Thursday's Final Takeaways: Recession Odds Increase & Fed's Uphill Inflation Fight

0:00Welcome back to Market on Clothes. I'm Marley Caden here in Chicago alongside San Bottas at the New York Stock Exchange. We'll close out the show the way we always do with our final thoughts on the session. For me, we're tracking a reversal in the housing market as mortgage rates surge to a seven-month high. The average 30 year fix climbed into the mid-six percent range around 6.4 to 6.5 percent on average. The 15 year fix jumped to 5.75 for the week ending Wednesday as rising treasury yields and inflation concerns rattled the housing market. This sudden jump marks a sharp uptick from the levels near 6 percent that we saw just weeks ago, driven largely by higher oil prices and geopolitical tensions pushing borrowing costs higher. Now, as we're seeing these rates rise and buyer confidence weakens, we're also seeing mortgage demand and refi activity falling just as the crucial spring home buying season begins. Mortgage application volume plummeting 10.5 percent in just a single week. We also saw refi applications drop roughly 15 percent in recent weeks. Also, with along with that pessimism, Wall Street forecasters are sharply lifting their recession odds. Moody's analytics model is now putting

1:03the probability of a U.S. recession over the next 12 months at roughly 48.6 percent. That's more than double the historical average. Goldman Sachs has raised its own estimate to 30 percent. Wilmington Trust sees it at 45 percent and EY Parthenon pegs their risk at 40 percent. Obviously, all of these reflecting growing concern about the economy's underlying strength. Analysts are pointing to rising energy costs, softening labor market data, and of course, geopolitical pressures, especially the war in Iran as the key drivers behind these elevated risk assessments. Now, with these models starting to flash these warning signs, investors and policy makers are watching very closely for any further cracks in credit markets, especially in the wake of the KKR downgrade and Apollo and Aries capping their withdrawal rates, also keeping a close eye on falling sentiment and economic activity that could foreshadow a downturn. Those were just a few of the things that stuck out to me, not the most positive notes from me today, though, Sam, what cut your eyes today? Well, the jobless claims, a bit of a nothing burger, which is a good thing, Marley. The number of Americans applying for benefits in

2:05stopper by 5K to 210K, which was bang in line with those expectations. While the jobs market remains in a state of low higher, low five, the numbers do continue to show conditions look stable for now, giving the fed some breathing room as it focuses on the potential threat of inflation coming from this energy shock, particularly after the organization for economic cooperation or the OECD lifted its annual inflation forecast for the US to 4.2% from 3% more than double the fed's target. It sees a setback to global growth. If energy prices rise further and stay high for a long time, so it would have revised its global growth forecast if it weren't for the war, but instead left its outlook unchanged. Liz Ansorund is telling me today the fed is in a pickle because unlike central banks around the world, it is at the mercy of a dual mandate right now. And she said her base cases that it's somewhat premature to expect that the market right now is pricing in a hike, but it depends on what happens in the labor market right now as to how long they stay on hold. Heading into tomorrow, Marley, what are you looking out for? We're going to get earnings from Carnival. We haven't had a lot of

3:06big name earnings, but Carnival will be reporting first quarter, 2026 results tomorrow before the market opens. Analysts projecting earnings per share of about 18 cents on revenue coming in near $6.1 billion that would mark a roughly 5% increase from the year ago quarter. Investors will be focused on cruise load factors, pricing power, any forward bookings, also any commentary on how Carnival plans to manage fuel and labor costs amid the inflationary pressures. Guidance, of course, going to be key here. The summer booking season, any commentary they have on margin trends. Those could be some key drivers that determine whether that travel stock can extend its recent resilience that it's been showing. How about you, Sam? Well, Trump's Iran deadline was tomorrow, Marley, and I say was because just in the last few minutes, the president taking to truth social saying this, as per Iranian government requests, please let this statement serve to represent that I am pausing the period of energy plant destruction by 10 days. That will take us to Monday, April the 6th. So what am I going to be

4:10looking out for tomorrow? We're obviously going to be looking out for the reaction to all of that. Now, of course, those goal posts have been extended, and we are of course going to track any developments around confirmation that these talks are happening, that negotiations are, of course, ongoing as well. No doubt we're going to get the first taste of how the markets are going to react to this tonight very much when the Asian session gets up and running. Obviously, we have seen this de-risking over the last few weeks, Marley, going into the weekend with just this thinking that anything can happen while the markets are closed, whether this helps the markets are, of course, you know, going to the weekend with a degree of optimism remains to be seen. Obviously, as I mentioned, look at the Asian session tonight. There's an expectation that perhaps we could see a bit of a rally off the back of this just as they have given themselves a little bit more time, a little bit more breathing room, and of course, Trump holding off on further attacks for now, it seems. Yes, and we just talked to KG about how we were going to hit the end of the pause and what that was going to mean for the markets now,

5:11potentially some reprieve there. So we'll both be keeping a close eye on what it means for the markets tomorrow morning, but that is going to do it for us today on market on close.