Closing Bell - Closing Bell: Bond King Gundlach Reacts to Fed Decision 12/10/25

Episode Date: December 10, 2025

Fed Chair Powell followed the committee’s decision to cut interest rates by 25 basis points, while signaling a higher bar for the next cut. DoubleLine Capital’s Jeffrey Gundlach joins Scott Wapner with his first take on the decision, Powell’s news conference and his own market forecast.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Breaking news, Fed Chair J Powell following the committee's decision to cut interest rates by 25 basis points while signaling a higher bar for the next cut, what you might call the hawkish cut, most we're expecting today. Chair Powell saying the Fed is, quote, well positioned to wait to see how the economy evolves. Maybe, though, the biggest news of all today regarding the balance sheet. The Fed will buy short-term Treasury sooner than we thought as well. The chair says to manage reserves, you can call it QE Light, call it whatever you want. Stock's jumping on that news. You take a look at the Dow up more than 1% right now.

In fact, the S&P may, in fact, set a new closing high today. We had three dissents for the first time since 2019. It does point to the divided Fed that we've all been talking about. Welcome to closing bell. I'm Scott Wapner. We're at Post 9. Let's continue the conversation now with our Fed Day tradition. Double lines.

Jeffrey Gunlock is with us exclusively. It's good to see you this, this may say. sounds so strange to ask it like this, but did we just have a hawkish cut inside of a dovish meeting? Did we just get that? I don't feel like that was a hawkish cut. I thought that it was interesting that he used the word well positioned. You opened your remark with that. Well positioned is the phrase of this meeting. And he went on to basically repeat well position when he was asked, are you really on hold now? And one of the most interesting things was he emphasized this idea that I've, that's new to me

anyway, that he thinks that the monthly jobs gains are 60,000 overstated. And so he says maybe a 40,000 stated job report is really a negative 20. And that sounded pretty doveish to me. And as he went on in the press conference, he seemed to de-emphasize inflationary risks. He's gone back to talking about break-evens from the tips versus nominal treasury market, which is appropriate. He's right about that. That's been extremely well contained in the mid-toes for quite some time. So he says he's well positioned, but he really emphasized things like, well, maybe, you know, inflation will tick up because of jobs, you know, being in demand or something.

But I don't expect that to happen. He went out of his way to frame inflation as less of a problem. He even went so far as to say they're making good progress on inflation if it weren't for those darn tariffs. So he's trying to carve out some real estate for himself on these things. But when he says he's well positioned, I really agree with him because at long last, the Fed funds rate is the same as the two-year treasury yield. It's fascinating that the Fed has dropped rates 175 basis points beginning a year ago September. but the two-year treasury rate is completely unchanged. So a 175 basis point drop in Fed funds has finally gotten it back down in line with the two-year.

So I think he is well-positioned, and he seems pretty clearly focused more on the employment risk of unemployment rising than he is on inflation being a problem. So I don't, I think this was sold, was kind of sold to be expected to be a hawkish cut, but I don't think it was. And when you ladle on top of the cut and the language surrounding it with the 40 billion of what some people will call QE, I mean, that's kind of interesting. We've been, we've been doing QT for a long time, and all of a sudden, out of the blue, we've ramped up QE, which is probably giving people some hope. that there's going to be QE if needed, and I suspect that is going to be the case. One thing that's fascinating is that people keep talking about the Fed cutting rates to help housing. Well, the Fed cutting rates, 175 basis points, has not helped housing.

What's happened is that long-term interest rates have risen as the Fed has cut rates 175 basis points. The long bond, the 30-year Treasury, is up about 75 basis points, since before they start cutting rates and the 10-year Treasury rate is up as well. So I continue to believe, and this has been my thesis since they started cutting rates, and the market action seems to have corroborated my view, that the Fed cutting interest rates is not going to be helpful for long-term interest rates. So today we had the Fed cut and the curve steepened again. We're out to 2's 30s, out to about 120, 3, 124 basis points. The high this year was 130. So I'm thinking that we might see long-term interest rates actually rise on this more dovish Fed. But I think that this is not a hawkish cut,

Scott, in my view. I mean, I ask it the way I did because you could say, well, Powell says the bar is high for more cuts. As you said, they're well positioned to wait. Those are his words. You say, okay, that's the hawkish cut that we were expecting. But then when they lay on the announcement of the Treasury purchases, the market is at the highs of the day. The S&P could do a new closing high today. You'll say, well, maybe that was actually a Dovish meeting because of what some already consider this to be QE light. You get where I'm coming from? Yeah, I do understand that.

The thing that's interesting about this meeting is the dissents. You know, you had one, you know, the Myron guy wants 50 basis points all the time. Two didn't want any cut, and I guess there were a few what they call soft dissents as well. So the committee seems more hawkish to me than Jay Powell's press conference. So I guess in that sense you could call it a little bit of a hawkish meeting. But from the statement and certainly the press conference, I thought it was more dovish than most people expected. And so when he was asked about, is it possible that we could have rates go one way or the other, other, you know, you might even hike rates, not just cut rates.

Powell's answer was pretty much there's no way we're hiking rates is what I heard for the answer to that rather specific question. Well, he said it wasn't the base case, right? He said hiking rates wasn't in any way the base case at this point, almost as if they're not even thinking about it at this point. Well, that's right. Yeah, he's basically, one way to interpret that is we need the data to radically change for us to think about hiking interest rates.

And my guess is that they're not going to cut rates. I don't think they're going to cut rates. I think he's going to go out with the Fed Funds rate. If the two-year Treasury stays where it is, he'll probably end his term with the Fed Funds rate where it is right now. But if they're going to do one thing rare than the other, it would be cutting interest rates.

And we'll have to see what that data comes out. He obviously emphasized multiple times that there's a boatload of data that's coming out between now and the next meeting. And we'll see how that goes. I'm confused, though, for a minute, though. If you just said that you don't think that he's going to cut rates again, but also noting that the chair said that they think that the job gains were overstated,

that maybe the labor market is weakening still, and you still don't think that they're going to cut interest rates anymore. I get that the outlook is for only one in 26. and only one in 27. He'll be long gone, of course, as the chair by that point in time. But you're making a statement here that they're done? Scott, I've said this so many times. I'm sure the listeners are tired of me saying this.

The Fed follows the two-year treasury. They've been out of sync with the two-year treasury all the way through this cutting cycle, and now they've actually caught up. And so if the interest rate structure stays stable, and it's been so stable, year treasury has been so stable for the past two and a half years. In fact, most bond yields have been very stable. It was interesting during the press conference, people brought up the mid-90s because I've been talking about that with my team. The bond market this year reminds me of the bond market in 1995, where yields were about where they are right now, and they made a push

towards 5%, but they never really could break out of a range. And we've been in a range for the past two and a half years on treasury interest rates, and that low volatility has allowed for significant stability as well and tight spreads in non-treasury products, like the investment-grade corporate market, which had a spread, the all-time low spread of this cycle was 71 basis points, and I think we're at about 75 or 77 basis points now. We have junk bond spreads, which had a tantrum, the tariff tantrum back with the stock market in March, April, but that's all. all the way back down to about 270 basis points or so. And so they're wider by about 15 basis points off their lows,

but they're very, very stable. And one of the reasons that I think credit is very stable is the market for private credit has been absorbing an awful lot of supply. So in the old days, you had the below investment grade debt market was basically bank loans and junk bonds, the high-yield bond market. But now it's now three pieces.

It's about one third, one third, one third, bank loans, high yield, and now private credit, which has boomed in the last five years in terms of assets under management. And my view, and there's a lot of anecdotal evidence to support this, is that a lot of the junkier stuff has gone into the unregulated market. That means that the bank loan market

and the high yield public market are actually safer now than they would have been at the same spread level, say six, eight, or ten years ago. And that's one of the reasons why the credit market has been so stable. And the bond returns broadly have just been quite good this year. The investment-grade bond market is, over the past 49 years, this ranks number 16 in terms of total return, with many very low-risk types of bond investments returning about 8%. You put that together with the stock market. It's been a wonderful year for financial assets broadly. And if you followed my advice for this year, I've been

actively interested in gold. I turned neutral on it a couple months ago, but positive on it again last week. So gold has done well. U.S. markets have done well, but foreign markets have done even better. And I've been a fan of local currency emerging market debt. That's the best performing sector for dollar-based investors, and also foreign stock markets have outperforming the U.S. So this has just been a phenomenal year for dollar-based investors that have been diversifying. First of all, their dollar-based investments are doing just fine, but their non-dollar-based investments are having a further profit on the currency translation in addition to superior index returns. So this has been, again, it's a lot like 1995, a year where you worry a lot during the

but when it's all said and done, it's turned out to be a pretty positive experience, no matter how you look at it. Yes, I mean, certainly our viewers know that full well. If you look across a number of different asset classes, Jeffrey, bear with me for a moment. Steve Leesman's made his way out of the room, our senior economics correspondent. So what is your biggest takeaway? And by the way, I'm not sure if you heard Jeffrey say before you got in front of the camera here, that this may be Powell's last cut, that he may be done.

Yeah, we've been talking about that today, Scott, that this could be it. And I'll show you that how that could be the case of just a second. I do want to point out that my concern had been being replaced by AI as a reporter. I'm now a little worried about being replaced by Gunlack. And the reason, Scott, is because I came out thinking that the operative phrase of this press conference was well positioned. And I heard Jeffrey say exactly that. And just in case you haven't heard it yet, here's another, here's one of the times that, one of the six times, actually, that I found Fed Chair Powell used the term well positioned. And I'll talk to what I think that means on the other side of this.

We've now cut a total of 175 basis points. And as I mentioned, you know, we feel like where we're positioned now puts, we're well positioned to wait and see how the economy evolves from here. So my question to him, Scott, as you might recall, was the extent to which the Fed is well positioned or has already taken out risk insurance for potential additional downside weakness to the jobs market. And I think what he's saying is, yes, we have. Obviously, with intolerance, if the unemployment rate skyrockets up, but they're already factoring in some revisions to the payroll number. So I think what you see is what you get for a bit when it comes to the funds rate.

And again, if you look at the probabilities and why this could be Powell's last, last rate cut. You'll see that there's a 60% probably they go again in April. That's not tremendous conviction there on the part of the market. More conviction happens when in June after the new Fed chair comes in. And just one point of disagreement, Scott, with Jeff. I'm not sure I would call this QE. What's happening is mostly going to be largely on the short end of the curve, mostly going to be bills. I don't know if they'll come back in and sterilize that on the back end after they get through April. But ostensibly, this is to replace. or to keep the balance sheet at a given or a fixed ratio relative to GDP and the economy.

And also to smooth over certain times with a tremendous demand for reserves. I know the Fed would not characterize it as QE. I guess everybody has a right to call it what they will. Well, yeah. I mean, look, he went out of his way, I feel like, as well, the Fed chair, saying multiple times, quote, for the sole purpose of managing their reserves, I think because one, would understandably say, well, if it's maybe not be full-blown QE, it could be baby QE, it could be QE light. The fact of the matter is, Steve, the market is taking that news, which is going to happen

sooner than we thought, as bullish, right? If you just had the Fed chair come out and say the bar is high for more cuts, and we took that as a hawkish cut, I'm not sure that the Dow's up 600 or that the S&P 500 is on the verge of a closing high? I guess I wonder the extent to which this really does actually over a longer term juice stock market returns. Maybe it does. But I will say, Scott, there are those people who are more traditionalists when it comes to the Fed's balance sheet that are rolling their eyes.

In fact, their pupils are well in the back of their heads right now, that the Fed is managing the balance sheet by doing it this way. There are other ways out there. And people want to see the Fed. people like Kevin Warsh, maybe some of the people coming in to be the next Fed, want to see the Fed reduce the size of the balance sheet. It's a separate discussion, but the idea that it has to do that to essentially manage reserves through difficult periods is part of the problem these people would say.

Gotcha. Steve, thank you, as always. Steve Leesman, back outside the room and spending time with us, we appreciate you down in Washington. So, Jeffrey, you so rightly told me last time that you were looking for a steeper yield curve. And it's exactly what we've gotten, as you alluded to that. Why do you think rates have backed up on the long end the way that they have? People are worried about the interest expense on the Treasury debt, and they're worried about the fact that the budget deficit is 6.2% of GDP while we're in an extended economic expansion.

So they're worried that the interest expense is going to be out of control because it's risen by nearly a trillion dollars over the past decade in terms of how much money the interest expense is. So I think that that's really the problem. And it's interesting that the Treasury issuance of the last 12 months, only 1.7% of the Treasury issuance over the past 12 months is 20 years or longer. It's this trivial fraction of the debt issuance. 84% of the debt issuance over the last 12 months is T-bills. So the T-bill market is massive compared to the rest of the total fixed-income market in the United States.

I'm talking about all sectors combined. T-bills are something like two-thirds of all the securities that are out there. So it's interesting that long-term interest rates still are rising as the Fed is cutting rates, when such a small fraction of the issuance is long-term. Treasury bonds. So I just think that the rise in long-term interest rates is not just a U.S. phenomenon. It's happened in all developed countries. We've had the same rise in the U.K. as in the U.S. over this rate rise period from 2022. And we've had Japan and Germany go up, not quite as much, but they've gone up several hundred bases, a few hundred basis points

as well. So I believe that's just a global phenomenon in the developed world's certainly that people don't trust the way these finances are being handled. And for that reason, gold has had this ridiculous return. Gold is up this huge amount this year, and silver is up even more, which is actually not a great sign. When silver joins the speculative frenzy of precious metals and it starts to really outperform, and silver's up over 100% this year, usually that, I'm afraid to say, starts to foretell some sort of a problem, some sort of a financial problem. It doesn't mean it's coming any time

in the very near future, but it's a bad sign when silver goes into, to join a wild speculative frenzy. So I still think that gold has a place in a portfolio, but I also think commodities broadly have quietly started to rally. If you look at the Bloomberg Commodity Index, it's been rising, and now even its 200-day moving averages rising. And, of course, the spot, the actual value today is above its 200-day moving average. So for the first time, in a long time, I turned positive on commodities broadly last week. So I think a commodity index makes some sense in here. The one thing that's not inflating seems to be crude oil, which is very positive for the inflation side of the dual mandate of Powell. And I think one of the

reasons that he's downplaying that side of the dual mandate is because the price of oil is been gradually declining for quite some time now, and it seems to be forecast by the shape of the oil futures curve to be in the high 50s for the next 12 months. That doesn't mean it's going to happen, but it's very rare that you have the oil futures curve predict no change in oil one way or another over the ensuing 12-month period. So I think that this, the, the The portfolio framework that I've been talking about, gold and now made some broader commodities, foreign investments, non-US, non-dollar, local currency emerging markets, and that part of the yield curve, that's the real performer, which is the belly that I've been talking about,

the two-year, the three-year, the five-year, the seven-year treasury, that if you owned the two-year treasury leveraged ten times, you've blown away the performance of any other spot in the the Treasury bond market. I don't think that's going to change. I think the yield curve is going to keep getting steeper. And we'll probably end up with two-thirties going at least to 150 basis points from about 120 to 125 where it's settled in for the last few months. Let's turn our attention to the next Fed Chair. We know that Chair Powell's term is up in May. Interviews are starting today with Kevin Warsh. If President Trump called you up and said, Jeffrey, of my final five, who should I put in that chair? What would you say?

I'd say put the two-year treasury in charge of the Fed funds rate, because that's what's always going to happen anyway. It's been happening for decades. But I don't know. I don't have any particular insight on who's going. I just know that who's going to be chosen is going to be a dove, because that's the only type of a profile that President Trump is going to is going to opt for. We just know that. It actually came out yesterday in the news. You know, I've been saying there's going to be one question in the job interview. Will you lower interest rates if I tell you to?

Well, yesterday, Trump almost said that, that it's going to be a litmus test. There'll be a litmus test for the next Fed share. Are they going to lower interest rates aggressively? So that's what's going to happen. That's why the Fed funds market, you know, they don't expect much of a change in rates, but then in June, all of a sudden, the probabilities go way up. because everyone believes, rightfully so, that the president is going to pick somebody who's going to be a dove. And that's going to be a yield curve steepener as well, and it's going to be negative for the dollar.

So you should be increasing investments in non-dollar assets, particularly in the emerging market fixed income area, which has been a great performer. But I think this is early innings for the outperformance of non-dollar investments relative to dollar investments. Stay with me another second. I'm going to go down to Washington. We do have breaking news. The president is reacting to this rate cut. Amon Javers joins us now. Amen, what do we know? Scott, that's right. Take a live look now at the Roosevelt room over at the White House. The president is meeting with CEOs from the technology CEO counsel, including Michael Dell and other high-tech executives. He just gave his first reaction to the Fed rate cut in that meeting. He said it was too small.

He said this rate cut could have at least been doubled. He was not impressed. He called the Federal Reserve Chair, a stiff, and said that the Fed is too focused on inflation, and therefore they are killing growth by not lowering rates even more. So the first reaction there from the president in real time. I also want to flag for you, Scott, a comment that the president made. He confirmed that the U.S. government has seized an oil tanker on the coast of Venezuela. He called it a large tanker, very large, largest one ever seized. So we have confirmation of that news now from the presidents of the United States. He also said, things are happening. So you'll be seeing that later, and you'll be talking about that later

with some other people. So we don't know exactly what the president was referring to when he talked about other things happening, potentially in the context of Venezuela, given how he expressed it, but he did confirm that the United States has seized an oil tanker. We expect to learn more about what tanker it was, on what basis it was seized and what that means for U.S.-Venezuelan relations as well. Scott, back up to you. Amen, thank you. Amen Javers. We'll go back to Jeffrey I'd like to get your reaction to that because it's quite clear we have another dissent of sorts, Jeffrey, at 1600 Pennsylvania Avenue, who says at least doubled the latest cut, i.e. wanted 50. Yeah, well, what else is new? I mean, Powell took a little jab at Trump by blaming what inflation progress has failed to be to materialize is because of the tariffs. I think he said it two or three times. So if you jab Trump, he's going to jab you back and call it.

is stiff and everything else because that's just the way he's wired. So not surprising that Trump wants a bigger rate cut, and that just means that we're going to get more rate cuts. That just doubly reinforces what I've been talking about. We're going to get rate cuts after Powell's gone, and it's going to weaken the dollar. I just think this is crystal clear. It's already been materializing. The dollar's already down.

It's one of the worst years for the dollar in the last 25 years, and I think that the rate cuts are going to weaken the dollar further. And investors should think about that seriously because it's already happening in real time. This year has been absolutely following that playbook, and Trump is telling you through that outburst that rates are coming down in the second half of this year. And I don't think he even cares what the inflation rate is, Trump. He just wants nominal GDP to go up and just want positive numbers all over the place. He doesn't care if it's inflationary.

I care a lot as a bond investor. That's why I'm avoiding the long end of the bond market and playing it safe in higher quality securities, just in case things get out of control, and there has to be some sort of emergency stuff done later on. So the QE thing, Steve Leesman, I can't replace Steve Leesman. He knows that. But I did not say that it was QE.

I said some people would say that this $40 billion a month for five months, $200 billion altogether is QE. But, you know, it is, he did emphasize that it's just liquidity management and all that. But the people that want to call this QE, I will give them one tip of the hat. And that is, the journey of a thousand miles begins with a single step, the old Chinese proverb. And when you're doing this now with T-bills, on an accelerated basis, it means that you are more open philosophically to doing quantitative easing than you were certainly when you're doing quantitative tightening to the tune of, you know, tens of billions of dollars per month. So it looks like they're focusing more on the employment situation, less on the

inflation situation. This is not a positive for long-term interest rates in the developed markets and certainly in the United States. All right. So we know, since we're just talking about President Trump, that among other things, he also wants the stock market to go up. You declared last month this to be, quote, one of the least healthy stock markets of your career. How so?

Well, it's because the valuation is so high. And it's kind of mania-like in terms of the, you know, the leaders being, you know, very aspirational. This is reminiscent of prior manias. It's reminiscent of the dot-coms. It's reminiscent of the financing and the housing market. But one thing about unhealthy markets, one thing about markets broadly,

whatever you think, whatever you think is going to happen, it's going to take a lot longer than you think. The one thing I've learned of almost 45 years in this business is you might be exactly right on the direction, but it always takes longer than you think. I always bring up the anecdote. I turn maximum negative on the NASDAQ September 30th of 1999. In the fourth quarter of 1999, it went up like 85%. I looked like a total moron because of saying that I was maximum negative at September 30th.

But just 18 months after September 30th, 1999, if you had gone short September 30th of 1999, you had a gain of 64% on just one turn short over 18 months. So it can take, it'll always take longer than you think. I've been negative on the dollar for a long time. It took longer than I think. It will always take longer than anybody thinks. That's just the nature of the beast. It works in a cycle that isn't days, weeks, or months, and sometimes not even years.

So it can stay unhealthy for a long time. But the valuation of the market relative to GDP is very, very high, and it's very high on a book value versus other markets. And I think that it's somewhat warranted by a lot of the policies, the very unusual policies that have been put in place for the past really 15 to 18 years or so. But I'd be careful. I'd be careful that because once it breaks, you're going to lose money very quickly. So this is one of the reasons why I have been substantially underweight the U.S. market and not regrettably because the other markets have done better than the U.S. this year. And I think this is not the end of that trend. It may even accelerate as we go into 2026. Well, there was a lot of catching up for a lot of those other markets to do, too.

And we shall see what 2026 holds. Jeffrey, you talked about your 45 years, that experience. We lean on every Fed meeting for what has become. a great tradition for us. I wish you the best. Happy, healthy, and I look for you in January. See what happens. Absolutely. Good luck everybody out there and go bills. All right. We'll see what happens there too. Jeffrey Gunlock. Be well. We'll see you soon. We're now in the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus Leslie Picker is tracking the

action in the banks and Simomodi has the set up to a very important earnings report. It is Oracle. out in overtime. Michael, I'll begin with you, your take on this market reaction to what happened today. Yeah, this is a market that was at least wary in advance of what I thought was going to be a hawkish rate cut, and it just really wasn't that hawkish. I mean, I agree with Jeff on that. In the commentary mostly, I don't even think it's about the $40 billion a month in buying T-bills because that was out of two o'clock. Okay, this market actually started to levitate over the course of the press conference and when people digested the kind of committee outlook, which is, Expect more growth than we thought in September for 2026.

Expect unemployment not to really go up. And we're still going to price in a cut. We still have an easing bias. In other words, they're not going to stand in the way of the economy gathering pace. The reaction is almost pristine in terms of what you would want to see if the market were gaining confidence in the cyclical outlook. It's value over growth. It's small over large. It's equal weight ripping relative to market cap weight.

It's volatility getting crushed. So everything the market was kind of getting in the direction of gearing up for, which is we're going to have a quicker economy, and sure, the Fed can be on hold, but that's not going to stand in the way. I think that's all positive. So this can change. We can have some kind of a shock out there in a rethink in the morning. But for now, I do think that even though they may be on hold,

they're not doctrinaire about it. How many times did Powell speak glowingly about the productivity growth of the past few years, he's signaling that they don't really want to restrain the economy in any material way. Hey, how crazy would it be in the year of AI and the Mag 7 and all that, that the Russell 2000, okay, which today is up almost 2% is now up 15.3% year to date and may very well make a run to be the second best performing index of the year before it's all said and done. I don't know how many people saw that coming, but that is the.

case as we sit here today. It's up near 5% a month. Yes. It's a catch-up move, obviously. The year-to-date frame definitely flatters the Russell because we're really not up that much from four years ago. But it does show you that this is the way the market is migrating. And that just says not just cyclical gearing in the market, but also risk appetites rising. Okay, that's also going on. The high beta stocks are flying. So it's not just, you know, kind of picks and shovels, old industrial stuff working, it's we think we can let it rip a little bit. So we'll see, again, if that overshoots it at all. But right now it does seem as if you would say that that's a positive risk-seeking signal.

There's green, a lot of green on the board, obviously, including the banks. I got J.P. Morgan up 3%. A nice move back from those losses of yesterday. Leslie Picker is following. That has really spent the last couple of days in the center of the conversation, Leslie, about the banks. Yeah, banks certainly bouncing today. As you mentioned, Scott, thanks to a lot of optimism from executives speaking here at the Goldman Sachs Financial Services Conference. Overall, Wall Street firms expect continued growth in investment banking and trading revenue. Consumer spending, they say, is resilient. We heard that word from several executives. And credit quality, seen as stable. However, some executives noted the health of the consumer depends on the labor market, which Blackstone President John Gray said,

weakening? The labor market has softened a bit. So when we talk to our CEOs, they say it's much easier to hire today than it was three years ago. And wage rates have gone from sort of low fours to call it 3 percent on an hourly basis in the U.S. And I think that softening of the labor market, given the Fed's dual mandate, will help them cut rates. We'll hear more about the labor market. and rate cuts in the 2026 Outlook from Bank of America's CEO next hour, Scott. Wow. All right. Good stuff. Continued. Leslie, thank you so much. That's Leslie Bicker. I said we're waiting on a really important earnings report in overtime. It is Oracle.

And Sima Modi continues to follow that story for us. Hi, Seema. Scott, it was about three months ago in September when Oracle revealed that massive bookings or remaining performance obligations number of $455 billion that sent the stock up 36% in one day. Since then, the stock has erased those gains. So tonight, can Oracle repeat history? Analysts are expecting yet another big RPO number of over $500 billion. But as you and I have discussed,

the street also wants details on the speed at which it will continue to go to the debt market to fund its commitments to Open AI and other customers. This is the first earnings call with Oracle's two new CEOs. But as always, commentary from founder Larry Ellison, that will be top of mind. He's widely seen as a person

who is the driving force behind the companies pivot into AI cloud computing. Now, worth knowing, the stock has rebounded in the last week of 10%. According to the false swaps, giving back as well, Scott. All right, Seema, it's going to be exciting to see what happens. Michael, I'll turn back to you. The importance of this one is what? It's pretty significant.

I mean, for all the good things that the market is embracing right now about the macro and how maybe the cyclical parts of the market can work, we haven't called off this really pitched debate about whether we can and should finance the AI infrastructure boom the way we are right now. It's remarkable how Oracle has become the concentrated, you know, touchpoint for all of these arguments, pro and con. So it is quite fascinating. I think the overall credit markets have done fine, right? They have not really been unsettled by even some of the ripples in data center-backed debt. So I think that's a positive. It's much more about how fast can we go, how much confidence do we have about, you know, the demand

continuing there. And if OpenAI has got $1.4 trillion in commitments, it's already signed up for, you know, how much capital is going to consume at what ultimate cost. Meanwhile, the world wants to talk about data centers in space now, right? So it's kind of like, it just seems way too open-ended with a wide range of potential outcomes to gain too much comfort in the short term. You know, Mike, we've been talking a lot about a so-called everything rally, whether we would actually be able to get one between now and the end of the year. There were some signs, then some not. But now I wonder that we get the Fed out of the way. We didn't get to your thinking anywhere close to the hawkish cut that the market was clenched

up for. Does this now clear the path for that? It's hard to see an identifiable obstacle to the market having that kind of a lift. Now, it doesn't mean it's going to be, again, the broadest and the most aggressive and highest momentum because the market hasn't really indicated that it wants to really hightail it to the upside in a broad way, but today could be the start of something like that, and at least you have to give credit to what the tendencies are, which is, you know, strong years tend to finish strong, all the things we know. I know everyone wants to talk about how when the Fed cuts rates

and the market's within 2% of an all-time high, it's always been higher a year later. That's very true. But it was 2.17% off an all-time high in October of 2007. So if you're widened out the scales, sometimes it doesn't seem as much like a sure thing. But right now, Mike the market's giving you the message you probably wanted to pull after this prejudices. All right. Good stuff as always, Mike. Thanks for adding your own insight into this big market day to day. So the Dow's going to go out around 500.

The S&P is going to fight it out to the finish. To see if it can get a new closing high doesn't look likely but you never know.