Closing Bell - Closing Bell Overtime: Treasury Secretary Bessent On Trade With Canada, China and Europe 6/27/25

Episode Date: June 27, 2025

Treasury Secretary Scott Bessent live from the White House lawn on pulling out of trade talks with Canada, the state of China rare minerals deal and if he would replace Powell as Federal Reserve Chair. Plus, S&P 500 and Nasdaq record closes—where do markets go from here?

Well that's the end of regulation. New York Life Investments ringing the closing bell at the New York Stock Exchange. Footsie Russell doing the honors at the Nasdaq. It was a record day on Wall Street. The S&P 500 and the Nasdaq both hitting new intraday highs and now closing at new record highs. But they did fall back midday after the president said he would end all trade talks with Canada. It was the first record for the S&P since February. It was the first all-time high for the Nasdaq composite since December.

The Dow, though, sitting out this new high party. Industrials and Staples were your winners today. While energy lagged for the week, tech was the standout. That rallied nearly 5%. Some of your movers today, Nike. That was the S&P leader on the back of better than expected earnings and guidance arm in the green again today that was up 13% this week circle another big decline it's now off 25% in five days but still so high off of those IPO levels just a

couple of weeks ago and some of the recent high flyers and phase coinbase and Palantir all among the worst S&P performers today. Well that's the scorecard on wall street. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Fort is off today. Coming up on overtime, wow do we have a big hour for you. Treasury Secretary Scott Besson is joining me in just a couple of minutes. President Trump announcing he is calling off trade talks with Canada. We're gonna ask about that and many other trade topics. Plus his name being floated in the Fed chair sweepstakes. There's a lot to get to there. But that trade news killing the markets highs closing well off this morning's records.

Let's bring in Mike Santoli for more on today's market action. I mean other than the Russell 2000 though Mike we still closed in the green. We're still higher on the week. Stocks still continue to mount this wall of worry. What's the takeaway? Yeah there was a final burst higher in the big cap indexes that did leave us not really terribly far off the day's highs. You know we are still working off this reservoir of anxiety that built up and got very deep around the time of those early April tariff panic lows. I still think you can make the case that large institutional investors have not really caught the move. They probably are better to be buying and adding exposure than selling it. And as I was just mentioning, you come to this place where you've round tripped in about four

plus months in the S&P 500. Earnings forecasts are higher than they were then. Yields are lower. The Fed's closer to cutting rates. All these things that would kind of create the ingredients for substantiating where the market is have cooperated. There was that intraday wobble though, which did show a sensitivity to any sign that frictions are rebuilding on the trade front with the headlines with Canada. So you have to be aware that at this level, we've definitely priced in some level of trade

peace. We'll see if we get it. OK. How closely are you watching bond yields in this market, especially since we got a PCE reading that shows that the pace of inflation is still relatively benign, but it did tick up ever so slightly with PCE. I think yields are kind of giving investors permission just not to worry that much or focus that much about them right now because four and a quarter

ish percent on the ten year it's right in the zone it's been in for two years. It's not necessarily kind of forcing you to either believe that it's going to be too high for what the economy to handle or so low that it's telling us something scary about the economy so you want to watch it you want to make sure maybe they stay in the range clearly economy to handle or so low that it's telling us something scary about the economy. So you want to watch it. You want to make sure maybe they stay in the range. Clearly, the yield curve has been steepening as lower shorter term yields come in as the market starts to price in, perhaps more Fed rate cuts before too long.

But I think in general, it's a supportive picture. I would point out financial stocks have resumed some leadership recently here and that's probably related to all that. And of course, in just about 30 minutes, we will get those Fed stress test results for the banks and we'll bring those breaking headlines as we get them in real time. Mike, the other thing that stands out to me here is we're at the end of the second quarter. Ryan Dietrich on CNBC this morning said the the S&P 500 is gained in July. 10 years in a row, one more,

it ties the longest win streak ever. Seasonality, how does that factor in? Yeah, it's net positive if it adheres to it. I do think we have to maybe throw an asterisk in there. I mean, we came off of some of the worst two month returns in February, March, and then you have two of the best April May Months ever right you're up huge this quarter because of that So I don't know how much it's gonna bear on the typical seasonal patterns last year

I'll also note July was net positive. We were up a little more than 1% of the S&P But in the middle of that month We had a pretty significant peak and you went on to have a correction through August and beyond Okay, Mike Santoli. Thank you. Good market wrap there. We'll see a little bit later in the hour Let's turn back to those trade trade headlines now President Trump saying the US is quote immediately Terminating all discussions on trade with Canada and a surprise announcement the president citing what he called the egregious digital services tax Joining us now to discuss is Treasury Secretary Scott Besant. Mr. Secretary, it's great to have you on overtime.

Welcome. Morgan, good afternoon. Let's start right there. What happened with Canada? Well, we knew it was coming. We hoped they wouldn't do it. Canada has this digital services tax, and several other countries do, too. We disagree, and we think that they

discriminate against US companies but what Canada did here as of Monday they're going to implement a retroactive tax and we think that we don't like the taxes and obviously we think it's patently unfair to do it retroactive. This was something from the Trudeau years so we were hoping as a sign of goodwill that the new Carney administration would at least put a break on that during the trade talks. They seem not to have. President Trump has responded.

And my inclination is that Ambassador Greer over at USTR will be starting a 301 investigation into the digital services taxes to determine the amount of harm to the US companies and the US economy in general. Why is a Section 301 investigation the way to go and what could that outcome potentially yield? Would that be broad-based, looking at Canada

and the possibility of tariffs or very targeted on certain industries? Well, no. The president can impose tariffs based on AIIPA, which is an Emergency Economic Powers Act. The 301 is more durable and could last longer. So in terms of 301 being more durable and lasting longer, would this be more broad-based looking across trade of goods and services with Canada more broadly or would it be more targeted to certain industries? No, it would be targeted across tariffs on Canadian products and again we'll have to see we know the amount I think

it's about two billion dollars of retroactive digital taxes which seem patently unfair we had been talking to the administration in Ottawa about this and they decided to go ahead with it. The European Union is doing something very similar in terms of a digital services tax. How is that factoring into negotiations there? Oh, well no, that's not right. The European Union does not have a digital service tax. Several countries within the European Union have digital service taxes. None of them have done those retroactively and we're in active discussions with them to take those down because again You know who has the great internet companies of the world is the United States of America

So it singles out our great American companies So Canada possible escalation depending on how this plays out overcoming days De-escalation though and that was the news of the morning with China. What are the details of this China trade agreement? Well, it's a continuation of the Geneva agreement, and the centerpiece of it is that we agreed, and it's away from the tariff measures because the tariffs came down immediately after Geneva. Post-Geneva, we had an agreement with the Chinese government to start the flow of rare earth magnets again. They were not as forthcoming as we had hoped that they would be. So the US implemented non-tariff countermeasures against the Chinese government.

We believe that the rare earth magnets are starting to flow again under a licensing agreement that, or a licensing regime that the Chinese government implemented on April 4th. And when we are certain that the magnets are flowing again, we will drop our countermeasures. So a lot of speculation out there about whether this July 9th deadline for trade deals is a hard line or whether there's some flexibility. Is there flexibility?

Again, it's going to be up to President Trump. We're going to follow his lead. What I would think is going to happen is there will be a lot of smaller trading partners. We will just send them letters. There will be a group of deals that we will land before July 9th on or about. And as Secretary Lutnick said yesterday, he believes there are 10 or 12 of those. And then there are probably another 20 countries where they could go back to the reciprocal tariff of April 2nd as we work on the deal, or if we think that they are negotiating in good faith

Then they could stay at the 10% baseline so there are a lot of moving pieces here a lot of it is based on the consistency of the Negotiations and again, it will all be up to President Trump Historically trade deals have taken years sometimes to craft It's incredible how quickly you're moving here when you're talking about 10 waiting in the wings and perhaps another 20 behind that here in the next couple of weeks, just to put it in context.

Another thing that seems to be poised to move quickly here, at least in the next couple of days, is the Republicans have reached a tentative deal regarding the state and local tax deduction, SALT. At least that's what we're hearing. That had been a sticking point my colleague Emily Wilkins is reporting there are a few other key topics still being worked out But can this big beautiful bill make it to the president's desk by July 4th? I think there's a very good chance and the only way to get there is for the Senate to start voting this weekend

I think there I was just with the Senate Republicans, and I think they're going to start voting tomorrow. Do you see potential roadblocks here over the next week? Look, nothing's done until it's done, but President Trump's leadership has gotten us here at what people thought would not be a possible date. Leader Thune, Speaker Johnson have done an incredible job of holding small majorities together and getting the bill moving forward.

So I'm optimistic we could have a July 4th signing. What does the bond market need to understand about this bill, what it's going to mean for government spending and the debt load? Well again, it is the largest cut in discretionary Spending in or not excuse me non discretionary spending in history And the the other thing too is what do we care about? We care about growth, we care about spending. So if we can stabilize the spending and up the rate of growth, then that's how we start stabilizing the debt to GDP.

This terrible situation we had, the deficit to GDP, 6.7%. We'd never seen anything like this when we weren't at war or in a recession. So this was a peacetime deficit. So we are going to slowly bring that down in a methodical way and we will stabilize the debt to GDP level and start bending the curve down. Injust rates are still elevated even as the dollar continues to weaken against other major currencies. Do these market moves concern you? Which market moves? What we're seeing in the

dollar as it weakens and the fact that interest rates are still elevated here. Well the couple of things are Morgan is I'm not sure why it would concern me that it's natural for currencies to move around. I've traded currencies 35, 40 years. So currencies move up and down. The US still has a strong dollar policy, and we're putting the economic factors in place to continue that. On the other hand, we are seeing for the first time

a real attempt at defense spending in Europe. We're seeing the Germans take off the debt break. So, you know, more fiscal spend would tell you that the euro should appreciate. If we stick with rates, in particular here in the U.S., the Fed was slow to respond to spiking inflation a couple of years ago. We know the president's been very vocal in criticizing the Fed chair.

Is it the president's concern that the Fed is behind the curve again? Well, not my words, but the president, he calls a chair pal too late Jay, and so he's obviously worried that the Feds behind the curve again. And Morgan, I would just point out that studies have shown that people who fall down then tend to look at their feet, which makes them fall down more. And the Federal Reserve fell down on the American people in 2022, let the great inflation get away from them. They should have been hiking sooner, so maybe that's what we're seeing here. There's a lot of market chatter

emerging right now about the possibility of a shadow Fed. How disruption would the nomination of a new Fed chair this far out from the end of the term of the current one be for the market? Well, look, I don't think anyone's necessarily talking about that. There will be two seats opening or there will be one seat definitely opening in the beginning of the year when board member Krueger leaves and then the chairmanship will open up in May when Chair Powell leaves. So Chair Powell doesn't have to leave, he could stay on the board, not as chair. So there is a chance that the person who is going to become the chair

could be appointed in January, which would probably mean a October-November nomination. Your name has been floated in some media reports as a possible replacement for Fed chair come next year. Your response, is that a job you'd consider taking? Look, I'll do what the president wants, but I think I have the best job in Washington. We're making meaningful change, working on the President's agenda every day. I get to work closely with the President. I think that, as I like to say, we've done peace deals, trade

deals, and tax deals. We spent the first hundred days setting the table on those. Now we're going to be landing all those over the next 100 days. So I think that's going to be pretty exciting. All three of those we've been talking about this week. Finally, the idea, and I think this is really key and it kind of brings us back to the beginning of this conversation with trade and tariffs, but this idea of higher inflation tied to tariffs. Case in point this morning, we haven't really seen it show up in the hard data. The Fed and Wall Street economists think that that's something that's going to materialize this summer. How are

you and the administration gaming this out and thinking about this inflation dynamic? Well, look, as you said, it hasn't played out and we're seeing very low numbers. And forget imported inflation, because if we were to get it from tariffs, which has not happened, it doesn't have to happen. That's a small part of the inflation calculations. What we're seeing is service inflation drop. I think we're going to see the rent component drop and the overall housing component, which is implied, owners rents drop. So the Fed's measure of super core inflation is way down. PCE year over year is down. So it looks like the trends are quite good.

We're at a four year low in gasoline prices, so we're going to have a great summer travel season. And Morgan, one thing I heard you talking with your colleague earlier, where they talked about the April tariff panic. So we found out today, this episode from April 3rd to today is the fastest bounce back after a 15% decline in S&P history. Fastest bounce back ever. So, you know, we, we, the administration doesn't look at the stock market every day. What we try to do is set in place economic fundamentals and, you know, presumably the market had a chance to digest the panic and is looking forward. So I think it is telling you that the tariff panic or as I like to call it, tariff derangement syndrome was overdone.

We're seeing earnings growth. We're seeing a good path for interest rates. So I think the economy is looking pretty good. And all of that has led to stocks at record highs today. Secretary Besant, Scott Besant, U.S. Treasury Secretary. Great to speak with you. We covered a lot there. I do hope you'll come back and join me again.

Thank you so much. Thank you. Well, let's get some reaction to that conversation with Secretary Besant in today's new highs. Joining me now is Morgan Stanley Wealth Management's Dan Skelly. Dan it's great to have you on. Let's start right there. We do have stocks at record highs. We just heard a lot and covered a lot with the Treasury Secretary. Your reaction. Thanks for having me on Morgan. And look yes the market has rallied. Very quickly and very aggressively. But our key take away today's to curb your enthusiasm over the summer. I think it's really important

today to do a then and now analysis. Then at forty nine hundred on the S. and B. two months ago. Hedge fund positioning was at a decade low now it's flipped to a more normal. Level in terms of- average net exposures- secondly earnings in the first quarter were excellent but more normal level in terms of average net exposures.

Secondly, earnings in the first quarter were excellent, but they benefited in terms of the pre-buy economic environment with the top line boost, as well as no real tariff pass through yet, because no one knows, frankly, what level of tariffs we're going to land on. And thirdly, and most importantly, the hope of negotiating tariffs and this very premise that tariffs would be negotiated was the key insight at 4900. Now what we're seeing clearly is the details and the execution around landing these deals is going to be different and frankly the risk reward around that at 6000 is harder.

Okay. So in light of that. Where would you be investing money right now or would you be taking profits off the table. Morgan we would be telling folks if their plans and their longer term asset allocation has rebalanced to a

point where they're now overweight or they're excessively position equities yes it's okay to trim modestly but we would still argue there's a ton of fundamental and structural positive themes underneath the surface. Frankly, when you look

at the leadership and Michael Santoli touched on this earlier, it's been a repeat of the 2324 leadership in the last two months. And so you're seeing that technology leadership, high quality leadership, large cap leadership, and I would also

double click for a moment on this whole thesis behind powering AI. We've seen the industrial complex and specifically the names and the ideas that help the AI ecosystem and infrastructure gain new highs very quickly. And that's still a theme we like. Financials have had a very strong week and a very strong couple weeks. We're expecting these stress tests to come out here in about 10 minutes and then of course we know the big banks

will help kick off earnings in about two weeks is this is this an area to focus attention on how much is it a harbinger for for the results we will get here over the next couple of months. Sure Morgan I'm glad you asked financials continues to be one

of those higher conviction themes that we like and that's been the case frankly for over nine months- and there's a lot of different drivers to that outlook I think one of them clearly is deregulation on on the horizon- and we're going to hear to your point very quickly more about capital return likely going higher secondly the capital markets- delay that happened-a-vis the tariff panic, as Treasury best in alluded to earlier, has now started to normalize a lot really quickly this quarter. We've seen IPOs and deal making pick up quite a bit. And frankly, we think following a three year down cycle in those end markets, there's still room to run on that front as well. And last but not least,

I talked about this earlier in terms of tariff potential impacts to certain parts of the market, banks don't suffer from that. They're mostly domestic orientation, and thus they're not gonna really have a negative tariffs outlook. Dan Skelly, thank you so much. Thank you.

Coming up, we'll look at some of the names making the biggest moves off of the April lows. Spoiler alert, Apple's not one of them. As the Nasdaq has rallied 17% since April 1st, Apple is down 9%. As a result, the stock is getting left in the dust on the road to a $4 trillion market cap. Can Apple get back on track in the second half?

We're gonna discuss that overime is back in two. Welcome back to overtime. The S&P 500 is up more than 20% since the early April lows. The biggest winner on the index since then joined halfway through. That was Coinbase up 120% as stablecoin summer kicked off. It was added to the S&P 500 in May, so that helped as well. Next best, Seagate Technology. It has more than doubled off the lows, and it's not just tech names either. The power players are also among the top performers NRG, Vistra, GE, Vernova, Constellation all up about 80% since April 8th. Well, meanwhile, one name that is sitting out this entire rally is Apple.

Falling more than 9% this quarter as some of its rivals hit all-time highs, will Apple turn the corner in the second half? Joining us now, Gene Munster, managing partner at Deepwater Asset Management. Gene, it's great to have you on. Hi, Morgan. What's it going to take for Apple to rally here? I think it's going to take optimism that the new series is going to crush it. And after WWDC, that was the clear message from senior management, they basically went on a media blitz to tell people, judge our AI chops on what that new series is

going to look like. And I think that for investors getting more confidence that they're making progress towards that, that's what this year is all about. I would also mention that there's this added benefit, the fact that they've essentially reset the bar. Don't expect anything from us about AI over the next year. The fact that they've reset that bar, I think it really does lower what some

of investors' expectations are for Apple and AI the next year. In other words, that low bar I think it really does lower what some of investors expectations are for Apple and AI the next year. In other words, that low bar, I think, can be positive for the stock in the back half of the year. And I think investors are kind of processing that piece, how much room to give them. There's one other piece that rarely gets talked about is that iPhone numbers have come down pretty dramatically over the past six months. If we rewind to late last year, investors were generally looking for about 6% iPhone growth this year, and about 8% next year. Now it's about one and 4%. And so Morgan, when I think about the opportunity for the stock, I

think that this can kind of win on two phases. One is just the simple block and tackle of people coming back, buying their iPhones, doing what they do, committed to the Apple platform. I think that should bode well for Apple iPhone numbers, but also kind of some growing anticipation for that new Siri next year. Meta CTO, Andrew Bosworth,

was on the show with me a week ago. And one of the things we talked about was how aggressively Meta is targeting top AI talent. Does Apple need to do the same here? Would an acquisition go a long way? It would. Perplexity would be a home run. Essentially, it would give them not only a Gentic browser to supercharge what's going on with Safari, but also give them a search product, which is pretty incredible, and the tools to build on top of these other LLMs. So Morgan, I think it's a huge deal, a huge opportunity for Apple to add this other talent, and the bar is high, but they've got money to spend. They've only

spent 10 billion on CapEx. Compare that to 30, 40, 50, 60 billion by the other hyperscalers. So they got room to spend, and I think that's one of the messages you're going to hear from Apple when they report their June quarter is this kind of commitment to spending more. And to put quickly some perspective on that is that that 10 billion in CapEx that they're going to spend, they spent last year, again, compares to, call it 50 billion for the rest of the hyperscalers.

I think that they can move that up to kind of 25 to 50 billion, acquire that perplexity. That would be a homeers, I think that they can move that up to kind of 25 to 50 billion, acquire that perplexity. That would be a home run, I think, in terms of not only the fundamentals of the business, but also in terms of what it could do to investor psychology. And so I kind of think about that hiring piece. I think this perplexity is just a really underappreciated opportunity, particularly around what they could do with search and essentially replace

Google in that arrangement. That would be a really powerful opportunity in the midst of this FTC pressure around that relationship. And so there's a lot of levers Apple can play. Understand that they haven't delivered. Clearly, they haven't delivered. But if you look at all the tools, they've got time and I think they've got the resources to really turn the tide around AI.

So MegaCap Tech X Apple, we'll say, has had a very good run here. Does that continue? I think it does. And at Deepwater, we're of the belief that ultimately that we're still in the very early stages of AI. I just want to put some quick context. I think that the MegaCaps are going to continue to do well.

I think the real outperformance in the back half the year is going to come from some smaller names. And if you use a benchmark, the LOUP, which is our frontier tech ETF, as a benchmark of kind of the sub $500 billion companies, just over the past three weeks, that's up 7% outperforming the MAG-7, which is up six and the NASDAQ up three. So Morgan, I think investors can sleep well at night

owning these big companies, but also kind of think about shifting to some of these smaller cap ones that are capitalizing on what still is early stages of AI. Hard to believe, but I still think we are in the nascent phases. And I think these small companies are going to have an outsized benefit.

Jean Munster, appreciate it. Thank you. With the tech sector and the S&P trading at record highs as the S&P trades at record highs. Stocks with a huge rally from the April lows to this morning's record highs.

But pulling back on the news that the US is calling off trade talks with Canada and I'm going to just go ahead and interrupt myself because we do have some breaking news. Those Fed stress tests are out and Leslie Picker has it for us. Hey Morgan, yes all 22 banks tested remain above their capital requirements after absorbing hypothetical losses of more than 550 billion dollars this year. The scenario by which the banks were tested against was widely seen as more moderate, evidenced by the aggregate decline in the common equity tier one capital ratio of 1.8%.

The lowest decline in years, the 2024 results by comparison showed hypothetical aggregate declines of 2.8%. This is the first round of stress tests with Michelle Bowman in the vice chair for supervision seat, although the test was developed before she took that role. Under this new regime, though, there's been a broad expectation of loosening capital requirements and regulatory reform. Just this week, the Fed proposed an easing of another leverage rule. Bank stocks are up about 4% over the last week on optimism surrounding capital.

As for today's results though, Vice Chair Bowman said in the statement that quote, one way to address the excessive volatility in stress test results and corresponding capital requirements is for the board to finalize the proposal that would average two consecutive years of stress test results, which was released in April. Fed officials said that the better results this year were driven in part by the way the test was designed, as well as the strong recent performance from the banks. The hypothetical losses included $158 billion in credit card losses and $124 billion in commercial and industrial loans. On Tuesday, the banks are

expected to each provide details on how the results of this test impact their plans for buybacks and dividends. Morgan. All right, Leslie Picker. Thank you. Well, joining me now is Gerard Cassidy, co-head of global financials research at RBC capital markets. And Gerard, your takeaway from those results we just got from Leslie especially since we have two full working days until we start to hear about capital returns to shareholders. I think we might be having some technical difficulties with Gerard. We're going to go to a quick commercial break and we will pick this discussion up on the other side of it. We'll be right back. Welcome back. As the S&P hovers near its record highs, how are its valuation and investor sentiment holding up? Well, let's ask senior markets

commentator Mike Santoli. He's back. Hi Mike. Hey Morgan look at valuation here. This is the forward price earnings ratio for the S&P 500 as well as the equal weighted version of the S&P 500. Now the index itself at the close today is about half a percent higher than its former peak. That was in February 19th of this year. That was right here. So because earnings forecasts over the next 12 months have gone higher as we've gone through time and earnings have come in better. The P is slightly lower now. It's still elevated relative to history There's been some upward drift in general PE ratios as the composition of the index has changed But you see nothing special about the valuation of the equal weight

It's really kind of near its average over this 10 15 year period now in terms of sentiment It's been a bit surprising that a lot of the surveys have not shown bullishness come back as quickly as you might expect, given the rapidity of the rally that's gotten us back to highs. This is the Investors Intelligence bull bear spread, how many bulls minus how many bears, and it really hasn't come back.

I mean, that was where we were near the highs of the market. And this shows you this underlying skepticism. Now it's not always evident in market behavior, but at least the mood is not quite buying into this rally. That's a net positive generally for the market if sentiment has not raised ahead. Okay, we'll take it. Mike Santoli, thank you.

It's time now for a CNBC News Update with Contessa Brewer. Hi, Contessa. Hi there, Morgan. A widespread computer outage hit American Airlines today. The carrier confirmed a tech issue disrupted connectivity for some of its systems. That outage caused delays, but American says it hasn't canceled any flights. Former New York Governor Andrew Cuomo reportedly will stay in New York City's mayoral race.

He conceded the Democratic primary to progressive assemblyman Zahran Mamdani, but still has a path to run as an independent. That would set up a four-way race against Mamdani, Mayor Eric Adams, and Republican candidate Curtis Sliwa. But we're watching the clock because there's still half an hour until the deadline to remove a candidate's name from the general election ballot. And Apple's F1 movie is racing ahead at the box office. The film starring Brad Pitt already has earned $10 million in the previews. F1 is projected to rake in between $50 million and $60 million for its opening weekend.

Morgan, that's the news on this Friday afternoon. I'll send it back to you. All right. Have a great weekend, Contessa Brewer. Thank you. Well, tech getting all the attention, but financials have also had big gains from the April lows, JP Morgan, Goldman Sachs, Citigroup, all up 30% or more. So up next, a closer look at the banks following those stress test results. Stay with us.

Welcome back to overtime. Stocks closing off the highs of the day as President Trump calls off trade talks with China but still higher. The S&P hitting a high of 61.87 briefly dipping into the negative territory before closing higher by about a half a percent. The Nasdaq also hitting a new record high and by about a half a percent. The NASDAQ also hitting a new record high and finishing up about half a percent. Nike a huge winner after its results last night. So you can see finished up about 15%,

had its best day since 2021. Investors were hoping the worst is over and that the comeback is starting to materialize. But joining me now is Gerard Cassidy, Co-Head of Global Financials Research at RBC Capital Markets. And Gerard, we turn our attention back to these bank stress tests that we just got from the Fed. So what is your takeaway on the results we just got, especially given the fact that we have what, two full working days before the banks can start to make announcements about what it will mean for buybacks and dividends.

Sure, thank you, Morgan. And the results across the board were very positive. As you pointed out in your comments, all the banks passed and what was noticeable was the pre-tax, pre-provision net revenue known as PP&R.

That was more robust this year and the Fed pointed out the reason for that was that the industry is more profitable driven by two factors, robust capital markets revenues but also a resilient net interest margin. Also, as you pointed out, the actual decline in capital wasn't as severe this year even though the stress scenarios were very severe. So I think overall investors should be very pleased with these results which to your point

now the banks will review the results and then some of them will come out as early as Monday with possible dividend increases and also share buyback programs. The banks have had a good run here in anticipation of this. It seems JP Morgan and a few of the other big bank names have been hitting record highs on a near daily basis as of late. Can that continue? I think it can because this huge change going on in Washington with the bank regulators. You saw it in the commentary from this report. Michelle Bowman, as you know, is the new vice chair of safety and

soundness for the Fed. And in an April release, they talked about the changes that might be coming for this stress test. There will be more openness, more transparency. That will be discussed later in the year. The big news, though, Morgan, is of course the Basel III endgame. She's going to need to address that, which she plans to. And she's taking a more realistic approach versus what was proposed back in 2023. So I think that's why investors are positive on the banks why we're positive that the deregulation outlook is quite positive in the Treasury secretary. Besson has also

pointed out that you know the corset around the banks due to regulations needs to be loosened up so the banks can become more involved in the economy to help the economy grow faster and I think that's why you seen the stocks do as well as they're

doing. So what do you buy here what are your top picks. I think that's why you've seen the stocks do as well as they're doing. So what do you buy here? What are your top picks? I think you can look at Wells Fargo as one of the top picks because, as you probably recall, they just had their asset cap lifted. So there's going to now be opportunities for Wells to grow their balance sheet. In addition to that, they had about 13 cease and desist orders since their CEO came on board, Charlie

Scharf, back in 2019. And then I think 12 of those have been lifted, six or seven this year have been lifted. So that means the costs, and they have pointed out the cost of adhering to all these regulations is about $1.2 billion. So I think that cost won't certainly be going up, we don't believe, and over time probably kind of goes down. But more importantly, they get to grow that balance sheet and grow revenues. And I think capital markets and investment banking will be the focus of that company along with their credit card program. The other name that people can look to as well is Bank America. Bank America is probably going to show some of the best net interest income growth this year out of all the big banks, which could take their stock higher

as well. And in both cases, as well as with JP Morgan and City, there's going to be tremendous opportunities to give back excess capital. And I think you're going to see that with the money centers and the regionals, like a fifth third, a Regents and an M&T, or all names people can look at. Okay. Of course, we're seeing a lot of the bank stocks move higher here in overtime after hours on these results, including Wells Fargo, about one and a half percent right now in real time.

Jared Cassidy, appreciate it. Still ahead, we'll discuss whether the handful of stocks dominating each sector will keep driving the market higher. Plus, fast money Steve Grasso is mining for profits and he's giving us the trade on a mining stock that has more than doubled just this year. Welcome back to overtime, a banner day on wall street, the S&P 500 and the nasdaq closing at record highs turning us now Steve Grasso he is a Grasso Global CEO a fast money trader and a CNBC contributor and Steve it's great to have you here on overtime. Thank you for having me Morgan appreciate it.

Alright there's a lot I want to get to with you but first the fact that we did close at record highs your takeaway. Yeah so when you close it right you want to buy record highs You don't want to be the seller of record highs because the momentum kicks in think about the psychology People look at the market sell off back in April people start to buy it. Oh my gosh It can't go higher from here so many headwinds with trade and tariffs The economy is slowing. Rates are too high. You can go down that path and

say there's a reason to be a seller of the market. But the market always sets up to hurt the most amount of people at any given chance. So when the market makes a new high, it's flushed out a lot of different people.

I wanna buy those highs. Okay, we had a Russell reconstitution today as well, which typically leads to a big surge in volume in the final moments of trading. How did that factor into what we saw today? Yeah, so if you look at the handful of names that were on the buy side, it was Nvidia, Microsoft, Apple, Flutter.

Sellside was Palantir, both Google's and AppLovin. When you look at the reconstitution, April 30th, rank date, and then you filter down the weightings of the Russell. If the Russell has increased in market cap, which it has in the last year by 10%, constituents have to be bought and sold. Funds that track the index will have to catch up and they do this only once a year.

Major event, always record volume. And Morgan, when you go back and you look at the overall market, go back 30 years. The best days in the last 30 years, pick the The best days in the last 30 years, pick the 30 top days in the last 30 years. If you sat out those days, you gave up 80% of your performance. So the reason why I say that is that

the biggest rallies always happen after the largest sell-offs. So you have to spend that time in the market, not timing of the market as the saying goes. Yeah, and of course we're seeing that play out right now, it's what we're talking about, right? Coming off those April lows. We teased it coming into this block,

the fact that you were mining for a deal in the mining space. What is it? Yeah, so MP Materials, you know, this was a pick going back and it was such a standout day that I remember when it happened. It was New Year's Eve. So I picked MP Materials because I knew that the Trump administration was going to do a

hard press on rare earths. It was trading at around $16. I knew that there was a lot of tailwind. You have tailwind, stock moves higher. This has been the best barometer for China trade that you could ever look at. I mean, follow that stock chart. The stock chart, if you pull that back,

I see you showing on the screen, go a little wider in duration. And if you look at when there's been China trade tensions, the stock will rally. And when China agrees to send us rare earths, the stock sells off. Why does it sell off? Because China supplies 70% of rare earth to the U.S. MP Materials supplies 15% of the U.S.A. needed supply of rare earth.

They used to send their extract to China only to have them, their concentrate, send it back to us. We no longer do that. They no longer do that because China put on 125% retaliatory trade tariff on the U.S. and on MP. So now that you see the trade tensions dying down, the stock also sells off. Yeah. To your point though, MP materials are the, it's the only company here in the U.S. that can actually make those magnets,

refine the rare earths and make the magnets. And despite a trade deal here with China, I suspect the U.S. is gonna wanna stand up more of that supply chain. Steve Grasso, it's great to have you on the show. Have a great show yourself and a great weekend. You too. All right, we'll follow the leaders. Up a great show yourself and a great weekend. You too. All right, we'll follow the leaders.

Up next, Mike Santoli looks at whether the big stock winners in each sector can keep outperforming. Welcome back. Let's bring back Mike Santoli one last time for a look at how individual sectors are playing by different rules as the broad market recovers from those April lows. Mike. Yeah, Morgan, you know, during this current bull market, which goes back, you know, two and three quarter years or so, there's been this winner take most effect even within sectors. It's not just about the mega caps kind of contributing the most to the S&P 500. Here is JP Morgan and Goldman Sachs relative to the broad list of banks. That's the KBE. That's a little bit more of an equal weighted index there. Clearly the market wants the dominant franchises and is actually willing to put premium valuations on Goldman and JP Morgan relative to their own

histories well above other banks. Take a look now at Costco and Walmart, which really do seem like winner take most businesses at this point. And this is compared to the retail ETF, as well as consumer staples, because technically Walmart and Costco are categorized as consumer staples. So leaving them in the dust,

and also trading so similarly to one another, Walmart and Costco. And finally, Semi's. You know, as a group, they've really revived over the last few months as we've gotten this nice rebound rally. But here's Nvidia and Broadcom relative to the overall semiconductor index.

By the way, these are two massive components of the Sox, so it's not as if they're necessarily just going against the rest of the field. But it just sort of shows you value is accruing most to those franchises that seem like they have the business momentum, the earnings momentum, and that has translated into stock momentum. Has it made the market too top-heavy, too unstable?

It's not clear to me that it has just yet, and there's probably some room for some other stocks, perhaps, to play some catch-up if the overall environment remains pretty friendly here. I know we've talked about some of the frothiness in pockets of the market. We've also saw some of that come off a little bit here this week.

What you're outlining to me signals the quality, the shift, the rotation, the move toward quality in this market and that maybe that's, maybe that's getting outsized attention as well. Sure, and that's been underway for quite a while. And I think that, you know, because quality overlaps to a great degree with momentum, it's almost like there's something

for multiple constituencies to grab onto there. Again, you know, how much do you want to pay for it? I mean, JPMorgan's trading at 15 times forward earnings. That doesn't sound like a high number, but relative to its own history and relative to other big banks, it's kind of a big number. You have to be counting on that company to keep repeating the success that it's had. So maybe it says something about the economy that we're in as well, not just how investors

prefer to lay their bets within the market that the economy is rewarding those dominant businesses that have scale. Yeah. As one of our market guests earlier this week put it, you wouldn't be seeing the banks rally like this if a recession was pricing in. Mike Santoli. Yeah, Mike Santoli. Thank you. Have a great weekend. Let's get you set up for next week's trade constellation brands.

It's the only big company reporting results next week. A lot of economic data on the calendar, though, including Chicago, PMI, Dallas Fed manufacturing reports on Monday. Tuesday's bringing ISM manufacturing, construction spending, and the job openings and the labor turnover survey. Wednesday, ADP employment report. And Thursday closes out the holiday. It's a shortened trading, a holiday shortened trading week I should say. We get the June jobs report on Thursday as well as other data. That's going to do it for us here. Record highs. Fast money begins right now.