Closing Bell - Closing Bell: Gloom or Boom in June? 6/3/24

Episode Date: June 3, 2024

Stocks started the month with a good amount of red on the board. So what’s next for your money in the month of June? Gabriela Santos from JP Morgan Asset Management and Invesco’s Kristina Hooper break down their forecasts for the weeks ahead. Plus, shares of Nvidia and AMD moved in opposite directions. Big Technology’s Alex Kantrowitz discusses how he views the space right now. And, Goldman Sachs Vice Chairman – and former Dallas Fed President Robert Kaplan – maps out what he thinks the Fed will do at the next few meetings. 

All right, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with this swoon to begin June and whether it means anything for where stocks might trade as this new month begins. We'll ask our experts over this final stretch. We'll also be joined in just a little bit by former Dallas Fed President Robert Kaplan. He's now the vice chairman at Goldman Sachs. He'll be at Post 9 shortly. Look forward to that. Let's show you the scorecard with 60 minutes to go in regulation in this first trading session of June. Dow's off the low, still a weak day, was down more than 400. We're still down two thirds of one percent. S&P is about a quarter of a percent loser. The Nasdaq trying to get something going as this last hour begins. Got a little bit of work to do, as you see.

Weaker economic data today, sending both stocks and yields lower. And that Got a little bit of work to do, as you see. Weaker economic data today, sending both stocks and yields lower. And that's a big part of the story. Most sectors remaining in the red, although even that's trying to turn just a little bit. I see three on my screen that are now green. We'll track it. Financials, industrials, materials

among the biggest losers today. So watch that as well. The outlier, what else? NVIDIA, it's higher again. And that's along with Apple and Meta. As you see, Meta having a nice day. They're up near 2 percent. Does take us to our talk of the tape. The road ahead for your money. A stock start June with a good amount of red on the board today. Let's welcome in Gabriela Santos, chief market strategist for J.P. Morgan Asset Management

and Christina Hooper, Invesco's chief global strategist, both, as you see here, joining me at Post 9. Nice to see both of you. Okay, new month. What happens to stocks? So I think what we've been seeing this whole year is that asset classes are still extremely sensitive to this back and forth of plain analogies, meaning the cyclical picture. During the month of April, initially in May, it was about concerns about a reacceleration in inflation, about potentially bringing back rate hikes. And that largely calmed down during the month of May. And I think we're really turning now into June, into an environment where there's more concern on the other side about real economic

growth. And for us, really, this is just a story of a moderation in the overall pace of growth. But anytime you're moving to a lower altitude, you can have some slightly more choppy air and some concern about too much deceleration. I mean, that's what we're seeing today. You speak to, you know, today, right, these data was not great. So bad news is bad news potentially for stocks. Do we no longer get the bad news is good news boost because we think it's just going to lead to rate cuts sooner? I think largely this year, it's been really a focus on why rates are rising and conversely, why rates would be falling. An environment where

yields are falling because inflation is moderating and the Fed is proactively starting a gradual rate cutting cycle is a good environment for stocks. But in an environment where yields are falling because there's true concern about economic deceleration, that then is not a positive environment. So the why matters a lot. But I would just highlight here, really, this morning we got manufacturing data. All really that we're seeing with manufacturing, with home building, with autos is until rates come down substantially. It's just going to be hard to get off the floor. And that's really not new information. I think we would really focus as the week goes on on any news or any downside news around the jobs market and the very, very critical consumer piece of the pie.

That says, though, to me, Christina, that if, you know, until rates come down considerably, that's the word that Gabriella used, that the broadening trade remains suspect, that you can't count on it until rates really start coming down. Is that fair? Am I wrong? I don't agree. I think that there's a real psychological value to having one rate cut, to feel as though the Fed is moving in that direction. And I think that can do a lot, certainly for markets, which I'm focused on, but I think also it will help the economy. I think we could see some loosening of credit conditions. It could provide a little breathing room for real estate. I think it could yield good things. And I also do believe that it wouldn't be the only rate cut this year.

I think the Fed could easily cut in July and cut again once or twice in 2024, not because the sky is falling, but because monetary policy is too restrictive given how much progress has been made on disinflation. What if they don't cut at all? Right. Barron's was out this weekend. They're not going to cut. You've obviously had expectations come way in. We'll ask Robert Kaplan in a little while what he thinks. But what if you get none? What if you get none? I think that can be problematic because we do have to worry about those long and variable lags of monetary policy, which is why we had that apprehension and nervousness today. This is a softening of the economy that the Fed has orchestrated. The Fed now needs to start cutting or else I do think

there will be more concerns. Well, there'll be more days where bad news is bad news if we think the Fed is resolute in not cutting. I just don't believe that's the case. So, Gabriella, sectors in May, tech led 10 percent, utilities sort of the outlier, people thinking, well, it's a derivative AI play up eight and a half percent. Com services that plays more into tech, obviously, than anything of six and a half. Real estate up five. What's going to lead us now? We've narrowed again, right, as tech has come roaring back. Is the narrowing of the market going to continue?

And I think one of the things we have to ask ourselves is not just the economic picture, and that's where we have a hard time seeing real estate or manufacturing rebound, with what's already been priced into the market. And specifically when it comes to real estate, public real estate REITs, substantially priced in the deceleration that we've had in the real estate market. So that's an area where a lot of investors we've spoken to are starting to take another look, including in private markets as well. So I think you have to ask yourselves not just what is a cyclical picture, but what is the actual fundamental expectation that's priced in? And that's where when we think

about the broadening out trend, it can still happen, even though rates don't move lower significantly, because you still have some sectors that are cheaply priced and some sectors that have other tailwinds besides just the cyclical picture. And it's very encouraging to see a broadening out of the AI infrastructure build-out winners from just NVIDIA to other types of hardware, utilities, energy. But I think there are also some other interesting themes our investors are focusing on, whether it's industrial policy, boosting industrials, AI plus GLP-1 drugs and healthcare, as well as reshoring and nearshoring benefiting places like India and Mexico. I feel like, Christina, you're making the case for the broadening because you believe that you're going to get the cutting.

Absolutely. Right. So that could make the argument for investors looking more across the pond to UK equities, to European equities, because certainly, especially in Europe, it's much more likely they're going to start getting rate cuts, and they're likely to get more rate cuts this year. Oh, so just go where the cuts are first. Well, there are other things at work as well.

You have attractive valuations, far more attractive valuations, and you have a little thing called positive economic surprise, and I think that's helpful as well. But how can you have all things for everybody in the sense that if you say look overseas because maybe they're going to be cutting first, wouldn't that be at the expense of the U.S. market doing well? If we think that the Fed is going to be late or last, so to speak, to the cutting game, doesn't that impact potential returns? Well, I think it could slow down positive gains. But it doesn't mean that you're going to have a terrible environment for U.S. stocks. It could be that others take the lead, that European equities take the lead.

U.K. equities could perform better. They're poised just given that they have existed with more negative sentiment, with lower expectations. And now we're seeing that positive surprise there. You could argue that U.S. stocks are far more highly valued, closer to being priced for perfection. Although, of course, if we were to break down the S&P 500, we'd certainly see the very highly valued segment and then other areas that could perform, that are more attractively valued and could certainly have catalysts that move them forward. You've got J.P. Morgan today, the firm Houseview, quote, or this is, maybe this is more their

trading desk. We see the market upside capped during summer due to the inconsistency between consensus call for disinflation at the same time the belief in no landing and an earnings acceleration. Without speaking directly, obviously you've worked for J.P. Morgan Asset Management, so I don't want you to get in trouble or put you in a bad spot. But the thought, the idea that this is going to be too inconsistent and that's going to hurt the market on the beliefs of, oh, earnings are going to be great and the Fed's going to do this and inflation is going to come down and everything's just going to work out perfectly? I think in the short term, you could see a more sideways market or even another correction like we had in April, this time not driven by concerns about reaccelerating inflation and rate hikes,

but this time driven to concerns about decelerating economic growth and how investors do or don't need to price that into earnings expectations. But if we zoom out a little bit more, I think our expectation is still for a market that grinds higher. However, we would very much agree with what Christina is saying, where we really do feel like there's already peak optimism and peak concentration in global equities within U.S. equities. It has never been this large at 63 percent. So it's not about the U.S. catching

down. It's just moving up a bit more slowly and the rest of the world catching up a little bit higher. So you agree with the attractiveness of markets outside the U.S.? Not just attractiveness, but catalysts. So for Europe, it's the region that was the most sensitive to rate hikes. Conversely, it can be the most positively sensitive to rate cuts. You also have very, very high discounts on a sector-by-sector basis versus the U.S. in an environment where there's growth again, there's inflation, there are positive interest rates. And then I would really look to Asia as at the epicenter of several of this decade's huge investing themes, Japan going through a once-in-a-generation re-rating due to governance

reforms, and then parts of Southeast Asia, like in India, benefiting from a combination of demographics and French or... That seems to be a very popular trade now. The elections and the market obviously is doing quite well. So, Christina, you talk about money coming off the sidelines. If we're having more questions about the strength of the economy, right? We're going to get a jobs report on Friday, for example. Why should we be convinced that money is going to come off the sidelines if we're going to once again either have a correction that maybe could occur,

as Gabriela says, or just more questions about the stability of the economy? Great question. My advice would be I don't expect money to come off the sidelines, but I would recommend that some money come off the sidelines, that investors not take profits necessarily. I'm sure they're overweight U.S. right now, but to add to exposure to those attractively valued areas like European equities, like U.K. equities and like emerging markets, Asia equities. And it doesn't have to be India. I mean, it certainly could include India, but that is richly valued. But there are other ASEAN countries where stocks look more attractively valued. Do you mean through like ETF proxies here in the U.S.? Is that what we're talking about?

You could potentially access it that way. Absolutely. Yeah. We'll leave it there. Ladies, I appreciate it very much. Gabriella and Christina, thanks for being here at Post 9. Shares of Nvidia, well, they're higher today. AMD, though, not. These stocks moving in opposite directions, and that is following some more AI announcements. Christina Partinevalos is here with those details. What can you tell us here, Christina?

Well, it's been only three months after launching NVIDIA's GPU platform, Blackwell, that NVIDIA is already announcing its next generation Robin platform. So the stock, like you said, is higher, almost 4%, that Nvidia is already announcing its next generation Robin platform. So the stock, like you said, is higher, almost 4%, because these Blackwell chips haven't even started shipping yet, and they're already announcing the next generation. CEO Jensen Wong promising at Computex, you see him on the screen right now, that they're sticking with a one-year rhythm of creating new chips. They also announced a succession of GPUs over the next few years.

There was no mention on your screen right now of any AI PC chips specifically, but he did hype up the RTX AI PC, which could or would be used, they would actually use their GPUs instead of NPUs, neural processing units found in other AI laptops from the likes of Qualcomm or Intel. Jensen says the higher cost of these chips are justified. CEO math is not accurate, but it is correct. The more you buy, the more you save.

Well, accelerated computing does deliver extraordinary results, but it is not easy. The more you buy, the more you save has been his catchphrase since 2018. They even had a really gimmicky song, a lot of more youmm, more you buy, more you save, but we couldn't get that up in time. But all of this bodes well for manufacturer TSMC, that's why you can see shares up 2% right now because of this continuous cycle. AMD CEO also promising a one chip per year timeline

with their new GPU available in Q4 2024, which is a direct competitor to Nvidia's H200 chip, not the Blackwell. Newer GPUs also set to be released in 2025, 2026, you can see on your screen, all promising to be significantly better at inferencing, which is the second part of a large language model. Of course for AMD the AI PC also came up. They announced its third or their third generation AI PC processor, which would go on sale this July, directly competing with Intel and Qualcomm's AI PC. Qual which would go on sale this July, directly competing with Intel and Qualcomm's AI PC. Qualcomm already on the market, though. But you can see the shares down,

what, two and a half percent today, not reacting the same way as NVIDIA because the pressure's on for AMD to provide the shorter product timeline, something that they haven't promised and NVIDIA has in the past. So it's going to be a lot of pressure on them, that's for sure. All right. Yeah, it looks that way. Christina, thank you. We'll come back to you in just a bit. Christina Partsenevelos joining me now with more Alex Kantrowitz of Big Technology. Good to see you here at Post9.

Feels to me like AMD's biggest problem is that it's not NVIDIA. And no matter what they do, it doesn't seem to allow them to have any sort of reaction like NVIDIA gets. NVIDIA announces something new, stock goes up a lot. AMD announces something new, no reaction. Why? I mean, absolutely. I mean, can you imagine being AMD this weekend? You're ready to go with your big announcement, and then Jensen comes up and announces a roadmap till 2027. What Jensen's doing there is signaling to the hyperscalers and to the developers,

if you're thinking about switching off, if you're thinking about building in-house, we have you covered for the next four years, three years, whatever it may be. AMD comes in, it's never going to measure up to that. They're talking about two generations previously in terms of the benchmark. So it's tough to be AMD right now. But that being said, I'm not fully crying for them. I mean, this AI boom has lifted them about 30% over the past year. That's good news for a company that was really struggling in the middle of a PC downturn. Is it long-term moat that is giving NVIDIA such a big theoretical advantage, or is it just simply first mover advantage is so first and so big that it's going to take so long for everybody else to

catch up? Yeah, it's momentum. Because what NVIDIA has, it has a better chip, and it has the software that all these developers are developing AI on. And so if you're an AI developer, you're thinking about this, and you're saying, wait a second, NVIDIA is pretty expensive. We don't know if we're going to get the supply. Let's look at others. And you look at others, and it has to be way better than NVIDIA chips because you're going to have to develop on a new software framework.

And then, meanwhile, NVIDIA is just saying, you know, you're already with us. You're already developing. You already want these H100s. You want Blackwell. We're going to, you know, raise it one more and show you Rubin. Now, if you're in a boardroom, how do you then justify saying I want AMD instead? You really can't. It's the overflow.

Yeah, when you look at stock moves like NVIDIA up another 4% today, it's up, you know, 129, 130. 130 actually right on the nose percent year to date. You think what? Does it make sense to you, not as a stock picker, but as a story watcher? The big question is going to be whether all this investment in NVIDIA is justified. And we just don't have that story at the bottom line right now. We have something like there's been numbers that Sequoia Capital, I think, has thrown out that $50 billion has been spent on NVIDIA AI GPUs, maybe $3 billion in revenue has been made.

You know, maybe that goes up a little bit more after Apple's event next week. But we're going to need to see ROI not just in enterprise, not just in areas like customer services, but in consumer and in a much broader segment of the economy, including what Jensen said yesterday, which was shipbuilding. I mean, you're going to have to see this brought in everywhere to justify these numbers. Now, I think NVIDIA is going to be fine up until the next generation. Blackwell, I'm sure that's going to be sold out. But when it comes to this Rubin thing, that's really when we're going to find out whether

this thing can continue to grow at the pace that it's been growing. You mentioned next week Apple, WWDC is what you're alluding to. We're going to be there broadcasting live as all of this unfolds. What's at stake? So Apple right now is going to make a big bet on its operating system. All the reports show that Apple is going to try to integrate AI deeply into its operating system. So with natural language, you'll be able to connect certain applications and really operate an iPhone in a way that you haven't been able to recently. I mean, Siri, we all know, has been a disappointment.

The graphic user interface, okay, tap, tap, tap, you can figure out your way around. Can Apple make a product that's that much better by connecting different apps and different commands through Siri, through whatever voice interface, or even text interface that it's planning to roll out. That will be the big question. And I thought, okay, maybe baby steps. We saw the news of voice memos and maybe images, dancing emojis, whatever it might be. But it looks like they're really going a level deeper and saying,

the operating system is the bread and butter on the iPhone. We're going to make some big changes there. I applaud. That's a bold move that Apple's going to make. We'll see how big they go, how far they go, and when it's coming, because we might not see it until 2025. How much of a wow does it have to be, just given the fact that they are, in quotes, last to go in terms of what you're really going to do from an AI standpoint

and how we can think about the monetization of it, whether it's going to lead to some great upgrade cycle and things like that? I think it has to be a wow. I mean, I think Apple really needs this. I mean, think about what they did with the Vision Pro. They made everybody think that virtual reality, augmented reality, mixed reality, whatever you want to call it, was going to be a thing that we're going to start using today. It hasn't fully panned out that way, but they have the marketing muscle. They can tell a story better than any other company in Silicon Valley. So if they can't tell a story about AI, it means that inside the company, there's not exactly the momentum and the vision that there might be on other products. So I think, you know, whether or not we're going to see an AI iOS starting next week, we really need to see a clear vision from Apple. And there's a

lot at stake here because the stock has run up. And listen to also, you know, the history here is they've proven that they don't have to be first. They've just been capable of being best. Now, I'm not suggesting that their AI offering, it could be apples and oranges to what, you know, the others have already introduced. It doesn't have to be that. But in terms of the category they're in, they don't care about being first as long as they get it right. Yeah. And I love this partnership that we're hearing about that they're going to have with OpenAI, which is going to power a lot of this stuff. They've also talked to Google.

I think they realize that they haven't been the best at developing this technology internally, but by God, they're going to be the best at trying to integrate it into an experience for consumers. And, you know, there's still a large percentage of the population that hasn't really seen AI. Maybe they've seen it on the top of WhatsApp or the top of Messenger, but ChatGPT still only has 100 million users according to the latest data. We're talking about billion-plus iPhones that are out there. That's a good point.

This could be a real opportunity for them to introduce it and, you're right, be potentially last or late, but be the one that matters. Yeah, we'll see the stock. You mentioned it's been running up into this event. It's positive on the year, albeit slightly, but some green is better than none, I guess they would say. We'll see you.

Thank you. Alex Cantuas, big technology and a CNBC contributor. Quick programming note. I just mentioned, don't miss Halftime Report and Closing Bell. We're going to be live from Apple's Worldwide Developer Conference. That is next Monday, June 10th. And we cannot wait. We're just getting started here, by the way.

Up next, navigating the meme mania. GameStop and AMC are popping. Thanks once again to Roaring Kitty. We're going to drill down on those moves and find out if the meme craze could really be returning. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back, shares of GameStop and AMC. Soaring in today's session, Kate Rooney is here with a rundown of what is driving those moves. And I think we know who and what. Kate. That's right, Scott.

Yeah, exactly. No fundamental drivers we can talk about on this one. It is the latest in a series of GameStop rallies that have happened in recent weeks, sparked by yet another online post from, you guessed it, Keith Gill and his account, aka Roaring Kitty, who led an army of retail traders into the GameStop short squeeze a few years ago. His return to social media after about a three-year hiatus has been jitting up excitement around GameStop and some other names. Despite never mentioning those stocks in any of his tweets or his mentions over the weekend, he took to Reddit with a screenshot of what appeared to be

a $116 million GameStop position. We could not verify this screenshot, but it does show 120,000 call options with a strike price of about 20 bucks bought for around five dollars the stock is now trading today at least above $30 famous short seller Andrew left meanwhile placed a new bet on GameStop after all of us telling Bloomberg in an interview today that he Had covered his short from May and then reassured it GameStop today did not disclose the size of that bet But said it's smaller than his prior positions got all right, okay Appreciate that Kate Rooney up next, former Dallas Fed president Robert Kaplan is back for his first TV interview since returning to Goldman Sachs. He's going to tell us what he's expecting from the Fed during the next few

meetings and more just after the break. The closing bell comes right back. June kicking off with a flood of critical economic data ahead of next week's Fed decision as investors search for any clues into the path for interest rate cuts. Joining me here post nine is Goldman vice chairman and former Dallas Fed president Robert Kaplan. Welcome. It's nice to see you in person. Great to see you. Okay, so let's just game this out.

Next meeting, June, no cut. Correct. July, no cut? I don't think so, unless something shocking happens, surprising happens. September. I think September is the first month where a cut is a possibility, but I think the Fed would need to see at least a few more months of improvement in inflation. If they see it, September is possible. When you see predictions

like Barron's has made over the weekend, it says no cuts. Goldman is a little more aggressive on that side, obviously. What do you think? You sit back, you say there's no way they're not cutting at all if the data continues to be what it is? So I think it's hard to make accurate predictions right now. And I think if I'm at the Fed, I'm more in the risk management business, not the prediction business. And the concern they have is they want to see more sustained improvement. And the other concern they have, if they cut too early and you see a softening in financial conditions and further appreciation, that could actually fuel stronger growth, consumer spending. So they're trying to thread that balance. And I don't think

making a precise prediction is that important. I think the next move is likely to be down, not up, but the timing is uncertain. Okay. So we just got a PCE that was, you know, their favorite measure, allegedly. Yeah. You know, it is. That was, that was in line. Okay. So then we get one in June for May. So if that one comes in, fine, that's good. And then if we get in July for June, that comes in, that gives them the green light, you think, to go in September? If I were in my former seat, I'd want to see, let's say we're right now headline PC around two and three quarters. I'd like to see it continuing to moderately improve between now

and September. I think they want to see not just sideways. They want to see moderate. I would want to see moderate improvement. But what's the go level? Two five, two and a half. Does that make sense? Is that like something we should put in our heads? Like if it's two five, that's the go? I think it's a trajectory being improving. And the reason I'm being cautious here, and I think they'll be cautious, is you've got to remember fiscal spending is maybe more moderate versus last year, but we're running higher deficits than we did pre-COVID. You've got these special programs like Inflation Reduction Act, Infrastructure Act that are open-ended spending programs.

You've got a big increase in wealth. It helps consumer spending, which you just don't want to see a reacceleration here. So there's no exact bogey, but you want to see continued improvement. Well, see, this is the great debate. And I think it's been somewhat of a conundrum of sorts inside the Fed as to what degree is inflation caused by the traditional forces, excess demand, versus things that they can't control no matter what they do? And those are still the residual impacts from a pandemic, supply chain issues, and other variables that make this inflation unlike other inflation. Well, you've got two or three structural issues that may not be COVID-related that they

have to contend with. We've gone from globalization to deglobalization, on-shoring. On-shoring is expensive. It's inflationary. That's right. Tariffs on foreign goods is expensive. In addition, you've got a massive energy transition away from fossil fuels. That's expensive. And then you've got, beyond the money spent for COVID, you have American Rescue Act, Inflation Reduction Act, Infrastructure Act that added another $4 trillion plus of potential spending. So you've got restrictive monetary policy that's being blunted by those forces. And you're going to have to just turn over a few more cards to see how it plays out. How can they and how do you think they're thinking about the positive benefits and the deflationary forces of AI and technology itself,

which is this incredible thing that we are still trying to figure out how to quantify it from an economic standpoint. So there's two big disinflationary forces that they're monitoring carefully and I'd be monitoring. One is we've got a jump in labor supply from immigration. Is that going to sustain or not? I don't think we know. I don't think they know. And then the second to your point, could all this technology spending lead to a jump in productivity growth, which would be very helpful, means we could grow faster with less inflation. We think yes, right? Well, to some extent, and the jury's out also, understanding that a big chunk of the U.S. economy is services,

and services in certain sectors isn't as sustainable to productivity improvements. So I think there's a great hope for that, but you want to see it manifest itself. Do you worry at all that a Fed was late to hike is going to be too late to cut? I think that I worried a couple of years ago that they were more than late. They were very late. They were 20 months late on bond purchases. I think if they're late this time around, it'll be by a meeting or two. And so I think these issues will be tactical. You could argue waiting 20 months might have been a strategic mistake.

I think the issues here are more tactical. So I'm not worried about a big mistake from the Fed. So even if they wait a month too long to cut, you don't think there'll be some sort of credit crack or crisis in which they're too late to react to? The dominoes would have already started to fall, and therefore they can't really fix it until they all fall. My view is the Fed is pretty well positioned now. They weren't two years ago. I think they're pretty well positioned. My big worry, as you've heard me say before, is not so much with monetary policy getting that wrong. I think the Fed will get it right. Maybe not perfect, but they'll get it right. I'm more

worried about the fiscal excess and how we manage that in the years ahead. I think one of the big questions of next week's meeting is the dot plot, right? The so-called forecast of where we think the number of cuts is going to come in, the median. What do you think about that? I would guess the dot plot median is going to be one, maybe one plus. And I think, though, the rhetoric associated with that will be hawkish. So I think you'll see some cuts in the dot plot, but people should understand that's not a commitment. That's an estimate. And I think they'll be hawkish and make clear that that's not a commitment. They're going to keep their options open.

But see, the interesting thing I think we've learned is that when you say they'll, they doesn't necessarily mean the in terms of the chairman. So the committee itself could be more hawkish. We've had more hawkish Fed speak at times, even associated with the last meeting. Then the chair himself comes out and was not nearly as hawkish as the market would have expected. And that's why we had that powerful rally from the April low until now. And I would venture to guess if the chair had a do-over, he might have wished he had

been tougher in the December press conference. I think they're speaking not total unanimity, but I think they're on the same page. And I think they'd be well-served to err on the side of, with hawkish rhetoric, to keep their options open. You think he overdid it on the Douglas side? Because, I mean, he's had public appearances since, and he didn't really make that big of an opportunity to walk anything back. The December meeting was the one where I think maybe a little too much of an indication that they were near success. I think the market got out ahead of them. I think they walked it back, but

it was a challenge to walk it back. I think the market and the Fed are not too far apart right now, and I think they're pretty well positioned. Okay, your Goldman hat is back on. You can put your Fed hat aside. So we're at 440 on the 10-year. We had this national economic challenge a little while ago, some of the brightest young people in this country forecasting the 10-year. I think the last person who went said 350, three and a half on the 10-year by the end of the year. Does that sound outlandish to you? What would your own prediction be? So let's start. The Fed funds rate by the end of the year is not going to be lower than four and three quarters or five.

We're selling nine trillion of treasuries this year. Next year, it's going to be closer to, say, 11 trillion. And we're struggling to sell duration globally, i.e. the 10-year and the 30-year. You can sell bills and short. So I would guess the big issue in the years ahead, no. $350,000 would be a surprise to me. I think the rates are going to be higher. And I think we're going to find out how deep the bid is for treasuries. But I think $350,000 is too low. But you keep coming back to, and I hear it even in answers that are unrelated to it, to the deficit. The funding thereof, right, is what you just were alluding to. When does that really come home to roost so that the people who continue to talk about it can point to specific things and say, there it is? I think we're already right now in a challenging situation in that we're an

aging society. So GDP growth is growth in the workforce plus growth and productivity. We know we're aging. And so all of our growth is going to have to come predominantly from productivity unless we have more immigration. And so we're already debt to GDP is over 100 percent and we're at full employment. If you're at full employment and you're an aging society, you'd want to be deleveraging right now. And so we're going to have interest expense next year in the neighborhood of a trillion dollars be the largest item in the budget. I think we're already in a position where we need to do more in this country to focus on the deficit and find ways to moderate our debt growth. I don't think it's a can we can keep kicking down the road. Are you thinking lastly

about who is chair of the Fed in the next year. We're going to have an election. You know where this is going. I'm staying far away from that. How much does it matter to the process? It always matters who's in the seats. And I have a hard time predicting, depending on various scenarios, what might happen. But I think we've got J-PAL at least through the end of 2025. And I think that's, in this type of

situation, that's an eternity. Does it matter to the stability of the process or the markets as to whether the, quote unquote, the person who started this gets to finish the job. And I don't mean started as Fed chair gets to see out the term. I mean from the hiking cycle to the end of that cycle that the same person's consistent. I think it matters that the Fed is independent. And I think we've learned anything in history, we need Fed independence. I don't know that it matters that you have the exact same person, but I think the Fed needs to make decisions that they think independently in the best interest of the country to get to full employment and price stability.

I think that matters more than anything. I look forward to many more conversations. Thanks for your time today. Thanks, Scott. That's Robert Kaplan joining us here at Post 9. Up next, we're tracking the biggest movers into the close. Christine is back with that. What do you say?

Scott, a trial gets new evidence and an accounting probe goes away. Sounds like a financial thriller, but involves two stock movers today. All the details next. We're back. Oil. Well, it's tanking in today's session. Take a look down there. Four percent. Pippa Stevens here with a check on the energy space for us. Hi, Pippa. That's right, Scott. Oil is sinking after OPEC and its allies outlined plans to unwind their production cuts, which total 6 million barrels per day, equivalent to about 6% of daily demand. Now, those barrels will start hitting the market in October. That took traders by surprise, since they were largely expecting the voluntary 2.2 million barrel cut to be extended through the end of this year rather than just through Q3.

Now, Goldman Sachs called it a bearish phase out, saying they see downside risk to their 75 to 90 dollar forecast on Brent. Following the decline, energy is the worst group today with Halliburton Diamondback and EOG the biggest losers. But a new energy for solar is a bright spot after Goldman raised its price target to $302, implying 10% upside on top of the stock's more than 40% gain in the last month. Scott? All right, Pippa. Thank you, Pippa Stevens. Let's get back to Christina now for a look at the other names moving into the close. What can you tell us?

Let's start with shares of pharma giant GlaxoSmithKline. They're down after the Delaware State Court gave the green light for scientific evidence against the discontinued heartburn drug Zantac. There's over 75,000 cases right now alleging Zantac's caused cancer, which was actually pulled from shelves back in 2019-2020 after a regulatory safety review. GlaxoSmithKline says it would seek an appeal against the ruling. That's how you're seeing shares down almost 9%. Shares of design firm Autodesk moving the other direction up almost 4.5% right now after releasing preliminary Q1 earnings results that came in higher than Wall Street estimates. These results were delayed for weeks over an internal accounting investigation, but the company announced there would be no restatements

necessary of any of their financial audits or financial statements. They also reassigned their CFO to chief strategy officer, and that's helping shares climb higher. Scott. Chris, Dina Partsanovalos, thank you so much. Still to come, the Spotify surge, the streaming company jumping on the back of a second price hike announcement. Details and how it could impact that stock in the months ahead coming up. Bell, the bell, it's coming right back. We're getting some news on the man known as Roaring Kitty. Kate Rooney has been following that already for us today.

And what are we learning now, Kate? Hi, Scott. So we are getting some headlines from the Wall Street Journal that E-Trade, which is owned by Morgan Stanley, is considering kicking Keith Gill, a.k.a aka Roaring Kitty, off of that trading platform. According to this report, E-Trade is considering telling Keith Gill he cannot use the platform. This is around potential market manipulation around purchases of GameStop. They call out call options that he bought on E-Trade. There has been this screenshot floating around of an E-Trade account showing Keith Gill bought about $116 million worth of options. That is really the crux of this. He's been posting on social media,

but those call options are now calling into question whether all of this and his actions did amount to market manipulation. And the firm is considering and debating, according to this report, whether to pull his account down because of those concerns around market manipulation. The Wall Street Journal also in this report is saying that the SEC has been reviewing trading in GameStop around those call options and some of his social media posts. That's according to people familiar with the agency's efforts. No decision, they say, has been made, and they're still debating this. We also reached out to Morgan Stanley and E-Trade.

Scott, no comment yet, but we'll keep you posted. Let me ask you a question, Kate. Has the page that you say has been going around on social media, allegedly, I suppose, an E-Trade page, has that been verified by any of the parties involved that it's legit? It has not, Scott, but this report does, if true, lend some credibility to the fact that he may indeed have an E-Trade account. If they're able to look him up and say, we are considering pulling his account down. So we have not verified that independently. Other news outlets have not, but it did spark some of the training we've seen in GameStop and some of the excitement. So newsworthy in that sense, but the actual screenshot was really up for debate.

Really interesting that they're calling out here on E-Trade, that this screenshot has caught their attention, and they're now considering pulling his account. So it seems, based on this, it in some ways confirms that he is an E-Trade client and does maybe have that massive amount of call options and that position at GameStop. Yeah, we'll see. I feel there's more to this story. Kate Rooney, thanks so much. All right, up next, industrial stocks getting slammed today.

We'll tell you what's behind that drop when we take you inside the Market Zone next. 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, industrials getting wrecked today. Seema Modi has those details. That's where we begin, Seema. Well, Scott, that ISM manufacturing report, that seems to be the catalyst. In May, the ISM number contracted to 48.7, falling below both the estimate of 49.6 and April's read of 49.2. Economists had been more optimistic on manufacturing improving in light of key infrastructure policies

providing a boost. We are seeing the construction stocks, Caterpillar, Fastenal, United Rentals among the key laggards today. And two industrial AI plays, Vertiv and Eaton, that have both surged in recent months amid growing demand for data centers

are selling off by around 2% to 3% as well. Milius analysts say Hubble's analyst date tomorrow will be watched closely by the industrial world. And with today's price action, I would just point out that industrial, from a valuation perspective, are now trading in line with the S&P 500. Scott. Appreciate it, Seema, very much. Thank you, Seema Modi. All right, Mike.

So we've had some late-day buying yet again. Similar pattern, as we've discussed on numerous occasions. NASDAQ, half a percent. S&P is trying to go positive. And the Dow has come about 300 points off its worst level. Took a trip down to where that Friday pop started, 52.50 or so. Didn't really find any sellers there. The market is going after, sort of chipping away at the conviction in the bank shot AI plays, right?

We got rid of the Dells and the software companies, and now the utilities down today and some of the electrical component industrials, as Seema was just saying. So it's almost like, why settle for the echo effect of it? Just bid up NVIDIA again, which is up 5%. So still kind of a wishy-washy market at this point. NVIDIA, still the main outlier to the upside. It feels as if they're trying to maximize two-sided frustration before deciding which way we bring. Job support. I mean, data today was largely not great.

Yeah, not great. Obviously, yields down have been supportive in general of the overall tape, but the cyclicals aren't taking much heart in that. I do think we need reassurance that the economy is not slowing too quickly. I don't think it is. You have the Atlanta Fed now down below 2%. So arguably nominal GDP is now running below the Fed funds rate. So you still need to get to that point where you say, hey, you know what? Maybe policy is restrictive. Maybe we can see our way toward a cut. Remember, a week from tomorrow, the Fed meeting starts. So a lot of these numbers are going to be what we're working with when Powell comes out on today's stage.

And you heard Robert Kaplan, the former Dallas Fed president. No June, no July. And we're talking September. September needs to stay in play, I think. All right, good stuff, Mike. Thank you, Mike. Ben and Chloe, see you tomorrow. All of you as well.

I'll send it in to OT with Morgan and John.