Closing Bell - Closing Bell: The Big Bull-Bear Battle 9/15/23

Episode Date: September 15, 2023

We are now halfway through a historically bad month for stocks and they’ve shown some remarkable resiliency lately. So, does it mean we’re out of the woods or about to get worse? Cameron Dawson of NewEdge and Hightower’s Stephanie Link gives their expert forecasts. Plus, Dominic Rizzo from T. Rowe Price says the tech trade still has room to run. He explains why. And, Ed Yardeni is says stocks will end the year higher and could rise as much as 20% by the end of 2024. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with bulls and bears in a battle. Your money caught squarely in the middle. Stocks trying to eke out a positive week. It's been anything but easy, though, despite coming off the best day of the month. There's your scorecard with 60 minutes to go in regulation. That's the kind of day, really, it's been. Not great, certainly for the Dow. Names like Microsoft and McDonald's, Intel and Home Depot dragging that index lower today. And speaking of Microsoft tech, a big laggard. In fact, every one of the so-called magnificent seven in the red today.

Adobe also sinking after its earnings and chip equipment names like Lamb Research, Applied Materials and KLA 10 core falling sharply after a negative news report about the future of semiconductor orders. So tech is broadly weak. Look at those losses across the board from those stocks. We're just talking about 5 percent and in some cases more than that gets deeper for Netflix. Look at the week to date on the right hand side of your screen. Down more than 10 percent over the past five sessions alone. Down 1 percent again today. We'll keep our eyes there over this final stretch. As for interest rates, well, they're a headwind today, mostly higher across the curve.

There you go. Pretty good look. 2.5, 10.30, the long end, short end, no matter where you look. They're in the green. Yields are. Takes us to our talk of the tape. We're now halfway through a historically bad month for stocks, and they've shown some remarkable resiliency lately.

Does that mean we're out of the woods or about to get worse? Let's ask Cameron Dawson, chief investment officer for New Edge Wealth, with me here at Post 9. It's nice to see you again. Nice to see you. So we have been resilient. Beginning of the month, we're like, OK, this is a historically bad month, batting down the hatches. And it really hasn't been all that bad. The question is, what happens now? We're halfway through.

Yeah, I think one of the reasons why it hasn't been all that bad is because we have had this lift in earnings estimates. It's been slight for the S&P, but it's actually been rather robust for the NASDAQ. They're up about 9% over the last couple of months. So that's acting as a little bit of a floor under markets. And I think it's one of the reasons why markets have been able to shake off the higher interest rates, which normally would put more downward pressure on valuations. So you know the obvious question that's coming out of that. Are they too optimistic? Yeah. Well, they might be for 2024. They're also very narrow. That's what's interesting is that the NASDAQ 100, which itself is a concentrated index, the upside to those earnings estimates is really driven by just three names, Amazon, Meta, and

Nvidia. And even the rest of the Magnificent Seven aren't seeing higher earnings revision. So just as the market leadership is narrow, earnings estimates are narrow. So it does put the onus for the rest of the market to participate. Is that the one thing that would cause you to be more cautious because you just don't believe that earnings are going to come in where they are? You look at other things like rising yields, rising oil prices, a really stunning drop in volatility that has some saying way too much complacency out there. But what is it for you? Yeah, I do think that it is an earnings revision down cycle because all this year flat has been the new up. We haven't seen earning estimates get cut. They've been raising a little bit.

If we go back to a world where earnings estimates start getting cut again, that's looking a lot more like 2022. And that's where you'd say we would expect more than just a short and shallow kind of correction. But if the economy continues to hold up and economic surprises continue to push economic forecasts higher, that's why we're seeing earnings estimates raise. Yeah, but which side are you leaning on, though? I mean, do you think the economy is going to run out of steam? It surprised so many people. Ken Griffin was on the network yesterday and just talked about the market in general is, you know, wow, there's been so many things that could have gone bad, but they haven't really. And even if they've been a little squirrely here and there, these are my words, of course, not his, but the market's been resilient. It's hung in there,

even though he thinks we're in the seventh or eighth inning of this move. And there's been so many cross currents because you can point to things like bankrupt seats within subprime auto lenders causing you to get scared and think maybe that there's issues with the consumer at the lower end brewing. But then you have the Empire Fed manufacturing survey coming out today showing a big jump in new orders and future expectations. So businesses may be saying, hey, recession averted, we can hire more, we can spend more. So you have all of these contrasting signals all over the place in this market. Are you in the recession averted camp? I think you were in the recession camp for a while. No, we were in the no recession in the first half of 23 reassess as we went through it,

because we thought that expectations for a recession first half were far too aggressive. What about now, though? Because I mean, the yield curve is still dramatically inverted. Yeah. Right. Leading economic indicators still aren't great. Now, you can point to other things that maybe would be the tell of a soft landing or not. But now what, though? So we don't think that we'll have a recession in 23. So the calls for an entry into recession in the fourth quarter, we don't think are founded by the data. We don't want to rule out a recession at some point in 24. But based on the pace of the data that we're seeing today, it's looking much more like late first half into the second half is the first that we would see it. But what if inflation continues to come down?

Now, obviously, this week showed that it's sticky in certain places, CPI, PPI, both a little hotter than expected. But it's not like that upsets the Fed narrative all that much, because even in the face of that, as we said, the market's coming off the best day of the month, even as the PPI was hotter than anticipated a day after the CPI was. And that is Austin Goolsbee's golden path, this idea that we can remain strong, but inflation can come down on its own, meaning that unlike what Powell warned about, which is that a period of below-trend growth would be needed to pull inflation lower, that's not what has happened yet.

So the question then going forward is, do we get that below-trend growth? Hardly at 4.9% on Atlanta Fed GDP now, are there signs that it is today? That could be a scenario for 2024. We breathe a collective sigh of relief. People get complacent. They overhire. They overspend. And just at that point is when you hit the full impact of interest rate hikes. And that's when you would have a classical recession. You mentioned the

consumer earlier. Do you feel as though the consumer is at an inflection point? That we've almost exhausted all of the stimulus that was in the system and in the bank accounts and everything else. And we're about to take a turn. I wonder if we are underestimating just how powerful of a tailwind the movement from five dollar gasoline in June of 2022 to three dollar gasoline in the past couple of months was for the consumer. We know that lower inflation really from energy prices help drive positive real wage growth. So that was able to offset some of the headwinds of running out of savings and the start to student loan repayments. So if real wages start to turn lower, that would likely mean consumer sentiment starts

to turn lower and you could see a choppier path for consumer spending. So oil prices continuing to rise is a concern like pretty high on your radar? Yeah. Yeah, very much so, just because it effectively acts as a tax on the consumer. And so we know as the consumer has become more stretched, they've whittled down those savings and they're using more credit cards, that there's a lot less wiggle room for the consumer to be able to continue to spend at an elevated pace if oil prices start to eat more into those budgets. All right. Let's bring in CNBC contributor Stephanie Link of Hightower as we expand the conversation. Steph, it's good to see you. So the gist I get from Cameron is, OK, pretty good now,

but it's just not destined to last for a variety of reasons, both when talking about the economy and the consumer. You want to counter that? Yeah, I mean, I think, well, first and foremost, all week long, the data has been really very good, very encouraging. The most important data, you know, I talk about it all the time, is the job market initial claims. The four week moving average this week fell to two hundred and twenty four thousand. That's a four week moving average. Wages are running around 4.5%. And if you want to switch to another job, that's double the amount.

That, I think, is very important for the support of the consumer. I think the consumer is in fine shape. Basically, they can put their money in cash at 5%. And that's going to offset higher interest payments from higher interest rates. And we've seen the consumer be resilient. Look at retail sales this week, beating expectations. Final demand beat expectations. And you know, I have been very mixed on manufacturing, but today's industrial production number was very encouraging. It was actually the third

best of the year. And that industrial production has actually been rising all year long. It's a nice, pretty-looking chart. So I actually think this can continue for quite some time. And I think the better economic data is going to lead to better earnings. I think earnings have troughed. I think you're going to see something like 5% to 6% earnings growth this year. That would be a surprise to the street. And I think there's a very good chance the momentum continues into next year and you can see 10 percent growth. See, Cameron, this is part

of the bullish argument. As long as people are working, people are spending. Yeah. Yeah. And I think that Stephanie's point is very, very clear that, yes, the labor market remains firmly tight. And we agree with that. There aren't any signs other than kind of these peripheral signs of things like jolts moving lower, quits rates moving higher, some temporary work. There are some signs of slight deterioration, but there's not signs of easing yet, which is why I would agree that you're going to continue to see this period of stronger growth. We're not at the point where we're going to see below-trend growth. It's not until you see that that you'll see earnings revision down cycle and then the risk for some kind of deeper movement lower in equities. Steph, if you're mostly positive on the economy and even industrials, which I believe you are,

why did you take money off the table in Ingersoll? Oh, that's just profit taking, Scott. I mean, I had a 30 percent gain in the position. I love it and I'll buy it back if it were to pull back. But I thought that that I put the money, by the way, into John Deere. And I did this earlier in the week before HSBC had initiated today with with a buy. So I think that for me, I'm looking for bargains in this in this market. And in Ingersoll Rand held up remarkably well, did what I wanted it to do. But Deere, when I bought it, was down about five and a half percent year to date, trading at 12 times earnings. It typically trades in the last 10 years at 17 times, seven times EBITDA for a very high quality

company. Ad backlogs are 14 billion. That's 25 percent of 2023's total revenue growth. And, you know, I'm a big fan of these big conglomerate companies that implement technology into their programs. You know, you've heard me talk about Schlumberger and their digitization. This is exactly the same thing with precision ag technology. Why does it matter? It gives you pricing power and it gives you positive operating leverage because you get better margins. And Deere, by the way, also has $6.5 billion in free cash flow, slated to grow to about $9 billion. So I just kind of thought there was a better bargain, better risk-reward in Deere. But I do like Ingasol for the long term. I'll return to it if it pulls back.

So, Cameron, let's take this to the next step, because what Steph has done here just makes me think what some have been saying that if there's a chase for performance between now and the end of the year yeah where are you gonna see the most gains come from and that sure tech may still do well for for the most obvious of reasons that we don't need to list but you're gonna get more out of other areas of the market, like the deers, like the cyclical plays, like the industrials, like the energies, like these other places that are just cheaper on a valuation standpoint. We thought that's how it would play out back a couple of months ago, where you would see the equal weight index get some life to it because there was value in it. And that's not what's happened, though. We've actually seen the big mega caps, the cap weighted index completely overtake the rebound that we had in equal way in June and July. And so we are seeing more earnings revisions up cycles

or earnings revisions higher in some of these tech names. I think that there's plenty of opportunity to be had in the unloved parts of the market where there are idiosyncratic drivers. We continue to find those opportunities in our portfolios, but I think if we're going to have a chase into the end of the year, it's a good question of if people will chase the things that performed the best instead of trying to bargain hunt.

So Steph, how would you entertain that question? Well, I think that certainly there are opportunities to be had in technology, and you're seeing a pretty big pullback in the semiconductor space over the past month. So I would look for opportunities to add there. You know, I recently added to Amazon, very small position. I would probably add more. I've been trimming meta because it's really had a great run. So I think it's going to be stock by stock basis.

But I think there are other sectors that are more intriguing to me into the end of the year. You know, quietly, Scott, the XLE is up 21 percent from the May 31st lows. And those stocks have really rebounded. And I think you're going to see actually a chase there, especially because with oil above 90, heck, it could be above 50. These companies make so much free cash flow and the numbers and the estimates are likely to go higher because the price of oil has gone higher on a year over year basis. And so to me, I think you're going to see chases all over the place if people are underperforming. But I don't think it's just going to be with tech. You know what? I'm so glad you mentioned chips because I was thinking of you earlier today.

You're Lam Research, right? It's you. These stocks are getting crushed today. That's down 5%. KLA Tencor, down like 5%. ASML, right? It's this report that Taiwan Semi has reportedly delayed equipment deliveries, and all of the suppliers are down a lot. You worried about that? Well, it's interesting, Scott. First and foremost, I mean, lamb research even down 4 percent today, 5 percent today, it's still up 48 percent year to date. So I see it's easy to take profits. These are very high beta stocks. But I don't think anything that TSMC really said was new versus what the company said when they reported earnings back in July. So, yeah, no, I don't like the commentary,

but I do think that the valuations are still very attractive. I still believe that wafer fab equipment spending is bottoming. And back in July, when Lamb Research reported, they did lift the wafer fab equipment spend number for this year. Very, very small. But incrementally, that was a big deal because the prior nine months it had been coming down. Right. It's down from one hundred dollars, one hundred million dollars, a hundred billion dollars, excuse me, to seventy billion dollars. And now it's going to be mid seventy billion, according to Lamb. So I think the fundamentals are starting to bottom here it's not going to be a straight line up little choppy today little choppy over the last month i think you're going to get a buying opportunity what do we do karen with chips and software i mean these

are you look sort of stock by stock i mean these are stocks that have had pretty good gains this year everybody's fixated on the magnificent seven and the valuations there and the incredible run that those stocks have had but you look at some of these other names they've outpaced the gains by a lot even in some of those mega caps I think Chris Verone had a really good point earlier today that would you be surprised that 50% of the semiconductor index is actually trading below its 200 day moving average for as popular as that sector has been as a leadership part of the market.

Well, because NVIDIA sucks all the air out of the room and makes everybody think that every chip stock is an NVIDIA. Yeah. Look, I think that if you're buying the chip stocks for a week or two weeks, you're likely to have a period of digestion. If you're buying them for multiple cycles, as we are for long term, we own some of the equipment names. We really like them as long term names.

But understanding that this is an incredibly cyclical business, and when they trade at valuations that are as if they aren't cyclical, that's when you tend to see a higher volatility. So, Steph, what should we think about the Fed next week as we spin it to that before we go? No one's expecting really a move. Is there a surprise, not necessarily next week, but are we underestimating the capability of the Fed to do more than we think? And is that one reason why yields remain as

elevated as they are? Well, whether they raise next week, which we don't think that's going to be the case, or in November, they're still going to be doing QT. So it's not like they're taking their foot off the gas. That's number one. Number two, inflation is going to be doing QT. So it's not like they're taking their foot off the gas. That's number one. Number two, inflation is going to be sticky. We've seen it, right? We saw it yesterday and the day before in CPI, PPI, and even core PCE. It's way too high. It's 4.2%. The Fed wants it at two or below. So I do think rates, we have said this for a long time, rates will remain higher for longer, whether they increase rates or not between now and the end of the year. It doesn't really matter. You're you're you're towards the end of this cycle in terms of higher rates. But I do think if they're worried about inflation being sticky, they will continue to be aggressive on QT. And that will actually probably lead to a

tightening of financial conditions further. You want to leave us with a thought about what you expect, you know, next week and beyond. Watch the dot plot. The dot plot. Oh, we get one again. We get one. And 2024 has 100 basis points marked down of cuts for next year. And the bond market agrees with it. Do we see because of this period of stronger growth, because of a resilient labor economy, because of sticky inflation, do we see those dots in 2024 start to drift up and not confirm this idea that we'll be in an easing cycle as soon as January? All right. Good stuff. Thank you. Cameron, Cameron Dawson here.

Stephanie Link, thanks so much. We'll see you soon. Thanks, Scott. All right. That's Hightower's Stephanie Link. Let's get to our question of the day. We want to know, halfway through September, the S&P 500 only down around 1%. Will we finish the month positive or negative? You can head to at CNBC closing bell on X.

Please vote. The results will come up a little later on in the hour. Switching gears now, we are following the latest developments on the UAW strike. Phil LeBeau is here with that. So, Phil, we've heard from the current president and the former one both weighing in on this topic. What are we learning? Is there any progress whatsoever? If there's progress, it's not meaningful progress. By that, I mean, we have not heard any types of drumbeats like, hey, we might see the end of these strikes this

weekend or early next week. There's still discussions going on between GM, Ford, Stellantis and the UAW. But when you look at the 12,700 workers who walked off the job at midnight last night, they're picketing in front of these plants, these three plants, one here in Michigan, one in Ohio, one in Missouri. They're going to be on the picket line tonight. They're going around the clock, Scott. So nothing has changed there. So when you look at the latest of what's going on, you've got the 12,700 workers, less than 10 percent of the UAW members represented by the big three who have gone on picket line. And you also have talks formally resuming tomorrow. And again, there's conversation going on, but they formally resume tomorrow.

And then there is President Biden who said record profits mean record contracts. Short time after he said that, UAW President Sean Fain said we agree with Joe Biden when he says record profits mean record contracts. Short time after he said that, UAW President Sean Fain said, we agree with Joe Biden when he says record profits mean record contracts. We don't agree when he says negotiations have broken down. Our national elected negotiators and UAW leadership are hard at work at the bargaining table. If you take a look at shares of General Motors, Ford and Stellantis, keep in mind that at the heart of this is how much will wages increase? GM and Ford have said, look, we're putting out 20% offer at this point. That is historic by their standards. We usually don't see an offer that rich from the big three.

Stellantis has formally offered at least publicly 17.5%. That's where the movement, if it occurs in the next week, Scott, that's where it will occur. Phil, good stuff. You'll be a busy man over the weekend in these coming days. That's Phil LeBeau covering the UAW strike. Let's get a check now on some top stocks to watch as we head into the close on this Friday. Pippa Stevens doing that for us today.

Hey, Pippa. Hey, Scott. Well, Lennar, modestly under pressure despite the homebuilder beating top and bottom line estimates during the third quarter, CEO Stuart Miller pointed to short housing supply that's continuing to define a strong sales environment, but also noted that homebuilders are using incentives, including buy downs, to draw buyers in as rates stay high with mortgage demand at the lowest level since 1996. Nucor also taking a hit after the company offered weak guidance for the third quarter. The steelmaker now expects to earn between $4.10 and $4.20 per share,

while analysts polled by LSEG were looking for $4.57. The company cited lower pricing as the primary reason, as well as lower volumes. That stock down nearly 6%, Scott. Okay, Peppa, thank you. We'll see you in just a bit. We are just getting started here on Closing Bell. Up next, Nasdaq under pressure in today's session. But T. Rowe Price's Dominic Rizzo is still betting on some serious upside for tech in the long term. He makes his case after the break. We're live from the New York Stock Exchange. And you're watching Closing Bell on CNBC. Welcome back to Closing Bell. Nasdaq on track to finish at the lows of the week. Now down one and a half percent. There you go today. Pretty ugly day, down more than 200 points.

My next guest, though, remains bullish on the sector, says the tech trade has more room to run. Let's bring in Dominic Rizzo of T. Rowe Price. Welcome back. Good to see you. Hey, Scott. Good to see you. I'm looking at your holdings. I want to hit this first. Taiwan Semi, Adobe, ASML. I just talked to some folks who are on the show about the blow up today and some of these chip names and then Adobe after its earnings. What concerns do you have? You know, Scott, we still feel really good about these names over the next 18 to 24 months. Last time we were here, we talked about seeing a little bull market consolidation in tech. And that's what I think we're seeing. But if we look at the fundamentals, in tech, and that's what I think we're seeing.

But if we look at the fundamentals, I think PCs have bottomed. I think smartphones have bottomed. I think e-commerce has bottomed. I think data center spending has bottomed. And the valuations are relatively reasonable across the space. The Global Technology Index is trading at roughly 22 to 23 times earnings. Historically, that peaks at 27 to 28 times earnings. So, yeah, we're in a little bull market consolidation here. But over the medium to long term, we still really like these names. Sure. But I mean, 18 to 24 months is a fairly long time frame from here. I mean,

what further pullback or consolidation, to use your word, do you think we could still be in for? Well, you know, I actually think that we're probably coming closer to a bottom here for most of these names. Again, look at the fundamentals. They're really strong. Look at that Adobe earnings report. I think that what happened there is the stock re-rated. It was roughly 20 times the streets earnings. Now it's at 30 times.

It was well owned long heading into the print. But if you look into next year, we have Firefly pricing coming through nicely. We have Generate AI expanding the customer base. We feel good about a potential revenue acceleration there. And we think they have a really nice room to run. Sure. But how do you counter the argument that some would make that say, you know, I agree that the fundamentals of many of these companies are good, but they still don't match the valuations because they got so incredibly stretched that they need to come back down to earth even further. How do you how do you respond to that?

I don't think the valuations look OK. Look at NVIDIA, right? So NVIDIA is trading at just 26 to 27 times the street's fiscal two earnings right now. And they are clearly the best position for AI. The AI chiptams going from 30 billion dollars in 2023 to $150 billion by 2027. That's a 50% CAGR. And between their CPUs, their GPUs, their DPUs, their software, that company is going to capture such incredible value over the next three years. So, yeah, we have a little bull market consolidation here that happens from time to time, especially when the stocks are up a lot.

But if we look out over the medium to long term, which we're always trying to optimize in our strategy, 18 to 24 months, we feel still pretty good. Is Apple going through bull market consolidation or something more as we question the growth rates of not only the overall business, but of the bread and butter iPhone? I don't know. I feel pretty good about the iPhone, actually. This is the third year since a nice refresh cycle on the iPhone. The company still continues to take share in emerging markets. We still feel really good about India. Services continue to grow as a total percentage of the overall revenue. And the stock's trading at 20 to 6 to 27 times the street's earnings. I think Apple's going to be just fine. Is there anything you don't feel pretty good about? Because everything I've asked you about,

you say you feel pretty good, whether it's a come down in valuations, fundamental questions about orders placed for certain kinds of businesses. There's got to be something on your mind that's a worry point. Of course, if you look at some of the very expensive software stocks, you always have to be very careful. But in general, the names that we own, the durable growth assets with reasonable valuations, with improving fundamentals, we feel pretty good about them, like you said. All right, Dom, we'll talk to you soon. Thank you. That's Dom Rizzo, T. Rowe Price. Up next, stocks sinking in today's session. The Dow is now down as we look about 250. Ed Yardeni, though, he joins us next. He's sticking by his bullish forecast. He's going to break down why he's seeing upside right now just after this break. And do not

forget, register for CNBC's Delivering Alpha Conference. I'll be there with some can't miss interviews, including a sit down with Altimeter Capital's Brad Gerstner, September 28th, New York City. You don't want to miss it. Scan the QR code, get your tickets. Closing Bell's right back. We're back on Closing Bell. The major average is under pressure today. Treasury yields moving higher across the board. My next guest, though, sticking with his call that stocks will end the year higher from current levels and could rise as much as 20 percent by the end of next year. Let's bring in Ed Yardeni of Yardeni Research. Nice to see you, Ed. Pleasure. So, look, we said at the outset here that the bulls and bears seem to be in a battle.

You know, we came into this month knowing that it's historically bad, but yet we've emerged somewhat unscathed to this point. Is that going to continue? And if so, why? I think so. I was most worried about the CPI inflation rate, whether it was going to surprise us to the upside. It really didn't. I mean, it was sort of a mixed bag. But a lot of the inflation that we still have is in rent inflation. And I think that's what the market looked at. They said that, you know, excluding rent, we're continuing to make progress in the CPI inflation rate. So we got that through that reasonably well. And I think we're going to probably see the market kind of hang in there through the end of this month into next month, going for a year end rally. And a part of the problem, though,

is non-housing services remain really sticky. And now oil prices are going up again, too. So that's a double whammy that we can't take. Certainly you can't take if your prediction is as optimistic as it is. Well, look, Scott, back in October, I predicted that we had made a low on October 12th in the S&P 500. And I thought we could get to 4,600 by the end of this year. Well, we got there by July. And when we got there at the end of July, I said, I think that's it for the year. And so, as you know, at the beginning of last year, the consensus was that the first half was going to be lousy and the second half would be pretty good. I had the exact opposite view that the first half was where all the action was and that the second half would be kind of flattish.

And that's kind of the way it's turning out. And so I still think we're not that far away from 4600. It's just a few days away the way the market trades sometimes. But in the interim, there are issues. There's a backup in energy prices here. I am concerned about the bond yield being sort of on the cusp of possibly moving up closer to four and a half percent. These can all be setbacks that can hold the market back. But I think all I would do is kind of hold back around 4600. And then next year, I think as the economy continues to perform pretty well and inflation continues to moderate and the Fed clearly has topped out in terms of the Fed funds rate.

Maybe they maybe they won't come down that much. But I think the market can live with a bond yield of four, four and a half percent. We might be tested. I mean, the two years chilling out at five percent. And, you know, I know there's not much expectation that the Fed is going to do anything next week, but most feel like November is still on the table. And speaking of the Fed, I want your reaction, Ed, if I could, to former President Donald Trump was weighing in on the Federal Reserve and interest rates in an exclusive interview airing this Sunday on Meet the Press with our colleague Kristen Welker of NBC. Take a listen. The Federal Reserve is obviously independent, but I wonder, Mr. President, if you are re-elected, would you direct your Federal Reserve chair to lower interest rates?

Well, you know that I put a lot of pressure on him. It was outside pressure because nobody knows whether or not you can really do that. But I did because I thought his interest rates were too high and he ultimately dropped his interest rates. The same gentleman, as you know. And but it was a lot of pressure. I mean, I was very active on that. Right now, interest rates are very high. They're too high. People can't buy homes. They can't do anything. I mean, they can't borrow money. The banks don't have the money. The banks aren't lending the monies. The banks, by the way, Chase Manhattan Bank, Bank of America, they discriminate against

conservatives. It's a disgrace and they shouldn't be allowed to. And I'm going to do something about that. But you take a look at banks throughout the country, and I think because of the regulators, but you take a look at Bank of America and Chase, they discriminate against conservatives and Republicans. What's the evidence for that, Mr. President? We'll give you plenty of evidence. OK. All right.

Well, let's stay on track with this question, though. So just to be very clear, if you were reelected, would you direct your Fed chair to lower interest rates? It depends. It depends. It depends where inflation is. But I would get inflation down because drill we must. Mr. President, are you going to appoint a new Fed chair if you're reelected?

Well, I guess he would have two years left or something like that. So we'll see. OK. All right. You know, the word jawboning. I did a lot of jawboning against him and he ultimately lowered interest rates. Well, you can be sure to watch more of that exclusive interview with former President Trump on Meet the Press with Kristen Welker. That is this Sunday on NBC. Should also note the same invitation to sit down with Kristen has been extended to President Biden, who has so far not accepted that. But do not miss that. And we wish Kristen well. Certainly she takes over that program. So, Ed Yardeni, back to you.

You want to respond to some of that criticism? I mean, obviously President Trump took many shots, which he alluded to at Jay Powell during his presidency. Well, that was back then. Let's look at what he said about the future. I think what he said is that whether he jawbones Powell to lower interest rates, you know, first we have to see whether he's even going to be president. But if he is and he talks about jawboning Powell, he made it very clear it'll depend on what inflation is doing, which I think is a fairly reasonable position. I mean, clearly everybody agrees that in order for the economy to grow sustainably, inflation has to come down. I think it is coming down. And I think Powell has made it clear that

he intends to do that. And he's made no promises once that's happened other than to suggest that then interest rates could come down. But you've been critical at times of the Fed in terms of, you know, thinking maybe they were going a little bit too far when they didn't have to. Right. Well, look, I thought that I agreed with them in 2021 that inflation was transitory. And obviously that wasn't a very smart call. But with the benefit of hindsight, it turns out that inflation has been very transitory. When we look at goods inflation, it's been services that's been slow toory when we look at goods inflation it's been services that's been slow to come down and i did anticipate that rent inflation will be slow to come down look i think they made a mistake and not tightening sooner everybody knows this

everybody agrees with us even better officials have acknowledged as much and i think they've done a pretty good job of catching up we're getting ahead of the inflation curve they were behind it for a long time so i think right now they're doing a pretty good job of catching up, getting ahead of the inflation curve. They were behind it for a long time. So I think right now they're doing a reasonably good job. I mean, everything's transitory yet if you wait long enough. Right. I think that's one of the messages in all of this. So. So 50. Thank you. Just make sure you give me credit. Fifty four hundred S&P next year is still what you think. How many rate cuts do we need, do you think, since we're talking about the Fed to get to 5400 on the S&P? You mentioned where, you know, we're not that far from 45, but we got a long way to go to get to 54.

Well, we do. And on the other hand, we've got some time to get there. But my assumption is that we're not going to have an economy wide recession. As you know, I've been in the rolling recession camp since the beginning of last year. And so far, so good. And I think earnings are going to be 225 this year. I think the analysts are looking at 220. So I think they're going to be it's going to be somewhat higher. Next year, I'm using 250. And the year after that, 2025, I'm using $270 a share. Wow. Yeah, I think the earnings are going to be quick.

270. I mean, there are people who say, you know, 220 is too optimistic. 240 is way out over your skis. Yeah. And 270 is like, you know, hella skiing. You're dropping from such a high level. Yeah, well, there were people who were saying we're going to fall into an economy wide recession and that the market was going to go to 3000 and so on. I mean, like you said, there's always going to be a debate between bulls and bears. I tend to be on the bullish side, though I try to be realistic about these things. And I think it's realistic to believe that the U.S. economy is going to continue to grow and generate some pretty good

earnings, especially in light of my view that we're going to have a product. We started a productivity boom in 2015 and got sidelined by the pandemic. But I think it's coming big time thanks to technological innovations. I don't think AI is hype. I think it's just part of a lot of technologies that are boosting productivity for all companies. Ed, always good to catch up with you. Enjoy the weekend. We'll see you soon. I'm sure of that. Thank you. That's Ed Yardeni, the president, of course, of Yardeni Research.

Up next, we're tracking the biggest movers as we head into the close on this Friday. Pippa Stevens standing by once again with that. Hi, Pippa. Hey, Scott. We're spotting one fitness name that is really feeling the burn. We've got that and more coming up next. All right, we're about 15 hours from the close. Let's get back now to Pippa Stevens for a look at the key stocks she's watching. Pippa. Hey, Scott, shares of Planet Fitness are tanking down 14%

after the company's board ousted the CEO, stunning investors and employees alike. The company said it's now searching for a new top exec, both internally and externally. Former governor of New Hampshire Craig Benson will serve as interim CEO, and that stock now at a two-year low. DoorDash also in the red following a downgrade to market performed by Moffitt Nathanson. The call is based on student loan repayments, which the firm said could eat into the delivery services sales. Moffitt Nathanson said DoorDash is a luxury product and noted that

it's disproportionately exposed to age groups that do have student loans. Shares, though, still up more than 65 percent this year. Scott? All right, Pippa. Thank you, Pippa Stevens. Last chance now to weigh in on our question of the day. We asked halfway through September, the S&P only down around one percent. So will we finish the month positive or negative? You know what history suggests. But will it live up to the hype? Go to closing bell on X vote. We'll bring you the results after this break. Get to our question of the day. We asked halfway through September, S&P down only around 1%. Will it finish the month positive or negative?

The majority of you said negative. It was kind of close, though. And many are surprised that we've gotten through the month the way we have to this point. So we shall see. Up next, chips. They're not doing well today. We'll tell you what's sending semis lower this afternoon. That and much more when we take you inside the Market Zone.

We're in the Market Zone. CBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Leslie Picker on what is putting pressure on Schwab shares today. Steve Kobach on the sell-off in semiconductors. Some names are down quite substantially. I'll turn to Mike Santoli. So Dow's down about 300. NASDAQ's the big loser today in part,

and we're going to get to Kovacs for the specifics, but Semi's no good. Some of the software names like Adobe are ugly. I'm looking at all of my mega caps, the Magnificent 7, all of them are down. I was going to say, it is the heavy index names that are taking the brunt of it today. This is one of those days where, you know, actually below the surface, it's not quite as bad. But I do think there is some pent up volatility or at least unrealized volatility the last couple of weeks getting liberated today, you might say, on the

downside. You know, we've been pushing and pushing and pushing on rates, on 10-year yields, on oil prices. And, you know, we're approaching perhaps some perceived pain thresholds. I'm not sure I see it as decisive just now. Everyone's aware of the seasonal stuff. Everyone's aware what happens, you know, at least on a tendency basis after the options expiration in September. And so I think that was room for a little more choppiness. Just to underscore that, this is an options expiration day. And some would suggest, looking at the charts, that a week or so, if not longer, out from that can be pretty nasty.

That's what the pattern has been. It's not universal. I was just looking at some of the longer-term numbers that go back to 50-plus years for this one- to two two week period in late September. And you've had like 55 percent of them to the downside, but not really that terrible in the last 10 years. Kind of 50 50. Worst drop is two point one percent over that period. So it's not as if it's it's cataclysmic.

But it definitely if you're doing a way to the evidence, you know, the seasonal setup is not one of the reasons to be incrementally bullish. Mid 4,400s, though, is kind of where that collection of options exposures seem to be. So we'll see if it matters. We're talking about 100 S&P points down from here. Plus, before we get to the August lows. Yeah, boy, tough week. Just to note a couple of stocks. Netflix down more than 10 percent on the week.

NVIDIA down about three and two thirds on tough week. Just to note a couple of stocks, Netflix down more than 10 percent on the week and video down about three and two thirds on the week. So you've got some carnage to be found that everything obviously is like that. Leslie Picker, it just leads me to you. Schwab, nasty day for that stock as well. What's happening here? Yeah, the Schwab down more than two percent right now, pressured by steep declines in client inflows for the month of August, the brokerage saying in a release that core net new assets amounted to $4.9 billion last month. That's a third of the level Schwab brought in during July. Now, there's a reason for this. The firm attributes the steep decline in those inflows to asset attrition as it integrates the Ameritrade business. Schwab spent the Labor Day weekend to convert former Ameritrade clients and migrating $1.3 trillion in assets from 7,000 investment advisory firms and 3.6 million

retail accounts. Total client assets were over $8 trillion, though, at the end of August, which is actually up 22 percent from 2022. Thank you, Leslie. You know, you know, Mike, I mean, you still have this tremendous competition to everything from money markets where you're you know, you can get in certain ends of it, five percent, and you can blame whatever you want on the consolidation of things here and that and the other. But that remains an issue and it's going to for some time as long as rates remain elevated. It does remain an issue, although in this instance, I think that, you know, we knew to be worried about, you know, what the paper losses were at the Schwab Bank and, you know, all the funding cost issues. We were past that. But I think one of the things that people who invest in Charles Schwab have not

really had to wonder about is, are they going to continue to be a major collector of investor assets? Because that has been the machine. They've just been kind of sweeping it up. And so I can understand being jarred by the fact that they had this shortfall with the transition of the platforms from TD Ameritrade. That being said, even if you're moving to money market, you can still keep it at Schwab. And I think that's what they're seeing. They're seeing the so-called client sorting is we're not going to keep it in bank deposits at Schwab Bank. We're going to keep it in money market assets where they don't charge a fee necessarily on. But so I see why people are skittish about this particular

move. I doubt it's a long term trend. Yeah, look at that down near 30 percent year to date. Steve Kovacs, some carnage today in the chips, too. Yeah, that's an understatement. Several chip names falling today following that Reuters report saying Taiwan Semiconductor told its suppliers to delay deliveries of chip-making equipment amid demand uncertainty. Now, that includes names like Applied Materials falling as much as 5% during intraday trading today. That company makes the machines that actually make the chips that TSMC uses. Other chip-related names falling too, though, Scott, and they're among the worst performers in the S&P 500 today. On Semiconductor, down nearly 4 percent. AMD, down about 4.5 percent. Intel, down more than 2 percent at one point. Lam Research, down more than 5 percent at one point. And TSMC itself, down more than 2.5 percent right now. Now, behind TSMC's request from suppliers,

that uncertain demand environment, especially in China, that's causing some consumer electronics companies to order fewer chips to manage their inventory. It's a story we've been hearing all summer long, Scott. Yeah, no doubt. Steve Kovach, thanks to you as well. Not going to take too much to push some of these stocks around, just given where we are. Yes, where they got to in the first half of this year. And, you know, some people have been looking at that and said, NVIDIA aside, that it was being pretty aggressive in pricing in a durable turn to the semi-cycle. So, yep, not too surprising to see that the conviction is not necessarily strong enough to defend against these type of pullbacks.

All right, so you see the major averages here. Dow is down just about 300 points at the moment. We are red across the board. It's been a rough stretch. It has to be right at 44.50. Keep an eye on small caps. We'll talk about that more next week, I'm sure. It's been an ugly run.

That's my sense. Thank you. Good weekend to you.