SOTS 2nd Hour: Recession Odds Latest, Jefferies’ Volatility Playbook, and Applied Digital CEO Talks AI Demand 6/3/25

SPEAKER_1 (0:00)

Fidelity Trading Dashboard brings live data, news and charts into one screen, so you can build and place trades better. Start for free at fidelity.com/tradingdashboard. Investing involves risk, including risk of loss. Fidelity Broker Services LLC, member NYSC SIPC.

SPEAKER_2 (0:16)

Are you still quoting 30-year-old movies? Have you said, cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to Discover. Learn more at discover.com/creditcardbased on the February, 2024 Nelson Report.

Sara Eisen (0:44)

Good Tuesday morning. Welcome back to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla. We are live from Post 9 as always of the New York Stock Exchange. David has the morning off. Take a look at stocks starting off weaker and then coming up higher. We're about unchanged right now on the S&P 500 The NASDAQ is outperforming today. It's up about a third of 1% and the Dow is down 52 points. Kind of waiting on some economic data. We'll get the biggie at the end of the week with the jobs report. Take a look at Treasuries as we kick off the month of June. We are seeing some buying today. Yields are a little bit lower, 4.426. We had a good Japanese bond auction. I know we're watching the global picture and that may be having an impact here with yields softer across the board. Coming up this hour, we'll talk about it. Jefferies Chief Market Strategist David Zervos joins us with his latest read on stocks and the macro setup as a key economic group cuts would forecast for US growth. Plus, we'll talk to the CEO of Applied Digital. This is the AI data center company whose shares skyrocketed nearly 50% yesterday on news of a deal with Coreweave in just a moment.

Carl Quintanilla (1:49)

First, though, let's get some Jolton factory orders with Rick Santelli. Hey, Rick.

Rick Santelli (1:54)

Hi, Carl. Indeed, on this jobs week, job opening labor turnover for April comes in at 7,391,000 above the 7.1 million estimates and sequentially above slightly revived 7.2 million in the rearview mirror. That is the best since just February because we reversed that March downturn. Now let's look at factory orders. Minus 3.2 expected, minus 3.7 arrives. Weakest since January of last year and a negative revision from 4.3 to 3.4 for previous month. Take out transportation, still negative, but a bit less negative. Down half a 1%.

We're expecting a positive number. Down half a 1% weakest since May of 24 Now these are durable goods coming up. These are final reads that replace mid-month read. Minus 6.3 remains at minus 6.3. That's the weakest going back to Jan of last year. If we look at durable goods, ex-transportation, a dramatic improvement up two-tenths equals our last look, and that would be the best since it was up four-tenths in February of this year. If we look at capital good orders, non-defense, ex-air, proxy for capital spending deteriorated by two-tenths of a percent from minus 1.3 to minus 1.5, making it the weakest going back to February of 23, Feb of 23 And finally, if we reverse from orders to shipments, it remains at minus one-tenth of a percent. Right now, we're looking at 392 in a two-year, and after all the data, we oscillated a bit in terms of price, but we ended up at the same place. That is down two basis points. Long end down much more dramatically. Hence, we're looking at some steepening of the curve. Ten years at 441, down a half a dozen basis points. Carl, back to you.

Carl Quintanilla (3:48)

All right, Rick, thanks so much, Rick Santelli. Also new this morning from Atlanta Fed President Bostic talked to reporters a short time ago. He says, quote, pervasive uncertainty calls for a patient policy stance, but depending on how that uncertainty resolves, he says there is still space for one rate cut this year. Bostic also echoed comments from some of his colleagues that it's unclear if the tariff impact on inflation will be a one time pass through or something more permanent, which he says he's hearing from business contacts who are stuck in a wait and see mode. Also heard yesterday from Chicago Fed President Goolsbee, he's a voter this year, that the PCE data may be, may have been, quote, the last vestige of the pre-tariff impact. But as for Bostic, Sara, he says, quote, I am in no hurry to adjust our policy stance.