Keep Moving Forward

The challenged consumer has remained resilient overall

Summary: There's a lot going on in the world right now but the economy seems to be holding fairly steady. Consumers continue to spend despite weak confidence. At the end of the day, labor markets are the most important factor supporting spending and labor markets are strong. Hopefully AI doesn't change that.

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Macro

The consumer is resilient
"So there's a lot of offsetting sort of signals, but bottom line is challenged consumer, still remaining resilient overall." – McCormick & Company (MKC 0.00%↑) COO Brendan Foley

"March actually was more in line with what we expected. And then with Easter moving to April, we saw really strong performance around that. And we're off to a good start this quarter." – Walmart (WMT 0.00%↑) CFO David Rainey

Sentiment is subdued
"The U.S. consumer sentiment is really tough right now. The University of Michigan puts out a poll. And what it would say is that it's the second lowest reading they've ever had. And the lowest reading was right after the pandemic began in 2020. So consumer sentiment is tough." – General Mills (GIS 0.00%↑) CEO Jeffrey Harmening

"We do see in some parts, some more consumer sensitivity to pricing and sentiment, which proves to be still below 2021." – Coca-Cola (KO 0.00%↑) Hellenic Bottling Company CEO Zoran Bogdanovic

But spending is consistent
"The consumer is spending money, and that's a little counterintuitive to the different confidence studies, but those are more impacted by what I feel versus what I do. And that's what we always try to make sure. This is what the consumer is doing, what they're telling you to feel is a question for the future." – Bank of America (BAC 0.00%↑) CEO Brian Moynihan

"In terms of consumer, what we're seeing right now is the consumer is still being very conscious and very choiceful about what they're purchasing. But it's been consistent. And I'll use that word consistent because the last 8-plus quarters, the behavior has been pretty much the exact same." – Walmart (WMT 0.00%↑) SVP of IR Stephanie Wissink

"At a very granular level the best word to describe what we're seeing quarter to date a thing is consistency consistency with Q1 once you adjust for FX and the extra day, we got....So it is consistent with what we're seeing are so consistently with or with Q1, we see some softness in airline spend in lodging as well, but that's not new trends I mean, those strengths were discussed and during the first quarter and they were discussed by by the airlines themselves." – American Express (AXP 0.00%↑) CFO Christophe Le Caille

There's no evidence of a broad economic slowdown
“We are still seeing our clients growing. Stated another way, we are not seeing a broad meaningful economic slowdown within our data...the U.S., the labor market is on solid footing." – Arthur J. Gallagher (AJG 0.00%↑) CEO J. Patrick Gallagher

Consumer behavior follows employment not confidence
"If you look at consumers, their real behavior follows unemployment. So if unemployment -- their employment goes down, then you're going to see a little more stress on the consumer side." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

Employment is strong
"But if you just separate what you read in the news for a minute, just with sort of what we observe in terms of the economy itself, unemployment is in a very strong place job growth wage -- real wage growth. It's in a good place. Consumer debt -- consumer indebtedness, consumer debt burden is very consistent with pre-pandemic and in a good place relative to historical levels. The consumer is in a very strong place." – Capital One Financial (COF 0.00%↑) CEO Richard Fairbank

We're all getting used to dealing with elevated uncertainty
"I think the world has been dealing with so much uncertainty, since the onset of the pandemic and then all the geopolitical issues that have cropped up since then. And people have gone from, geez, it feels uncertain, I need to take a break and pause to -- I got to run my business, right? There's never going to be a time when things are fully settled, and I just have to continue to run my business, and that's really what we're seeing." – Cisco Systems (CSCO 0.00%↑) CFO Richard Scott Herren

International

Europe has a cost of capital advantage over the US
"The ten year bond issuance that we can do in Europe is 130, 140 basis points inside of what we can issue here in the U.S. So obviously, the cost of capital is more attractive...So, all of that is coming together for us. at this point in time, in making more investments in Europe than here in the U.S." – Realty Income Corporation (O 0.00%↑) CEO Sumit Roy

Consumer confidence is subdued globally
"Consumer confidence in China has been subdued now for more than two years because of the real estate situation and everything that has happened post-COVID. The US has been a surprise, low consumer confidence because we all went into the calendar year thinking the US was going to be the driver of the economy in so many consumer goods product including beauty. And Europe has been also a little bit subdued for some time" – Estée Lauder Companies (EL 0.00%↑) CEO Stéphane de La Faverie

The Chinese consumer is stressed
"China, I would say, is a sentiment not too dissimilar from the U.S. Consumers are pulling back. They feel the economic challenges. We've seen that in our Häagen-Dazs shops. Traffic is down double digits in our Häagen-Dazs shops because people aren't eating away from home as much, similar to the U.S. On the other hand, we do see growth in our retail business in Häagen-Dazs in China. So China is a little bit stressed." – General Mills (GIS 0.00%↑) CEO Jeffrey Harmening

UK has a uniquely strong AI ecosystem, but is missing high-scale infrastructure
"U.K. has one of the richest AI communities anywhere on the planet. The deepest thinkers, the best universities—Oxford, Cambridge, Imperial College. Amazing startups. I ..The U.K. is the largest AI investment area anywhere else in the world. Between these two ideas that you are rich with great computer scientists, it is a fantastic place for VCs to invest. The ecosystem is really perfect for takeoff. It is just missing one thing. It is surprising. This is the largest AI ecosystem in the world without its own infrastructure, which is the reason why we are talking about it so much." – Nvidia (NVDA 0.00%↑) CEO Jensen Huang

Financials

Markets have stopped expecting rate cuts this year
"And so and you look at look at the rate futures market and even a month ago Three cuts baked in for this year, six by middle of next year, that's now. about half that. And so, and so the market, you know, the market is sort of reflecting a likelihood that there'll be more inflation from the stimulative effects, a likelihood that there'll be less need for rate cuts. And I think when you combine that with the Treasury supply that's required, there'll be pressure on the long end of the curve as well." – Apollo Global Management (APO 0.00%↑) CFO Martin Kelly

IPO activity has picked back up
"So, the teams are busy. In fact, I think if you look at IPO market the last couple of quarters...it's slowed down a little bit kind of post-liberation day, but it's picked back up." – Carlyle Group (CG 0.00%↑) CFO John Redett

Robinhood's retail investors bought the dip
"Margin balances are as high as we've ever had them....[our customers] were very strongly buying the dip. And obviously, they've been pretty well rewarded as a result of it. As I mentioned yesterday, when we were doing some media, this is like the second occurrence where I would argue retail came to the rescue of the market, COVID probably the first." – Robinhood Markets (HOOD 0.00%↑) Chief Brokerage Officer Steven Quirk

JP Morgan is seeing a tiny bit of credit deterioration
"We see a teeny bit of deterioration. I know some people here have said, not really. We see a little bit. Middle market, I mean I'm going to exaggerate the numbers. Losses for like 8 years were 0. And now we're seeing some. And if you look at upgrades and downgrades, there are more downgrades than upgrades. If you look at little things, but none of it's material yet." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

But overall credit quality is still strong
"Credit quality is very strong. Charge-offs in the consumer credit area came back up over the last couple of years from the post-pandemic drop and now basically settled in a level very consistent." – Bank of America (BAC 0.00%↑) CEO Brian Moynihan

Public markets will likely be open 24/7 eventually
"I think we'll look back in a couple of years and laugh at the notion that we waited until 9:30 Eastern for trading to start." – Robinhood Markets (HOOD 0.00%↑) Chief Brokerage Officer Steven Quirk

Mortgage lending is a bad business
"The mortgage business hasn't earned 17%. I mean, if you added it all together, it's probably lost money in the last [ 50 ] years combined, it's a shitty business. And it's being made worse by regulators and rules and regulations. And -- but I think we can eke out a decent return there over time, and we're working on that." – JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon

Consumer

Consumer spending has been turbocharged since the pandemic
"Then you could say, well, why don't we spend less? And I don't know the answer to that question. We seem to -- our spending habits got turbocharged with the stimulus and they never got unwound. And maybe some of that is at the heart of the disconnect. We've gotten used to a certain way of living, we can't really afford it. All the base numbers are good but I don't think people feel like they're on -- there's much of a safety net around them. And the labor market does remain extremely resilient." – Upstart (UPST 0.00%↑) CTO Paul Gu

There's a lot of employment and spending but not great financial security
"I think we have, on the one hand, an extremely resilient labor market but it's not producing for the -- for some large percentile of Americans, the types of incomes that will both support the consumption habits that have materialized and the savings, sort of practices that we've typically been used to and that sort of creates security for us. And so I think the result of that is you've got a lot of consumption and a little unemployment but very little financial security and a lot of people who feel like they're going backwards." – Upstart (UPST 0.00%↑) CTO Paul Gu

The consumer is bifurcated by income
"I think the consumer is a little bit of a mixed bag, if you will. I always tell CEOs, if you can tell me how well your consumer customer is doing, I can tell you exactly who your consumer is. I think it depends on income levels. I think at the lower end of the income spectrum, it's more of a challenge. And at the upper end, it seems to be smooth sailing. But generally speaking, we haven't seen any deterioration in our portfolio the last couple of months." – Carlyle Group (CG 0.00%↑) CFO John Redett

Hispanic consumers are especially wary
"Across the board, consumers are a little wary. And that's double down if you're a Hispanic consumer...The things that we've seen with that consumer is there's a lot of concern about inflation. There's a lot of concern about the whole immigration question. That gets doubled down if you've had someone in your immediate family or friends, who've been -- had that issue attached to them at all. And where it's playing itself out is in behaviors that are sort of anti-r business. which is they're going out to eat less. 75% of Hispanic consumers are going to restaurants less. There's less social occasions." – Constellation Brands (STZ 0.00%↑) CEO William Newlands

Americans are eating at home more
"The U.S. consumer is stressed financially. They're still buying, but they are stretched. You can see U.S. consumer debt has risen. And as a result, consumers are looking for value. And that's not exactly a shocker, I think. But I'll give you some perspective on that. And it's not all bad for us. I mean 87% of eating occasions in the U.S. are now at home rather than away from home, and that's a benefit to our category." – General Mills (GIS 0.00%↑) CEO Jeffrey Harmening

Pandemic darlings: housing, furniture and exercise equipment are all weak
"So weakness, I would say furniture is clearly weak. There's been no demand. A lot of people bought furniture during COVID kind of went away. And then as Brad says, furniture went in recession. I'd say exercise equipment is another one that's that way. But I'd say on the upside, home improvement retailers, interest rates are high. People are not buying new homes. So a lot of remodels. So they're more optimistic. Grocery, pretty optimistic, everybody kind of trading down from eating out as much to more meals at home." – J.B. Hunt Transport Services (JBHT 0.00%↑) COO Nicholas Hobbs

There's a large population of millennials who won't own homes
"There's the millennials. So these are the folks now into their 40s, later 30s who would be out buying homes at this point in a lot of cases. But because of lifestyle reasons, we do a good job elaborating, as Rich said in our book, people are getting married later, if at all, they're having children later. If at all, half of our residents live alone in their units. So you've got a lot of the population that's chosen a lifestyle that doesn't need as much space, doesn't need yards, values a lifestyle where we're doing the repair work for them, and they're able to be in places, whether it's dense suburban or these urban nodes where there's a lot of things to do and they can feel very activated while still being a single person." – Equity Residential (EQR 0.00%↑) CEO Mark Parrell

Technology

Today’s AI will look primitive to tomorrow’s kids
"I find it incredible that children of today, when they become grandparents and then reflect back on the earliest most antiquated piece of the technology they can possibly imagine, it is the technology that we are so excited about today. And I love that pace of change in the skills as we think about that transition." – Nvidia (NVDA 0.00%↑) CEO Jensen Huang

AI is now beginning to improve itself—marking the early stage of recursive self-improvement
"From here on, the tools we have already built will help us find further scientific insights and aid us in creating better AI systems. Of course this isn’t the same thing as an AI system completely autonomously updating its own code, but nevertheless this is a larval version of recursive self-improvement. There are other self-reinforcing loops at play. The economic value creation has started a flywheel of compounding infrastructure buildout to run these increasingly-powerful AI systems. And robots that can build other robots (and in some sense, datacenters that can build other datacenters) aren’t that far off." – OpenAI CEO Sam Altman

AI is already multiplying R&D productivity
"We already hear from scientists that they are two or three times more productive than they were before AI. Advanced AI is interesting for many reasons, but perhaps nothing is quite as significant as the fact that we can use it to do faster AI research. We may be able to discover new computing substrates, better algorithms, and who knows what else. If we can do a decade’s worth of research in a year, or a month, then the rate of progress will obviously be quite different." – OpenAI CEO Sam Altman

AI will inevitably reach human-level capability because the brain itself is a computational system
"But there are so many things it cannot do as well, and it's so deficient in certain areas. So you could say it still needs to catch up on a lot. But it's evocative. It's good enough that you can imagine—okay, fine—in some number of years (some say three, some say five, ten... numbers are being thrown around), it's hard to predict the future. Slowly but surely—or maybe not so slowly—AI will keep getting better. And the day will come when AI will do all the things that we can do. Not just some of them—all of them. Anything I can learn, anything any one of you can learn, AI could do as well. How do we know this, by the way? How can I be so sure of that? The reason is: all of us have a brain, and the brain is a biological computer. That's what it is. So why can't a digital computer—a digital brain—do the same things? That’s the one-sentence summary for why AI will be able to do all these things: because we have a brain, and the brain is a biological computer." – OpenAI Co-Founder Ilya Sutskever

The societal implications of general AI surpass technological debate
"So now, you can start asking yourselves: what’s going to happen? What’s going to happen when computers can do all of our jobs? Those are really big questions....What does one do in such a world?" – OpenAI Co-Founder Ilya Sutskever

The 2030s are going to be wildly different from anything we've seen before
"In the most important ways, the 2030s may not be wildly different. People will still love their families, express their creativity, play games, and swim in lakes. But in still-very-important-ways, the 2030s are likely going to be wildly different from any time that has come before. We do not know how far beyond human-level intelligence we can go, but we are about to find out. In the 2030s, intelligence and energy—ideas, and the ability to make ideas happen—are going to become wildly abundant. These two have been the fundamental limiters on human progress for a long time; with abundant intelligence and energy (and good governance), we can theoretically have anything else." – OpenAI CEO Sam Altman

Even in the era of 'vibe coding', foundational thinking remains your best long-term bet
"If you have a passion for computer science, I would say you know computer science is obviously a lot more than programming alone. So, I wouldn’t change what you pursue. I think AI will horizontally impact every field. It's pretty tough to predict in what ways, so any education in which you're learning good first-principles thinking, I think, is good education" - Alphabet (GOOG 0.00%↑) CEO Sundar Pichai

Apple shelved launching upgraded Siri after it failed to meet reliability standards
"As we got into the conference, we had V1 working to do basic capabilities that we showed off at the conference. So we had some real software we were able to demonstrate there and show what was coming. But it didn’t converge, quality-wise, in the way that we needed it to. We had something working, but then, as you got off the beaten path…we weren’t able to achieve the reliability in the time we thought." - Apple (AAPL 0.00%↑) SVP of Software Engineering Craig Federighi

Inference is exploding
"....what has really changed is the demand for inference. This has grown significantly, driven by more capable models and new use cases that are increasing our usage...We can now see that inflection point. With all the new use cases and reasoning models, we now expect that inference is going to grow more than 80% a year for the next few years, really becoming the largest driver of AI compute" - AMD (AMD 0.00%↑) CEO Lisa Su

"At this point, definitely more usage is in inference than training." - Amazon (AMZN 0.00%↑) AWS CEO Matt Garman

Industrials and Transport

Freight markets may be near equilibrium
"I'm an optimist. So I'd say we're getting pretty close to equilibrium just because of all those previous things I've talked about...the sensitivity is there. They're getting fairly close." – J.B. Hunt Transport Services (JBHT 0.00%↑) COO Nicholas Hobbs

Airline travel demand has stabilized, but isn't ticking up yet
"This is what's in our guidance today, but versus what we were thinking at the beginning of the year. So it came down quickly, but it certainly has stabilized. I think that all of the carriers now are looking to see signs of an industry inflection back. And while it's stabilized, we haven't really seen a major significant inflection back yet as an industry. And so I think that's something we'll continue to watch." – Southwest Airlines (LUV 0.00%↑) CFO Tom Doxey

EV adoption continues a steady upward trajectory
"EV adoption continues on a steady upward trajectory, a trend which has held for more than a year. Despite political turbulence dampening consumer and capital spending, North American EV sales were up 16% year-over-year for Q1 according to Rho Motion. In Europe, EV momentum rebounded strongly with the same data set reporting 22% EV sales growth year-over-year for Q1, a significant surge. The European Green Deal mandates all new cars sold there to be 0 emission by 2035, reinforcing the EU's trajectory of EV adoption." – ChargePoint (CHPT 0.00%↑) CEO Richard Wilmer

"Specific OEMs have challenges and headwinds. But if you look at an aggregate, somebody else is getting that because the total number, EVs in Europe are starting to increase. They're not going down. So, the slope is not what we thought, from four years ago or three years ago, but EVs are still a growth market from a unit perspective. And as those, EVs get to the 800-volt battery, which is kind of where the market is going, silicon carbide is going to be more and more." – ON Semiconductor (ON 0.00%↑) CEO Hassane El-Khoury

Materials & Energy

Energy is the most precious commodity to AI
"Energy is the most precious commodity today in building this large AI factories, AI clusters. Power is driven #1, of course, by the GPUs themselves...You're talking 100 megawatts. So the largest one is a gigawatt, right? So you're thinking about like a small city equivalent of power consumption built into this. So every saving on the power will help." – Lightwave Logic (LWLG 0.00%↑) CEO Yves LeMaitre

The marginal cost of intelligence is trending toward the cost of electricity
"As datacenter production gets automated, the cost of intelligence should eventually converge to near the cost of electricity. (People are often curious about how much energy a ChatGPT query uses; the average query uses about 0.34 watt-hours, about what an oven would use in a little over one second, or a high-efficiency lightbulb would use in a couple of minutes. It also uses about 0.000085 gallons of water; roughly one fifteenth of a teaspoon." – OpenAI CEO Sam Altman

Nuggets of Wisdom

Accept reality as it is rather than dwell on what could have beeny"I will offer one bit of a useful state of mind, which—if one adopts it—makes everything much easier: accept reality as it is, and try not to regret the past. Instead, try to improve the situation. The reason I say this is because it's so hard to adopt. It's so easy to think about some bad past decision, or a bad stroke of luck, or something unfair. And you can spend so much time thinking like this. But it's just so much better—and more productive—to say, 'Okay, things are the way they are. What's the next best step?' I find that whenever I do this myself, everything works out so much better." – OpenAI Co-Founder Ilya Sutskever