Closing Bell - Closing Bell: 6/2/25

Episode Date: June 2, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to closing bell on Mike Santoli in for Scott Wapner. We are live from post night at the New York Stock Exchange. This make or break hour begins with another dip buyer special as Dom and Kelly were just talking about to start a new month and early market pullback on more tariff noise and some weaker manufacturing data was recovered rather quickly. The scorecard was 60 minutes left in regulation shows the S&P 500 having crossed above the flat line in the last half hour. rather quickly the scorecard with 60 minutes left in regulation shows the S&P 500

having crossed above the flat line in the last half hour or so up about a third of a percent right now more than a percent off the morning lows. It is holding on to last week's near 2 percent gain while still digesting the huge relief rally

that ran from the early April lows through two weeks ago today. The mega cap growth stocks again supporting the tape as they did much of last week in video and meta are driving the Nasdaq modest lift on the day and treasury yields

they are up a bit after wobbling lower on that weaker ISM data but they are unwinding perhaps a month end bond buying that was featured into last week. The rates still now holding below key thresholds of four and a half percent on the 10 year,

the 30 just on the verge of that 5% level as well. Which brings us to our talk of the tape. What is the state of play on the trade policy drama and what likely outcomes have markets already priced in? We go to Megan Casella in Washington for the latest on those fronts. Hello, Megan. Hey, Mike, the top headline today is a senior White House official telling CNBC that President Trump and Chinese President Xi Jinping are

likely to speak this week. Press secretary Caroline Levitt later confirmed that reporting, said the White House would provide a readout of the call once it happens, but she had no further details on the timing. But simply the fact that a call could be close is still an optimistic sign. Remember the last time the two leaders spoke was shortly before the inauguration. So amid all the trade tensions and back and forth this year, they have yet to speak directly about any of it. And the call would come, of course, at a tense time for US-China relations after overnight China's Ministry of Commerce accusing the US of damaging China's interests and vowed to quote

take strong measures to defend its legitimate rights and interests if it needs to. And meanwhile talks with other countries are continuing. Reuters reporting just in the last hour that the U.S. is asking countries to provide their best offer on trade talks by Wednesday as they race to finish deals before that early July deadline. That's according to a draft letter to trading partners seen by Reuters. No confirmation at this point for CNBC. Mike. And Megan, given the fact that the administration does seem to want to hasten this process, try to get things knitted up by let's say five weeks from now when that deadline hits,

and now we're talking about a phone call between the leaders of the U.S. and China, do we have a sense of what the U.S. is going to consider progress, real progress or victory in these deals? Because everyone has said to get a real comprehensive trade deal is a much more prolonged process. It takes years to get a real comprehensive trade deal, almost always in history, several years to do that. So of course this has to be something a little bit different. Remember what we saw with the UK, I think last month at this point. It was sort of a framework to continue to,

to agree to continue talking of some sort. And you know, there were some pieces of concrete details in there about sort of aircraft purchases and some tariff rate quotas on metals, for example. That's the kind of thing I think you can expect with most trading partners when you think about someone like Japan or India, Vietnam. And it's an agreement that allows tariffs to either stay paused or stay at a lower level

at this point, and then they keep talking. But it's just a framework. It is a good sign for certainty and for stability, but it doesn't mean that anything is officially settled. I will add, though, the big question mark is going to be China. Is there anything that the Chinese could do at this point, especially with tensions ramping up again, that would satisfy the administration? So far, it doesn't look like they're eager to lift tariffs on China again or to raise

them further from the 30% level where they are now. But I think there's going to be a lot of reading into this statement and this readout of the call once we get it to try to see the writing on the wall and get a sense of whether we might see anything further in that department. Absolutely. Megan, thank you so much for all the color there. Let's bring in Lori Calvicina, RBC Capital Markets, head of US Equity Strategy. Lori, great to see you. Good to see you.

What's your sense of where the market is on what it's already essentially taking credit for in terms of the trade front and what happens to growth as a result. So look, I've been on the road talking to clients the last two weeks and started out the day after that de-escalation in China and the U.S. And, you know, to be honest, based on my valuation work, I feel like we went ahead and priced in the economic improvement and the improvement in the inflation outlook that that portends in a day. And we've been sort of hovering around, you know, kind of the recent highs kind of bobbing up and down a little bit. My valuation modeling says 57.30 is fair value. If you use consensus earnings instead of my earnings,

you'll get to about a 58.84. So that's telling me we kind of put it in already. So like one to 3% down from where we are right now is kind of how the work brings you in. Exactly, and I've got a couple of models. I use five models in my targeting process for the S&P. My valuation earnings work is the median, so we went with that with the target revamp

we did this morning. My sentiment model can certainly get you up to around 6400 on the S&P, and that's plausible, but my GDP test also tells you to look for something between 56 and 5700 and that's the idea that the stock market doesn't do well when economic growth is in the sluggish zone, which is in kind of the 1 to 2% type range. Consensus forecast for around 4.4% right now. So there's a big hurdle to get back to that 2% mark, which is where stocks tend to be

really healthy. So what's your read then on how far the market has been able to travel to this point? Is it just kind of, oh, we re-engage with the AI trade and we're sort of continuing to enjoy this period when the economic data has not really eroded yet? So, you know, what we did on April 8th was we priced in a growth scare,

which was a recession near Mmiss or big systemic breakdown. And if you look at the distance we've traveled, that 20 percent is within range of the rebounds off of prior growth scares or 10 percent drawdowns in the post-GFC period. So we actually did a big study of that. And the rebounds, you know, kind of on a nine-month basis tend to range from 17 percent to 35 percent. So, you know, we're kind of right smack in the middle of that range. You know, I do think that investor interest in kind of rotating out of the US took a little bit of a pause. We saw a lot of that in March. It kind of

took a breather. I think that's helped. And I think that's also reinvigorated the Mag-7 trade. The other thing, Mike, that's really fascinating is the rate of upward revisions on the biggest market cap names in the S&P fell to like 15% in April. And that's on par with crisis lows and we've seen some relief there, but I think you got a lot of earnings angst out of the way and maybe there's been a calm down on that AI trade as well.

How much of a spread is there between where you think earnings are gonna go and consensus at this point? So my modeling is at 258. The consensus bottom up, when I checked it late last week, it was at 264, and that's been pretty stable. About two months it's been around that level. Right, it came down, it was at 275 at one point,

it was hovering around 271, and now it's taken that step down. And what I've got baked into my modeling is, we've got three cuts from the Fed starting in September, inflation in the upper twos. None of that is terribly controversial versus consensus. We've also got GDP, again, kind of 1.3% type number. What we're really doing that's a little bit different

is we've got margins contracting a little bit on a year over year basis, if you look at the second half of the year. And we've modeled that on what we saw similar to the kind of late 2018 type period. We've got a little bit of margin hit in the second quarter. And I think that's where there's probably some difference. You know, I hear people pointing to things like,

you know, credit spreads have come back in. They're really not particularly worrisome levels. Industrials as a sector made new highs. They continue to outperform. Now, would it be smart to pull a macro message out of that and be reassured, or do you think there are other things happening? I think it's hard to read the tea leaves in high yield

if you're comparing it to history. This is not my area of expertise, but when I talk to folks on that side of the business, what they tell me is the balance sheets have been cleaned up there as well, so it's not your mother's high yield sector. And that's certainly, to be honest, how we feel about small caps,

except that has taken on quite a bit more pain. If I think about industrials, I'll tell you, I'm neutral to sector. It's ridiculously overvalued. It's like three standard deviations on my model, both absolute and relative PEs. But the one thing I'll give the sector is that as we've gone through and looked at transcripts and the ability to manage through tariffs, they sound very confident. You contrast that with the consumer sectors, not so confident. They're not quite so sure they can pass on pricing.

They might be having more margin pressures. Industrial seem like they've been there, done that, and they've got it under control. And then in terms of where you feel as if you should emphasize within the market, what does make sense? I still like financials. And, you know, we had a modest stabilization

on the UMICH Consumer Sentiment Index last week, and Conference Board obviously had a bigger pop, but we found over time that the financial sector, if you look at performance relative to the broad market, trades in sync with consumer sentiment on that Michigan survey. And we've said, you know, it's so bad. You have to be on guard for that reversion.

Financials should benefit. I think they're also your cleanest deregulation play. They've got good valuation appeal, especially in the financials. And they're just not caught up in the tariff issue. No, exactly. That was the selling point, at least, at the beginning of the year.

Lori, stay with me. Let's bring in patient capitals, Christina Malbon and Wilmington Trust's Megan Hsu to the conversation. Welcome to you both. Megan, I feel like you're still a little bit on guard, perhaps, for some economic slowdown and what that might mean as it filters into the markets. Yeah, I think that's right.

So we did modestly revise up our economic outlook in the light of the de-escalation of tariffs and to some degree some of the noise around the courts, although I'd place less confidence in that right now. So we have about 50-50 odds of a mild recession. And I think that puts us a little bit on the more pessimistic side of economists as they have revised up their estimates as well on Wall Street. And what we're really focused on is whether or not we have a recession. We're probably looking at a slower growth outlook. And where do you want to be positioned in that?

You know, it's really hard. Lori just went through a really great analysis of the market and we are pricing in a lot of good news. Yet the market still remains very sensitive to headlines in both directions as it relates to trade. So I don't think there's a whole lot you can do here in terms of moving around the portfolio, but we are definitely advocating for staying fully invested and focusing on a larger size and larger quality within the equity space. So it's staying fully invested and feeling as if

maybe there's 50% chance of a mild recession. Megan, do you think that means the market would be able to kind of put on a brave face into that recessionary period we've kind of you know put in the lows for that maybe that's what the 20% down was about or do you feel as if you know we actually would have further damage done if in fact we started to go in that direction the economy. Well I think what we would see if we did go in the direction of a recession as we start to see some of that weakness come about in the summer.

We know that we've seen a pull forward of activity. We have inventories that have been built up about two to three months, depending on the retailer or the business that you're looking at. So if we are looking at continued tariffs into the middle of the summer and all of that uncertainty, it could start to weigh on the market. But the other thing that's happening is that we're hearing from businesses, I think two important things.

One is that tariffs are a problem for sure, but there's also regulation that has been weighing on different businesses. And so if we saw some of the lighter regulation and regulatory reform come through, I think that would be a support to businesses. And then on top of that, you have businesses saying they might hold off on spending, hold off on hiring, but they are not holding off on spending on technology.

So that's where you get the resurgence of the mag seven trade that you were talking about earlier. Got it. Christina, your firm is called patient Capital, your fundamental stock pickers. Obviously, I guess maybe you had some shopping to do when the market did get down to those lows. Did it present opportunities? Yes, exactly.

I mean, we think that volatility really creates opportunity to buy stocks at attractive prices. And so we're trying to look through the near-term noise of all the tariff headlines and think about five years out, what does this mean for this business? Does it impair the TAM? Does it impair the margins? What does that mean for what it's worth today?

We were opportunistic on that dip. We did add to names that we thought were really attractive. I think even today, as we think about where the attractive opportunities are, Yes, tariffs are the unknown. What will they do? But I think we're under appreciating what AI could also potentially offset on the margin side of things. So five years out, I mean, what can AI do for us? And so it's not clear to us that, you know, a 10% tariff level would be that detrimental to the fundamentals of a business on a longer term basis.

So what has the market been serving up in that case? What particular types of opportunities that you feel like did get lost in the mix? Well, I think travel is an area that we've been invested in for a long time. Those names had done really well through the end of last year. And with the headlines of tariffs

and the concern around the consumer, and to everyone else's point, the concern around the consumer and to everyone else's point the spending of the consumer. Those names took a hit. And these are high quality names, at least we think so, like Delta Airlines, which has really solidified itself as a brand name. It has dominated the business market. We see that coming back. That's remained resilient. Their CEO Ed Sebastian was on TV on Sunday saying that he expects demand to pick up in the second half. And so that's the opposite of what we heard earlier

in the year from him. They were a little cautious at first. We're now seeing it play out. They're getting more confidence than a rebound in the back half. And so we think that consumers and businesses will continue to spend on services and travel. And we think those names have not yet rebounded

from their pullback that we saw earlier in the year. Laura, you mentioned earlier that, you know, one of the more flattering models that you would look to in terms of an upside target is based on sentiment. Yeah. Obviously investor sentiment for the most part, I assume. What is that telling you? And is it a clean view?

Is it, cause I've looked at the mixed signals there in terms of, you know, yeah, the survey-based investor sentiment looks really poor, but the rest of things may be mixed. It's not a super clean signal. I mean, the two things that I focus on the most in my kind of process week to week are gonna be the AAII net bulls.

We have a great history there. We can back test it. It was at hold your nose and buy levels, two standard deviations below the long-term average for a long time. But guess what? It also went to sell levels last October, and it took a little while for that to play out.

That one's not clean right now because it is rebounding rapidly. In just a couple weeks, we've moved from minus two standard deviations to minus one, and we're actually about to cross over the minus one threshold into that kind of no-man's land between that and average. So that one's on the move, I don't completely trust it. If you look at the CFTC data,

it gives you an entirely different picture and that's also historically been a very good indicator and it shows some de-risking in terms of asset manager positioning in US equity futures, but maybe about a third of the way done to where you typically expect to bottom out. So it never really collapsed. And then we've got all these, you know, regional fed surveys, all the conference board Michigan

surveys and they're all sort of in this varying state of hitting recession lows, maybe inflecting or stabilizing. I was frankly a little surprised ISM, you know, didn't give us a little bit, you know, of good news today based on some of the stuff I've seen. But, you know, it's messy. It's messy. Megan, I think you're looking for, given the fact that you do think that maybe there's on some of the stuff I've seen. But you know, it's messy. It's messy. Megan, I think you're looking for, given the fact that you do think that maybe there's some fragility in the economic outlook for the remainder of the year,

that you think the Fed is gonna be more active than consensus believes at this point? Yeah, I think that's probably our most differentiating view versus the street is our expectation that the Fed will begin cutting rates this summer and get in about 425 basis point rate cuts this year which is basically double what the market is pricing and that is really on the fundamental view that tariffs will not be inflationary and that we are going to see the growth impact of tariffs outweigh the short

term price impact of tariffs, which is just to say that you might see sticker prices increasing. But if the consumer is not willing to take those price increases, they won't be buying those goods. They'll shift purchases or just pull back altogether. And so I think our expectation is a little bit supportive for the market in that light that we would get a little bit more easing this would pass through to support parts of the real estate market, support parts of consumer borrowing and then on top of that you've got the potential

for lower energy prices. So it's a mixed bag. There's definitely puts and takes on both sides. Sure. I guess that would mean a cut at every meeting starting in July for the rest of the year if that's the cadence that would go according to. Christina, I'd love to have you amplify on one of your holdings that I think is in a very fascinating spot, which is Alphabet. We have a market here that is willing to give hundreds of billions of dollars in market cap credit to Tesla for its kind of budding robo taxi business, whereas Google's Waymo is there in a bigger way. Likewise, honestly, with Netflix,

I mean, in terms of that stock being on fire, and there's YouTube sitting inside of Alphabet. So how do you think about the company, and why do you think the market might not be appreciating it? I'm so glad you brought that up, because it's one of my favorite things to point out. There was an article over the weekend in the Wall Street Journal pointing out

how Waymo has surpassed 27 percent market share in San Francisco, and that's above where Lyft is, in just 20 bonds. And so, you know, it's a really underappreciated asset. When we look at Alphabet in general, we see it as completely underappreciated on the sum of the parts basis. And, you know, you have headline risk from the legal issues going on with them right now, but our view has always been that there's hidden value here that is not being appreciated when they're combined. So if you were to have to split it up,

which we hope doesn't happen, there's potential to realize that value. To your point, you have YouTube, you have Waymo, you have the ad business, you have search. And what Google actually came out recently and said is that their AI summaries has been additive to their search. It's not taking away from core search, it's incremental. We think the market is just being overly pestic in terms of the depth of search and the legal risk of a breakup. We think the asset is really attractive here trading at 18 times

earnings when it's growing its earnings more than double the market and so we think it's an attractive asset that you know people are probably waiting for some clarity but I think you give up a lot of upside if you do that. Yeah we'll see if that starts to shine through that view. Christina, Laurie, Megan thank you so much appreciate the time today. Let's send it to Christina Partsanevalos for a look at the biggest names moving into the close. Christina. Mike, let's talk about shares of automakers, Ford and General Motors.

Following today, after Trump's tariff decisions continue to ding the auto industry, a new tariff hike on steel imports brings the rate on imports to 50% as steel prices rise in the US. Auto production becomes more costly. That's why these guys are getting dinged right now. And this is the newest move by Trump, also bringing increased uncertainty for businesses

with really no guarantee when the tariffs will actually remain in effect while you're seeing General Motors down 4%, Ford down 4% as well. The higher steel tariffs also knocking home builder stocks like Toll Brothers and D.R. Horton, higher material raises costs across the board for builders and slow suppliers for some buyers with elevated interest rates and questions about housing demand any new tariff decision can cause significant swings which is why you're seeing KB down over 1% toll pretty much all negative about 1% Mike. Christina thank you talked to you again in a bit we are just getting started here up next

former Federal Reserve vice chair Richard Clarida is back he'll tell us what he thinks the feds next move might be what could mean for your money. We're live in New York Stock Exchange you're watching closing bell on San Francisco. Comments from key Fed officials today showing mixed opinions on the central banks next move and several more data points this week including a critical jobs report on friday giving the fed more insight into how the economy is tracking here to share his outlook pimpco global economic advisor and former fed vice chairman richard claren rich it's great to uh... great to have you on

thanks for being here. Yeah, look forward to it. So, you know, we have Chair Powell on the record a couple different times, essentially saying, you know, when the risks seem like, you know, they both maybe are a challenge to the employment mandate as well as the inflation side of the mandate, you have to figure out which one looks like

to be the bigger risk at a moment in time. What's your assessment of that, and what's your assessment of the Fed's read on that right now? Well, I think their read is that there's still a lot of uncertainty about tariffs. You know, the reality seems to change day by day. The court rulings.

You know, the models tell them that if the tariffs go in place and stay in place, it'll both push up inflation at least for a while and push up unemployment. And so I think they came into the year thinking they were in a good place and I think they're happy to sit on their hands and let the data come in over the coming months. Does it still seem as if they can be comfortable in a wait and see mode at this point, just based on how some of the growth data have been? I mean, obviously it's mostly held in there,

but you know, the labor market's decelerating, housing market is kind of stuck. Exactly, you know, I think that underlying GDP is probably running either at or north of 2%. Obviously the first quarter was held back by the trade. And if you believe in the Atlanta Fed GDP now, we could be looking at a gangbusters quarter. Average out, the economy is growing around trend

or maybe a bit above. You know, the inflation data has been good. Year over year, PCE inflation came in last week at 2.1, which was the lowest in four years. And I think on your labor market point I think they expected the labor market to slow this year payroll gains running around one hundred thousand I think is certainly something that they would be fine with.

Of course we'll get another payroll number on Friday. For sure. I guess the question is how restrictive the Fed even thinks it is right now with rates above four and a quarter on the short end. And I guess if that's going to motivate them in one direction. You know, we heard Christopher Waller say that essentially he could see good news rate cuts coming if in fact the Fed treats the tariff price impact is transitory. Yeah I did see that comment from from Governor Waller and other feds speak including I think Lori Logan today.

We had Tom Tom bargain last week also so you've had a lot of fed speak. I think there I think they're comfortable waiting I think there is probably a scenario for so calledcalled good news cut I think that's really going to depend on what we see in the in the inflation data and I think several Fed officials have emphasized the importance of getting some certainty about what the ultimate ultimate tariff program is going to look like and right now of course that's up in the air so that's another factor as well. Yeah I mean it's it's a very good point just how contingent it is because you know it was a couple of months ago or I guess you could have said wow the Fed might is at risk of

being behind the curve here if we're going to go to these maximalist tariffs and then you can just dial back and say never mind on the tariffs and all of a sudden you have a very different economy. Financial conditions of course are much more broad than just the federal funds rate. You've had a nice big rally in the equity market. Bond yields are more or less in the center of the range they've been in for the last year or two.

Credit spreads have tightened. And so tighter financial conditions were the story a couple of months ago. Most of the markets seem to have digested the tariff and trade news pretty well so far. For sure. And I guess the US dollar declining, it's doing so again today is obviously on one level

of loosening of financial conditions. But are there other implications of that dynamic that the Fed has to be cognizant of? I think that the dollar came into the year at a pretty frothy elevation. It really had a tailwind for five or 10 years. And so I think just on valuation alone, a weaker dollar is probably not really catching them by surprise. Obviously, Fed officials don't like to talk very much about the exchange rate.

They think that's the Treasury Department's job. But I would say so far what you're seeing with the dollar, certainly if I were there, not something that would be really troubling me right now. And Rich, before we let you go, I did hope you might be able to wait on Stanley Fischer, another former vice chair of the Fed, also an official at the IMF. And Rich, before we let you go, I did hope you might be able to wait on Stanley Fischer, another former vice chair of the Fed, also an official at the IMF, head of the Central Bank of Israel as well, in terms of what his legacy might be in your mind. Well, my goodness, I met Stanley 40 years ago when I was a graduate student, and he

was never my professor, but he was always an influence, a peerless scholar, a policymaker. In fact, I succeeded Stan as vice chair of the Federal Reserve, and he was such a mentor and friend to me. So it's a huge loss to the profession, but just a really, really incredible, wonderful human being in addition to being policymaker and scholar. A big, big loss. It certainly is. And it's great to hear you say that, Rich.

I'm glad we had you here for that. Of course, Stanley Fisher passed away at 81 over the weekend. And Rich, it's always good to talk to you. Thanks very much. Thank you. Take care. Up next, top technician Jeff DeGraff is breaking down the charts and setting us up for summer. The key levels he's watching as we kick off June.

That's coming up. Closing bell will be right back. Music Trade worries making for a choppy start to June, at least for a couple of hours this morning. But our next guest says the seasonals paved the way for a strong setup from here. Joining me now, renaissance macro research chairman and head of technical research, Jeff DeGraff. Jeff, it's good to see you. I know you've been in a mode for a while here of, you know, open your mind to what might

be able to go right in the markets based on depressed sentiment and some of the other action in terms of the character of the rally off the lows. Bring us up to date with that. Where does it stand? Yeah, thanks for having me, Mike. Well, look, I think you had a couple of things that kind of changed the narrative here. I mean, one is this massive expansion in momentum, which is good news.

The rally was led by beta. That's nothing new. Almost every rally off of some significant low is led by beta. So there's no real characteristic change there. But we did see this surge in some of the new high data, some of the breadth that we look at. These things are usually typical of a low that's been set and will be a hard one to breach for some time.

So I think we're in really good shape from that perspective. And I think the trends will start to change and improve though They tend to be a little slower You know the real thing for us, you know bringing up to speed I think that we're gonna move away from beta and that's what we've been suggesting for clients is not that beta is gonna be bad But I just think the the Delta the surge that you had in beta is probably You know by 80% through its its normal course of action and now what we're really looking for is relative strength and momentum. Those are the things that you want to be owning right here because the narratives might not

be clear, but they sow the seeds, they're kind of the germinating leadership that's going to be driving the narratives as we get into the back half of the year. So our real call here is less about a market call, even though we think it's bullish, is really transitioning from the beta-centric call into something that's momentum-based, relative performance-based, because those are gonna be leadership names as we go. Right, so not necessarily, in your view,

an environment to go kind of hunting for laggards and turnaround-type candidates, I guess. Where is the- I think that's actually one of the worst things you could do right now, to be honest with you. That's historically not the place you wanna be. Yeah. In terms of maybe what could get in the way or present a hurdle here,

where does the stock bond, treasury yield dynamic play right now? We've been kind of here before, not that long ago. It's not as if yields are broken out, but it seems like there's some sensitivity to higher levels. Yeah, I totally agree with that. I think the one thing that we're looking at that we feel like could disrupt our call is where bonds are.

Now, that's becoming a little bit more consensus, so we feel a little bit better about that. If everybody's concerned about it, it's probably not much of a concern. We've got models that we look at relative value of bonds versus stocks. In fact, our asset allocation model is pretty heavily weighted for bonds here, given our relatively bullish condition on the S&P. That's because there is value that we see in the bond market right here. I feel like it's the, the villagers have gathered. They haven't sharpened the pitchforks

and they haven't lit the torches yet, but certainly they're stewing and they're ready to go. So those bond vigilantes are out there. We'd start worrying about that over 475 on the 10 year. But look, the 30 year yield looks like it's in an uptrend. If it was, if it had the symbol Google on it, I'd tell you to buy it for sure. The 10-year yields is still in a range. Basically it's 420 on the downside to 475 on the upside.

So the good news is we're still in that range. And then you look at the 10-year, the short end of the curve, and it's continued to be in this downtrend. So it's really a tale of three different bond markets, if you will, depending on the duration. So it is something we're concerned about. We're not seeing it in corporate credit. We're not seeing it in some of the liquidity measures that are out there and some of the other factors that we look at. So I've got some solace with that, but I do think it is a potential disruptor in the summer. Yeah, I mean, market, they've kind of, you know, have this process in previous phases

here, right? We kind of have to find a new equilibrium at the yield level and make its equities make their peace with it maybe at some point under the right conditions. Real quick, Jeff, we alluded to the seasonal inputs here, and what is that telling you right now entering June? Well, you know, there's this old saying on Wall Street, sell in May and go away. And our data just says that's not true.

I mean, I know it rhymes and we can't really come up with something that's good. We say goodbye in July and come back in October. So if you can make that rhyme, good luck. But really it's the earnings season around July that you want to start lightening up on equity positions from a seasonal standpoint. But really, the next six weeks are some of the best six-week periods historically, really

rivaling only what we see in the fourth quarter. So this is not a time to lighten up on positions just from the calendar's perspective. Usually what happens is people, the analysts, you know, were very optimistic to start the year. They kind of get a come to Jesus moment in the second quarter when the earnings come out, and they have this reality shock to them, so they start taking down estimates. And that's where the market gets a little bit more choppy, and you get these oversold conditions in late September,

early October, and that's what you want to buy. But usually you want to fade it sometime in late July and into mid-August and play it that way. But for the next six weeks, historically, the calendar says we're in good shape. Gotcha. Yeah, that was the cadence last year for sure. Jeff, thanks a lot.

I'll catch you again soon. Thank you. See you, Mike. All right, up next, we're tracking the biggest movers as we head into the close. Christina, standing by with those. I am, Mike. Online betting shares tumbling after Illinois lawmakers hit the industry with another tax hike. And a digital infrastructure company shares soaring on news of a massive 15 year cloud services deal.

We'll have those stock movers right after this short break. Coming up on 17 minutes to the closing bell, the S&P 500 near the highs of the day, up a third of one percent. Let's get back to Christina for a look at the key stocks to watch. I'm looking at shares of online sports betting platforms because they're struggling today after Illinois lawmakers approved a budget that again raised taxes on the industry. The new budget includes a 25 to 50 cent tax on every bet placed in the state. City analysts, they put out a note

this morning and they expect companies like FanDuel and DraftKings to really cut back on promotional events specifically in the state to offset the tax costs and that's why you're seeing Flutter down 3%, DraftKings another example down 6% today. And switching gears let's talk about shares of Applied Digital soaring today after the digital infrastructure company announced it will enter two 15-year leases with CoreWeb. Each lease should generate about $7 billion in revenue for the data center operator

over the particular 15-year lease period. CoreWeb is a cloud services provider, which is backed by NVIDIA. Also seeing its shares up 7%, but applied. Look at that, almost up 50%, Mike, right now. Wow, wild stuff. It is the new hot area, Christina. Thank you very much.

Still ahead, we are drilling down on a big pop in oil. We'll tell you what's driving that move today. We are now in the closing bell market zone. Pippa Stevens on the big swings in oil and clean energy spaces, plus Angelica Peebles on big movers among the next gen cancer drugs. And HSBC's Max Kettner joins me to break down the final minutes of the trading day. Pippa, finally a little relief in oil. Yeah, that's right, Mike.

So we did see oil prices jumping today after OPEC and its allies agreed to increase July production at a steady rate. The group said they will return an additional 411,000 barrels per day to the market next month, the third straight month of higher output. But part of today's move is a relief rally since ahead of that meeting, there were some concerns the group could surprise the market with a larger than expected hike. Still, TD Cowan saying they continue to believe the market will struggle to absorb these barrels and that quote

There is only a very narrow path towards substantially higher oil prices now on the clean energy side Those stocks under pressure as the fate of some of the all-important tax credits remains with the Senate After they were much reduced under the house's reconciliation bill first solar shoals Sunals, Sunrun, and SolarEdge, all down here, Mike, at least 3%. And, Peppa, when it comes to oil, you mentioned that it seems as if, you know, it might be a bit of a long shot to say you're gonna get sustainably or substantially higher oil prices.

I look at the oil services stocks, I mean, they're still like 35, 40% off their highs. It feels as if even when you get a lift in prices, nobody really pencils in a lot more drilling activity. Yeah, that's right. And I think the services has been one area that's really shown the pain and the expectations that there will be a pullback in drilling.

Of course, with oil where it is in the low 60s, 65 is that level you need for break even to drill a new well. And so if prices aren't there, we're likely going to see a pullback in production. Probably won't happen in the U this year but in 2026 we certainly well of course the US is now producing about 13.5 million barrels per day so that likely is here to come down I think also should note that going into the weekend bearish bets against oil were at the highest level in some six months or so and so definitely some of today's move could also be an unwind from some of those calls. For sure, yes, some snapback

potential likely there but thank you. Angelica, plenty of news here out of Asko. That's right Mike, it has been a quite the busy day here at Asko with the biggest move that we've seen really coming from BioNTech, that company announcing a partnership with Bristol Myers Squibb to develop a next-generation immunotherapy. Bristol will pay BioNTech 1.5 billion dollars upfront and up to 11 billion dollars for a 50-50 split for this drug. Now this is becoming one of the hottest areas in oncology that we've seen lately. We've recently, just in the last few months, seen Pfizer, Merck all jumping in and so this is definitely a space to keep your eye on. There's a lot of debate over how

successful this will be but Bristol's CEO telling us that if this works this could be a big area for the company. Another biotech company that we're paying attention to is Maris. That company saw quite a big bump before Asco once it released the phase two results from its head and neck cancer drug. Now this weekend seeing another nice bump about 4% you can see today as they go out and show those results to doctors. So another one to watch in the space, Mike. For sure.

And Angelica, I wonder just bigger picture in terms of the talk of the conference there. Obviously these are, you know, development projects, research that has been in train for a long time. We're seeing the result of. What's the thinking there in terms of the forward prospects when it comes to the new administration and approvals, as well as just cuts to basic research funding? Yeah, you know, we've asked everyone that we've talked to today about their interactions

with the FDA, and they're all saying no change so far. They're continuing to have those discussions with the agency and at this point they haven't seen a shift in policy. Obviously that is important to pay attention to the Lilly head of oncology telling us that that certainty is so important and so if anything does change that could have a big impact. So something to keep an eye on there and in terms of the cuts to basic research of course that is something that people are concerned about in terms of what it means for the overall ecosystem, especially here in the U.S., as we do see China becoming a really strong competitor.

For sure. Yeah. And of course, overall, the healthcare sector has suffered under some of the policy cloud. Angelica, thank you very much. Max, what do we think about how this market over the last two weeks has kind of, I suppose just cooled off when it had to cool off, but what is it looking for in terms of determining what you think might be its next move?

Yeah, look, it's actually a great question because it's probably the question that we get the most and the most frequent right now. What is the next catalyst? What's the market looking for? What can drive us higher in equities, tighten spreads and really higher across the board and risk assets?

I would actually argue it is as stupid as that sounds, it's sort of benign nothingness. As long as we've got a lack of further bad news that can help realize volatility to go down and that can cause really some of the systematic strategies, think CTAs, trend following strategies, think things like volatility target strategies, like risk parity strategies, that can cause them really to re-risk and at least according to our measures,

those systematic strategies are still really, really, really carrying with very, very low risk exposure, so very low equity exposure. So to me, it is not necessarily something, I'm not necessarily looking for this big next thing, the big next thing on tariffs or on earnings or something like that. I am genuinely just looking for, you know what, as long as we've got a lack of further bad news with of course also earnings and top down growth expectations already having gone down quite substantially in the last few weeks, you know, a lack of further bad news

I think is enough to drive the market higher from here Yeah, I guess that would fit in with the old, you know Don't short a dull tape and you know No news is usually good news in a bull market for for returns in a in a kind of slow and steady way I suppose what you read on the current state of this sort of sell America trade, the idea of capital flight. We're seeing the dollar come down. It oversees investors now concerned with this tax provision that might get through Congress.

I just wonder if that was just a flash panic or if that's gonna be an ongoing issue. I think it's ongoing, but it really depends on where it is. I think there is two separate issues. The first one is, is where do we trade it? Do we trade it is. I think there is two separate issues. The first one is is where do we trade it? Do we trade it in FX and rates and credit and equities or actually do we just sell everything US? I would argue the trade is probably most clean or the really really cleanest

in FX. It's really something where you say well you know what the dollar should continue to struggle because of these increasing hedgerowsers across the globe, particularly from Asian investors, because of repatriation from the US assets home to Europe, but also to the rest of the world more broadly. I think it's also in rates. I think you can see the curve steepening a bit further, but of course, the higher yields go, the more it stokes growth concerns, and that will eventually then lead to lower yields again. So the rates trade has an expiry date. Whereas I do think in credit, where the technical pictures have been really, really strong and the end of the US exceptionalism picture that the market

has been playing for the last three, four months, that's not affecting the technical picture at all. So I think credit is the wrong place to play it. And I would argue equities is the entirely wrong place to play it because let's face it, when you look at the Magnificent Seven, most of the Magnificent Seven actually derive a much larger share of revenues from overseas. So the lower dollar really, really helps them. I would argue the weaker dollar, when you're one of the Magnificent Seven, one of the mega caps, you're loving this. You look at this and like, yeah, great. As long as the dollar keeps coming down, we have an artificial further boost to EPS and that actually should keep U.S. equities

very, very well bid in the next few weeks. Yeah, I mean, that is almost what U.S. exceptionalism is for equities, which is taking profits from the rest of the world, bringing them here, and then we put a 25 or 30 multiple on those earnings. And there you have, you know, the NASDAQ and the equity market leadership of the S&P 500. Max I really appreciate you weighing in today thanks so much we are heading up into the close

here getting to within 30 seconds just about of the finish and we have the S&P 500 pretty much at its highs for the day did have about a three quarters of a percent decline initially this morning on some weak ISM manufacturing numbers and now it's time more than one percent from there about 4 tenths of one percent 5935 the Dow has finally moved into the green as well on the day market for us nothing to let home about actually.