Closing Bell - Closing Bell: How Far Can This Rally Go? 8/12/25

Episode Date: August 12, 2025

The record run resumed with new questions about how far this rally can really go? Blackrock’s Rick Rieder gives us his take. Plus, former Dallas Fed President Robert Kaplan tells us what he thinks the Fed should do about interest rates. And, 3Fourteen’s Warren Pies tells us where he thinks stocks are heading – as we near another record close. 

Brian, thanks so much. Welcome to closing bell. I'm Scott Wobner. This make or break hour begins with the hunt for more milestones. The S&P going for its first ever close above 6,400 will track its every move over this final stretch. Here's a look at the majors. A CPI report deemed good enough was enough to get stocks moving higher today. Investors clearly betting that a September rate cut now, all but a lock. The Russell surging, the two-year note yield falling, all the classic signs, of course, that you'd expect to see. We'll ask Black Rock's Rick Reeder what is likely to happen. He's going to join me right here at Post 9 momentarily.

Elsewhere, an all-time high for meta today. Threads shows 400 million monthly active users, a big number, and the market loved it. Chips like Micron, Nvidia, and Broadcom also having a very good day to day. And airline stocks are surging. The market gaming out some potential consolidation involving a low-cost carrier. But it takes us to our talk to the tape right now. The record run resumed with new questions. about how far this rally can really go.

Let's ask Rick Reeder. He is Black Rock, CIO of Global Fixed Income. It's head of its global allocation team as well. And as I said, he is with me here at Post 9. It's good to have you back. Thanks for having me. I tell you, you sent me an email earlier. I had to do a double take.

You said this is the best investment environment ever. I think that. You mean that? I do. And by the way, it doesn't mean necessarily everything's going up. But there's a couple of things that play that are pretty extraordinary. First of all, as you take the equity side. First of the technicals and equities are crazy.

I know we've talked about it before. Amount of cash on the sideline, the amount of buybacks relative to the IPO calendar, i.e. the demand versus supply is pretty extraordinary. And these companies, you know, we've talked about on the show, the multiple is not that attractive. These companies are thrown off these earnings growth. So I looked at 2024. If you strip out Tesla for obvious reasons,

Mag 7 year-on-year growth is like 54%. You get through multiple pretty quickly when you're growing that fast. Then you take the other side of it is you've got an income, in fixed income, you're getting yield levels. I think the Fed can cut rates. But until then, you've got yield levels. You can create portfolio, six and a half, seven percent yield. That's pretty good. I would throw one last thing.

Today, volatility, you don't have to necessarily, one of the things I was saying about, what's your exit strategy, what's your escape hatch, if you get something surprising? The volatility, the equity market, you know, we did a trade today, equity vol, I think was 10,000. 9-5-10 vol to own a crazy low volatility to own equities, so you don't actually have to take the downside risk. So that's a pretty good environment. And the Fed's going to cut in September? Listen, I think they can cut. I think it's almost a given that they cut.

And particularly if you've got a payroll report that shows what is heretofore happened, you're seeing some sogginess around job hires, around job openings that I think the Fed's got, you've got more slack coming into the labor market, So I think they can move. Listen, I still think the funds rate, you can get it down faster and more aggressively than where they are today. You're talking about, you know, the inflation report today, you're still talking about there's a little bit of elevation from tariffs, which I think you have to be respectful of, and I think the Fed's been respectful of that.

But you're still running under 3% core CPI and things like shelter. You're starting to see some improvement in. I think they've got room. You're talking about five-year inflation break-evens at 2.5%. I think you've got room to get that funds rate down 100 basis points. Why aren't they all talking as if they have room? Not everybody agrees with your assessment. They're worried about sticky inflation.

They look at the CPI and they say, well, yeah, it beat expectations, but it still shows that it's still a bit of a problem and it's above our target. So, Scott, I think there's something that's really important. How the interest rate tool affects inflation, do you think about the Fed raised rates, 500 basis points? The impact on the economy inflation, I would argue, not terribly significant. The interest rate tool doesn't do a lot today. You think about how companies finance, Capax, big cap, you're not borrowing.

You think about asset, the banks are asset liable. The interest rate tool is not that important, except for a couple of big factors. What it does to housing, and you look at mortgage applications, building permits, housing starts, new home sales, frozen. Stuck. The mortgage rate has to come down. You drop the funds rate, you know, there's some yield curve steeply. It probably happens.

And then the other side of it is, A, the low-income people who are the low-income people who are the borrowers, you're actually, you know, they are getting hurt by this way, you know, high savings, older people are actually benefiting from the high rates. And the last thing that I will say, I don't think the funds rate has to be at four and three A's. The cost to the government, we have too much debt in this country to charge an extra 100 basis points. When I think the transmission of how it impacts inflation that I think is dull to start with, is it worth it? It's a pretty high price to pay. If the White House is listening to what you're saying right now, standing up yelling, yes, yes, this is the story we've been trying to tell.

Yeah, I mean, I'll say a couple of things. One, I think you have room, and I think you have room to bring that rate down. I also think there's something spectacular, happening around productivity, much of what's happening on the backside of this technology investment, not just the traditional hyperscalor dynamics, but you think about how big companies are using data, you think about space as a new technology. Like all of these are geared towards higher productivity operating at a lower cost basis. That's where we're going.

We, you know, I sent you over this chart. I don't if you saw that chart that shows other than a pandemic, a once in a hundred year dynamic, inflation, volatility of inflation for the last 25 years is incredibly low. We don't run an economy that's manufacturing, commodity oriented. It's not cyclical. Volatility of inflation is incredibly low, and we're seeing enhanced productivity. But I'm not that worried of the Fed drops the rate that all of a sudden we're going to see inflation pick up. I mean, you've been bullish.

You've urged people to continue to look at stocks. You've made really good calls on this show. Nothing scares you? Listen, would I like to multiple a couple of hours? I mean, you defend growth. You're not worried about tariffs. So I would say, I'll tell you what I'm most worried about complacency. Like it's, I mean, so the thing about the vol we're buying today, like people are selling us insurance.

And people, you know, think about the way markets, work, the way insurance works. Nobody buys insurance when you're far from the hurricane they're by right after when the price is too high. Today, the price of insurance is incredibly cheap. We can hedge our portfolio. Complacency is high. You see it in some of the credit markets. That being said, you know, I think, hey, I'm sanguine on the economy. You know, I think we're moving generally in the right direction. Listen, one of the reasons why there's a great investment environment. There's a lot of news flow that allows you to take advantage of opportunities. markets, particularly in August, they tend to overreact to things.

So your ability to actually take advantage of that. But complacency to me today, I'd love multiple to be a little bit lower, to be honest. And I think, I know like spreads to be a little bit wider into credit markets. But boy, you see where the technicals are, where the amount of cash. We were looking at it. The amount of money that's gone into money market funds, including last week, is extraordinary. Some of that is going to move into equities and other fixed income and other assets. We have had conversations, Rick, over the money.

the last, you know, six, eight months where you've looked at the multiple of the market and said to me, it's a little rich, we've come a long way in a short period of time, well, it's richer today than it was when we had those conversations. How do you square that? Yeah. So for me, I mean, I always thinking about, you know, how do I protect the downside? How do I, you know, our job is to generate return for clients. When the markets we think could elevate, you've got to be in it. But I always think about how do I protect the downside? Today, part of the idea is, hey, I can buy downside very cheaply. You can overwrite your equities.

So think about the vol in some of the big cap names, some of the hyperscalers, some of the semis. If you have positions, you can override it. You get paid premium for that and then buy some downside. And like today, I bought some, I tried to get too technical. I converted some of my Delta want some of my straight equity holdings for options at such a low vault. So I know if we trade down, my downside is pretty limited. You still love the mega caps here? I do.

You know, I think this is, I think 20 years from now, we're going to talk about this was a period of time where the CAPEX, the R&D spend, not just in traditional. We know AI, GPU spend, energy spend, cooling, all of the cloud, all the infrastructure around it. Think about it, the scale they're operating at, to grow earnings. And I was looking at this year, so we're now year on year at about 40% earnings growth. Think about these are not small-cap companies. The grow at that sort of rate is pretty powerful. So I still like them. And, you know, I'd branch out into some new areas.

I talked about space. There's some new areas. By the way, some of the health care technology is super interesting. That there are other places to go, but yeah, I still like tech. Do you agree with those who say health care so bad it's good, finally? So I think they're parts of health care that are so bad. They're not, it's not so good. I think there is, like, health care technology, robotics, tools are pretty, you know,

there's some pretty good companies there that are going to take advantage of technology, data, diagnostics that are better. Let's play what if. What if the Fed doesn't cut? What if they don't agree with you? How dependent is the market and the best investment environment ever if they don't listen, if they don't cut. So by the way, I just want to qualify my term, best investment. I'm not saying that the middle of August is very... No, I understand, but you're talking about the general

environment that we exist in as investors. You declare, you know, one of the best, if not the best you've seen in a long time. Totally. And part of it is because we have so many tools to utilize to take advantage of that. So what happens if the Fed doesn't cut? It'll have a lot to do with the environment. Will you see the market trade down? And if the Fed says, gosh, we're still running. And by the way, there is some inflation transmission through these tariffs. By the way, you're seeing goods inflation, which you haven't seen for a while, pick up a little bit. Will the Fed to react to that and say, you know what, we could wait a bit longer? It is possible.

Some are talking that way. Right. Will the market? I don't agree with it philosophically. What I've learned in my career, though, it's more important what you think they will do than what I think they should do. I think they're going to cut. But if they don't, boy, it's going to be, the market will trade down. I think it'll trade down over a short term, depending on how they define, how they're looking at it.

But you'd be a buyer of the dip. I would. I would. Because, as you suggest, there's all this cash still on the sideline. Some have called this the most hated V-shaped recovery since the April low. You buy that? So it depends on how you define V-shaped. I mean, post-liberation Day, it's a pretty powerful.

I mean, it's a pretty good V. It's a pretty good V post-Livocally. It actually looks directly like a V post-Liberation Day. Is it the most hated? I think, yes. I think there's some people that haven't jumped on board. Listen, I, you know, I think the technical is one thing I've learned, there's a famous investor I probably shouldn't say who's taught me in my career, the technicals matter more than the fundamentals over the short to intermediate term. Those technicals are crazy powerful.

So, listen, you don't have to have a lot of humility. I find, you know, I've gone through, you go through cycles, you go through periods, you don't want to be complacent, you want to know what your escape hatches. But then, you know, your job is, let's see if we can generate return when the opportunity is there. I might know as initials, but I won't say them just in case you don't want to say. All right, Rick. It's good to see us always. Thanks for sharing your views. That's Black Rocks. Rick Reader, joining us right here at Post 9. Let's bring in Sofyes, Liz Thomas and Arias Asset Management's Kerry Firestone, who, as you see, are here at Post 9 as well. Well, ladies, nice to see you. Liz, what do you think about what you just heard? I think it sounds pretty optimistic

and I got to say I agree. Too much so? No, not too much so. I think you have to take a long-term view in order to hop on that optimistic train. At this point, not only in the year, but at this level of valuations, at this point where we're waiting for so much data still. I mean, we've got one CPI print. We still have another one. We've got a jobs report. We've got Jackson Hole. We've got PCE. There's a lot still to come that could change what the market has priced in today as far as a Fed cut in September. But I do think that this is still a continuation of an upward moving market. Are we going to get a pause? Honestly, I hope so. I think that a pause would be a nice buying opportunity. I think a pause would be a nice way

to shake the tree and sort of look a little more rational for a while. And if there was a good time to do it, now would be the time, right? Sometime between August and the next Fed meeting. But I do think that this market can continue going up and there can continue being more multiple expansion, but also on the heels of the strong fundamentals, which is something that Rick talked about. But Rick also, I guess, Kerry, is overarching thing is there's a lot of noise. There's always a lot of noise. And there's going to continue to be noise about tariffs, about inflation, about the Fed, and who knows what else. But the overall environment, when you block out the noise, looks pretty darn good because growth is holding up better than people thought.

So I can give you a couple of positives and then a couple of negatives. That's it? Just a couple positive? Well, I'm going to give you the big ones, the ones that I think matter the most. And on the plus side, what we have is the market being led again by the biggest tech and digital players. The idea that the market has really broadened is just not true. If you look at the gain since April 8th in the Mag 7, up about 50%. And Tesla hasn't really participated, Amazon, some, not as much. Apple had great earnings. You've got fantastic numbers from META, from Microsoft, even Google. And now you've got a huge positive, which is that if you're capable of playing ball with

government and coming up with some type of agreement, as NVIDIA did, then your problems can go away. So you have a dominant group of stocks leading the market higher, earnings dominating the earnings growth up 24% collectively for the Mag 7 versus about 10% for the market, and the ability to make a deal so that the problems go away. That's incredibly powerful. The idea that this is going to stop these companies, antitrust, anti-bonopoly, whatever China problems, they don't really have those problems. I'm waiting for you to get to one of the negatives. So now the negative is there is always something that brings it down, you know, deep sea when we suddenly heard that there was a way that somebody in China could create AI without

Nvidia chips. No one had really expected that the market took a big hit. Yeah, but for 10 minutes, for 10 minutes, and it was bought immediately. But that gives you, well, it gives you opportunity. When you have Nvidia, it went down, whatever, to 95, and now it's back up 80%. You get opportunities.

And to say that, oh, well, we're in an uptrend, it just goes straight up. No, there are these drops, and the drops are serious. 20% is terrible. Two different things. Saying you're in an up trend and suggesting that things just continue to go straight up, I think those are two different conversations. And I don't think that he was saying that in any way, shape, or form. But the fact of the matter is, if you look at both what he said, the technicals of the market, and you match the fundamentals to where we are. I would say that the market is in an up trend. We've got earnings, but it's driven by the top.

Remember that. It's really being driven by these big names. And there's a lot of trauma that's going on underneath. If you look at mid-caps, small-cap, I mean, look at any group of indices and they're poor. If you're staying with these top names, I think that you can make a case, it continues, and they carry the market higher. But you have to own them, but you just don't want to own five names or six or seven. No, but if you own a diversified portfolio. If you get, as I said, at the very outset of the show, the rate cut playbook within equities looks like it does today. The Russell is up two and two-thirds percent. that's a broadening confirmation for one day.

That's a confirmation of rate cut idea. You get a rate cut, now I'm finally going to get broadening. Not to say that a lot of money is going to come out of the mega caps, but if there's enough cash on the sideline, as reader suggests, then you win here and you win there, and maybe you'll win not everywhere, but a lot of places. Broadening would be healthy, right? broadening would be great to see some other sectors, some other size categories, start to carry

their weight. If we get a cut, that could happen. But like I said before, I don't necessarily think, first of all, I don't think that we need one in September. We're going to obsess over it until we find out. But I don't necessarily even think we need one. And I still think there's a chance that if stuff comes in hot between now and then, we may not get one. So the market is sure today. Why don't we need one? Why don't we just need one for needing one because we're just too restrictive? that they're stubborn. Sure. They're being stubborn in their restrictive stance.

That the Fed funds rate, you look at that versus where the two year is, you do have a slowdown and job creation. It's not like inflation is that much above target. It's not that much above target, but it hasn't moved down closer to target as they have wanted it to. And when you look at the spread between where the Fed funds rate is and where the two year is, it's about 75 basis points right now. So the market is saying we want at least one cut.

We want at least 25 bibs, okay? Back in September of last year, the two year was at 360 and the Fed funds rate was at 550. So that was almost a 200 basis point spread and they gave us 50. So I don't think they need to be that generous. And they don't have a precedent of being that generous and saying, you know what, the two years telling us that they want 50, we're going to give them 50. I don't think so. I think this spread signals that the market would prefer to have a cut.

But the cut itself, whether it's 25, 50, whatever it is, is really a signal that they're starting to ease, right? It's not so much about what's the number. Don't look at what the overall numbers are going to be. It's that they are starting to ease. And I think that there's a chance if the rest of this data comes in hotter than expected, there's a chance that they don't want to send that signal yet. They don't want to send the signal that, okay, now we're starting to normalize, especially if inflation starts to tick up.

We need rate cuts or now. Does this market need rate cuts? I think the market desperately wants a rate cut, desperately wants it. Does it need it? I want a lot of things, so I can survive if I don't get it. Yeah, I think that the market needs a rate cut to feel positive about itself. And the market is assuming right now, very much assuming that that's going to happen, and we're seeing the jobs number, which is really driving the decision today.

And those numbers are not getting a whole lot better. It doesn't matter who you put in charge. I think you'll get it. We're going to bounce. Carrie and Liz, thank you so much for being here post-9. Another big story today. Elon Musk threatening to take legal action against Apple over its app store rankings. Steve Kovac here with more on that.

Steve. Yeah, Scott. So just here from Elon Musk is that Apple is violating antitrust law by not ranking his XAI app as high as it's ranking ChatGBT. Let me give you a little bit of an explanation how this works. So there's this top free apps, of which, by the way, XAI is number five in that list behind number one, chat GPT. That's based on how many downloads an app is getting. Then there's some editorial lists that Apple editors put out there, like, you know, best apps

for Mother's Day or what have you. It is true. ChatGAPT is on some of those lists, but not all. But it is nothing to sneeze at being number five in the app store. That means there are a lot of people using XAI, despite what Elon must be thinking. And by the way, Sam Altman, Open AI CEO, is getting involved in this little TIF as well, kind of claiming that Musk is being hypocritical here because he also, according to Sam Altman, manipulates X to downrank certain competitors and people he doesn't like and things like that.

Those two billionaires have been sniping quite a bit. But I'll just point out this is a kind of a pattern we've been seeing from Elon Musk over the last year or so where he'd rather kind of sue his way into success. as opposed to winning on the merits. If he wants to be number one in the app store, he can just make an app that more people want to download, Scott. He sure can. We'll see what the next development and all of this is.

Steve Kovac, thank you very much. Appreciate the update there. We're just getting started here at post night on closing bell up next. The former Dallas Fed President, Robert Kaplan, is back with us. We'll get his forecast for rate cuts to cut or not to cut. That is the question. We'll get the answer next. To cut or not to cut or not to cut, that is the question. The market seems to have made its call.

Is it right? Let's ask Robert Kaplan. He's the former Dallas Fed President, Vice Chairman Goldman Sachs, and he is here at Post-Nine. It's nice to see you. Good to see you. I noted you avoided the incoming today in the presidential missive at Goldman Sachs. Congratulations. He wants cuts. He's made that clear. Rick Reeder sat with me not 15, 20 minutes ago and said Fed should cut. Way too restrictive. You don't sound like you're a that sold. I'd be leaning toward cutting in September if I were in my first. former seat. The part that I'm sort of the cross-currents I'm weighing, weak job market, and you've heard me say before, the headline unemployment rate masks a weaker job market than

appears, and the reason unemployment is so low is just lack of supply, but hiring is down to stall speed. That would move me toward wanting to cut. Also, you've got some disinflationary forces. The AI boom, big overcapacity. in goods, which I think was reflected today in the CPI, you got sluggish demand. And so all that makes me lean to cut. Why not? Why just lean? You paint a scenario in which you'd be like falling over to cut.

Here's the only thing I want to understand, and this is a sensitive topic, but I want to understand, is we're not through the setting of the tariffs. I think it's easier for businesses to process low to midteens, the little. a little harder to process. High teens, it's going to get divvied up among suppliers, maybe a stronger dollar, maybe some margin erosion, maybe some in pricing. I don't know how it's going to be split. And at the Fed, if you don't need to jump into that risk, we'll know a year from now how it was split. And so the weaker job market would push me to act, but if it weren't for that, I might want to be patient. Would you admit that the tariff sky is

falling calls that have been out there from people, that it's going to cause this inflation, that it hasn't materialized in a meaningful way to this point? I do agree with that. And I've been saying for quite some time, we're in a world of manufacturing and goods overcapacity. The inflation issue in the United States, and this morning confirmed it, has not been a goods issue. It's been a services issue. So yes, in that context, It makes me feel more confident that maybe after these tariffs get set, over the next year, we'll realize it's a one-time price effect, not persistent. It sounded like the Kansas City Fed Pres today was hold.

I mean, how in your environment, the one that you see, how can anybody be a firm hold? Let's not raise rates, not cut rates right now. The argument around the table for not cutting is the job market is still, what they're being swayed by is the headline unemployment rate of 4-2. They're saying, you know, yeah, hiring is sluggish, but we're in balance, and we still are above target on inflation. My counter-argument to that would be, I think the hiring market is much weaker and the job market is much weaker. You have to look more broadly than headline. But those that will counterargue are saying, we're still at full employment, you should be more patient. Okay. So you've stated your position that you're leaning if you were in your former seat.

I'd be inclined to cut. Okay. What will they do? What will they do in September? I think they will ultimately cut in September. The only thing that could derail it is if you've got a surprise in the job report early September. I don't expect that. The part that may disappoint people, this in my opinion, is not the start of a cutting. cycle. It is, we'll cut in September, and then you wipe the slate clean and take another six weeks to assess these cross currents, make a new decision in October and a new decision, or October, November, and a new decision in December. I think the markets have gotten ahead of that and are saying it's much more likely they're going to cut two or three times. And I don't

think it's as clear as that. They may wind up doing it, but they're going to have to feel their way through it. You think it could really be like 25, one and done for a while? The only reason why it would be if you saw that the weakness in the job market was overstated, I don't think that's going to happen, then they'll have to assess that for November. But is it whether it's going to be three? I think it's more likely to be two than three, for example, but I don't know. And so we're going to have to see. Now, one other comment I would make, a lot of people say, well, look at last fall.

They cut 50 in September. I wouldn't have done the last 25 in December. but they did a hundred basis points. But the difference was a year ago, we were at five and a quarter, five and a half. We had a lot more room. In my opinion, at four and a quarter, four and a half, I think you can cut down to three and a quarter, 350, but I don't think there's a lot more room to cut than that. And why do I say that?

I think the inflation rates around two and a half, two and three quarters, and the real Fed funds rate, in my opinion, is three quarters. So I think you got 75 to 100 basis points of room, whereas A year ago, I think you had more like 175, 200 basis points of room. Who would be the best next chair of the Fed in your mind? Because the pool's getting bigger. I think any number of the candidates who've been talked about, the key for the next chair, they have to have strong economic views on their own two feet.

They have to command the respect of the room. They have to be good at assembling a consensus. And I do believe they have to demonstrate. They can throw in new ideas, out-of-the-box ideas, but they have to be committed to the ethic of the Fed, which is independence from political influence and political considerations. But that's your own point of view.

That is my point of view. Because the president and other people around him may have a different idea. They may... You asked my opinion. Yeah. So that was my opinion. My opinion is, I think the country would be best serve

and all parties would be best served by someone who fit those characteristics. You worry that the Fed itself is going to take on a new dynamic, that the way, forget the independence of it. It could still be independent, but it could take a whole different look, could morph into something that's a little bit different in the way it operates now, if you believe some of the commentary out of the hill. So I'm not afraid of new practices, new frameworks, new ideas. I know there have been proposals about whether the presidents more fully should vote, other things like that.

I think those ideas could be constructive to debate. What I think the northern light, the true north for me, is the people around the table, though, have to make the decisions based on their own true beliefs about what's the right setting the Fed funds rate without regard to political influence and political considerations? New ideas, new frameworks, new processes. That's all healthy to have as long as you adhere to that northern light. What are you thinking about the changes at BLS and how that's going to influence the debate in the months ahead? You feel confident today that you'll be able to trust the data in the months ahead or not? Well, it's vital that we trust the data.

I know that, but do you feel like we can do that? Because it's so clear that we must that I believe that is what we will do. Now, should they be investing in new techniques, high-frequency data, too relying on surveys, all those, they should be re-looking at everything, of course. But you've got to be able to rely on the data. And one thing I learned when I first got to the Fed 10 years ago is don't overact. I got to lecture my first month. Don't overact to any single print.

It's distorted. It's backward looking. It's aggregated. It's going to get revised. Who gave you the lecture? Senior economist, who I think very high-live, and it was great advice, and that's still my observation. I always enjoy our conversations, and thanks for being here in person. Good talk to you.

That's Robert Kaplan, former Dallas Fed President, of course, Goldman Sachs Vice Chairman. Up next, 314's Warren Pies. He's standing by with his playbook as we head for another record closed today. He's here at Post 9 next. Welcome back. Stocks are heading for a milestone closed today. With the S&P looking to finish above 6,400 for the first time ever, NASDAQ also hitting a new high. For more on where stocks are heading from here, let's welcome in Warren Pyes. He's the co-founder of 314. Research, good to see you.

Good to be here. You downgraded equities in July. That's correct. Uh-oh. Yeah. I mean, to be, to give us a little bit of slack, we upgraded, we were overweight. It threw it from May. Last time I was here, I was pretty bullish in May.

And we went down to benchmark weight. And so we just told our clients, look, we've been following us. Then you're ahead on you. You're beating your benchmark. We downgraded in February, re-uprated in May. Now we're pulling back. I think tactically, it makes sense. Everybody's bullish today.

You've had a lot of guests that I don't hear anything but positives. Well, I mean, Rick Reeder, for example, he described what he thinks is an absolutely amazing investing environment. Yeah. I heard that. Yeah. I mean, I think that gives you pause? Well, we measure. sentiment objectively, but it does reflect what we're seeing in our objective indicators.

So we see sentiment is really stretched extreme. We want to fade that. It's a little tricky. Seasonally, we're going into a week period of the year. And, you know, one of the things that I talked about it last time I was here in May that really supported the market with these systematic buyers, so Vol Target, CTAs, and corporate buybacks. We're going in this period right now where there should be a seasonal dry period for corporate buybacks. We've had some a seasonal buying at the beginning of August, and I think people are starting to jump the gun in misinterpret that as this summer meltup that everyone wants to believe in. If people are so bullish and there are so many of the bulls, why is there so much cash on the

sidelines? Well, I think the cash on the sidelines honestly reflects the amount of fiscal spending that's gone on in the economy. I mean everything, we look at checkable deposits, you look at the stock market, you look at gold, you look at Bitcoin. Every asset has increased $100 trillion of wealth creation, the main assets that we look at. And it's really coming from the federal government running a 7% deficit every year on pro-cyclical. So I see that as a huge support to the market. We still have a $6,800 price target to the S&P at the end of the year. But I think when you're talking tactically, and I think Rick said this,

is you want to lean more on technicals and systematics. In our work, I think this is an area to watch for a pause. Well, because he talked about the technicals being great for the market. Yeah, I mean, we had a lot of great momentum signals. And we put those out in May when we upgraded stocks and went overweight. And those are still in place. That's like a 12-month signal. But you have to recognize that trees don't go to the sky.

Fair. These things pause. And I think, like I said, we're going to benchmark weight. If you're a client of ours and you followed our advice, I think you want to just neutralize your overweight and let the market come to you. No, I hear you. I'm not trying to pick on you like that at all, no. At all.

And some suggest, look, I'd love a pullback. and I would buy it. I mean, the Fed plays a role in this conversation, too, doesn't it? I mean, don't fight the Fed. They say that for a reason. For sure. You get more cautious and negative on the market when even, you know, Robert Kaplan, who isn't exactly, you know, Mr. Dove, is leaning towards a cut himself.

Yeah, and to be fair, we've been on three to four cuts all year. So, like, this is ebbed and flowed. Everyone's got, you know, different points of time. there at no cuts. Bank of America, no cuts. You get the big guys. Now they're all back on cuts. That's now getting priced into the market. So what comes next? That's the big question. What comes next? I think there is some concerns in my mind about the labor market and the growth story. And the market's kind of glossing over that in my view. What about areas you either want to be leaning into in the market or maybe taking some profits?

Well, I think what's relevant to today is I'm fading small caps in low quality. Oh, you're fading this big move today. This move today in small. caps, I'm not a believer in it. And I think that hedge funds got over their skis using small caps as a short that they use against these large cap high quality stocks. So that trade's probably going to have to digest a little bit. That's almost a 3% move today. I know.

And I would, if I have small cap exposure, I'd be lessening here. And if I was looking to put shorts on against my equity longs, I would be shorting the brussel here. Oh, interesting. What about the mega caps? Because the NASDAX is having a record high kind of day of its own. Yeah, I mean, I think you can't fade the move in the mega-caps. That's the one thing. I mean, they're like a perpetual motion machine, and so, no, I would want to be long,

the large-cap, high-quality stocks, and then short or underweight these low-quality stocks. Okay, so you'd still stay high up on the cap list, whether it doesn't necessarily have to be in big-cap tech. I mean, we've had industrials at near-record highs, financials near-record highs. Yeah, absolutely. I think that's the trade because the bottom line is when you zoom out as a macro investor, we're in a late cycle environment. So you want it in a late cycle environment, you know, recognize even with the Fed cutting, and that's what everything's about today.

Fed's going to cut. So we got a CPI report and the one thing that confirmed is tariffs aren't causing inflation, is a myopic focus from the market, rally everything that's supposed to work with a rate cut. And I think that narrative is going to probably fall apart. Man, I had somebody the other day sit right in the same seat telling me we're mid-cycle. So, I mean, the debate rages on. Yeah, I mean, it's always, those are, you're never going to find a winner in that debate. It's like, it's kind of like a little bit more art than science.

But in my view, the unemployment rate is tickling up. It's already troughed, and the Fed is trying to ease. So we're in this kind of weird cycle, but it's definitely late cycle. And that's why you're seeing things like Russell and that they've underperformed for years. You don't want to stick to that trade. All right. We'll leave it there. Warren, thanks. Good to see you.

Thanks. Warren Pies. Up next airline stocks. They're soaring in today's session. exactly why when we come back. moves in the airlines today. Phil LeBow joins us now. Phil, you don't, you don't see these kind of moves that often. No, no, no. Every once in a while, it's been a while since we've seen this. Take a look at what the major airline stocks in the U.S. have done so far today. And we haven't

even shown you the ones that are really soaring. We're lucky talking about American, Alaska, Delta, United. A couple of things at play here. First of all, the CPA data for July showed average Airfare's up 4% compared to just a slight decline in June. That's one reason why they moved higher. But now take a look at shares of Frontier, up 30% today. 30%. Why? Because Spirit Airlines issued a going concern warning yesterday.

That fuels a lot of speculation that if Spirit goes under, which is a possibility, you could see Frontier pick up a number of gates and greater more. market share in the United States, but it's not just frontier. Take a look at Sun Country, a Legion, JetBlue. They also have had a nice day as well. Speculation that as some of that market share goes up for grabs, these guys will certainly benefit. Bottom line is this, Scott, heck of a day for the airline stocks. Big, big, big gains today. Yeah, no doubt, Phil, thanks for bringing those to us, just huge gains. That's Phil Lebo. Still ahead. We'll run you through the key metrics to watch four when Corweave reports at the top of the hour. That's been a favorite

stock of late. We're back on the bell after this break. We're now on the closing bell market zone. CNBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus K Rogers getting a setup for Kava results in OT. Christina Parsonabalos is watching Core Weaves numbers as well. Michael, we're going to close above $6,400 for the first time ever to do. on the S&P, barring something completely unforeseen. NASDAQ's another new high.

The Russell's ripping almost 3% today. Where do you want to start? The market likes nothing better than to sort of dodge a bullet or to have something that they thought might be a challenge to be lifted. And I think even though the market was not really in deep anxiety heading into CPI, we were tensed up enough for the possibility that it was going to get in the way of the multi-sequence bulk case, which includes September rate cuts. So once that was removed, I do think that you essentially had both engines firing, which is rate-sensitive, small caps, risk-on type stuff, cyclicals.

And then, you know, the AI stuff is working because it just does. Meta gave people an excuse. So I think you can sort of agree that the market is giving you a very positive message while also saying you really have to believe things. There's going to be no economic price for tariff taxes or the idea that we had. this labor market slowdown and we're going to kind of get the good stuff on top of it. It's plausible, but I think you have to recognize you're paying up for a sequence of good news from here at these levels. No doubt. Back to you in a minute. Kate Rogers, tell us more about Kava. Hi, Scott. So analysts are looking for 13 cents adjusted on revenues of 285.6 million for the

second quarter. Same store sales, of course, will be key. They are expected to increase 6.1%. We'll be looking out for commentary around the consumer and value perception. All of that will be notable. The company, for example, just announced limited edition plushies that look like Labuboos rolling out this week while supplies last. They're inspired by the company's mascot, Peter Chip, as it tries to differentiate in this challenging market for the restaurants. Now, the company is on track for its third straight negative quarter in terms of stock performance. Generally speaking, the fast casual names really having a tough year to date. Kava is down around 26%. The biggest loser, Sweet Green, after another tough quarter last week,

that's down over 70% year to date. Chipotle, down. 29% and Shake Shack down around 15%. So we're watching out for all of those names. Back over to you. Okay, Rogers. Thank you very much. Very different story from a stock standpoint. Talk about Correweave, Christina Parts and Evel. It's up 250% since the IPO. 30% in just the last five days. Yeah. There's a lot of people are still bullish on the street for this and it's set for possibly another strong earnings beats. But investors might be more focused on timing issues rather than fundamentals. And what I mean by that, first is a recap. It's an AI infrastructure company that rents out Nvidia-powered servers to clients like Microsoft, and also has this

massive $4 billion Open AI contract, which should provide revenue visibility for this quarter. Analysts also expect another double-beat, digit beat, I should say. Nvidia also holds a 7% stake, making this a key player in the AI ecosystem. But this is the big, important part. Corey's lockup actually expires Thursday at 4 p.m., and it would free up about roughly 83% of Class A shares on Friday morning. And that's major potential selling pressure from insiders should they choose to sell. Plus, Scott, there's drama over their $9 billion all-stock deal for core scientific.

This is essentially the target's largest shareholder, 2C's capital, who is publicly opposing this murder. So that would add another wrench into this story. So while the AI story may stay strong and you've got Microsoft with leases, open AI, et cetera, the stock reaction may come down to these technical factors rather than just business momentum, Scott. Christina, thank you, Christina Parts of Nevelas. Got about a minute left. I mean, Corweave represents a part of this market that we've been following. No doubt. And by the way, the IPOs are going to keep coming, and we keep rolling to the new hot one. You got this bullish coin desk parent coming. It was upsized circle after reporting earnings for the first time, had a nice run, but then it is about to close like $25 off its high.

So it just shows you that you've got this high-velocity money surfing from one next hot thing to the next next next high. thing, it's just a phase we're at. And you have to be comfortable with bull market rules and the fact that they're pushing the fringe and getting maybe a little bit over-aggressive in spots, especially with crypto-related stuff, the ether mining company, all that stuff. It's sort of, you know, you have to kind of make your peace with it if you're going to get, again, the benefit of the rising time. Nice, thank you. The cheers, the whistles, they are all justified today, no doubt. We'll close green across the board.

New high for the S&T, new high for the NASDAQ into O-T.