Closing Bell - Closing Bell Overtime: Special Envoy Steve Witkoff On Iran-Israel Ceasefire; Vanguard’s Second-Half Outlook 6/25/25

Episode Date: June 25, 2025

Interactive Brokers’ Steve Sosnick and Invesco’s Brian Levitt break down the momentum and what could keep it going as the S&P 500 approaches record high. U.S. Special Envoy for Peace Missions Steve Witkoff discusses potential off-ramps to conflict in the Middle East and the state of the Iran-Israel ceasefire. PIMCO’s Pramol Dhawan weighs in on global markets and emerging risks. Vanguard Chief Global Economist Joe Davis lays out his midyear outlook for rates, growth, and asset allocation. Plus, Scott Cohn reports from Meta’s sprawling new data center campus in Louisiana, examining which states are winning the AI infrastructure race. 

Well, that's the end of regulation. Glauco's ringing the closing bell at the New York Stock Exchange. Deloitte doing the honors at the Nasdaq. Markets closing off their highs. Basically flat, it looks like, for the S&P. The Dow closing lower. The Nasdaq small gain. The Nasdaq 100, though, hitting an all-time high.

Again, chips having another up day with Super Micro, Nvidia, and AMD leading the gains. Nvidia hitting a new all-time high today as well. AMD now 29% this month. General Mills among the worst S&P performers after warning that sales could fall this year as consumers are spending less on snacks and tariffs raise costs. Tesla moving lower as the company posted another month

of steep sales declines. In the EU, new car registrations fell more than 40% in May. Paychecks posting its worst day in five years after a miss on earnings and revenue. The company also giving weaker than expected guidance. FedEx sliding after earnings guidance for the current quarter missed estimates and it was another big down day for Circle.

The stock off 10% today after falling 15% yesterday as investors take a breather from a stock that's rallied more than 500%. So maybe some profit taking here in the past three weeks since it debuted. That is the scorecard on Wall Street. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Well coming up, we'll get results from Micron Technology.

It's one of the hottest stocks in the market right now. It's nearly doubled off the April lows. And later, we will be joined by Steve Witkoff, Special Presidential Envoy for Peace Missions. He has been part of a key part of the ceasefire negotiations with Israel and Iran, so we definitely want to hear from him. That will be a big one. But first, a mixed session here on Wall Street with the Nasdaq tracking for its third positive be a big one. But first, a mixed

session here on Wall Street with the Nasdaq tracking for its third positive session in a row. First time since June 10th and as we mentioned, basically unchanged on the S&P. We're led by names like Nvidia and Strategy, Interactive Brokers Chief Strategist Steve Sosnick and Invesco Global Market Strategist Brian Levitt both join me here on set. What a treat to have you here in the studio with me Steve I'm gonna start with you. Have you been surprised by the market moves? We've seen this week, especially given the geopolitical backdrop. Yes and no I mean we didn't really react negatively to the geopolitics Morgan but we but we seem so it's sort of more of a speed bump than a

real reason to sell off and So it was sort of more of a speed bump than a real reason to sell off. And whatever doesn't kill this market makes it stronger. And so when we didn't, when oil stopped being a problem, something for us to worry about, then we can start to, you know, everybody, you know, please resume rally time that you were involved in before. It is pretty incredible, Brian, because stocks have climbed this wall of worry. We're just about 1% from an all-time high for the S&P, but very much range-bound.

It really does not seem to want to break out here. What's the next catalyst? I think the next catalyst is going to be some positive developments on the policy front. I still, I think most of us expect that where we're going with tariffs will be incrementally better than what most had feared. We will see some legislation in

Congress that could provide modest support to the economy and ultimately I would expect at some point the Federal Reserve to lower interest rates. So it's not a ideal macro backdrop. Things are slowing a bit here but the market already paid attention to that right. The market already went down 20% earlier this year, expecting this soft patch. From here, I would expect the economy to muddle through and then some policy support to lead us into next year. So recession fears have come and gone then for this market?

For the most part, I mean, if, yeah, actually, yeah, I don't know why I'm saying for the most part. If you were to look at corporate bond spreads, where they are right now, you would have very little concern about recessions. In fact, they have tightened very significantly. So what we saw, you know, really in early April with volatility spiking, credit spreads moved modestly from tights, never even got back to average.

That's not consistent with a recession. Industrials performing well year to date. That's not consistent with a recession. And you know, look, it's just not an over levered, over excess economy. So I suspect this goes on for some time. Okay. Well, we mentioned micron results. We have those earnings. They're out. Christina Parts and Avalis has the numbers for us. Hi, Christina. Hi, Morgan. A dollar 91 adjusted for earnings per share, which is higher than what the street anticipated of thirty one cents higher on revenues of nine point three billion. Those estimates are also higher than by side. So that's why you're seeing the stock spike seven percent. Same thing for Q4 guidance

coming in also stronger. Two dollars and fifty cents. The street was anticipating two oh one. So big beat there on Q4 revenue guidance of 10.7 billion. The same thing for both Q3 and Q4 non-GAAP gross margins, both coming in higher than what the street anticipated. There is a good quote in this press release right now coming from the CEO saying that they had all-time high DRAM revenue, including nearly 50 percent sequential growth and high bandwidth memory,

so that's used for a lot of AI infrastructure. Data center revenue more than doubled year over year and reached a quarterly record and consumer-oriented end markets that would include PCs and smartphones, also had strong sequential growth. So this is a great barometer for the chip sector, shares are up 7 percent. Morgan?

All right. Christina, thank you. Steve, I'm going to come to you because Semi's have been on a tear here. They are an economic barometer. They're also a barometer and we just heard it from Mike Rahn with the results on this AI trade. Is that alive and well? Does that continue to have legs here? It seems to as long as they can post the guidance that that they gave just now. I mean that to me it's more about guidance because when you let off the show you you had a series of stocks that were down all because they did not give good guidance. They tended to be more consumer oriented which is which is I think I'm going to say it's a little bit more of a risk than Brian saw it as. But the semis have been powering the markets this whole way up. And if they can continue to offer the kind of guidance that allows them to keep running, well then the run continues.

And the market needs this to continue because we're really, I know it's broader than it seems, but it's really driven by semis. It's Nvidia, it's AMD, it's Micron, and the whole AI theme and the semis are at the root of that. Yeah, stablecoin seems to be another theme that's emerging here too. And we've been talking about it. Mike Santoli has been tracking it. Some of the frothiness we're seeing in the market. I mean, when you see some of the moves like encircle and some of the other IPOs,

that signals what? It signals that customers are looking for volume, volatility and are willing to speculate. And I wouldn't say we're at full flight to crap mode yet, but we're definitely in a situation where customers are looking for situations that are moving. And once something gets momentum, that momentum lasts longer and shoots farther than one might expect. Circle was certainly the beneficiary of it.

It was up almost tenfold at one point from its initial IPO price. It's given back some of it, but that's still a phenomenal rally, and it shows you how much people are willing to speculate and how much they're willing to chase momentum. And quite frankly, it's working for them, so it's going to work until it doesn't, basically. Brian, where do you see opportunities right now? What would you be buying right now, given what we're seeing? I still a quality focus.

It's an environment where leading indicators are pointing lower in most of the world. And I mean, in essence, that's just nobody really wins in a trade war. So when you get into that type of an environment, you need a better policy mix. That's why investors have looked more towards Europe, China, where policy could be more stimulative. In the United States, we'll ultimately get there. I think that's the thesis we will ultimately get there.

But until you get there, until you see a turn in leading indicators, you wanna focus more on quality. So coming into the year, the hope was to Steve's point, a broader market. And that was because growth was resilient. Inflation was at the upper end of the comfort zone, good nominal growth, broader markets.

Right now, what we're dealing with as the economy softens is again, a move towards quality. And that's what's been out performing. All right. Brian Levitt, Steve Sosnick. Thank you both for joining me here on set. Thank you. Great to have you. Great to see you.

In a mixed session for stocks, but after a very strong start to the week, let's turn to geopolitics because that has been something that's been driving the markets this week. After nearly two-week battle, Israel and Iran agreed to a ceasefire earlier this week with the help of the US. So joining us now is someone who has been integral to helping broker the ceasefire and to negotiations that followed with me now, Steve Wittkopf, the president's assistant and special presidential envoy for peace missions.

Steve, welcome to overtime. And I do believe this is your first time on CNBC since you began serving in this administration. So welcome in that capacity as well. Thank you, Morgan. Thanks for having me. My pleasure to be here. So let's just start with how this ceasefire came together and, perhaps just as importantly now,

how you ensure it persists. Well, as the president said, it's the 12-day war. We achieved our objectives in that period of time, as did Israel. And the president called up the Israelis and called up the Iranians. And we have a ceasefire that did not turn this thing into the endless war. It was incisive, and we achieved everything that we wanted to achieve here and there's no need for the conflict to keep on going. What are the next steps for diplomacy with Iran?

I would say, Morgan, that we're hopeful for a comprehensive peace agreement. We were hopeful when we first started negotiations. It didn't quite work out that way, but today we are hopeful. The signs are there and we're hopeful for a comprehensive peace agreement. What are the signs? Well, you know, we're having conversations with the Iranians. There are multiple interlocutors who are reaching out to us. And I think that they're ready.

That's my strong sense. So let's all have some hope that that's what we achieve, because it will be a renaissance for the GCC, for the Iranians as well, for the whole region. And it'll be good for the world. How much do the Abraham Accords that were established in the president's first term now lay the groundwork? Is that the template and does that expand? Well one of the president's key objectives is that the Abraham Accords be expanded, that

more countries come into it and we are working on that on my team and in coordination with the Secretary of State and the entire State Department. And we think we're going to have some pretty big announcements on countries that are now coming into the Abraham Peace Accords. And we're hoping for normalization across an array of countries that maybe people would have never contemplated would come in. So we're excited for that prospect.

That will also be a stabilizer in the Middle East. The president at the NATO summit today said a couple of times, basically, that this is not about a new nuclear agreement. I think getting to the point that you just made about a comprehensive peace agreement and that being the broader goal here. That being said, the Iranians taking a crack at nuclear enrichment again, is that the red line? That's for sure the red line, yeah.

That's always been the red line. Enrichment is the red line, and beyond enrichment, weaponization is the red line. We can't have weaponization. That's just, that will destabilize the entire region. Everyone will then need a bomb, and we just can't have that. This is going to be good for the entire region. We had that DIA leak that said the U.S. strike delayed the program, Iran's program, by only months, not years.

What is the latest battle damage assessment and your response to that leak? Well, first of all, the IEA thinks the exact opposite of that. The Israelis think the opposite of it. Our CIA thinks the opposite. So it's just preposterous. The Israelis did plenty of damage before we came in, and when we came in, it added, it basically created lots of certainty around eradication of their ability to weaponize and to enrich.

There are three nuclear reactors at play here. Two are in the tons, one above ground, one below ground, then the Fordow nuclear reactor, which everyone's talking about, that got hit with 12 bunker buster bombs, and then there's Esfahan, where we have, there was a conversion facility, and the Iranians had announced that they were creating another enrichment reactor down below. Every one of those sites was hit by us, either with bunker buster bombs and in the case of Esfahan with I want to say 30 Tomahawk missiles that were fired from one of our submarines.

And it's eviscerated that entire program. The conversion facility alone, you can't begin an enrichment process without having something that processed with their with the gas that begins in the conversion facility and you can't successfully weaponize without that conversion facility metallicizing the material molding it into a round ball and putting it into the weapon into the the actual bomb so that's been eradicated and much of the enrichment potential has been eradicated too. All the different sources by which you might get to a weapon have been

eradicated and now the issue and the conversation with Iran is going to be how do we rebuild a better civil nuclear program for you that is non-enrichable? Very, very similar to the enrichment, to the non-enrichment program that is in the UAE today and That many many other countries operate you don't need enrichment to run a nuclear energy program What will that? Entail does it is that going to mean officials on the ground to permanently monitor and make sure that this is not crossing The line into an enrichment situation either secretly or openly, as we've seen in recent years? Absolutely. It will be robust observation,

and the Iranians accept that. We've talked about it. So hopefully, if they've got nothing to hide, then they're not going to have any issues with robust observation. The IEA right now, under Rafael Rafael Grossi has been doing that observation. It may be supplemented by us. But I think what we really want to do is get everybody to understand that this is better for the region. This is better for the economic progress of all the nations in the region, including Iran.

So this is a good thing. This is a positive thing for everybody. We just don't need to have conflict in the region, including Iran. So this is a good thing. This is a positive thing for everybody. We just don't need to have conflict in that region anymore. The president lifted and the administration lifted some of the sanctions on Iran to be able to ship crude oil to China yesterday as well. Why was that necessary? And how does that perhaps create the beginning

of a pathway towards this more prosperous Iran that you speak of? Well, I think it was a signal from the president. He's got this uncanny ability to take the temperature of how people are feeling about certain things. I think this was a signal to the Chinese that we want to work with you, that we're not interested in hurting your economy.

We're interested in working together with you in unison. And hopefully that becomes a signal to the Iranians. So I think it was a great decision. And I'm not sure if it was unexpected or not, but I have come to expect President Trump doing these sorts of things that people look at and say, wow, that's a pretty smart, prudent economic move. We see so much money, so many investments, including by American companies going into the region more broadly. Right now, what is the message to some of these business leaders in corporate America

as they are looking to make these investments, as you do have countries in the region looking to diversify away from oil right now as they navigate the ceasefire in a region that historically has been very volatile. It's a very good question, Morgan. I speak often about this topic. I believe that the GCC, particularly when this, when we get this peace agreement, there will be a renaissance there. It will be an upward move in almost all asset classes.

And why? Because you will not have to underwrite war risk anymore in that region. Right now, it's very, very difficult to get the type of senior debt, senior credit that we get, that you can get when you're doing risk projects in the United States. That senior debt, that senior credit is going to come into that marketplace, the GCC, when there is no war risk to underwrite. Right now, it's been very, very difficult for credit to play in that marketplace. And so once you create that opportunity, it's going to be an upward trajectory for almost

all asset classes. And I think you're beginning to see some very, very smart operators' position for that upside opportunity there. And since I know you have been critical to negotiations in the Russia-Ukraine war as well, what is the read through of everything we're seeing play out in Iran in real time to Russia? Well, first of all, I think that situations like this,

where you get a president who implements a battle plan strategy as impeccably as he did, it was impeccable to watch it. It was my privilege to watch the way he oversaw the entire process and the way his entire team worked. When you can come in and out of a conflict, achieve your objectives, not fight the forever war, but do what's necessary

at that moment. It was necessary and we did it. I think that it's uplifting for all of the world. And I think when you see the hopefulness that is now emanating as a result of what's happened here, I think that may well gravitate towards Russia and Ukraine. That's what we're hopeful for. We're hopeful that people look at what happened in Iran and say, you know what, we want a part of that sort of peace process as well.

So we are hopeful that this will lead to some very, very good things happening in the Russia-Ukraine resolution. Steve Witkoff, thank you so much for joining me today. Appreciate it. Thank you. Thank you. My pleasure. Well, the buy America trade seems to be back. With the S&P 500 rallying more than 10% from the April lows, getting very close to another record high.

But with the tariff deadline looming for two weeks away, should investors look elsewhere? Coming up, we will ask the head of PIMCO's emerging markets team where he sees opportunity right now. Overtime is back in two. Welcome back to Overtime, a long list of new highs today. Nvidia up 4% and a big reason the Nasdaq managed to stay in the green.

Many of the other names which hit highs this morning pulled back and actually closed negative, including Netflix, IBM, and Oracle. Also new highs for some names which have been on huge runs, including Palantir, GE, Vernova, and Coinbase. I feel like I say the same names every day. The S&P 500 is up more than 8% since the start of the quarter.

It's on pace for its best two-month performance since 1997. But despite those gains, international markets are still outperforming here in 2025 so far. The emerging markets ETF, EEM, is up 15% year-to-date and the European stocks 600 is up nearly 6%. Will the international markets, or outperformance I should say, continue into the second half? Well joining us now is Pramil Dhawan, the head of emerging markets portfolio management team at PIMCO.

It's great to have you back on. Let's start right there. Does outperformance continue? Yeah, we think it does, Morgan. And we think the outsize gains in emerging market equities and fixed income, as well as the non-dollar European equities and fixed income, was set to continue into the second half of the year.

And really what's been driving that outperformance has been the capital reallocation story. So capital being pushed away from America into the rest of the world where there's larger fiscal stimulus, some of it due to defense spending and infrastructure spending. But really that's going to be driving fundamental growth in European economies and emerging market economies. And that's really pushing equities to record elevated levels in emerging markets. And we think that that continues and the pressure of a weaker dollar and the converse to that is stronger emerging market countries. What that's creating is effectively a disinflationary backdrop for the rest of the world.

That's allowing central bankers in emerging market economies to cut rates more aggressively. And we think we're just at the start of what can be a multi-year virtuous cycle where central bankers can lower rates. They can really focus on growth versus inflation. And this month alone, Morgan, just for a statistic, the number of emerging market central bankers that are cutting rates jumped from 28% of countries to over 60%. And that's emblematic of us being in this virtuous cycle. So you expect disinflation to continue to set into emerging markets in large part because

of a weaker US dollar, and that therefore speaks to the divergence we're seeing between the Fed and so many other central banks who are cutting right now. Yeah, that's right. And we think we're just at the start of this. This is early innings. The U.S. equities are a couple of points higher, but in non-dollar terms, they're substantially underperforming European equities and emerging market equities. And really that's the story.

It's a huge amount of capital reallocation that's going on, diversification away from the US into the rest of the world. And we think this is a very target rich environment, whether it's an EM or international bonds, there are great opportunities outside of the US that command attention for investors that are going to allocate capital to these against the backdrop of really very low ownership. And that capital flow is happening very quickly and that's driving asset prices forward.

And that's gonna create this virtuous cycle allowing central bankers to really focus on growth and that will feed into this positive feedback loop. How much do trade deals and trade negotiations and the tariff backdrop matter to this investment thesis moving forward? Yeah look July the 9th is an incredibly important day with the termination of the 90-day trade window that we have. We'll see what the administration decides to do, whether they decide to re-up

and roll it a little bit further or negotiate and cut some deals ahead of that. I think trade is really at the centre of emerging markets investment performance. But for the US, they have to make an important decision on what they want to be able to do in the message they want to be able to send to the rest of the world. Right now, they've weaponized effectively their current account. 899 in the tax bill is effectively doing the same on the capital account as well. That serves to discourage inward investment to the US. So that investment has to find a home and it has to find a home somewhere.

And just given the under ownership of emerging markets markets a lot of that's finding its way to EM equities and EM fixed income. Okay Pramil Dhawan thank you for joining me. Thank you. Well broader markets getting so close to all-time highs today the Nasdaq 100 actually hitting a record before pulling back. Up next Mike Santoli will look at what often happens when markets hit new highs and as we head to break. Look at the stocks in companies exposed to New York City real estate. They're moving lower as Zoram Mamdani won the Democratic primary for mayor. A key part of his platform, freezing rents. Over time we'll be right back. Welcome back as the S. and P. five hundred hovers near its former high could indicate more gains in

the future well let's bring in senior markets commentator Mike Santoli for a look at what history is telling us Mike. Yeah Morgan and looking in particular at a couple of historical precedents that most resemble the way that the stock market is

acted in this last stretch of the year. Well let's bring in senior markets commentator Mike Santoli. Yeah Morgan and looking in particular at a couple of historical precedents that most resemble the way that the stock market is acted in this last stretch of time- bespoke investment group has a tool it's called

haystack you can kind of compare. Current indexes with what they most look like from the past and- currently you see here this is- today's market going back into last year. And this is nineteen ninety eight ninety nine that's when we also

had. One of those near bear markets that I've been talking about for months it was down market going back into last year and this is nineteen ninety eight ninety nine that's when we also had one of those near bear markets that I've been talking about for months it was down twenty percent intraday it was due to some of these exogenous global fears hedge fund liquidation things like that and a very rapid return to

the old highs that obviously was positive nineteen ninety nine was one of the not only most bullets but most unhinged bullish years ever not to say that this indicates were in for something like that but the one of the not only most bullish but most unhinged bullish years ever not to say that this indicates we're in for something like that but the nature of the quick drop and rebound at least echoes with what did happen back then take a look at another one 2018 into 2019 this was the sort of trade war slash the Fed is too tight pull back in the last quarter of

2018 and then again a near V bottom just like we got this time and it is looking somewhat similar there you did have a kind of an upward grind to the remainder of 2019 at that point continuing to make new ties I don't want to say it's universally positive though Morgan it also kind of resembles periods of 2001 which was a bear market and did not actually have a sustained uptrend and then some more middling the the the the

the the the the the the the the play out here in real time. And I realized there was some different factors back then, but also some similarities too, including the same president and tax cuts in the mix

and other policies to stoke economic growth domestically. And a drum beat that that was arguing that the Fed should be easier than it was. Yeah, there's no doubt about it. Now we were at a different point in a cycle probably back then. We have started to see the unemployment rate leak higher. I do want also point out that you know the starting points vary a little bit they're kind of matched up at the lows and then it shows you what

happened before and after but yeah there's no doubt it's a kind of entering resemblance I mean the market has these similar rhythms even when the specific circumstances are different it's pretty incredible we're halfway through 2025 already we'll have to see what the other half brings. And we'll see you a little bit later in the show as well. So Mike Santoli, thank you. Coming up, Fed Chair Powell, mostly dodging questions about the direction of interest rates

in two days of congressional testimony. But several Fed officials have been hitting, hinting cuts could come sooner rather than later. However, our next guest says higher rates are here to stay. There's some nuance to that argument. Plus a preview of our top state's rankings. Data centers likely to play a big role as states try to lure those big projects.

But you've got to have power too. That's why we've seen huge gains recently in power companies. Oklo nearly doubled in the past three months. Over time, it's coming right back. Ashen, the Dow and S&P 500 both closing lower gains for the Nasdaq composite and for the Nasdaq 100, which did hit a record earlier in the session. NVIDIA was a big boost to the Nasdaq,

up nearly 4 percent hitting an all-time high itself. It's the first record level for NVIDIA since January. Shares of Micron also higher after its results, just a little bit earlier here on overtime. Earnings and revenue beating expectations, guidance for the fourth quarter also better than expected for profit sales and also for gross margins. You can see those shares up 4 percent.

Don't miss an exclusive interview with Micron CEO. That is tomorrow at 9 a.m. Eastern on Squawk on the street. But as the S&P 500 approaches its first record high since February, some investors are betting rate cuts from the Fed will help propel stocks to new highs. Is the market getting ahead of itself? Well, joining me now is Joe Davis. He is Vanguard's global chief economist. He's the global head of the investment strategy group.

Let's start right there, is it? I don't think so. I mean, I think we have the expectation of some Fed easing in the back half of the year. Clearly we heard Chairman Powell talk about awaiting C mode. I think that makes sense, but we continue to expect a modest further coin

in the labor market. And I think once we see that, I think it'll be appropriate for the Fed just to take their foot off the break a little bit. That said, there's been a lot of focus on the fact that the yield curve has been steepening and the idea that part of what's driving the bond market, particularly on the longer end,

is fiscal policy and other dynamics rather than the Fed itself. So if that's the case, should we expect higher rates for longer? Well, that certainly has been more of a secular theme from Vanguard. For roughly two years, we thought both where the Fed in the long run would be as well as just average treasury yields would be higher today than where they were just two years we thought both where the Fed in the long run would be as well as just average treasury yields would be higher today than where they were just two years ago in part because of what's called our structural deficits, which mean they're compounding consistently

over time. And we've seen nothing that really changes that sort of thesis and outlook. It doesn't mean we're going to have alarming rises in interest rates, but the days of where we were four or five years ago, we were of high conviction that we have left that world, and I think you're seeing greater appreciation for that. So what does that mean in terms of how you should invest and think about investing in this environment? Well, I think, again, what was clearly at the beginning of the year, and I think the

dynamic still at play, is that you have an economy that remains fairly resilient, which is actually pretty remarkable given the headlines we've had. You have greater support from fixed income, just from an income level and a carry level, regardless of what the Fed does in the back half of the year. And then you have an equity market. I've been encouraged to see some of the broadening outside of technology, which has been just a V-shape one way for the past several years. So I think that's, I think I would say at the margin, you know, fixed income is compelling. And then I would be looking outside of tech, not because tech

is in a bubble, but rather if this is an enduring expansion of the equity market, we're gonna test new highs, we got to see a broadening in participation in other sectors. We have a White House that says there's some trade deals in the wings, so they're looking to get through this reconciliation bill in Congress. We're two weeks out from the self-imposed tariff deadline. How much does that factor into your outlook in the second half of the year? Certainly tariffs and the uncertainty of the tariffs themselves and where we land

is really been the biggest factor in moving some of our growth expectations, say for US GDP. We have an assumption that the tariff rate at the end of this year will be in the low teens, which is, you know, say 13%. That was well north of the 2 percent we had last year, but it's certainly lower from where we had a liberation day and some of those announcements.

So we're expecting a little bit of choppiness in the labor market because of that uncertainty tax, as we call it. I think we saw a stalling in investment and hiring for a time. The trick will, and that I think then introduces the Fed in the play. But again, unless we see a wild shift further in tariff rates, it will not be enough to derail expansion this year. Interesting. Okay. We'll be watching.

Joe Davis, thank you for joining me, Vanguard Global Chief Economist. Thanks for having me. Well, it's time now for CNBC News Update with Kate Rogers. Hi, Kate. Hi, Morgan. CIA Director John Ratcliffe just issued a statement that credible intelligence indicates Iran's nuclear program was severely damaged in the U.S. strikes, that key facilities were destroyed and would have to be rebuilt over several years. That echoes comments from the president earlier today when he disputed news reports that an

initial U.S. assessment of the strikes showed limited damage. After a months-long crackdown and pledges of deporting the worst criminals, the Trump administration has arrested just 6 percent of undocumented immigrants already known to ICE as having been convicted of murder. According to internal data obtained by NBC News, ICE arrested only 752 from October to May. In September, the agency told Congress it knew of more than 13,000 who remained at large. DHS recalled the data obtained by NBC inaccurate.

And the U.S. will no longer help fund the Global Vaccine Alliance, or GAVI, until it has quote, re-earned the public's trust. Reuters reporting, in a video shown today at a GAVI fundraising it has, quote, re-earned the public's trust. Reuters reporting in a video shown today at a GAVI fundraising event, Health Secretary Robert F. Kennedy Jr. accusing the organization of neglecting vaccine safety. GAVI said that it acts in line with World Health Organization guidelines.

Morgan, back over to you. All right, Kate Rogers, thank you. We heard similar comments about nuclear site damage from Steve Witkoff just earlier on the show as well. Well, soaring demand for AI and data centers could be a deciding factor in this year's top states for business. Isn't that right, Scott Cohn? It is right, Morgan Brennan, and it's not just demand for data centers.

More specifically, it's demand for the stuff that data centers need. That's things like space, lots of space, and huge amounts of electricity. We will tell you where Meta landed for its biggest data center yet. Wait till you see this place. It's coming up on Overtime. Welcome back to Overtime. NVIDIA shares closing at a new high today. One of the top performers in the S&P 500 after loop capital hiked its price target on the stock to $250 a share from 175, citing a strong outlook for AI data center spending. Well, that helps semiconductor stocks. They've been outperforming the broader market

and the tech sector. Meanwhile, that data center demand could be a major factor in deciding this year's top states for business. It's that time of year. Scott Cohn is in rural Louisiana. He has the details, Scott. Yeah, Morgan, when we choose our top states for business, we look at things like grid

reliability, business friendliness, and the availability of shovel-ready sites like this one. We will reveal our top states for business coming up in a couple of weeks, but we can tell you that when Meta had to choose a site for its biggest data center yet, by far, it landed right here in Louisiana. The site is massive, best viewed from the air, 2250 acres, enough to cover a big part of Manhattan. Rachel Peterson is the VP in charge of data centers for Meta,

which chose Louisiana for its main artificial intelligence hub. We looked at finding very, very large contiguous plots of land that had access to the infrastructure that we need, the energy that we needed, and could move very, very quickly for us. Louisiana did just that. Susan Bourgeois is secretary of economic development. As barriers arose in the project, we're eliminating. But this project will create just 500 permanent jobs, even at the height of construction, it's just 5,000.

Yet, Louisiana is giving Metta a rebate on potentially billions of dollars in sales taxes. A CNBC investigation just last week found those sales tax breaks increasingly popular. Like most states, Louisiana can't say how much it will cost. This wasn't about what the state would win or lose from just that one isolated sales tax.

This was about we want to compete with Texas. We want to compete with Mississippi, Alabama, Georgia, South Carolina. And then there's the energy. Local utility, Energy Louisiana wants to build three power plants just for this project. Worth it, says the CEO. With this announcement, it says we're open for business. We believe this is a foundation upon which we can build upon and attract more technology to the state of Louisiana. And bring more vitality, I should say, to a really impoverished part of the state,

in fact, one of the poorest places in the country. So they're excited about it here. But there are concerns, particularly about the power demand. You can read about that and more about our study and follow our Top States journey at topstates.cnbc.com. Morgan? When we're talking about rural Louisiana or talking about some of these other areas, we're seeing these big data center sites be picked. You're talking about places where maybe there's not a lot of people but there is a lot of potential job creation at least relative to the

population centers that exist. So I'm curious what it means from a job creation standpoint and because you teased it I'm also curious about power demands now. Sure, we'll take the job piece first. Yeah it is only 500 jobs. This site the state actually purchased about 20 years ago for an auto plant. That would have been a whole lot more than 500 jobs. We spoke with the governor earlier today and he said, look, in this area we would take five jobs. 500 jobs is fine. It is absolutely worth it, he says. It really brings development to a part of the state that is very, very rural. There's not a whole lot here, and that's why it's attractive for something like a data

center. As for the energy piece, yeah, there are concerns about that. As I said, energy, the utility here is going to build three power plants. They're still seeking regulatory approval to do that. There are some groups here, a group called Alliance for Affordable Energy is worried that it's going to destabilize the grid in a state that does not have a perfect record when it comes to grid reliability. But the utility says it's actually going to make the grid more stable by bringing on more

power. And even though the utility is going to be spending some $3 billion on this, with Meta only picking up a small fraction of the cost, they say that it will ultimately lower people's electric bills. We will see. That's part of the gamble here. Scott Cohn, thank you. Yeah, it looks like Richland, Paris, 20,000 people. So significant.

Scott Cohn, thank you. Speaking of AI data centers and chips coming up, Mike Santoli looks at what the outperformance of semiconductors over home builders can mean for this market. And investors are having a big appetite for shares of yum brands today. JP Morgan upgrading the owner of Taco Bell, KFC and Pizza Hut to overweight from neutral citing strong free cash flow and unit growth and its focus on technology investments. You can see those shares finished up 3%. Stay with us.

Welcome back to overtime. Check out shares of AeroVironment taking off today. The military drone maker reporting much better than expected profit and revenue. William Blair's analyst predicting shares will fly even higher, citing a strong outlook for foreign sales. The but as we saw today with NATO in Europe and elsewhere as well. Well up next, Mike Santoli breaks down the relationships between some key sectors and what they could be signaling about the economy and what it means for your money. Welcome back. Before we go, let's bring back Mike Santoli for a look at what the market is saying about the economy by looking at some of the key sectors. Mike. Yeah, in fact, we'll go back to a touchstone of mine, which is home builders versus semiconductors. And this is a five year chart meant to show how they've really moved in sync for much of this period. Both kind of had these structural demand stories that played out over multiple years.

You do see some divergence now. Obviously, housing has been struggling here. A lot more existing home supply has really pressured the new home builders. As you see, though, semiconductors, mostly thanks to Broadcom and Nvidia, and of course, Micron is going to participate, has rebounded more strongly. I still think semis have more to prove here. They're still kind of just up to that level. That could be the top of a range. The equal weighted version of the semis doesn't look as good, but it's suggesting that there's a little bit of fraying around those secular stories, at least when it comes to the rate

sensitive home builders and broader housing sector. Now take a look at gold versus financials. So it's sort of paper money versus metal. And again, over the last couple of years, we kind of moved in sync, largely speaking. And then we got the scare after the tariff bombshell and we diverged there, massive bull run in gold. It still looks like, obviously, a pretty well-positioned chart.

Financials got that scoop lower, but now recovering. So just a little convergence there is what it more looks like as opposed to it being a zero-sum game between those two groups, Morgan. Yeah, and of course we need to keep an eye on financials, especially banks, given the Fed meeting about possible deregulation and bank balance sheets. We got the Fed stress tests in this hour on Friday as well. I just want to go back to the home builders though. We got pending home sales tomorrow. The housing data lately, it's not been great. We talk about the risk of inflation from tariffs, but should we also be talking about the possibility now, finally perhaps, of deflation from housing?

Yeah, I mean, it's certainly no longer a source of upside to the inflation gauges. Now, it's more rent that matters for the official inflation numbers when it comes to residential but even that is softening up so I do think that's a kind of a good news through by way of bad news story I don't think inflation is coming from there- in general

inflation is kind of settling around you know the low twos- or thereabouts in terms of PC inflation we're going to get PC inflation also. Coming up soon and all of that fits into this idea that all else being equal- low twos or thereabouts in terms of PC inflation we're going to get PC inflation also coming up soon and all of that fits into this idea that all else being equal the Fed is leaning to to cut rates again pretty soon maybe not soon enough for some but markets pretty confident

in September. Okay, Mike Santoli, thank you. Let's get you set up for tomorrow's trade on the economic calendar weekly jobless claims the final reading of Q1 GDP made durable goods orders and may pending home sales on the earnings front as well. We're gonna get results from the Cormac in the morning and then Dow component Nike right here on overtime tomorrow. Mixed day for markets and consolidation that does it for

us here at overtime fast money begins now.