Closing Bell - Closing Bell: Positioning Ahead of the Fed

Episode Date: September 16, 2025

How should you position your money heading into tomorrow's high-stakes Fed decision? We discuss with Trivariate’s Adam Parker, NewEdge Wealth’s Cameron Dawson and Capital Area Planning’s Malcolm Ethridge. Plus, former Dallas Fed President Richard Fisher weighs in on the Fed’s independence. And, Oakmark’s Bill Nygren tells us where he is finding opportunity outside of tech.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to closing bell. I'm Leslie Picker in for Scott Wapner. Today, live from post nine at the New York Stock Exchange. This make or break hour starts with the fate of the record rally. Stock's pulling back slightly from all-time highs as investors gear up for tomorrow's critical Fed decision on rates. Today's stronger than expected retail sales failing to juice the rally as traders hunkered down ahead of the Fed. Here's the scorecard with 60 minutes to go in the trading session. Stock's a mostly flat across the board. You see a little bit of lower moves in the Dow, down about 0.2% at this point in time with the S&P and NASDAQ. A little changed at this hour. Energy, the leading sector right now, followed by consumer discretionary and staples, while rate-sensitive parts of the market like tech, real estate, and utilities are all in the red, which takes us to our talk of the tape. How should you position your money heading into tomorrow's high-stakes Fed decision? Let's ask CNBC. contributor Adam Parker, founder and CEO of Trivariate Research. Adam, this is the question of the day, really. If you want to do some sort of portfolio reallocation of head of tomorrow's meeting now would be kind of the time? You've got an hour? You've been in the morning to do it?

Do you think investors should be repositioning, or is most of tomorrow's meeting priced in already? Yeah, I don't know. I don't know. I mean, some people think they do 50 bibs, some think they do 25. I think they do nothing. That'd be a little surprise to most. But if you take a step back and you run a big pile of money and you don't move stuff around between 301 and four, right? I mean, I think the distribution of outcomes to the Fed is going to be more dovish over the next year, right?

And I think you still can dream. Margins are expanding for a lot of U.S. equities, right? They're going to start implementing AI as they predict their employee and customer behavior better. So if all of equity investing is a little bit like perceptions about growth and perceptions about rates, they're both pointing toward a bullish outlook. And I think that's why the market's basically near highs. And I think that's why people are still, you know, risk-wort positive on the market. I think a lot of it depends on if they are cutting, and that's the assumption based on the markets right now.

Are they cutting into an economy that is actually weakening? Are they cutting into an economy that is somewhat stable and therefore are there different outcomes based on the macro backdrop by which they are I mean, I think if you said, hey, Adam, go away, do all the analytics your team can do, come back and tell me the state of the U.S. consumer. I think the answer is it's in pretty good shape in absolute terms, but slightly eroding. You saw pretty good retail sales print today, but there's no question employment data has been weak. The last few prints, if you really take a step back, new hires out of college, grad school, et cetera. The low end's been struggling. But I think the consumer's in decent, absolute shape, slightly eroding.

And I think that's the same for the economy. me if you look at kind of the nominal GDP versus where we were a couple years ago. But, you know, the S&P 500 can be separate from the economy. We know that. I mean, it's a superior set of assets, record margins for a number of companies, and that's why the market's near records, because the profits are. So I think you still want to be bullish, whether they, whatever the Fed does tomorrow, I think ultimately you're going to look back six, 12, 18 months higher and have a higher market

because the dream of productivity is still alive. Now, the pushback I get in meetings is, well, what if the private? activity so good that we end up with a lot of unemployment. Right. And that's something you have to deal with down the road. I think ultimately, though, people redeploy, they get other jobs, new things open up. That's happened every previous cycle. I don't know why it would be different this time. But that question comes up. I think the second thing that's hard to answer is just, you know, we got this October 1st sort of debt ceiling thing coming up and, you know, how do you answer?

You know, if somebody, if a reporter on the IRS says to me, well, aren't you at all worried about U.S. government debt, then you feel stupid saying, no, I'm not at all worried about it. But the question is, do I position a portfolio for today? I don't think so. So those are the bigger debates that come up in the meetings. So that, I guess, is the question there, whether, let's say the, I don't want to say, worst case scenario, they cut into a solid economy that is actually growing better. Maybe then it appears at, you know, at first glance, then do you look at a hotter inflation

print and therefore do you position for different assets that will outpace the potential for inflation, which, by the way, is still above target? Look, I mean, some of the stuff that started working from June Lowe's, home builders, you know, building products, they're up a lot from Lowe's in anticipation of the cut. I mean, we analyzed in our note at Tribera last weekend, we called it the cut pause cut playbook, right? Because it's been, it'll be about nine months if they do it, you know, since the last time they did it. So it's not like you want to go back and say it's the initial cut, let's analyze the industries and sectors that outperform after initial cut, because it feels like we've been in a downtrend. People know we're in the downtrend. And some of that, I mean, Linar's up, what, 30% since low.

So some of the interest rate sensitive stuff is already anticipating it, right? So I sort of feel like I'm trying to find offense that maybe is not totally priced in. We took a look at our note at industrials and thought, okay, maybe there are some economically sensitive stuff that's lagged that are pretty good businesses, some machinery, some building products, things that, you know, even like waste management, stuff that probably picks up a little bit where the stock's not up a lot in the last six months. So I'm trying to find some offense in industrials. We're underweight discretioner. I think outside of the core four, five, six businesses, Walmart, Amazon, Home Depot, et cetera. There's just a lot of bad companies there. And I don't really care if the Fed cuts 25 basis points or not.

Their fundamentals aren't going to rocket better sort of independent than that. So I think you've got to dodge your way around the fines rate sensitive offense, you know, at this point, given it's not just a cut. It's a cut than a pause than a cut if you believe that's different. Yeah, you bring up a good point about the broadening because I've read countless reports over the last few days that talk about, you know, in the past when the Fed has come. and it hasn't been against this backdrop of a recession, stocks tend to rally, and the next nine months, 12 months following that. But the stock market looked different in those years. It looked different in the 90s. We weren't talking about the Mag 7 in the 90s, the concentration of the stock market and everything else. So do you think the same holds true will history serve as a guide here?

Do you think because of the makeup of the economy and because of the tilt toward big tech, toward AI, potential winners here, that it may do something different. Well, we found nine times in the last 40-plus years where we had this sort of three to 12 months pause between the initial cut and then the next one. We looked at the average returns there. The best performing sector, on average, historically, was financials. I get that.

We're overweight financials. I worry it's a little bit of a consensus column on the institutional investors. I talk to you, but I think it's because you can look at Capital One and say, okay, there's some synergies on their deal. You can look at the alt and say there's some IPOs and MNA and some offense there. You can look at the big three, JP Morgan, Morgan, Stanley, Golden, and say, okay,

they're balanced enough that the things can go higher. So I think that people are there, but the data shows they should stay there, and it doesn't feel like it's exactly the same AI trade and correlated with tech. So I feel like that's pretty good risk reward. History does show your own discretionary. That's the part I'm sort of deviating from, because I just don't believe

that I can buy a bunch of impaired businesses. I mean, our whole thesis on what's different this time, which you always feel stupid saying, is that the companies that have gotten more expensive recently are probably either AI beneficiaries on revenue, AI beneficiaries on productivity, maybe, or they're just impregnable to AI, like their business is safe, and the ones that have gotten cheaper are maybe disrupted. So if I'm going to use mean-reverting

valuation based on history, all I'm really doing is buying companies that have a higher probability of being impaired, and I'm sort of selling companies that have a higher probability of benefiting, and that feels sort of wrong at this point in the cycle. So I think history is always a little different, but if you say, what's the playbook? I'll just own the financials. that's the number one historic playbook, and I think that still makes sense, despite the fact most of the institutional clients I talk to seem to be there.

Yeah, I know, I agree. It definitely is a consensus. Consensus move there. But sometimes consensus is right. Yeah, it doesn't mean that's wrong. It's not always wrong, for sure. You know, in fact, I would argue the opposite. I think contrarian means wrong, at least recently.

Yeah. Yeah, for sure. It makes even harder to be a contrarian when it means wrong, I guess. Adam, stay with me. So what should we expect out of tomorrow's meeting? Let's end it over to our CNBC Senior Economics Correspondent. with new results from a very well-timed CNBC exclusive Fed survey. Hey, Steve.

Thanks, Leslie. Yeah, the Fed meets today amid considerable disagreement among respondents to the CNBC Fed survey, not over what the Fed will do. Most everyone expects that quarter point cut, but over what the Fed should do, and there's growing concern as well over President Trump's intentions for Federal Reserve Independence. Let me show you some numbers here. 97% believe the Fed will cut, but just 41% think that's the right. move. 28%. They want the Fed to cut by 50. Twenty-eight percent say the Fed shouldn't cut at all.

We could see tomorrow some possible dissents whether this mirrors disagreements over the right policy on the committee with inflation above target, but flagging job growth. When it comes to what respondents believe the president intends for Fed independence, 41 percent thinks he wants to limit it, 41 percent thinks he want to eliminate it, and 10 percent believe he wants to support it. Majorities of the 29 respondents think limiting Fed independence will lead to higher inflation and unemployment, along with weaker growth and a depreciating dollar. The funds rate outlook coming down quite sharply, likely in the wake of those weak job reports we've had, now seen at 366 by year, and that's down about 30 basis points, 25 basis points,

and 2026 now below the long run rate of 3.2%, now seen at 3.13%. You wouldn't know it, of course, from looking at the stock market per concern is also rising, about the economic outlook and growth, the recession probability, ticking up to 40%. First time it's ticked up in a couple months from 31% in the prior survey. Also, we saw the outlook for unemployment rise this year and next. 55% say if there's a recession, it's going to be moderate, not just mild, and last 10 month. We'll get a fresh rounded forecast tomorrow from the Federal Reserve, and there's speculation about the new dot from CEA chair and new Fed governor, Stephen Myron, whether he adopts the call of the president

for 300 basis points of rate cuts. Leslie? Steve, I'm curious, this lack of consensus that's expected tomorrow. What do you think that means for Fed Chair Powell's willingness to provide forward guidance, given there are such, at least in the past meeting, there was a disagreement on kind of the trajectory of where rate should be. It's expected the same is true tomorrow. Does that make him less willing to share views on where he thinks rates will go, where he thinks the economy is at?

I think that's a pretty astute observation. If you think about the kind of decision-making you might make, well, I need to make this decision now, and I don't need to make that next decision next. So I think you might want to brace for a little lack of clarity in the outlook here that he's unwilling. If he has a lot of resistance, we don't know how much you'll have. There seem to be like there's two voters that are concerned more about inflation than the job situation, Jeff Schmidt from Kansas City, and Mr. Alberta Muslim from St. Louis. And we'll see how much that matters and what he has to sort of do to kind of buy their vote or their support. Sometimes that happens in a statement and sometimes

that happens Leslie directly as you're talking about through the forward guidance. If they say, okay, we'll do a quarter now, but we're not going to promise anything in the future. That might be a way to get support right now. And he can deal with the other stuff later when October rolls around and all that data rolls in that'll be more instructive for the Fed. Yeah, it certainly feels like a pivotal moment here, Steve. We appreciate you being all over it. Our Steve Leasman, let's bring in New Edge Wealth's Cameron Dawson and CNBC contributor Capital Area Planning Groups, Malcolm Etheridge. Trivariates, Adam Parker, still with us at this hour.

Cameron, let's start with you because we were just talking about whether the economy is slowing down. If it is doing so, is that consistent with where you see valuations? in the equity markets right now? Certainly not. We don't think that the equity market is signaling any concern about a more meaningful slowdown in growth because, as you said, equity valuations are at 22.3 times forward. You also have earnings estimates that continue to go up.

You've added about $7 a share to 2026 earnings estimates. Now, for 2026 up to $302, it should be noted, though, that those earnings revisions higher are coming from just the Mag 7, a very small cohort of stocks, you actually are still cutting equal weight estimates. So to Adam's earlier point, the market is not the economy, but because earnings estimates continue to move higher, you're in an environment where stocks can continue to press higher.

And it may speak a little bit about what Adam said regarding productivity and kind of how that's working its way into corporate margins as well. Yeah, I mean, to get a... Look, it's innocent until proven guilty. All the original AI investment were told back half of 26 into 27 as we're going to see the productivity from the company. So what are you going to learn in the next three, four months that's going to derail your dream that we're going to have productivity in 27?

Not much. So if you're anchored to the median company, you can have margin expansion a year, 18 months from now, and you're anchored to a more doveish skew to the Fed, that's the cocktail for bullishness. We've got to watch out for froth, the crazy valuations, you know, all that kind of stuff. but I think the North Star is we're headed higher over any meaningful period.

Malcolm, in the short term, you think tomorrow will be a cell-the-news event. Do you think it will stay lower, that equity valuations will stabilize lower after tomorrow? Or do you think it will be a short-term phenomenon? Yeah, I think it's more likely to be a short-term phenomenon. I don't think that investors are likely to suddenly find religion tomorrow and start focusing on valuations in comparison to the promise of AI, like Adam was just saying. I think more than likely it's going to be a short-term. knee-jerk reaction is, sell the news, and then figure it all out from there.

But I definitely think that the guidance or the lack thereof on what the next cut will look like will suddenly have traders trying to parse out, where does the Fed go from here, how much impact does the White House have on the next round of cut or cuts, and will we actually be able to posit the fact that maybe this means something for the economy, maybe this means something politically. Those sorts of ideas are the ones that are really going to drive the conversation the last quarter of the year. But I think more than likely investors are going to focus on AI above all else, and the party will keep on going. Yeah, and that lack of clarity speaks to what we were just discussing with Steve Leesman regarding, you know, whether there will be

an inclination to give forward guidance if there's not consensus within the Fed. Cameron, given the equity valuations and where they are, how fragile, how sensitive do you think the markets are to any kind of a negative shock at this point? The biggest saving grace for markets right now is that institutional investors, based on the Deutsche Bank consolidated equity positioning, as well as Goldman Sachs Index, that these investors are still relatively neutral and even slightly underweight positioning. That still means that you have this potential for a positioning chase higher. But as we move through the fourth quarter, we think that the higher that this market moves,

the more fragile it is to incoming data that potentially challenges this very optimistic view about growth. So when you are priced for perfection, you do need perfection. And if we were to, say, rally to 7,000 by the end of the year, which is some price targets that exist, that you would be trading at 23 and a half times forward earnings. And that's an extraordinarily fulsome valuation. So it probably is more of a 2026 issue than it is necessarily something. that investors will consider for 2025, simply because that positioning is still light to neutral.

I got asked twice today, hey, I've had a good year. Should I lock in my returns? Just kind of go turn off the engines and just kind of lock it in. And you go back and look in most years where you've had kind of mid-teens returns, and we've had, we're up 30, over 30% since April Lowe's. The average, by the end of October, the average is still up a lot in November or December.

So sometimes I think that second bullet under Cameron thing where you can have like a meltup, I think that's still where people's heads are. I think if we get a solid October earnings season, I think people were sort of shocked at the move on Oracle and they're thinking maybe there's a couple more of these kind of juicy things happening in October. And they just can't, you can't be behind 400 or 500 basis points versus your index if you're long only. So I think there's still going to be a meltup. I hear, I kind of really like the bullets that Cameron laid out there because I could see a scenario you get a sell-off. You know, usually January strong.

I could see this year being good. I could see people chasing it all the way through year end and then kind of say, let me worry about rotation later because right now, the party's still kind of fun. And if I'm hung over later in the year, I'll, you know, I'll hydrate then. So I think right now there's just too much dreaming. And if I've learned anything about equity investing, I buy my little dream today. I sell it to somebody with a bigger dream later. And I still think people are going to dream bigger later in a lot of parts of the market

when they start seeing the productivity proofcases. I'm meeting earlier today. Somebody said, I wish we had an agent in the room to sort of measure what we're doing. I mean, like, people are just starting to warm up to AI productivity, and they're not fully there yet. I know Malcolm knows a lot about this stuff, but I mean, just saying, not everyone does.

Well, Malcolm, one thing that I thought was interesting in the notes today was this idea that you think there's an opportunity from a rate cut in fintech. So maybe you could comment a little bit about what Adam said regarding just the melt-up from AI productivity as well as how that fits into your fintech thesis as well.

Yeah, so marrying the two themes, right? Adam started out talking about the big three and how they'll likely do well following a rate cut. But I think that it's also important to consider other parts of the finance ecosystem that are immediately impacted by the shorter end of the curve, right? The two-year, for example. So if we're talking about a quarter-point cut

or a half-point cut or whatever by the end of the year, that immediately is impactful to companies like a lending club, an ally or a SOFI, which I own personally, because they actually earn the bulk of their revenue from transaction volume and not necessarily on that net interest margin, like a traditional bank, the G-Sibs. And so I think that's a great place for investors to place themselves if they're looking for a trade that's bound to do well, regardless of how large the cut happens to be. Yeah, and it's no coincidence that we've seen a slew of these fintech names, do IPOs this year as well. I'll be kind of feed onto that trend. Adam Cameron, Malcolm, thank you so much.

for joining us today. You'll see everyone. See you guys. Appreciate it. New details are emerging on the U.S.-China TikTok deal. Amon Javers has that for us in Washington. Amen. Yeah, Leslie, this coming from the Wall Street Journal just posted a couple of minutes ago on their website. They're saying that a consortium is going to take control over TikTok under this new deal between the United States and China. That consortium will consist of Oracle, Silver Lake, and Andresen Horowitz. They're also saying that U.S. investors will hold about 80% of the company.

The Chinese side will get about 20% according to the U.S. law that was passed earlier this year. Now, the key here is the algorithm and what happens there. And according to the Wall Street Journal's reporting, which they've just posted, TikTok engineers are going to recreate content recommending algorithms. They're going to use technology that's licensed from ByteDance, but they'll recreate it here on the U.S. side.

An Oracle will control the data flow. So that should take care of some of the national security concerns about the Chinese government, potentially having influence over what millions of Americans see in their social media. We'll wait for more details. And, of course, all of this is pending the official confirmation. That we've been led to believe is likely to happen after President Trump and Xi Jinping speak by phone on Friday. So maybe not till the end of the week until we get all of the details of this officially read out to us. Leslie, back over to you.

It's interesting bedfellows because you have Oracle, which, of course, is a publicly treated big tech company, Silver Lake, which does private equity in the tech space, and then Andresen, more in VC space. So kind of an interesting group in that consortium there. Amen, thank you. Absolutely. And one of the detail, Leslie, on this is that the board will be reconstituted. And then at some point, the U.S. government will get a board seat in this new company. So that, you know, adds another interesting bedfellow to all the bedfellows that are already in there. Absolutely. Part of that strategy there. Amen, thank you very much for bringing this to us.

Amon Javers. We're getting more news out of Washington. Emily Wilkins has that for us. Emily. Hey, Leslie. Well, we've seen a couple times this year Republicans trying to actually end Trump's tariffs by overturning this National Emergencies Act that he's used to implement them. But the House has now put a ban on any such measure from coming up until March of next year, effectively sort of taking away. Congress's power to regulate the president when it comes to some of these tariffs. Now, there were a number of Republicans who were on the House floor actually refusing to vote for this particular provision because of their concerns about giving up that power for Congress to regulate. And we did hear the Wall Street Journal is now reporting that at least one of those lawmakers, Congressman Don Bacon, has said that he does expect some changes to come with exactly how the House can approach this. But this really goes back, Leslie, to what we've seen with members in both the Senate. Senate and the House, including Republicans, having some concerns with these tariffs and what

they are going to mean for their constituents. But at this point, it doesn't seem like the House is going to be able to have the power to directly challenge them the way that they did just this morning. Leslie? Emily, thank you so much. Emily Wilkins in Washington for us today. Let's send it over to Christina Parts-Nevelas for a look at the biggest names moving into the close. Christina. Let's start with Warner Brothers, Leslie. Warner Brothers Discovery shares are lower after TD Cowan downgraded the stock to hold from buy analysts say they're just less bullish on the stock after its surge passed their $14 price target following a report that Paramount Skydance is looking to buy the company. Shares are down over 6% right now. Steel dynamic shares are the second

best performer in the S&P 500 after a reporter better than expected guidance for the current quarter. The company does expect higher profitability specifically from its steel operations and growth in its metals recycling and steel fabrication segments. That's a mouthful. are up over 7%. Last but not at least, Rocket Lab shares. Look at those. Those are falling over 10% after the Space Company announced plans to raise up to $750 million through new stock sales. The move seemed to dilute existing shareholders, but investors, though, are still up big. The stock has surged over 500% in the past year. Shares are down almost 12% right now, though. Leslie? Yeah, that looks like some gravity for Rocket Labs there.

Oh, you were holding that one, and I should have used that. Thank you. Coming back down to earth, as you say. I don't even have a comeback. Bow down. It's all you. It's all your toes. We are just getting started. Up next, former Dallas Fed President Richard Fisher

tells us what he's expecting from tomorrow's highly anticipated decision. It's after the spring. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Day one of the FOMC meeting is underway, but it's not just the Fed's rate decision investors are keeping an eye on. It's the Fed's independence. And a new potential Fed chair all at stake. Former Fed Governor and CNBC contributor Richard Fisher joins us now. He is also a senior advisor at Jeffreys. Richard, thank you for being here. The Wall Street Journal kind of sums this all up, is calling it the strangest Fed meeting in years. Do you think the political drama that's ensued will have any impact on the ultimate decision making, any impact on the market reaction to tomorrow? Well, I think the market is fully discounted, a 25 base point cut. What makes this interesting, of course, is the fact that Stephen Myron is suddenly a new governor and was approved by one vote in the U.S. Senate last night.

So he is now going to have to adjust to a new ecosystem. The way things are done at the Open Market Committee is very different than the way things are done elsewhere in Washington. It's not a combative atmosphere. You have to present your arguments in a cogent economic way. He's already expressed his views about we think we know where he's going to vote. But I think the one to really watch here is Waller and to see how he cast his vote.

Is he going to argue for 50 base points for 25? He's indicated, it seems, to be 25 basis points so far. We'll just have to see how he responds. Why do you think? It's not unusual, Leslie, even if you had three votes against, three governors against the chairman, Jay Powell, who, by the way, I'd like to remind people is the other Trump appointee to the Fed. That happened to Paul Volcker over and over and over again, and he finally prevailed on the

inflation argument. So we're just going to have to see what the balance of risk is here. We know that we're beginning to see through corporate earnings reports and corporate expression, a little more inflationary pressure right now due to the tariffs. At the same time, we also know the economy slowing. And it's the unemployment rate, although it hasn't risen numerically, the ability to find workers, it's made more and more difficult. Why do you think Governor Waller, oh, sorry, I didn't mean to cut you up.

I'm just curious why you think Governor Waller is the one to watch. Is that because you think he's the frontrunner for the Fed chair, or just because he exemplifies more a moderate stance? Well, first of all, as you heard Scott Besson talk this morning, gave a very good interview, by the way. To me, he's the adult in the cabinet, but particularly on the economic side. But I think if you really look, he talked about Jim Bullard, who I think is well prepared for the job if he is asked to do it. Waller obviously is very well rounded, very well backed.

He's been there for a while. He's thoughtful. And I think the real sleeper here, by the way, is Lori Logan from the Dallas Fed. She'll be meeting with Secretary of Bessent this week, I think. Of all the people they've named, Leslie, she understands every aspect of the Fed. and the system. She ran the desk in New York when it got up close to $9 trillion. She's run at Federal Reserve Bank. She's been at the Federal Reserve System for 27 years. She's very technocratic, very able. And those are the three that I consider to be the most serious

possible candidates. So, Richard, I apologize. We are actually getting some breaking news on Microsoft. Stay right there. We'll get right back to you. Steve Kovac has that for us. Steve. Hey there, Leslie. Microsoft is going to be investing $30 billion in the United Kingdom over the next four years. This is part of a tie to, rather, Trump's state visit over there to the UK. Now, as far as how this money is going to be spent, about half of it is going to be for AI CapEx expansion, and the other half for numerous types of operations like AI research, gaming, the sales force of 6,000 employees they have there in the UK, and so much more. Now, Microsoft is going to be partnering with UK cloud provider N-scale, which basically means they're going

to write a check to this company, and N-scale is going to spend it on all that infrastructure. They expect to buy 23,000 NVIDIA GPUs to power this. Now, Microsoft also telling us that CEO Satya Nadella is going to be in the UK tomorrow as part of this state visit with President Trump. And we also know CEO of NVIDIA Jensen Wong is going to be there as well, as our Christina Perzenevelas, reported last week. And Microsoft President Brad Smith told us in a phone call earlier today, they're going to be good for every cent of this investment. We see all these big numbers thrown around by these AI companies all the time, but unclear how committed they are.

But Microsoft saying we are guaranteeing we're going to be spending this money over the next four years. In the meantime, we have reports of several other big name executives that we talk about a lot here, including Steve Schwartzman of Blackstone, Larry Fink, a BlackRock, Apple CEO, Tim Cook, Open AI CEO, Sam Altman, in the UK tomorrow. Either they were invited or will be there for sure with the president for these big announcements tomorrow. We're expecting more details about how this is all going to play out to come over the next few hours there, Leslie. All right, Steve, quite the list there. Thanks for bringing that to us. Richard, I want to turn it back to you on what we were discussing with regard to the Fed. I'm curious what you assess to be the backdrop that tomorrow's meeting is coming into. How concerning do you think the summer slowdown is in

actuality with regard to the labor market, given, you know, where equity markets are, but then also we're looking at most likely a cut tomorrow. Well, I do think we're seeing some stress on the labor side. We're seeing a slowdown. If you look at the Facebook and all the 12 Federal Reserve Bank's reports, we're seeing it in several consumer confidence indicators, et cetera. So this is what you have to do. You have to balance out what you worry about on the inflation deflation front with the employment. picture. Now, every president of the United States, it doesn't matter if it's Donald Trump or Democrat or other Republican, they're always worried about employment because that's what drives

their voter base. And the Fed is always worried about inflation deflation. If you're going to err on the side of anything at the Fed, that's where you err, even though you have the dual mandate as everybody knows. So I think figuring out the right balance here, I would make one argument that I haven't heard others make. We have to have a positive real rate to encourage capital formation. So if the Fed Funds, say, ends up at 4%, and inflation, as we've seen recently, is running closer to 3 than it is to 2,

you have a real interest rate return of 1% at least that encourages capital formation. If you fall behind the inflation rate, that is very destructive. We've seen that historically over. and over again. So this is sort of the balance that they're trying to achieve. And again, we'll see what Mr. Myron argues. All those will be summarized. His vote will be taken. And I expect that he will be as civil as everybody else sits at that table. And you should know

that Chairman Powell knows him very well. It's not like you ignore the Council of Economic Advisers Chair. They've dealt with each other previously. So I'm not as worried about him if for any reason he departs from that ecosystem or that protocol, I don't think it would be helpful for his long-term career. And I don't think it would be helpful for him returning to the White House. So I'm not as alarmed by this as some people seem to be. And I do think there's some thoughtful people around that table, and the chair will probably lead them most likely into a 25 basis point cut. The real issue, Leslie, is what he says at the press conference.

And we'll see what happens when he talks to the media after the media. and explains not just the vote, but where they think they're going to go with the dot-plot, and very importantly with his interpretation of that. Yeah, less about what they do, more about what they say. We will be all eyes and ears tomorrow. Richard Fischerick used to always say what we say is as important or even more important than what we do. And what he says should be closely watched here.

You know he's going to be asked about the new governor. I doubt he's going to answer that question. You will plea the fifth on that one, perhaps, but there's plenty more we can learn from tomorrow. We appreciate you previewing it for us, Richard Fisher. Thank you for your time today. Thank you, Liz. And speaking of the Fed, don't miss Scott Wapner's exclusive interview with Double Line Capitals, Jeffrey Gunlock. That's tomorrow right after Chair Powell wraps his news conference right here on closing bell.

Up next, we are tracking the biggest movers as we head into the close. Christina Barnes-Nevilus, standing by with that. We have one major entertainment chain that just can't stop the bleeding. Nine straight quarters of sales drops as management admits they screwed up from everything from staff training to game selection. Plus, one energy stock just doubled its price target after a massive data center deal. The details when we come back. We are about 20 minutes until the closing bell. Let's get back to Christina Parts of Nevelas for a look at the key stock.

to watch. Christina. Webtoon Entertainment. Skyrocketing right now. About 38% on news of its deal with Disney. The story tech company will create a digital comic platform for Marvel and Star Wars, with Disney getting a 2% stake in the company. Dave and Busters keeps bleeding customers with same store sales dropping 3% last quarter. That's nine straight quarters of declines now. The company's new boss, who started in July, says they pretty much screwed up by pushing out too many appetizers, skimping on staff training, running. too many confusing promotions and basically forgetting to buy new games that keep people coming back. Shares are down almost 18%. And Morgan Stanley doubling Bloom Energy price targets

$88 from 44. The energy company surging ever since its deal to power Oracle's data centers was announced just this summer. Shares are up 8.5%. Leslie, looks like investors are really fueling this enthusiasm. Oh, good one. See, I'm still stuck on the Dave investors. Like it's a bad thing. to push too many appetizers. Like, wouldn't we have too many appetizers? We take too long, that waste time, you have servers, so it just ends up being more costly. And think of all the wasted food, too.

Fair enough. Too much grease there. Christina. Thank you. Up next, Oak Mark's Bill Nygrin is flagging some opportunities outside the world of tech. His top stock picks. After this break, closing bell will be right back.

Welcome back. all-time highs earlier today. It's eighth straight session, thanks to Strengthen Tech, and the MAG-7. Our next guest is seeing some opportunity, though, outside of tech. Joining me now, Oakmark Fund's partner and U.S. Chief Investment Officer, Bill, Negrin, Bill, thanks so much for being here. Thanks for having me. I think this is the key question everyone wants to know, is where are the opportunities outside of tech, just given the overall concentration in the market? So, you know, without further ado, where do you see those opportunities?

I think investors have gotten so used to the idea that the S&P 500, is a relatively low-risk way to invest. And it's kind of obscured the fact that it's a technology mega-cap fund today. And what we do at Harris-Oakmark is so different than that. We're looking at the companies that don't have such high expectations built in. And because of that, their PE multiples are less than half of what the S&P-500 is. We've, in fact, got a lot of companies that we own that are at single-digit PEs today. And they're not just banks.

They're across a lot of different industries, something like Corbridge Financial, which is retirement services, is it about six times expected earnings, Delta Airlines about seven times expected earnings, Merck, the giant pharmaceutical company, everybody's worried about Ketruda coming off patent. We think the runoff value is more than the stock is selling for today, and you get the whole R&D effort for free. So it just, I think an investor today who's got a lot invested in the S&P 500 should consider owning a fund that's invested as differently as we are, something that's more Russell value-based, or of course we'd love it if it was Oakmark Fund. Right. So starting with

Corbridge financial, I mean, it makes sense just given the demographic trends toward retirement. It feels like an increasingly competitive space, though. How does Corbridge really stand out? Why do you think that has kind of a next leg of growth from here. We're not going to dispute it's a competitive space, but we're not arguing it's worth 20 times earnings. If it's at five times earnings today, and they're putting most of their capital into share re-purchase, you know, in five to seven years, if the stock doesn't move, they would be taking out the entire market cap of the company. So a lot of our stories are relatively slow, top-line growth that's supplemented by return of capital to shareholders.

And if that goes to share re-purchase, that can really boost their earnings per share growth rate. Interesting. So those few names that are able to buy back their own stock, it's somewhat decent valuations there. In terms of Delta, that one caught my eye because we were looking at booking some flights next year. Just JFK to Seattle was $850 a ticket. And I'm curious, as we kind of think about the travel space, which has taken a hit recently, why you think Delta stands out, especially given what It feels like a very inflationary backdrop for travel. I'm just curious if the demand holds up into 2026. Well, we like the management at Delta.

The balance sheet is stronger than the other major airlines. And we like the demand for travel. The reason that ticket is so expensive is because demand is strong for travel next year. And it's been a tough environment for the discount airlines. And that's given the major airlines more of an opportunity to increase their prices a little bit and get back to normal margins. And again, at a single digit P.E., it's not asking that much of the company. Yeah. You're like, no sympathy for you, Leslie. People will pay that $8.50 if you do not pay that $8.50. Lastly, there's Merck. You mentioned the

Ketruda going off patent. What else in the pipeline or what else do you think will supplement this company once that takes place that will support valuations from here? Merck has some other really interesting assets, including strong franchise. in vaccines, which is another controversy area today, but we think that will continue to be a good profit source for them. They have a good business in animal health. And then in the pipeline, they have a lot of experiments of combining Ketruda with other drugs to more target specific cancers.

And we think there's a reasonable chance that at least one of those will be successful. Oh, that's interesting. Something to watch there as well. Bill, really appreciate your time. Nice to see you in person as well. Thank you for your perspective today. Thank you. Bill Nygren. Up next, Hershey Hire in today's session. We'll break down what's behind that pop and find out if investors should expect more sweet returns. And the Market Zone is next. Welcome back. We are now in the closing bell market zone. CNBC Senior Markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Angelica Peoples is here with what's weighing on shares of Kim's and Hers and Kate Rogers standing by with a look at the move in Hershey. Mike, let's start with you. Yeah, I mean, market, you know, kind of typical pre-fed, just sort of settling into a neutral spot, which makes sense after the run that we've had. A little bit of a kind of laggards over leaders type flavor within the market. So just sort of mean reversing, getting balanced.

I think the general take, it's hard to really argue with if some of the. The oldest principles out there are don't fight the tape, don't fight the Fed. Both of them, in a general sense, are kind of traveling in an upward direction in terms of underlying trends. So you want to stay in tune with that while acknowledging some parts of the market maybe getting a little stretch, some parts of the Mag 7, and to say, you know, maybe not the perfectly benign scenario is going to play out for months on end in terms of the economy holding up and the Fed becoming increasingly dovish.

But for now, that's what we're presented with. Yeah, is this kind of muted reaction typical in advance of an expected rate cut? In general, I would say yes. Obviously, it all depends on preconditions. I mean, there is a longstanding tendency of what's called Fed Drift, which is kind of levitating indexes, gently so, right, in the day before, the day of the Fed decision. But I don't think that, you know, basically staying well supported with 50-50 up and down volume, which is what's going on today, is too unusual.

We'd take note, though, some of the consumer cyclical areas have backed off. They're underperforming, despite the strong retail sales number we got. So the market is trying to figure out where things are headed and not just seize on what we've already seen in the past. Yeah, maybe a bit of the calm before the column or calm before the storm. We'll find out in the next coming days. Mike, stay with us. Let's send it over to Angelica Peebles for a look at the move in Hems and Hers. This one is quite volatile, Angelica.

Yeah, Leslie. Well, Hymns and her is receiving warning letters from the FDA claiming the company's website makes false and misleading claims around compounded GLP-1s. The FDA is calling out claims like that Hymns is saying that the same active ingredient as of Zembek and Wagovi and clinically proven ingredients. The agency says that compounded drugs are not FDA approved and the claims imply that the products are the same as an FDA-approved product when they are not. And Hymns is not the only one receiving a letter today. The FDA last week said it would send thousands of letters. about direct-to-consumer marketing of medicines. But Hymn's CEO, Andrew Dutton, a post on X saying that this industry-wide push, the FDA is demonstrating its commitment to ensuring individuals can make informed choices about their care, a commitment that we share in something that Hymns and hers was built to do. Eli Lilly and Novo Nordisk also received letters about their promotion of GLP-1s. So certainly we are seeing this across the board, but still the HIMS letter getting a lot of attention, Leslie. Yeah, it's always a fast-evolving space there, Angelica, thank you.

Let's send it over to Kate Rogers for a check on shares of Hershey. Kate. Hey, Leslie, Hershey's stock up more than 4% today as Goldman upgrades to buy from sell with a price target of $22. The note points to a generally improving market share outlook in the second half, it says, along with resilient consumer demand and lower cocoa prices. Potential risks, though, for the stock include an economic slowdown and higher input costs. Analyst writing, quote, after multiple guidance reductions over the past year, we now see a compelling risk reward set up for the stock with cost pressures like cocoa and tariffs, largely known and reflected in expectations. Plus, the company's market share trends have improved with incremental tailwinds expected in the second half. Hershey's shares are up over 14 percent year-to-date.

One more thing I would note in this research note this morning, they're saying there's better convenience store, placement and sales expected ahead, and also product innovation, which has been so key across the food space. They're talking about the Reese's Oreo Cup collaboration. Just one thing they point out there, less. back over to you. Oh, my gosh. That sounds phenomenal. And also an interesting antidote, you know, next to Angelica's report about GLP1. So here's a sweet company that is actually doing well. Kate, thank you. Mike Santoli, your final word for today. Yeah, I mean, you know, I think that the big framework that everybody's operating under, it makes sense, right?

Everyone's sharing the same stats that say whenever the Fed cuts rates and the market's near a high, let's say, within 2% of a record high, whenever the Fed cuts rates after a long pause, as you guys were talking about earlier, it has tended to mean positive things going forward. That all fits together, it makes intuitive sense. I would point out that maybe not every one of those tried and true rules has applied this current cycle, right? We had a year and a half or so of an inverted yield curve. It did not foretell a recession. You have a lot of extenuating circumstances this time around in terms of what's driving the economy.

fascinating that the job market has been weak enough to guarantee us a more dovish fed. At the same time, we've got upside surprise on retail sales today. People are looking at CAPEX plans and the fiscal push coming next year and saying, hey, this economy's going to reaccelerate. And it's a little bit like, you know, you kind of have all gain and not much pain. We'll see if that does hold up in terms of how things develop from here. But I think that you can both give credit to what that history says to stay positive. while being alert for the idea that things maybe are going to overshoot in the short term. We simply don't know what the effect of this massive AI CAPEX boom is doing to the numbers.

And in fact, whether the market is going to stay on this idea that it's willing to look through sticky inflation and the potential overhang of tariffs. So, you know, a lot of things have to still break right to redeem a market that's trading at elevated valuations. It's been the case for a while. I think that's the interesting setup we get going into a pretty careful. consequential fed decisions now. Yeah, it certainly feels like the default for the market, regardless of the uncertainty, and regardless of the pedantile headwinds that are out there,

is to continue moving higher. As for today, energy is the best performance sector. You told it is the worst performance sector. That doesn't have a closing go. Now that's in over to all the time with John Taylor. Thank you.