Closing Bell - Closing Bell: Stocks Stretched? 10/20/25

Episode Date: October 20, 2025

Blackrock’s CIO of Fixed Income Rick Rieder weighs in on the market, credit market concerns and the future of the Fed. Plus, Apple is on pace for a record close. We discuss with CNBC tech reporter Steve Kovach and Big Technology’s Alex Kantrowitz. And, we break down the big moves in Boeing and TripAdvisor.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

All right, Brian, thanks very much. Welcome to closing bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break out begins with the big bounce in stocks, some positive trade headlines along with Apple's new record high. Very much the stories today. Here's the scorecard with 60 to go in regulation. NASDAQ leading the action today.

We'll discuss this renewed Apple run in just a bit. There's your picture. S&P 500 having a good day as well. Zions is reporting earnings in overtime today. Regional banks are in focus on those credit. concerns. Yields they're steady while both gold and Bitcoin, they're shooting higher today. There's your picture now. Gold at 4377. Bitcoin back above 110,000. It does take us to our talk of the tape. Our stock's too stretched or about to take their next leg higher. Let's ask Rick Reeder. He is BlackRock's

CIO of fixed income. He is also head of the global allocation team. And great for us. He's here at Post 9. Welcome back. Thanks, Charlie. What is your current view of these markets? We keep getting through these turbulent little episodes, and here we are. What do you think? So, by the way, it went viral when I was on your show. We talked about, I think it was two times ago. This is a pretty good investment environment. You said it was like one of the best you've ever seen.

That's what you're referring to that went viral. And listen, I think there's a couple things that apply. One, you've got an economy that's operating a pretty good level. I mean, just printed, or we think you're printed second quarter GDP 3-8, third quarter we think's running 3-3. You've got an economy that's operating a pretty good level. and you've got a Fed that's got to bring rates down, and you've got a dynamic where corporate earnings are pretty good.

I think people, one thing that I think is extraordinary. By the way, do I love multiples, these levels, I don't. But these earnings, I mean, the level of earnings, and you're watching productivity happen, everybody wants to talk about AI, but productivity that's happening. You see it in inventory management, logistics, automation, customer procurement.

Like, I'm pretty blown away. When I go through these earnings numbers and say, gosh, these are pretty impressive and you have the level of cash that's sitting out there that you know my guess is it continues to drive these markets higher you and tony pascarello at Goldman seemed to have this sympathico of your belief on on where we are and this ability to look beyond the noise tune some of it out and focus on the big picture today's note he says quote if you want to be a serious bear right now i suspect your timing needs to be impeccable where the fundamental setup needs to change otherwise you're fighting the fed and

stimulus and U.S. mega-cap tech. I mean, it sounds like you could have written that. And, well, I mean, I agree. He's pretty smart guy. I agree, but you also have a couple other things at play. The amount of cash on hand that's just got a naturally and just normal earnings, savings that has to come in, and the buybacks. I mean, we're witnessing something that is history in terms of these companies throwing off earnings. And by the way, we talk about is an AI bubble or is it's a bubble? I mean, I'm actually going through a presentation where I'm presenting that the cash flow these companies throw off, the free cash flow they throw off, that allows them to do cap-ax, allows them invest in R&D, but then buy back their stock. So you actually are

reducing your book equity outstanding and driving your stock hire. It's pretty, it's pretty unbelievable. There was a report that I read today that because of the intense level of CAP-X, that so much money is going towards CAP-X, that it's going to eat into the ability to buy back stock. You have to make a decision, and if you're a mega-cap, and that's maybe what we're referring to, that called into question the continued buybacks if you're going to keep amping it up on the CAPEX. So I don't know. I mean, at the end of the day, the actual, the answer is the amount of CAPX is going is intense. I mean, the sheer size is going in. You still have enough free cash flow. By the way, we're talking about free cash flow. Companies can buy back their

stock. They're not throwing off positive free cash flow. They're still throwing out enough free cash flow to buy back your stock. So it's pretty, it's pretty unbelievable. By the way, not everywhere. I mean, I think part of why I think tech is exciting. You know, I say, you know, you've got parts of the stock market. We talk about small caps all the time. And it's very interesting. And you haven't. And I have it. I don't think they're very interesting. Yeah. But big tech, and by the way, you take big tech and expand it to who else is around data, including retailers, including obviously semis and everything that's around technology. The ability to use data is pretty, and I would say, energy.

you're in entertainment. Same, same dynamic. Is there pockets of froth that makes you a little uneasy? Apollos, Torson, Sloke had an interesting chart out today. Companies with negative earnings are outperforming companies with positive earnings. That's pretty interesting. That's this month. What do you think about that? So there's truth to that. I mean, in fact, this month, I was looking at the most shorted stocks. They've killed it. And so clearly it's a dynamic where People have gotten short names, that's running higher. Listen, I think, you know, I think we've talked about it, we talked about in California, the idea around complacency, complacency is high.

And, you know, you look at your portfolio today. By the way, you look at Apple, you look at other names. They become larger and larger portions of your portfolio. You have to be thoughtful about that and how do you manage the downside. The nice thing is a volatility in the markets is pretty low that you can buy some downside there's some interesting things you can do to buy some downside. So you can stay long, but then have some, some downside protection. Well, that's one of the reasons that you listed the last time as to why

the investing environment was so good, because the ability to hedge, the ability to buy the protection pretty cheaply. Yeah. Yeah. So by the way, the other thing, because you're seeing single name volatility at some pretty, I wouldn't say extreme levels, but significant, you can override a number of your stocks that are organic in your portfolio, get paid for your single name to buy some downside protection. The other side of it, by the way, I don't mean to suggest that the equity market's going to keep running unabashedly higher, the thing I would say is that your ability to actually, and we're actually building a bit more balance in the portfolio, buying a bit more fixed income than we are equities these days, because the income levels in fixed income are awesome.

And we're still creating over 6%, barely, above 6% yield using a lot of tools to get there. So today, you think about if you're in a pension endowment foundation, your ability to, gosh, if you get a 7% return target, you can get 6 in fixed income. It's pretty good. And do you reduce a little bit of your equity that's taken you to a nice position? At the same time, I saw a recent interview I think you gave in which, I think it was an interview format. Correct me if I'm wrong. Where you said the, quote, generational opportunity in bonds is getting mature.

Yes. Explain that. Yeah, so there are parts of the fixed income market that has gotten spreads to some pretty tight levels. Investment grade credit. We've reduced some U.S. investment grade credit. We still like Europe because of the cross-courgarten. For credit. because you can swap it back to dollars.

But, boy, you look at U.S. investment rate spreads, not that interesting. There are pockets of places that you can take advantage of. You know, we shift to places like agency mortgages. Yeah, we're using a little bit more emerging markets today because we feel good about dollar staying contained. So the opportunity set in terms of spread assets is not nearly as robust as it was, but you're still getting yields, particularly if you go internationally.

And so we're holding some of our interest rate exposure places like Australia, India, Indonesia. So it's not as though you can go everywhere to get the yield and the opportunity like you did a few months ago. But there's a view also that internationally may present better opportunities for equities, whether it's Europe and emerging markets, which are outperforming the U.S. What do you think? Not so much. I, you know, if you take from a multiple perspective, by the way, European financials, I think, are quite reasonable. They had a good day today, even though there was some news out.

European financials, I think, are interesting. There are a few European technology companies that are interesting. But if you take by and large, you know, people talk about the German infrastructure spend, and I look at industrials there, not that exciting. So I still prefer equities in the U.S. I prefer fixed income, actually, in Europe. But equities I'll take the U.S. all day. So since we last spoke face-to-face, which I think was in California at Future Proof,

we have this bubble up in credit concerns in the leveraged loan market. Do you feel like you have a good handle on that? So I would say, you know, whenever you're involved, we're very involved in credit. You have to look at all parts of it because you don't know who's doing bilateral credit, what the covenants are, what the collateral is, pick financing, et cetera. I will say, I haven't gone through a few crises in my life, by and large, I feel pretty good about we're not going to see a secular problem. You don't really see, you don't see a lot of low collateral pick finance. I mean, I would say, by and large, it's in pretty good shape. I will say, you know, I've talked about it before, the low-income part of this country,

which is a bigger portion than people say, I would argue up to almost half the country, is struggling. And I do think you will see whether it's in subprime auto, whether it's in the lower parts of the credit card business. I do think you will see some higher levels of defaults, but not a structural dynamic that is out there. You don't worry that anything out there is systemic. Not even close. I mean, not even close. When you think about, hey, first of all, the big banks,

It's obviously well articulated around the leverage isn't a good place, the diversity of where they're lending to. And even at the regional side, I mean, I've been including this weekend, I was looking for some opportunities among the regional banks. You know, they're okay. You know, they huge equity opportunities. I'm not sure of that, but I'm pretty certain there's not a bubbling problem there. You think it's overdone what we've been seeing in the regionals? I think it's overdone. Like I say, it's just hard to see.

You know, I looked out at the show and I think about where I could buy some paper. and I don't see a lot because they're not as heavy in terms of where they are in capital and the ability to actually grow. So I didn't see a lot of gashes upside. I didn't see the growth paradigm, but I certainly don't think it's a secular, you know, systemic problem. You worry about what's out there that you can't see because it's worth, you know, essentially talking about the shadow banking system where it's so opaque for the most part that you don't

really know what until something comes to the surface and then it's right in front of your face and you're like, oh man, now what are we? do. So you know what I've found over the years? You never, like, what are you hedging for? And I give away more basis points in my career for hedging for the thing, because you usually don't get warning for what it is. Today, I don't see anything structural. Usually it's driven by where there's too much gearing, where there's too much leverage in the system. It always presents up how you think about where Europe had stresses, obviously because of the Asian crisis, the M crises. So you don't see, the only place you see the leverage is in the government

is your Treasury has a lot of debt. That's the only place. Will the Treasury be able to to finance it? I think part of why rates need to come down so the Treasury can keep financing at attractive levels. But you can see, you can see where the debt levels are in the government and the ability to either finance it or not. You can see the movement in interest rates. You can't really see to what degree there was so much demand for paper that lending standards were lax and now we're only starting to see the cracks. listen, you can't see exactly how people are lending, but you can see the capital ratios, you can see, you know, where there's excessive gearing, unless you think the economy is going

through a significant downturn, boy, I don't see anything in terms of who's exposed in terms of their debt relative to their capital, that there is anything out there. I will say one thing that I've learned over my career. There's a rhythm to markets that complacency, and I always think about this Minsky cycle, complacency builds, and then you start to see pressure. Part of what the discussion about, do you take a little bit of beta down? You take a little bit of beta down. But I don't think there is, I don't think there is the big get out of the way thing coming unless there was some massive exogenous shock.

Do you think people make too much of like Jamie Diamond saying, you know, the cockroach thing is there's never just one. It would take a severe economic or a more pronounced, maybe severe is a bad word to use, pronounced economic downturn for us to really have some issues? I think so. Listen, I mean, I think he's a pretty smart guy. Are there other issues out there? There are probably a few other issues out there, but no.

Unless you, if you thought labor would come under tangible pressure, listen, I think we have, and I think part of what the Fed's got to focus on, is I think we have labor because of the other side of productivity is we're going to employ fewer people. If, for whatever reason, you felt like we're going to go through a significant downturn in terms of labor, then we have to start thinking about the housing market. We've got to think about credit cards, subprime auto, et cetera. But I just don't see that today. What did you make of the Fed's announcement, if you want to call it an announcement,

that they're going to end the runoff in the coming months? Some would say, well, it can't be a coincidence that we're having these conversations about credit and maybe a little bit of tightness as they make that call. What do you think? I mean, one man's opinion, I don't think they have to keep reducing the balance sheet. I don't see any reason why liquidity. I would argue today, liquidity is as important to markets, to the, to the, to the, economy to velocity in the system, liquidity is arguably more important than the actual interest

rate. The amount of people that have actually borrow off the front of the yield curve is pretty muted to start with. I think it's a big deal. I don't think there's any reason to run down the balance sheet. The total size of the Fed's balance sheet today, I believe, is 22% of GDP. I mean, people say, well, look at Japan. Japan was, what, five or six times that. I think the Fed should end the runoff. By the way, I don't think there's any reason of the Fed to reducing mortgages at the same time affordability is difficult in the mortgage market. So I think it makes a ton the sense to end it, I would have ended it sooner, but I think they certainly could end it. Yields moved a little lower the day that Powell said. He was at Knave in Philly, I think,

when he said that. Bill Gross posted last week that the 10-year has, quote, no business below 4 percent because of supply, because of the deficit. What do you make of that comment? You know, listen, I've talked about the debt in the country. The debt in the country is too big. We've got it. We've got to continue to move it down. And the only way, quite frankly, the only way that we bring the debt down on the country is we've got to run nominal GDP at five. We're going to get the cost of the debt down to three. Part of getting the cost of the debt down, the Fed adjusts down. It will pull the 10-year down.

So, listen, I think the 10-year is going to stay around this level, and I think it's going to migrate a bit lower than here, depending on how the Fed thinks about balance sheet, et cetera. So I don't have any issue. By the way, these real rates today, if you think about where we're running in inflation, I was looking at real rates at the very back of the curve today, pretty attractive levels relative to history. How does it feel to be in the so-called Final Five?

I saved the best for last. I would wonder whether we're going to end the... It's, I mean, it's the biggest honor of my life. I mean, it's surreal. And I, like I say, it's an incredible honor to be considered among that group of people. Would you want to be, Fed Chair? I'm focused day-to-day in what I'm doing, and, you know, I love what I do today. But, like I say, it's great to be included in the discussion.

I asked Muhammad Al-Aryan who the markets would like the best. He said, you and Warsh, do you think that the next pick, whether it's you, Warsh, or somebody else on the list, needs to be blessed by the markets? No, I don't. I actually think at the end of the day, to me, the biggest stress point in the system today, as we talked about, is low to middle income in this country, where I think the real duress is. When you keep interest rate as high as you do today, we have a country that's become savers, older savers. In fact, there's a stat that I looked at that the wealth in this country used to be 19% that people are 70 and above. It's now over 30%. Older savers, when you keep the interest rate high, you're actually allowing for wealthy older savers to do well. Who, by the way, are the players in the market where I think you have a problem today.

We need more housing velocity. We need to protect small businesses. We need to protect a number of things around lower income that are part of the earlier conversation. That's where I think, quite frankly, the initiative needs to come. from. I mean, Chair Powell was criticized in some respects and for keeping interest rates too low for too long. And one of the reasons you could make an argument, he has said, if not directly in the past, he certainly alluded to it, because of concern for the same thing, for lower income consumers. So if you raise rates too quickly, you're going to hurt the same people you're suggesting

are hurt by keeping rates too high for too long. Listen, I think today it is very clear that when you look at credit card delinquencies, you look at auto loan charge-offs, the lower income is where you're having real stress today. And you think about who are tariffs hurting. It's that same cohort that are getting what is a tax, if you want to call it that. And at the same time, we're charging too much on their interest rate. So you can't, if your wealth is built up in your house, which has happened with a lot of lower to middle income, you can't unlock it. He goes, A, you can't take out a home equity line. B, you can't sell your house and move to another state if you want to take out another job.

So, listen, I think the interest rate would be quite helpful to much of the country today. And it doesn't. And when people say, well, it's going to create, if you lower the rate, it creates a financial conditions ease that we don't need, given where the market is. If articulated right, I actually don't believe that. As long as you're going to a level that is closer to neutral and is helping a huge cohort of the country, I actually think you're doing, you won't create a financial easing of any single. significance, and you'll help a lot of people. If they cut this month, which the market's convinced it's happening, it's like 100% quite literally, should they go 50?

Will they go 50? Should they? Yes. Will they? No, I don't think so. I would get the rate, personally, I would get the rate to three sooner rather than later. By the way, you look at what's having a five-year inflation break-evens. Every day, they trend down. Today we're trading 232.

So to say inflationary expectations are unanchored, they keep coming down. And so if you've got five-year inflation expectations, and five-year break-evens at 2.32, if you've got the funds rate at three, you're still well above where five-year inflation is. So I would have no problem getting that rate to three. And then, you know, where do you go from there? I'm not sure you have to go a lot from there. Let me lastly ask you before I let you go. Gold, the debasement trade is people are characterizing what's happened with gold. You subscribe to that?

Is that what it is? And how high is it going? So, you know, I'm, you know, my global allocation fund, it's all public. I mean, I have a decent position in gold. We do, you know, we do a lot with options to create convexity around gold. Listen, I think gold's going higher. People around the world are looking at, gosh, I want to hedge the dollar a bit. And you've had that acceleration of that activity.

And so gold is the, you know, we could argue, is Bitcoin part of it. You know, Bitcoin's a tougher trade as a pure hedge to currency. There's hundreds of years of efficacy to gold as a hedge. So, anyway, I think gold probably still has, I'm probably. pretty blown away how fast it's accelerating. I mean, the chart's pretty incredible. When you back, I'll just show it again on the stream. You back it out. It's like crazy.

Yeah. I still like it. I still think you're supposed to own it. But, you know, there's also some things to do around. Can you sell some call options struck high to trying to do some of your exposure, but it keeps running up. But I think it's, I think it's, if you want to hedge some currency around the world, whether I believe it or not, many central banks, many reserve managers believe it, and that's what people are doing. Appreciate it as always.

Thanks for being here. All right. That's Rick Reader of BlackRock right here at Post 9. Let's talk Apple shares. They're hitting a fresh high of their own today on optimism over the new iPhone. We'll watch now to see if a record closes in the cards, and we'll track that for the next 40 minutes or so. Joining us now, CNBC tech reporter, Steve Kovac,

and big technologies, Alex Kancherwitz, a CNBC contributor. Kovac and Cantrow are back together, and we're so happy about that. It's good to see you. Steve, what is behind this move? Yeah, just woke up this morning, Scott, to a bunch of bullish analyst notes, a great headline for Apple in the Financial Times saying this is the best iPhone cycle since COVID and just so many other things. following on the themes that we've been talking about since the iPhone launched back about a month ago. Actually, we were talking about it before because, look, we've learned over the years, Scott. It's been 18 years since the iPhone came out, the very first one, that when Apple changes the design, gives new hardware features, whether that's a bigger screen, changes the overall design, adds more cameras, adds 5G to it.

You can literally chart it. You see the surge in growth every time Apple does. That does that. They didn't do that last year. They tried to push the artificial intelligence product. That didn't work. That didn't drive sales. And this year, they went back to the basics. And they said, we're going to make a new design. They have the iPhone Air, that's super thin design. The iPhone pro models, the two over there. They got a better camera system, really good battery and a new design. And then you got that base model iPhone that is a hot item out there in China, in part because of those Chinese subsidies, but also because it started adopting some. of the new features from the iPhone pro, including a better screen, smoothness of the animations on the screen. So you put all of that together, and it's turning into a gross cycle for the iPhone and something we haven't really seen since Huawei came back online and started being a real competitor for Apple and China and also just all this economic uncertainty around tariffs, Scott. I mean, Alex, you've bet at this, not you, but the investor or skeptics have

bet against this company at times at their own peril. Is this another one of those moments? I would say that, you know, this is definitely Apple returning to its roots. Remember, 50% of the company's revenue comes from the iPhone. It's still an iPhone company. And the bet against, and I've definitely been a part of the criticism, the bet against the company has been that they couldn't get their act together on artificial intelligence. I think that's still in play. the difference here is that as these phone sales have served, the threat of AI has gone from something that might have been immediate term to something that's now clearly intermediate term. None of Apple's competitors have come up with the defining product or defining feature

built on artificial intelligence. So what you see now is the company capitalizing on what it does best, which is making the iPhone, while having some breathing room on the AI conversation. Now, I still I still think this is a very serious long-term liability for Apple. If it cannot get the AI house in order, we've seen many of its key executives move to places like meta over the past few months. But if you're Tim Cook or if you're an Apple shareholder, you have to be happy because the iPhone for many quarters was stagnating. The only thing doing double-digit revenue growth within Apple was services. Now you have last quarter 13% growth. We now see that maybe the 17 is on track to do double-digit growth as it comes out. And That is what Apple needs to do. So I think bet against the company at your own peril definitely remains true, but they're not completely out of the woods yet in terms of the thing that we've been digging them for over time. No, that's right. Steve, I mean, how do we reconcile the AI deficiency if you want to put it that way? They have one more shot to get it right.

I mean, this spring was when they said we can't do it. We're not going to release this product. Siri is not going to get that big AI update. We advertise and promise would be. core to the iPhone 16 experience. Okay, now you have a, you bought yourself another year to get it right. They got the tariff picture behind them a little bit. They got the iPhone 17 showing success. But to Alex's point, there is so risk here. They're losing talent, and they have to, they've proven that they can't build it themselves. Now they're looking to partner with one of these

established players. This has to really nail it when this new updated version of Siri comes out. We're thinking early next year. If it isn't on par with something like chat GPT or one of the others we talk about a lot, we're going to have a much different conversation in four or five months time, Scott. And lastly, Alex, I mean, part of this story is about diplomacy, both domestically and internationally, right? We're having this conversation days after Tim Cook returned from China. He's seemingly managed that about as well as you could. and he's done that in his own way as well at 1,600 Pennsylvania Avenue.

That's spot on. And to me, looking at the counterpoint research report that came out this morning and has really driven the stock forward, but to me the line, the most important line is that the base model in China has doubled in the first 10 days of selling between the 16 and the 17. I had to read that like three or four times to make sure I was reading the same thing because Apple has been in trouble in China. We've had the Chinese government reportedly tell government employees no iPhones in the office.

We've had this happen in the middle of a pretty significant trade work between the U.S. and China. And to me, the arrow was pointing down in China. It seemed like there were many liabilities and points where, you know, you could see this continue to decrease. And the fact that Apple has been able to surge within China, to me, that's the headline. This is an important country for the company's ability to continue to grow its revenue. if it's getting its house in order in China, that's a major deal and really points to continued quarters of revenue growth ahead. All right, Colback and Cantrow, appreciate it. As always, by the way, the stock record closed, 259.02. We're obviously above that level, and we've got about

35 minutes to go, and we will follow it right into the close. We are just getting started here on closing bell up next. Credit concerns in the regional banks and what to watch for when Zions reports in over time, we'll tell you coming up. We're live at the news. New York Stock Exchange. You're watching, closing bell, on CNBC. We're 30 past the hour. Got a five handle on the game for the Dow. Now, 540 to the plus side. The NASDAQ's up almost one and a half percent, too. So market's getting a lot going today. Despite credit concerns, which are hanging somewhat over the market, did at least make for a dicey last week, especially for the regional banks, including Zions, lost a billion dollars in market

cap in a single day last week. The company does report earnings in overtime. Hugh Sone is with us now. So it's going to be interesting not only to see the numbers, but maybe more so the commentary we get, Hugh. Yeah, that's right, Scott. So Zion's bank is scheduled to post results after the close, with analysts expecting EPS of $1.41 on revenue of $843.1 million. But what investors really want to hear about is their credit underwriting, and specifically how they came to lose. $50 million to a pair of CRE investors known as the Cantor Group. That's the disclosure that Zions made last week that sparked the sharp sell off from regional banks on Thursday. Investors want to know how much Zions is lending to non-depository financial institutions or NDFIs

and what the biggest exposures in that group are. They will also want to know the status of the independent review that Zions promised about the lending. This is happening because of the bankruptcies of Tricolor holdings and first brands last month as investors on edge for possible failures in the underwriting that fuel the private credit. boom. Private equity and alternative investment firms and publicly traded BDCs are all trading heavily in the red in recent weeks as investors questioned their underwriting standards. Citigroup's global head of credit strategy recently calling out private credit for its lack transparency, saying investors are, quote, flying blind to some extent. Scott?

Even so, Pew, you know, you heard it now from Rick Reeder a few moments ago. I think there is a prevailing view that the issues that we've seen are idiosyncratic, the word that people use. rather than some sort of cascade towards something systemic? I mean, that's certainly the prevailing view out there. I mean, I guess the question is, you know, we've had two or three of these. If, as the Citigroup Global Head of Credit says, you know, private credit is a bit of a black box, how do we know? And so we have to actually go through the calls and banks individually one by one

and hear what they have to say about this, Scott. All right. You see what Zions has to say in a little more than 30 minutes after the close in OT. Hugh, thanks, still ahead. The Boeing bounce. We'll tell you what's driving shares higher in today's session. There they are, one and three quarters percent. We're back on the bell right after this. Coming up next, the rally heating up as we head towards the close today. We'll discuss what's next for stocks with our all-star panel. They're here post nine next. We are back. The rally resuming today, Apple hitting that new record high for more on where stocks are likely to head from here. Let's welcome in Solace Alternative Asset Management's Jan Greenhouse, CNBC contributor, Courtney Garcia of Payne Capital, JP Morgan Asset Management's Gabriela Santos.

It's great to have everybody here at Post 9, in which we do have a nice day in the market. I just spoke with Rick Reeder. I think you guys might have heard part of that conversation. I want to play a soundbite from it as to why he remains positive on the market, and then we can react to it on the other side. Black Rock's Rick Reader from just moments ago. I think there's a couple things that play. One, you've got an economy that's operating at a pretty good level.

I mean, just printed, or we think you're printed second quarter GDP 38, third quarter, we think's running 3-3. You've got an economy is operating a pretty good level. And you've got a Fed that's got to bring rates down. And you've got a dynamic where corporate earnings are pretty good. All right. Gabby, you don't really need anything more than that, do you? Good economy, Fed cutting, and earnings are going to deliver.

Yeah, it's a pretty good setup for risk assets, including stocks. I do just think today, notwithstanding, that our investors are looking for a reason for stocks to correct. And it's really about more about how fast and furious the market rally has been since early April than anything that's fundamentally wrong with the picture here. So you see credit concerns wobbles in banks or you see AI investment wobbles in mega cap tech or concerns about some slightly weaker economic growth and then it's your cyclicals. I think it's really just something we've been speaking to clients about how volatility was abnormally low, valuations abnormally high. So you could get a correction and really areas to lean into should that accelerate from here, especially when it comes to those secular themes around financials as well as tax spending. Is everything that Reader said like all that matters right now?

You can tune out some of the noise around credit, which you've been suggesting is just that, that it's not a sign of something worse to come. You posted this long thing over the weekend I saw on social media. It was a long thing on Twitter. But the point required the text, which is effectively each one of these instances has an element of fraud in them. And so there's a concern out there that there are underlying credit worries that are going to spill over into the equity market, worries that are entirely valid. But it's not as if these loans, tricolor, et cetera, have gone bad because the economy turned down, EBITDA and revenues suffered.

And as a result, you could not make your loan payments. In each one of these instances, there were fraud. Now, the question I posed on Twitter was, X, is fraud systemic? That's a fair conversation, but there's nothing in this credit situation that tells me or should tell equity investors there's something I don't know about, about which I should worry. So then good economy, as we said, Fed cutting rates, which is highly expected, obviously, almost a given at this point. It's only a matter of how many times and by how much. And earnings, which were in the midst of the season now, you're going to get to the mega caps in about a week.

And then you're going to remember all the reasons why we're bull. bullish stocks? Yeah, I mean, earnings growth has been really impressive. We have three consecutive quarters of double-digit earnings growth. And it's expected that you're going to see earnings growth up 6.4% is the expectation right now. But oftentimes you do see that get beat. And if you do get over 10%, that'll be four consecutive quarters of double-digit earnings

growth. And as we have this kind of momentum going into the end of the year, it's a really good setup. When you look in November, December, that's your kind of stereotypical Santa Claus rally. on average, adds about 4% to the S&P of 100, which could easily put you above 7,000 for the SMP. So we'll see where we're going, but I think seasonality, momentum, earning season, I think it's all lining up for a good end of the year here. Small caps are having a big day, you know, a stabilization of interest rates. Rick Reader said he also expects rates to come down, the 10 year to come down even further from where it is. Is that good for that trade, or do you

not buying that? And that's where I would make a distinction between the secular stories that we would really lean into, even if there is more volatility, versus the cyclical story where the economy is fine. It's good enough for banks. It's good enough for credit. But it's not amazing. And that's much more what you need if you're looking at small caps or consumer discretionary or even consumer staples. And still a lot of questions there around margins, which I think is super important for this earning season. So that's where we would not lean in would be small caps, and especially across market caps, the unprofitable leadership that we have had since the middle of the summer. It's just not, conditions are not Goldilocks enough for that.

Well, I mentioned that earlier, that chart that Torsten Slok and Apollo had put out. Do you see that? Yeah. Where, you know, companies with negative earnings are outpacing companies with positive ones. What does that tell you about this market? Yeah, when Lizanne Saunders and I were on last week, we had a brief conversation about this, that since the Torson's doing it a little different than she did and I did, which was since the Liberation Day low, the unprofitable portion of the Russell has outperformed the profitable.

But to Gabriela's point, you're seeing a lot of, I'm sorry, to Rick's point, you're seeing a lot of short covering, you're seeing the AI story driving the market. Outside of that, strike that for a minute, it is a very speculative move from the record. It's a pretty speculative move the last month or two. And frankly, the equal weight index is essentially unchanged since late July. So there's a lot of about this, to Gabriela's point, that's not 100% kosher, and I think it's sort of caught in the, in the Torson slide pretty illustratively. Are we too complacent towards that part of the market, which is a little frothy, perhaps? Well, I think there's a short-term and there's a long-term conversation.

I do think short-term, you're going to continue to see this trade heat up. You're continuing to see this risk on rally, and I think you point out a lot of really good points here, where especially ever since you start to see the Fed cutting interest rates or indicate they would, that's where everybody's going, is the AI race. going towards your unprofitable companies, but you're still not evaluations you were like around the tech bubble bars. You're starting to see a lot of those comparisons, but it's not to say that can't continue to go. There's a lot of cash that's on the sidelines. And as much as what we're advising clients to do is be allocating elsewhere. So I want to own those things,

but longer term, at some point you're going to start to see those come back to reality, or they're not going to have the earnings growth that's expected. So you want to start to broaden out. What people are doing is they're taking that cash and they're putting it right into there. So I think short term, you're going to see it go up long term. I think you want to make sure you're robbing out. Isn't it interesting, a day, you know, Gabriella, where you can't speak about individual stocks in their performance, obviously,

but nonetheless, we're talking about a new closing high for Apple. It just brings us back to the way that people play these mega-cap stocks is both for offense and defense. And some would suggest that this is a new kind of staple stock being Apple. That's why the group remains so popular. That's why it continues to outpace

other parts of the market, because even in times of uncertainty, some of these stocks can still do well. Apple's just a case in point for the defensiveness that some people have, and they express it that way. And I think especially in the mega cap tag, you're also seeing days where the laggards really catch up. Again, back to that elevated valuation for some of the more AI-focused mega-cap tech stocks. Now, one thing I don't think we should forget is what happened from late January to the bottom in April, which was not just about policy change. It was also about exactly disappointment in this large cohort. And you did have a 30% sell-off in these mega-cap tech names.

So they're defensive until they're not. And for us, they're not the best defense to find in portfolios. You can get that much more so with just direct hedging. You're giving up a little upside to protect on the downside, fixed income. core fixed income when it comes to recession risk, and then especially alternatives when it comes to more inflation risks, which can't pop up up at some time in the next few years. But let me add, it's not, like I understand the impetus to always focus on AI, but pull up a chart of DoorDash, pull up a chart of Ralph Laurenne or Tapestry, Caterpillar.

There's a lot of stocks that are at or near highs that have more or less nothing to do with AI. And so I don't think that here's the chart of DoorDash, for instance, I don't think that you need to hide exclusively in the AI trade. It's easy. As an investor, it's working. It's spirewebs throughout the entire market, into industrials, into utilities, etc. But there are other stories out there that are helping drive the market. All right, we'll leave it there. Dan, thank you very much. Courtney, thank you. And Gabriella, thanks to you as well. We'll see everybody soon. Up next. We track the biggest movers into this close today. The bell is coming right back. All right, coming up next, TripAdvisor is soaring in today's session.

We'll break down what is driving that bounce coming up. for now the closing bell market zone cnbc senior markets commentator mike santoli is here to break down these crucial moments of the trading day plus phil abo he talks about what's driving the action in boeing today and dessa brewer with what has trip advisor soaring today phil a bow tell us more about bowing it's all about the seven three seven mac scott we knew the news was going to come and it did on friday that they've now been cleared to go to 42 per month in terms of production. It sets up the question, what's next? They will stabilize at 42 per month and then increase 737 and 787 production, likely in 2026. They still need FAA certification for that.

And there's still a question of certification for the max dash 7 and max dash 10. They need those certified because that's a big chunk of their orders. If they get those certifications, if they can increase production rates over the next year and a half, the expectation is that they can continually increase max deliveries. Don't forget that we get the 737, or excuse me, the Boeing Q3 financial results next week. Big question for a lot of people, Scott, is do they give us any more clarity out the expectation on free cash flow in Q4? All right, Bill, good stuff. Thank you very much. Trip advisor. Contessa Brewer is here at Post 9 to tell us about this and the activists. Yeah, you've got the shares soaring 8.5%

right now hitting territory that they have not seen since 2015. And right, those shares are rising on the news that activist investor Starboard is preparing to push for changes at the company. Starboard announced it took a 9% stake in the online travel company earlier this year. It's up 42% over the last six months. Shares just responding positively. Now Jeff Smith, who runs Starboard, reportedly, is talking to the TripAdvisor team, according to Reuters.

But no details have been made public about Smith's stance or, potential demands for operational changes. But Smith is scheduled to speak at 8.30 tomorrow morning at an investor conference in New York and scheduled to sit down with CNBC's David Faber on Squawk on the Street tomorrow at 9.30. Now, that conference is often where we get a view into what Smith sees as areas needing improvement in the companies that he has taken a stake in. So we shall see. If we don't get it from the presentation, surely we'll get it when Faber sits down and press a set up.

Jeff Smith is always there and he always sits down with FAPE, so we'll find out what actually is happening tomorrow. Contessa, thanks. Sure. All right. Mike Santoli, 500 plus on the Dow, 300 plus on the NASDAQ, Apple's going to get a new closing high. The conversations of last week feel so last week. They really do, and I think the story is told by the volatility index down two and a half points today, which it really got inflated last week, probably in excess of what you would expect, given that we only had a three percent. pullback in the S&P from Pete to Trough. So it does show you that people were kind of ready to clench up in advance of a deeper correction or a more prolonged period of volatility.

Now, today's action does not foreclose on that possibility, but it definitely means that the don't overthink it case prevails, which is pretty much as Rick Reeder laid out to you, which is the trend is higher, earnings were going up, the Fed is going to cut the economy. We can debate how strong it is, but it's definitely still at least solid, if not better, even if job growth is pretty weak. So all that put together, I don't know if that means, you know, AMD goes up 4% a day because, you know, that's obviously a separate channel this market is operating through. But for now, we make a run toward the old highs, not quite there. Still about 20 points or 30 points on the S&P to the intraday high. We got all worked up last week over credit. Yeah. Alts and private equity, private credit, et cetera, et cetera. A lot of those stocks are bouncing back today. Now, Zion's reports, as we said after

the bell, and it's a good time to hear from the regional banks, too. You're going to have to hear more consistent stress points emerge in order for that to kind to keep up as a storyline, because otherwise it does seem like it's an accumulation of one-offs and anecdotes and over, you know, kind of overblown individual situations. That being said, I still think you've probably seen the best credit conditions you're going to see. It just doesn't mean that you're going to have blow-ups. She just may act at as much help from that area. So the bell's going to ring us out here.

They're clapping, and they should because it's green across the board. And we're going to write down a new closing high for shares of Apple, which has been on a run, and it's going to reach new heights as we end this day. I'll send it into overtime.