Phil Rosen, chief market strategist at Pro Cap Financial, my man, welcome.
Thank you for having me, JD.
Phil Rosen, Tuesdays on taking stock.
It's a weekly holiday for us here on the broadcast.
Thank you for being here.
Your takeaways here CPI cooler than expected headline cooler than expected core CPI.
What did you make of this inflation print today?
The lowest inflation we've seen in quite some time.
And the biggest monthly drop in, I think, 6 years.
That's a pretty good day from what I can tell.
And this is what I've been talking about for several months at this point.
I have been saying that we are more likely to get a cut than a hike from the Fed in 2026, and the market has been on the complete other side of that call.
CME data has been saying that we're going to get a hike.
July we're going to get a hike in September.
All that reversed today when we got this cooler than expected inflation report.
The economists across the board all wrong.
All the prediction markets all wrong, and I think markets should be pretty good at this point, as in the optimism for cooling inflation continuing to cool down, the energy shock.
Look, that's not really the Fed's remit to be trying to.
Manage what's going on in Iran.
They have to focus on what's directly in front of them in the economic data.
I'm still in the camp.
We're going to see a cut more likely than a hike this year.
Talk to me a bit more about your expectations for what the Fed does, assuming maybe we get a few lighter than expected inflation prints.
Hey, we heard from Kevin Warsh today testifying to the House of Representatives, and tomorrow he's back on the Hill facing members of the US Senate.
I think Kevin Warsh, he has to come out and earn his credibility with the market, right?
He's going to come out and be hawkish.
He's going to say we have to combat inflation.
Inflation, the war is not over yet.
All this stuff, that's the rhetoric that he has to put forth to earn his credibility, earn his stripes with his committee members at the Fed.
But at the end of the day, and this is what I've been saying since January, he's going to come in and he's really there to cut interest rates.
That's why President Trump put him in.
That's why he got the bid to do the job.
And whether or not you agree with that outlook, I think that's what he's there for.
We're not just talking inflation.
I want your take on how the AI infrastructure buildout and the general conversation on CapE spending is impacting inflation.
Maybe not something that's top of mind, but you're a total pro.
You.
This stuff all the time.
So this morning I actually wrote a newsletter and I published how software inflation is up almost 15% year over year, and most people don't look at that because, frankly, it's not going to move the needle on CPI.
It's, it's probably 0.01% of CPI, software inflation.
But if you look at some other components like electricity costs and some of the construction costs related to data center buildout, AI has its own ecosystem of rising inflation.
That's You know, on one hand, that's what you'd expect because this is a $1 trillion boom we're seeing.
On the other, you and I may not feel it, JD, because at the end of the day this is going to be a negligible part of the actual CPI basket, so it may not hit our wallets, but the prices behind.
The data center buildout, the AI buildout are definitely rising right now.
I've got less than a minute left.
It's a busy week here on Wall Street.
Big bank earnings.
We'll hear from Netflix and a few other names.
You've got inflation prints.
Any other big potential catalysts, Phil Rosen, on your radar, we would benefit from also paying a little bit more attention to coming up.
Earnings are the big story, right?
Big banks came in, totally hit it out of the park.
JPMorgan, they're reporting massive numbers.
Goldman Sachs reporting massive numbers.
I don't know if that was necessarily that surprising to me.
I've been very bullish financials for the last few months, and it looks like they're at a great.
Inflection point right now.
The rest of the earnings at Netflix, I'm not too concerned about.
They're not on my radar, frankly, but otherwise I think we're going higher from here.
The great Phil Rosen, chief market strategist at Pro Cap Financial, and my very good friend, most importantly above everything else, brother man, we'll see you again soon.
Thank you.
