Closing Bell - Closing Bell: Stocks Sink in Final Hour of Trade 11/13/25

Episode Date: November 13, 2025

Is this another routine but fleeting gut check or are the bull market underpinnings of tech leadership and a friendly Fed buckling? We discuss with Cheryl Young from Rockefeller Global Family Office, Gabriella Santos of JP Morgan Asset Management and Yung-Yu Ma of PNC Asset Management. Plus, Jeff DeGraaf of Renaissance Macro tells us where he is finding opportunities outside of tech. And, former Dallas Fed President Robert Kaplan tells us if he thinks the Fed will cut in December.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to closing bell. I'm Mike Santoli in for Scott Wapner today. This make-a-break hour begins with a stampede away from risk. The biggest winners of the year in the AI trade and high-momentum speculative plays are trampling the indexes. Ongoing scrutiny of AI build-out economics, a chorus of hawkish Fed speak, and a data vacuum on the economy have investors backpedaling from the year's big winners. So take a look at the scorecard. Where the NASDAQ is down to about a three-week low, It's off 2.4% at the moment. Invidia is six days out from its quarterly results. It is leading the downside in the NASDAQ.

The stock now 13% off of its recent high. The S&P 500, down a little bit less, but still around 1.7%. It's been in that zone for a couple of hours now. It is still barely up for the week. The Dow had only a one-day stay above the 48,000 mark. It is also lower by about 745 points at the moment. time the Russell 2000 small cap testing its early October pullback low down 2.8%. So it is not a washout across the board though as health care builds on its recent surge. It's up about 5% this

week and consumer staples offer some temporary shelter at least from the selling, which takes us to our talk of the tape. Is this another routine but fleeting gut check or are the bull market underpinnings of tech leadership and a friendly Fed starting to buckle? Let's ask our panel, Cheryl Young from Rockefeller Global Family Office, Gabriella Santos of JPMorgan Asset Management, and Young Yuma, CIO of PNC Asset Management. They are all here, and I appreciate it. Welcome to you all. Cheryl, diagnose what we're watching here. Obviously, it probably was pretty common to say, you know, the last legs of that rally to the record, maybe it was a little bit narrow, maybe a lower quality, maybe has to cool off a little bit. But it obviously is taking its toll.

There's some slippage here in this rotation. Yeah, look, I'm not surprised. I've been saying, the past three months, these stocks are priced to perfection. You look at a stock like Nvidia, it's 20% of the S&P this year. They were, I mean, people forget they were at a trillion two years ago. To go from a trillion in two years to five trillion is a massive, massive move. So I'm just not surprised they see some profit taking, but there's also some questions about large language models and what value they're really providing. And the problem, of course, Mike, as you know, comes down to data.

Where are we going to get clean data that's going to give us the results to drive margin expansion, and that's what we have to see from these companies. Do you think that that means that really all of the underpinnings of this AI-driven bull market? Look, it's three years old, this bull market. ChatGPT was launched three years ago. It's not purely coincidence. You mentioned NVIDIA 20% of the gains in the S&P this year.

It's 8.5% of the weighting. Mag 7 is like a third of the market. So, you know, how many eggs are in that basket at this point? Well, that's right. And I think a lot of the concern comes from, is AI really going to be a game changer? And I think it will be. I'm not sure it's going to be this year. I think this is a long game.

I think we're going to see fits and starts to get the results we want. And just like we saw on the dot-com crash, not that I'm suggesting a crash, but it may be that the winners are yet to emerge in terms of the actual beneficiaries. Right now, the AI gain is really coming from the companies selling the chips, etc., going into it. So we're waiting to see. Gabriela, I mean, clearly the market is having a rethink. It's been doing that periodically from time to time. Nvidia is also higher than at any price it's been in history until like six weeks ago, right?

So in other words, I guess we have to keep a lot of this in perspective. You know, the S&P is still above where we were a week ago or so. Earnings have come through, but we're in a little bit of this in-between moment where we don't really know what we should be reacting to. So what do you think that means for how investors, should think about it. So I think from a lot of our clients, we've been getting asked really since late July, you know, is really the only thing I should fear the lack of fear itself, meaning a little

less questioning of the actual fundamentals, resilience in the economy, very strong earnings growth, one that's broadening, which is good to see, monetization of AI. So it was less a question about this narrative being incorrect and more just how extended it had gotten. And I think it makes complete sense on a day like today. to see a momentum reversal. You see that in the tech complex, industrials, utilities,

about that AI story, as well as consumer discretionary bonds, the dollar. So really just a reset. And then with our clients, we think, all right, but what do we want to lean into here as an opportunity?

And we would still focus on the structural, over-cyclical themes for next year. A lot of that still is AI, is just that it keeps evolving. This year, it's already evolved as a story.

And next year, we really think the focus is going to be much more on AI enablers, which includes things like software, solutions-based, so actually sectors, companies can actually incorporate large language models, as well as physical AI, things like robotics, which really takes us a lot to Asia as a way to access that theme. Young You, I guess we have to be basing a lot of what we believe on the premise that the economy remains okay, right?

So, I mean, is that still your working assumption that, I mean, obviously we've seen pretty good earnings performance through the quarter. The market didn't reward everybody. But in terms of the economy during this government shutdown, coming out of it, what's the current condition of it? Yeah, I do think that is a fundamental underpinning that's important for the markets, crucial for the markets even. It's important to put this in perspective that what's happened is a lot of the high flyers have come a little bit closer to earth. I think that's good and healthy, actually. investor sentiment has actually turned quite quickly, and I think that's also positive for the market. So there are some positive elements to this pullback that we've had, but the underpinnings of the economy

and the underlying strength for consumer spending, for business spending, we think that remains healthy and remains healthy in the 2026 as well. And you're going to get the Fed cutting rates. I do think right now the discussion about some hawkishness that you're seeing out of the Fed, I think that's actually what's transitory. I think coming next year, you're going to see more softness in the labor market, the Fed more tilting toward defending or protecting the labor market. And that's going to help these names that have their earnings or their growth is really priced out far into the future. You need lower interest rates to sustain that. Let's drill into that Fed question, actually, right here.

So stick with me. Let's bring in our CNBC senior economics correspondent, Steve Leesman, as the odds of what we once thought was a slam dunk December rate cut are looking less likely. Steve, where do we stand? Yeah, I mean, the idea of thinking as a slam dunk, you need to be listening to folks and the probability of December rate cut and futures market slipping down to around a coin toss after several

Fed officials have either said explicitly they would not support a rate cut or suggested the bar is high. Just this afternoon, St. Louis Fed President Alberto Mussolam, saying the Fed needs to proceed with caution, seeing little room for additional easing. The Fed, he said, needs to lean

against above-target inflation, providing some support for the labor market. But it was comments yesterday from Boston Fed President Susan Collins that really moved the needle. Collins saying that she thinks the Fed should hold rate steady, quote, for some time before Collins spoke, markets had a 64% probability on a December cut. That's now slipped to 49%. Still a 69% probability of a cut by January. So Marcus still thinks it's happening. So CNBC's count here. Again, it's kind of a subjective count. About half of the members have expressed some form of doubt about a December cut. Here you can see Collins and Casey of President Jeff Schmidt.

He dissented against the cut at the last meeting, so unlikely to join again. President Schoolsby and Hussolm and Governor's Jefferson and Cook, all suggesting going slowly or some form of caution. It's Governor's Myron, Bowman, and Waller. They're all presumed to favor a cut here on the green side there, on the right side of the screen. Those who want to cut mostly acknowledge the inflation,

but they point to weakness. in the job market and say the Fed should look through the tariff-related inflation, those opposing the cuts, the inflation in the data that has spread beyond tariffs and don't see worrying signs in the employment market or the economy. Mike, this is a matter, I think, of some people hearing what they want to hear and other people listening to what the Fed is saying, and we've got a split Fed here. Yeah, for sure. And as, you know, Powell has been clear about, you're not at either mandate, so therefore there's a lot of room for debate as rates go lower, closer to neutral, whatever that number might be, Steve. So thanks very much for that

setup. And Younger, just to go back to you, you said you think this debate, this idea that for four weeks we might be in this 50-50 cut or no-cut mode is transitory. What are we going to have to see that's going to move it toward one side of a cut? Yeah, well, look, layoff announcements are trending at 2008-2009 levels. Yeah. So job creation has trended more weekly, weaker recently, and I think that's going to continue as well. And you're seeing the most sensitive part of the labor market, the group between 20 to 25, really struggle to find employment. I think that's going to spread.

I think that's a canary in the coal mine. And so as that progresses in the coming months, that shift in the Fed is going to go from worrying about inflation, which is coming down in most areas, at least from the higher levels that are more concerning, and the trend is going the other way for the labor market. So I do think this balance that we have now that you're seeing there among some Fed,

members that want to cut and some that want to hold, I do think that's going to start shifting in the coming months. I guess that would mean, Gabriela, that the market would have to tolerate more evidence of a slowdown, or lean on the faith, as a lot of people have been expressing, that the first quarter of next year, you actually have some reaccelerance in the system, whether it's because of tax refunds or kind of fresh budgets for companies and things like that. So I think in terms of the reacceleration in the first quarter, maybe even first half of the year, I do think we should look at that as a sugar boost, not a protein boost. It's about those tax rebates once that gets spent by especially lower-income Americans,

which tend to spend it. That should fade, and the economy should slow down again in the second half. So that's why we would fade certain areas of the market that had gotten a bit stretched, like consumer discretionary. This is still a very discerning consumer at the end of the day once we look through these checks. I think what's interesting that you referenced, Mike, in terms of the Fed is that they're all framing this as a normalization of policy, not an easing of policy. It just depends where they think neutral is and how much further they have to go.

So we also wouldn't extrapolate this as a Fed that's looking to ease policy or a market that should expect the economy to re-accelerate. So areas like home builders, small caps to us had also looked overextended. And Cheryl, I guess the question is going to be, too, yeah, the market can talk itself into worrying about some things, whether it's these little pockets of weakness and credit, private credit, or people are all of a sudden worrying about, you know, the balance sheets of some of the big tech spenders at the moment. And so I wonder if it could snowball or you think this is all just kind of, you know, a healthy

reckoning because really, you know, we were just talking about an AI bubble running, running away to the upside a few weeks ago, and now meta's down 20% off its highs. Clearly not everybody's winning in this environment. So is it just a healthy head check? You know, it's, it is a very good question. What we know is the data is, again, showing not a lot of margin expansion, but we're seeing a lot of momentum, a lot of traction. Some small AI companies I track are getting incredible results. We're seeing drug discovery accelerated. Things that used to take 10 years and are taking three or four weeks. So there's some real. real progress that we're seeing here.

So I don't think this is all hype and noise, and I don't think it's necessarily a bubble. It is a question of being discerning. There are going to be a lot of companies that are not going to make it through this, that it's just not going to play out. And there's going to be companies that actually have real material products and software that are changing people's lives.

I was just in the GCC, and there was an enormous amount of appetite for AI in the Gulf. They're putting in data centers, they're like crazy. And all they wanted to talk about are what are the real companies in Silicon Valley, what are they doing, what's coming up. And it was very interesting the appetite there. So we're not just seeing it in the U.S., we're seeing it across the entire world. And you're mostly talking just going to be about private companies that are sort of coming online. Yes, got it. Well, stay around for another minute here. We're also seeing

as part of this sell-off and unwind in some of the high-flying parts of the market, high-flying and maybe lower quality, Christina Parts Nevelos, tracking some of that action for us. I have it all. I have it all. And there's obviously you've been talking about a clear reduction in risk, but trading deaths at Mizzouro right now in Goldman Sachs just aren't calling this panic mode just yet. The pain, though, is concentrated. I'm putting it into three areas. First, momentum name stocks with recent strong performance. The I shares momentum ETF is down over 2%, almost 2.5%. Marking its third negative session and third week in a row down. Inside that fund, you've got Flutter having its worst day since 2020 alongside Rocket Lab,

SoFi. Robin Hood, for example, down almost 9%. Sofi, 11%. Keep in mind this particular ETF tracks excess returns over at least six months. So these are longer-term winners that are getting hit. Second, you've got the meme stocks, the narrative-driven names that rise and fall with retail attention. So open door, Coles, Rivian, GoPro, all on your screen. Rivian, I'd say GoPro, the worst, to 8% lower. And I'm going to throw in Palantir into that mix, too. It does, you can say, trade on fundamentals, but it just trades with wild swings. It's lower, about six percent lower. Third, and last, you got high beta stocks. The names that move more violently than the market average. And in that mix, the worst are super micro, Tesla, Seagate,

Coinbase. You can see on your screen all hovering around 7% lower. The drivers are across the board, you've got a few negative AI headlines in the FT, Corrieve's recent cut to revenue guidance on Monday night, lower odds of a December rate cut. You've discussed that. And then general selling ahead of Envidio's earnings next week's all are combining to push investors out of risk right now. Mike? Christina, thank you for that rundown. I think everyone who kind of does this for a living and likes to see markets reprice according to fundamentals maybe welcomes this kind of thing, right? Where you can get the market to kind of

have the froth drain away in some areas. But is it possible that that happens without the broader tide kind of going out? Because we saw what happened in 2021. Those stocks got destroyed. Everything was okay for a while. And then it turned out that the rest of the market had more of a reset to do as well. Yeah, I think the reality is that the AI trade does underpin a lot of the market, either directly, indirectly in terms of knock-on effects or psychologically. So I do think a lot of the market is underpinned by the AI trade. I still think this pullback is a healthy pullback, though. And you have this push and pull in the market, you have this reset of investor sentiment, but you also have a lot of failed breakouts and broken charts. And that does take a while to rebuild.

I think it takes a while for investors to assess the landscape again. What is actually happening, which companies are going to be able to grow, able to prosper in this new environment because we're seeing very rapid disruption. But at the end of the day, the ultimate backstop is whether or not this new technology is being implemented, used efficiently, seeing productivity gains, improving people's lives. And I do think there's a lot of evidence for that. It does take a while to play out even over the course of years. but I do think there's a backstop in this market, and so we don't actually spiral downward.

You know, speaking of broken charts, I mean, I don't think you can escape Bitcoin, really not able to get back on its feet after that liquidation event on October 10th. It dipped below $100,000 today. In fact, it's there now. It seems like stocks are somewhat taking their cue from that. Does that make sense to you, Gabriel? Just as a liquidity and risk appetite indicator. I think it's a broader symbol of how investment.

had turned into speculation, really since late July. It had been a very low quality type of rally. Quality. Talk about a factor that had not been doing well, especially over the last few months. So I think you can see that in a variety of places, whether it's cryptocurrencies, whether it's unprofitable small caps. A lot of that had been extrapolation of the AI theme, which at its heart has something real there. A lot of capex in it, a lot of power-hungry data centers, but then ended up manifesting itself in a very small company that maybe might have something to do with nuclear eventually one day in the future. And so it's just that kind of threshold that we would be careful with and important to get a reset and then lean back in

to what we think is that next phase of something real, that AI investment theme, which are much more your enablers, but that are actually generating substantial revenue already. Maybe unremarked because AI has kind of consumed so much of the oxygen, is maybe some indicators that the rest of the world, in a more traditional, cyclical way, maybe on a bit of an upswing. I mean, you look at some of the indicators of Chinese activity, autos globally are strong,

financials globally are strong. In fact, overall equities outside the US have been pretty good this year. So does that tell you anything, Cheryl? Or would you kind of follow along that, chase those types of moves? Look, I think there's a lot of reason to look abroad outside of the U.S., but I still think the U.S. is going to be the leader in all of this. I mean, we dominate in A.A., although we have to watch China without a doubt.

And I think that that is important to really look at how much you're paying in terms of these stocks, what their potentials are. And again, it comes down to really be discerning. Now, with that said, I'm a wealth manager. If I was to look at these stocks and just say, hey, my mega caps, you know, my Mag7s are too expensive. and I want to trim them. I have to worry about taxes, too. So I can't just say, throw it all out, it's 57% of my portfolio, and start over and go to healthcare, which has been doing really well in the last few weeks. And by the way, healthcare six weeks ago was flat on the year. Oh, yeah. Up 10% now. So we've seen some nice moves in other

areas outside of tax. So again, you have to look at what you're paying. I don't like shopping and paying top prices for things. Maybe the time to be patient. Great time to add some hedges and some downside protection. It's almost health care is essentially, besides it being cheap and out of favor, is also acting as like anti-momentum at this point. So it's kind of in the rotations. It's getting that benefit. You know, Young You, speaking of tax implications, man, it's one of the reasons everyone thought November is just, put it in the books, it's going to be higher, right? Seasonally, everybody came into the month saying, especially when the market's up a lot coming into November, you have a huge win rate in terms of what the market does from here. Does it

change given the fact that we've had this rocky start? Well, you do have December probably is the strongest month, so people want to position into that. November tends to be reasonably positive as well as far as seasonality goes. I don't like putting too much stock in that, though, right? Because people are also talking about how September is one of the worst months, or the worst month historically, and September did quite well, right? So in any given year, you don't want to overemphasize that seasonality. I think a lot of people also thinking about the tax rebates.

that are going to be outsides this year and how that can boost consumer spending, kind of give a jolt to first quarter or second quarter numbers as well and really want to position ahead of that. I don't think you want to try to play those shorter-term dynamics too much. You really want to think what the longer-term trends are. Where's the strength?

Which companies are improving profit margins? Who's capitalizing some of these trends? So the seasonality is there, but you don't want to over-do that idea. Sure. I think it was one of the reasons that people were able to say stay long, even though we're at cycle-high valuations, and everyone's pretty well exposed, you know, to this market. And by the way, the three-year trailing on the S&P is like 21% total return annualized. It's incredible.

So, you know, it's not as if it owes us much at this point. Cheryl, Gabriella, and Young You, thank you very much. Appreciate it. We are watching shares of Disney as well. That name's sinking on the back of this morning's earnings report. Julia Borson is here with more. On that move, hi, Julia. Hey, Mike, Disney share is plummeting 8% on a mixed quarter.

The stock falling on revenue missing analyst estimates, as D-to-C and experiences, revenues both fell short of expectations, linear network suffering a 16% decline in revenue and a 21% decline in operating income. This overshadowing the fact that EPS beat estimates and the company doubled its share repurchases to $7 billion in the fiscal year and increased its dividend by 50%.

CFO Hugh Johnston saying on Squatts, that Disney's returning more cash to shareholders, in part because of confidence in streaming, and that 80% of subscribers to Disney's new ESPN app are picking bundles, and that drives retention as well as engagement. Johnston also saying that the consumer is resilient, and that bookings at the Disney Park so far in the fiscal first quarter are up 3%. Mike? All right, Julia, thank you very much. Well, we are just getting started here. Up next, This renaissance macros, Jeff DeGraph, is breaking down the charts, where he's seeing opportunity in the recent pullback. We are live from the New York Stock Exchange.

Dow is down more than 800 right now. We are back on closing bell. More pain today for the high-flying tech and AI names, while some unloved parts of the market, like health care, managed to hold on to slight gain. Here to discuss it all. As Renaissance Macros, head of technical research, Jeff DeGraff. Jeff, great to have you on. I mean, I guess we've seen these rotations before. Sometimes they're painless.

Sometimes they're more disruptive. Is anything getting knocked off course today in this action? I don't think, of course, Mike. You know, I think actually what's interesting is some of these real, real high flyers, particularly in the Russell 3,000, the quantum names and, you know, some of the uranium names and some of these things that just didn't seem to have. any sliver of a bearish narrative are right at the edge of being oversold in a lot of our work. So I think that's good news. And it's usually the point at which, you know, it starts

to feel a little tense out there. So I like what we're seeing from that. Look, I think this is an adjustment. We always knew or we've all known that I think sentiment was a little, a little extreme. Was it extreme enough to pull the rip cord on, you know, something that's more secular? I don't think that that was there. Beta certainly was a high flyer. And now we've got this mix with the Fed and not really sure what that's going to look like. I think you're getting that pause. I don't think it disrupts trends. I think if anything, we're actually seeing some improvement in breadth and deterioration as we see health care kick in. Financials are responding well to some of the quakes and concerns that it had a month ago. And even energy, which is starting to improve looks

all right. Yeah, I mean, obviously a lot of that either could be, you know, kind of mean reversion or, you know, people sort of grabbing for what hasn't already moved as tech sells off, or maybe it is a trend change. What are you seeing there in terms of durability and things like the health care move? I'll tell you what's interesting to me, and we've been seeing this for probably two or three months now, particularly in health care and a little bit in energy, that globally they've looked a lot better than they have here in the U.S. So I think there has been this focus, this tech dominant focus in the U.S.,

that really was not, one, because there aren't that many tech names, you know, globally that really matter, but that we are seeing better energy charts and breakouts in, you know, Galaxos Smith-Kline and the like. And so I've been more encouraged that we're kind of catching up to what the rest of the world is doing. And in my view, that usually has more durability. You want to see this sort of global synchronization taking place. And certainly we've seen that in Asian energy, in Asian pharmaceuticals, in European pharmaceuticals. So I do think that there's something there. One of the indicators that we look at is kind of this rolling alpha model that we developed.

And you've never seen returns, three-year rolling returns from an alpha perspective, worse than what we've seen in health care up until about a month ago. So there really isn't anybody on the planet who's lived through this and seen these types of returns. And these are usually the types of spots that bottoms develop. Now, they can languish for a long time, so it's not a great timing tool. but just in terms of the overall conditions and where we are, you know, when we start seeing these breakouts, we start seeing relative performance improve. We want to find the bearish narrative, not just dismiss it.

So I think there's something there. When it comes to energy, it is kind of interesting. Obviously, you know, it hasn't gotten any help from the crude oil price, although natural gas has had kind of a rip here lately. So does that add credence to it, do you think? Or is it telling us anything about the macro? Or is it just seem as if, you know, there's more demand for these stocks? particular. Yeah, it's on a relative basis they haven't broken out yet. So we're more lukewarm on

them. I mean, the absolute charts are okay, but we're more lukewarm. I think the refiners look better. You've got some of the marketing and the equipment names that are selectively better. So we're not full throttle in energy, but I would just note that, you know, even kind of a dead space like energy has started to find decent charts. And obviously, relative performance is an important part of that, which we don't have yet. But I think it's okay. Again, I would just go back to the global nature. You don't have to have crude in lock step. I mean, if you're going to tell me that crude's going to 45, then I think we probably have a problem for these energy names. But if it's stable right here, you know, I think we're okay. And a lot of these names still look

like they've got higher in them. And there's a lot of reluctance out there. And I get it because the performance has been so bad. But at least we're starting to see some glimmers. Yeah. I mean, the smaller part of the benchmark, everyone feels like they have permission. to ignore it. So, you know, maybe that's a benefit. Jeff, great to catch up. Thank you very much. Thanks, Mike. All right. Still ahead. Former Dallas Fed President, Robert Kaplan is mapping out what he thinks the Fed's next move might be, and if a December cut is in the cards. As we head out, a quick check on the broad markets, continuing to sell off the S&P 500, down about one and two-thirds percent, and the NASDAQ off 2.3 percent. Closing bell will be right now.

Let's send it over to Christina for a look at the biggest names moving into the close on this tough day. Thanks, Mike. Well, Planet Fitness shares showing resilience today after it issued strong long-term guidance, including new club unit growth between 6% and 7% ahead of its investor day also today. It comes after the gym giant posted a beat across the board with strong full-year guidance in its earnings just last week. That's why shares almost up 4%. Meantime, Sweet Green shares also on pace, surprisingly, with this market sell-off for their best. day since April after CEO Jonathan Neiman disclosed a purchase of roughly 180,000 shares

of stock. Co-founder Nicholas Jamet also disclosed a smaller share purchase. That's why shares are up almost 12%. And last but not least, spectrum brands on pace for its best day since August of last year after it demolished, nearly tripling analyst profit estimates in Q4. Great word there. It did miss on revenue, but the owners or the owner of brands like Black and Decker and George Foreman guided profit growth. as well, strong revenue guidance for the upcoming fiscal year. So a little strength there, up 9%. Mike?

All right, Christina. Thank you. Up next, former Dallas Fed President Robert Kaplan tells us if he thinks the Fed will cut rates next month, closing bell, be right back. We are back on closing bell. The outlook for interest rates weighing on stocks today. The market now pricing in a near 50-50 chance the Fed will cut at the December meeting. Joining me now is Robert Kaplan, Goldman Sachs, Vice Chairman, and a former Dallas Fed president.

Robert, great to have you on. You call this decision an agonizing one for Fed voters in this coming meeting. I guess given the fact that labor market is definitely softened up and we still have inflation sticky above the target. What do you think is going to kind of break the majority in one direction or another? Yeah, I think this is one time where the market probabilities at 50-50 have it about right. And if I were in my former seat, I would use every bit of the time between now and December 9th to assess this and make a judgment.

But the agonizing part is exactly what you just said. Tariffs in the near term are slowing growth. The immigration policies. Uncertainty around 12 to 15 million immigrants that are in the workforce is not only affecting supply, but I think it's also hurt growth and created some headwin on demand. And then lastly, the shutdown. Obviously, the shutdown is getting resolved, so that will help. But it's not surprising that the labor force is weak.

What the Fed's going to try to have to figure out is, as we go into 2026, will the tailwinds be more powerful, have more force? The shutdown will be unwound. You've got tax incentives coming. You've got regulatory relief coming. You're still in the middle of an AI data center power boom. And the problem is they're near neutral on the Fed funds rate. And that's why the stakes are much higher on this decision because they're so close to neutral. Well, that's interesting because obviously pretty much everybody has his or her own version of where neutral sits, right?

I mean, we're at three and three quarters to four percent. That's the current Fed funds rate range. You obviously have Stephen Myron, who has dissented in favor of a 50 basis point cut. I think that, you know, there's a sense out there that he believes neutral is much lower or should be. So where do you think it rests and and what does that mean for how this debate is going to develop? So I think the real Fed funds rate, neutral Fed funds rate, i.e. X inflation is probably between three quarters and one percent and one percent. And I've found it hard to find many people who have estimates below that. So then the debate is for those who think the neutral Fed funds rate,

today, nominal should be two and three quarters, I think they're assuming that inflation's going to return to 2%. The problem is it's running at 2 and 3 quarters to 3, and it's been above target for three or four years. So I take the 3 quarters to 1%, add the current inflation rate of 2 and 3 quarters to 3, and I get 3 and 1⁄2 and 3 quarters. Now, why might I be wrong? if inflation improves into next year, that would lower the neutral rate. But I think you're more likely to see into the first half of next year a firming in inflation. Maybe over the horizon you'll see improvement. But I think it's a leap of faith to think that the inflation rate is going to improve in the first couple of quarters of next year.

So I might have thought at the beginning of the government shutdown, even if it persisted as long as it turns out it did, that, you know, we were going to be deprived of most real-time economic data from the government, and that might have tilted the committee more in the direction of, okay, I'm going to err on the side of easier, not tighter. That doesn't seem to have been the case. So I wonder if there's particular things you think that these hawkish voices are focused on that's come in recently, or it's just a matter of we can afford to wait? I think here's the reason you're hearing more hawkish voices come out.

closer to neutral. We cut in October, we're another 25 basis points. That's why you're seeing the split. In fairness, secondly, the shutdown has hurt growth. So that's a factor arguing for cutting. But I think the fact that inflation's been sticky and we're getting close to neutral, I think do you really want to be at neutral when inflation's running three quarters to one percent above target. And that's why I say it's a game time decision, and I take all the time between now and December, because I really want to every day and every week assess what's really going on the labor market. How much of this is a real cyclical slowing? How much of it is due to the shutdown, which is getting reversed, and how much of this is structural, i. mismatches between people

looking for jobs and open job, which there's a lot of open jobs that can't get filled. And I think they're trying to come to grips with that. Yeah, it's all pretty tough. We've got less than four weeks, I guess, of data to scrutinize. And it does make sense if the market was pricing in a sure thing cut to have a lot of folks come out and say, look, it might be a closer call than that. So here we are. Robert, we really appreciate the time today. Thank you.

All right. Good to talk to you, Robert Kaplan. All right. Up next, we have a housing alert, the new warning signal that just flashed will bring you those details. Plus, we're all over the pullback as we head. into the close. You see the 1.5% drop in the Dow Jones Industrial Average. The S&P just up off its lows, also down about 1.5%. We are now in the closing bell market zone. Dear Jaboso standing by with more on Alibaba's big AI revamp. Christine Departz Neveless here

with what to watch from applied materials results in overtime. Diana Oleg covering a big jump in foreclosures in October and MetLife Investment Management's Drew Mattis is here to break down these crucial moments of the trading day. But first, we're getting a news alert on AI startup thinking machines. Mackenzie Segalos has that for us. Matt. Hey there. So former Open AI exec, Mira Murati, is in funding talks to raise an evaluation of the range of $50 to $60 billion for her company thinking machines.

That's according to Bloomberg, citing people familiar with these talks. That would more than 4x the startup's value just from July, making it one of the most valuable private companies less than a year after launching Maradi. she just brought this to market in February. Keeping an eye on this, though, sending it back to you. Remarkable. Jump in four months. All right, Mackenzie, thank you very much. Deirdre, Alibaba, Open AI, seems to be on some investors' minds today. Yeah, so Alibaba is rebranding its existing AI chat bot from Tongyi to Quinn.

That is its core AI model. This puts it in greater competition with Chattebt, yes. But this is also a sign of Quinn's success in terms of adoption and capability. So rebranding going global eventually. That's an effort to really push Quinn beyond China into consumers globally. Something that's already happening in the back end as an open source model, enterprises and developers. They can host Quinn on their own servers, which means Alibaba's technology is already spreading beyond China, even if most users don't realize it. This move, though, gives Alibaba a different kind of leverage in the AI race, consumer products that can be better monetized.

Mike? Dean, thank you very much. Christina, Amat, what should we look for? Wall Street's looking for revenue of about $6.7 billion. That's down roughly 5% from just a year ago. The company, though, has a strong track record beating on revenue in 17 of the last 20 quarters,

but shares of the chip equipment maker have fallen after each of the past six reports. Expectations are somewhat low heading into this one, and already slashed their forecast after weak guidance just last quarter, so any beat tonight would come against an easier bar. Looking ahead, investors will

be watching for updates on China demand after recent export restrictions and that had an impact to revenues and then signs, of course, of AI-related spending helping to drive orders from memory and advance chip tools just in the next quarter. Mike? All right, we'll look for all of it.

Diana, foreclosures uptake. Yeah, that's right. While the numbers are still pretty small, the persistent rise in foreclosures may be a sign of cracks in the housing market. There were just less than 37,000 U.S. properties with some type of foreclosure filing in October. That's default notices, scheduled auctions, or bank repossessions, according to Adam, a property data firm. That was 3% higher than September and a 19% jump from October of last year and marked the eighth straight month of annual increases. Foreclosure starts, which are the initial phase of the process, up 6% for the month and 20% higher than the year before. Completed foreclosures, that's the final phase, up 32% year over year. Florida, South Carolina, and Illinois led in the nation and state foreclosure filings.

a city level. Florida's Tampa, Jacksonville, and Orlando had the most filings with Riverside, California, and Cleveland rounding out the top five. Mike. Diana, thank you very much. Drew, obviously the market under some pressure here in part because of this switchback in the AI names, but the Fed is part of the story, I guess. At some point, we're pretty sure that was going to be easing into a decent economy. How do you see that equation? Well, I think the Fed's talking about not easing into a faltering economy. because I think, you know, the data that's come out, the housing data is just yet another kind of thing that doesn't make sense that the economy is as strong as people are arguing it is. If you look at the data, the data is clearly weakening. If you're looking at companies, you know, companies that are missing are announcing layoffs pretty quickly thereafter.

So firms are trying to figure out how to manage your expenses and how to manage how many people they have. And once enough firms basically announce layoffs, it kind of becomes okay for other. firms to announce layoffs, too. And I think you're beginning to see this kind of downward trajectory in the labor market, even though we don't have the official government data, I think it's pretty clear that firms are actually moving towards kind of a cost containment, reduced employment story. And that should keep the Fed moving rates lower, but they're talking like they're not going to. For sure. And I wonder if trying to figure out if the market immediately is going to rush to the conclusion that holding rates here in December would be a mistake, I mean, maybe you're going to

you would expect the tenure to rally more. I mean, 10 year yields actually up a little bit on the day. Does that fit into the narrative at all? It doesn't really. If the economy, you know, if they're not going to ease, then actually I would expect that's actually more likely to pull the 10 year yield lower. And the reason for that is because if they're not going to ease, I think the economy has a greater potential of weakening and weakening over a long period of time. And so, you know, in my mind, I don't actually see the 10 years being the problem here. I think the problem here is that, you know, the market needs to see the Fed as kind of a consistent player over time. And instead, we're getting this kind of jerky reactions from the Fed where it's like, oh, we need the lower rates.

Oh, wait, 50 basis points was enough. 50 basis points is rarely enough. You know, it usually is the trend in activity from the Fed that matters. and people don't believe the trend is there or may not be there after December because if they don't go in December, they're not restarting in January. And so, you know, I think this Fed has to get maybe a little more aggressive in their communication strategy, a little more consistent in their communication strategy. I think people understand that there are differences of opinion within the Fed.

But really, the direction of travel, in my mind, should be obvious, given a lot of the noise that we're seeing from companies, oddities, and foreclosure. closures, et cetera. You know, there's just something not right with this economy. I think we're smart, and that's important. Yeah, well, we'll see. We've got a couple of weeks, perhaps, for them to make their case or refine it a little bit from here. Drew, really appreciate the time.

We're running up against the close here. 20 seconds to go. The S&P 500 is still down about 1.7 percent, still above the lows of last week. But the NASDAQ has been bearing the brunt of it down 2.3% on the day. The small cap also weak off. 0.28% on the Russell. That does it the closing bell. It's into overtime with John Ford.