortening this intel stock, who it has been a

[Kelly Evans]

rough week because some are asking, they're afraid of owning it here because it could get kind of Trump coined, you know, where it's almost like it becomes too much of a broad meme stock. It goes down as much as it came up. But. But what you're describing, it's that you think you could hold this and put it away.

[Jeff Kilberg]

Well, Kelly, to put a finer point on it, do you believe that intel is closer to $1 trillion market cap now than is where it was back in the $20 to 650 billion market cap? So we own this in our essential 40 ETF ticker ESN. This is our largest holding. It's an equal portfolio, Kelly. So it's starting at 2% in January when we rebalanced in the first quarter. Now it's a 6% weighting. So that is a large weighting. But we want to stick with this theme because of what they did with tariff and what they're going to do with Apple. Potentially that is a replicated template for them to really take that foundry business and just watch that vertical grow even higher.

[Kelly Evans]

Yeah. And again, you know, you have been really bullish, Jeff, throughout the whole, all the geopolitics, the oil spike and all that on the broader markets, not just on Intel. A lot of the names you still like here, you like Palantir. I'm curious, you know, how much upside you think we could have. That, of course, had a rough year. You like Pershing Square, we can get to that. But on Palantir quickly. Just talk about that one.

[Jeff Kilberg]

So quickly. If you look at earnings season, this has been a gangbuster earnings season. The average, Kelly, year over year average for earnings has been about 8 to 10% growth. We're at 27%. So this is extraordinary. So that's why I look at Palantir, which is at an unbelievable record quarter, unbelievable margin and profits. I know it has not reacted well. It's down about 10% since we actually saw the earnings come out. But we bought it here. We actually own in our other etf, the Mango growth ETF ticker symbol, Gary. And we like owning it here because at some point this highly politicized stock will find its way very similar to Tesla. If you remember, Tesla was trading $100 lower not too long ago.

[Kelly Evans]

All right, so then Pershing Square, this one is also been a subject of a lot of debate. And you are a buyer now, is that right?

[Jeff Kilberg]

We own it, so we own us. And this is really critical for viewers and listeners to understand. This was a 5 to 1. It was a closed end IPO, the largest closed end IPO ever. $5 billion. So for every 100 shares of PSUs, you got 20 shares of PS. So right now PS is actually up 60% since the IPO, and we're seeing PSUs down 15%. So that's a really important understanding because you will see those move separately and independently, but you want to own them collectively. I like the consumer play. That Bill Ackman, he's deployed about $2 billion already in cash. So we get excited about owning Persian Square. But both of them, Kelly, PSUs and.

[Kelly Evans]

And yes, and Intel. Are you ever going to sell Intel? You think it's a trillion dollar company. All right, fine. Jeff, thanks. Really appreciate it. Great to see you this afternoon.

[Jeff Kilberg]

Have a great weekend.

[Kelly Evans]

That's it for us. Thank you for watching the exchange. And I'll join Steve Liesman for power lunch. Right after the spring. When the school year ends and suddenly everyone's home and everyone's hungry. Here's the good Stouffer's makes it easy and delicious. Whether you're feeding a whole crew with lasagna or just need something quick like Mac and cheese, Stouffer's has a dinner for whatever your night looks like. When the clock strikes dinner, think Stouffer's. See all the great options@stouffer's.com and add them to your cart today.