Closing Bell - Closing Bell: The Fate of the Fed & the Future of AI 8/29/25

Episode Date: August 29, 2025

Major questions are looming on two critical fronts – the fate of the Fed independence and the future of the AI trade. It’s been a big week for both. We discuss with CNBC’s Eamon Javers, Allianz��� Mohamed El-Erian, CNBC’s Kristina Partsinevelos and Partners’ Group Anastasia Amoroso. Plus, we discuss a big shift in consumer spending and what it could mean for U.S. companies like Tapestry and Ralph Lauren. And, Robinhood’s Stephanie Guild tells us how she is positioning as we head into a new trading month. 

Welcome to closing bell. I'm Scott Wobner, live from Post 9 here at the New York Stock Exchange. This make-a-breakout begins with major questions on two critical fronts today, the fate of Fed independence and the future of the AI trade. It's been a big week for both, and over this final stretch, we'll ask our experts what's at stake in both areas. In the meantime, here's the scorecard. The final trading day of August is read across the board. NASDAQ is the worst of it today. That follows the latest read on inflation, poor PCE, rise. in July. It has investors considering the implications for a rate cut next month. It is the Fed's favorite measure of inflation, so we'll follow it. Now, there's the NASDAQ, down more than 1%. Why? Invidia shares, they're lower again, and so are a number of other semi-names

today. Advanced Micro. There's Broadcom, AMD, Micron is down, and so many of the other names, too. The Wall Street Journal is reporting that Alibaba is making its own chip to fill the void from the lack of NVIDIA ones there. That's interesting news. It takes us to our talk of the tape. Stock's heading into the fall on a record run, but one not without its issues. We'll start there with one of them, the future of the Fed and one of its leaders. Amon Javers is in Washington with the very latest on that court proceeding today. What do we know? Well, Scott, what we know is that the court adjourned for the day without any resolution of whether or not the court is going to intervene in this case and stop the president from moving

forward with his attempt to fire Lisa Cook from the Fed. The court said it wants to hear more information on Tuesday, so we'll go through the long weekend with this big question mark still hanging over the Fed. And one of the issues raised, and one of the big questions going into this Scott was whether or not Lisa Cook's team would argue that because the alleged mortgage fraud here happened in 2021, before she was confirmed to the Fed in 22, therefore it's not relevant here. Abby Loll, her attorney, did make an important concession here. He conceded that any kind of behavior, and there you see Abby as he was leaving the court this afternoon, this afternoon, he conceded that any behavior from before the official's tenure

could be used for cause by a president of the United States to fire somebody from the Fed. But he said there's a whole bunch of contingencies as to what you'd have to take into account in order for that to count as actually being for cause. The whole debate here, Scott, is what cause means under the statute. It's not defined in this particular law, so that leaves it sort of up to the court. The government, the Department of Justice, arguing on behalf of President Trump, is saying the president has very wide discretion here to fire officials for cause. All the court needs to do is determine that he had a cause of any kind, and that's pretty much it.

Abby Lowell and Cook's team arguing, no, no, no, wait a second. There's due process considerations here, and there's a question of whether this cause has been adjudicated at all just yet. So a lot of issues still hanging over the head of the Fed as we go into the weekend, Scott. So there was no decision, obviously, on anything today. But what does that mean for what the next steps are? Well, next steps are. We're going to have more court proceedings next week. And the question is whether the judge here is going to issue an injunction to stop the president from moving forward with this attempt to fire Lisa Cook.

That would be just a temporary injunction, what they call a preliminary injunction, in order to allow this lawsuit to proceed to its conclusion. And what both sides are arguing is, hey, we're the ones who are likely to win here, so therefore you should or should not offer the injunction. Abby Lowell, arguing for Lisa Cook, said, we've got to have this injunction right away because the danger here is that Lisa Cook is removed from the Fed. The president nominates and the Senate confirms somebody else while this lawsuit is going on. And then if we get to the end of the lawsuit and Lisa Cook wins it, then there's no way for her to get back on the Fed. So we need this injunction in place. What the Department of Justice is saying, arguing on behalf of President Trump, is, look, if Lisa Cook had a valid explanation for this, we would have already heard it. This has been national news for a week now.

And we haven't heard a reasonable explanation from her for why this mortgage document seems to suggest that she did something improper. So therefore, we don't need an injunction. the president should be allowed to move ahead. He's got broad sweeping authority here. Amen, thanks for the very latest. I mean, not to mention the fact that you have a Fed meeting looming large in the middle of next month, the 16th and the 17th. So that's Amin Jabbers bringing us the very latest from Washington. Now let's bring in Muhammad El Airy and he's Alihan's chief economic advisor. It's good to have you back. Thanks for being on. Thank you, Scott. So we keep discussing this in the context of Fed independence being at

risk. At what point do you, you personally say, you know what, that was it. It is no longer independent because of what just happened. What is that moment? So I don't think we're there yet, but we're getting closer to it. And what worries me, Scott, is as complex as what Amman just told us, and his phrase was a lot of issues hanging over the head of the Fed, there are other issues as well that make this Fed risk its credibility and its policy effectiveness. It's a data-dependent Fed and the data is not helping it. You have officials within the Fed, top-level officials, Waller and Williams, as Steve Leesman has reported, expressing different views about the outlook. And this is a really difficult moment for this institution. Hopefully, we'll be able to navigate it,

but I am worried. We'll get to the policy debate in a minute, but I don't want to move off of the topic at hand because it's it's so critically important. If Lisa Cook is in fact fired, is that the moment where you personally say there is no more pure Fed independence like we've known it for decades? If she's fired and replaced by a loyalist, then the February reappointment of the Fed presidents is in play. And if that is in play, then you will hear me say, yes, Fed independence has been seriously undermined. You know my view. It wasn't a popular view last month that perhaps we could have preempted all that by Chair Powell stepping down.

Because I was worried we were going to go down this road, Scott. This is the exact road that I was worried about. The Fed is vulnerable on so many different fronts. And I fear now that we've started going down this road that I really dread. I just wonder what you make of the comments, even from the vice president to USA Today, where some would suggest they're saying the quiet part out loud now. And he said the following. And I want your reaction to it.

Quote, I don't think that we allow bureaucrats to sit from on high and make decisions about monetary policy and interest rates without any input from the people that were elected to serve the American people. That says we should have a say in what the Fed decision-making is. Do you have a problem with that comment from the vice president? I have a comment if it's yes, we have to have a say. I don't have a comment if it means the Fed should reform and that the Fed should be subject to two things that's not subject to right now.

First, be like the Bank of England, have external members that bring a different perspective and that help reduce the risk of group think. And second, that there'd be a discussion about the inflation target and what is consistent with the well-being of the economy. Look, last month, the Speaker of the House of Representatives said, perhaps we should revisit the Act, the Fed Act. Again, the concern is the longer the pressure remains on the Fed, the bigger the risk that we seriously undermine the institution.

I understand, but this is the Vice President. president himself talking about decisions on interest rates and doing so without input from the people who were elected. The chief executive, members of Congress, where does it stop? Thus the concern, I completely agree with you. Look, I've been trained by evidence that shows that an independent central bank is in the interest of good economic outcome. I've also been trained by data that shows that central banks learn, they evolve, they're open to reform themselves, they ask questions, they own their mistakes, they get external views. The Fed has not done that, and unfortunately, this is catching up with it at a time when the political

attacks are deepening and widening. So yes, I am really worried that we may risk something here that is really important to good economic well-being. But the critical issue is to get a new Fed share in there who's committed to reforms because the most established people agree that the Fed need reforms and to get moving and to somehow avoid this increasing political attack. Do you find it in any way ironic that the people who are arguing that the people who are arguing for rate cuts now are essentially arguing that inflation caused by tariffs is transitory, of all words. It's not permanent. At the same time, some of the same are, have criticized the

Fed share in the past for being wrong on that, that very issue. Is there any irony in that? I mean, there is an irony, but these are very different circumstances. You know, I am among those who believe the price effects of higher tariffs are not going to be a major inflationary shock. But I also, in 2021, was criticizing the Fed chair for rushing to the transitory inflation. These are very different circumstances. But the biggest difference is the labor market. The labor market today is weakening. I thought that Governor Waller had a really good explanation for why.

you have to go beyond the one number that Chair Powell is focused on, the unemployment rate, and look at the internal dynamics of the labor force and the labor market. It is weakening. That's the argument that says, you know what, we should get ahead of this by cutting, and we should have cut in July. The inflation arguments are twofold. One, the transitory, and Governor Waller did say, I'm back in camp transitory. That was his phrase. And the other view, which I know you don't like discussing, but we're getting evidence day in and day out is what is the right equilibrium inflation rate for this economy that is going through so many structural changes. I don't know why you suggest I don't like discussing. I mean, just because I give you a counterpoint

to your argument doesn't mean I don't like discussing it. In fact, I want to discuss it further because I want to know from you, I'm looking at stocks at record highs as we enter the fall, right? GDP for the quarter was just revised up to 3.3%. You make the argument, and others have made the argument that inflation's transitory. Core PCE was up in July, right? What Fed would ever cut in that environment? What? Which one?

So this Fed will cut in that environment. I mean, here's the irony, and the market gives it an 85% probability that this Fed will cut. And it's worse. If you want to go down the line of argument, you just cited. PCE core inflation will go up above 3% in the next few months. Goods inflation will pick up, service center inflation has picked up, and it's very likely we're going to go up above 3%. So the whole point is you're supposed to look forward

and ask yourself of the two risks right now. Higher inflation that de-anchors inflation expectation, and that's the critical phrase. Employment where the labor market sees the bottom falling out of it. What is the greater risk of these two? My judgment, Waller is there. Some others are there.

It is the labor side that's the bigger risk. It doesn't mean the inflation isn't a risk, but you worry about the labor side more. And that's why the market is pricing in 85% probability. That's why Waller says, quote, get on with it, right? The point is yours. Why wait for things to deteriorate? And others would make the case that maybe the Fed is, in fact,

in the insurance business of sorts, and there's nothing wrong with that because if you wait too long, then, of course, you're behind the curve. And then you're late, and then you're subject to all sorts of other issues that may result from a policy error. Muhammad, I'm going to let you run.

I appreciate it very much, as always. I do like the discussion. Thank you. Thank you, Scott. I like them too. Muhammad Al-Aerian. The week's other big story, of course, probably maybe more important for investors right now

as August comes to a close, the future of the AI trade following Nvidia's earnings. Christina Partsenaevalos joins us now with more. What was our big takeaway? do you think this week from invidia from invidia i guess the big takeaway is that demand is still expected to be exponentially higher and that's because when we off to talk about ai we talk about training right you study for an exam you look at all the textbooks you study from them that's like

training the next part of it is inferencing when you actually have to do the exam think about complex answers and write them out so that's like how i would compare it to the problem is you have investors that have gotten into the stock it's run up higher than the s and p 500 you You've seen phenomenal growth in data centers, especially for NVIDIA. That growth is starting to decelerate. And so just, I would say that people are just taking a breather right now. There's no major catalyst aside from Broadcom next week. You have the CEOs and CFOs of a lot of chip names that are going to be speaking at tech conferences in the coming week.

But the biggest takeaway for NVIDIA from them is that the next leg of demand is going to be incredibly strong. It's just patience, you know? Are you getting into this name to hold it for a really long time? are you getting in and trying to get out? And so that's the, I guess, the relief or the drop that you're seeing just over the last few days. So if we take Nvidia then to the next layer on the AI trade in general, because we did hear from some other companies as well this week that are critically important to, to investors, no less. What was our takeaway then from all of that as we think about what these stocks might do as a whole in a new month?

The ones I can think of off the top of my head were just what Dell yesterday, their shipments were incredibly strong, so still adding to that AI narrative, the things people or companies are spending. Marvell is a custom chipmaker, a little bit less so, but it's very company-specific. They were hurt on the data center side, some custom chip business, possibly with Microsoft hurting some of their numbers. But overall, it seems like the narrative is still there. However, there are several headlines in the media just this week alone that are, you know,

having people think, is the AI-CAP-X bubble going to burst? And I see that specifically from news coming from China. You have, you mentioned it at the top of the show, right? Alibaba creating its own chip. That's not good news for NVIDIA, right? Because it's a $50 billion market, according to Jensen Wong, the CEO. Nvidia could be losing all of it if it goes to a company like Cabracon, a company like Alibaba, a company like Huawei. And so I think that narrative keeps coming up.

These headlines keep popping up. And so that's creating some anxiety for investors that are so heavily in. in the AI trade. Good stuff. Christina, thanks. Christina Parts de novo, set in the table for us. Now let's bring in Anastasia Amoroso, Partners Group, Chief Investment Strategist for Private Wealth and Retirement. It's nice to see you.

All right, so we dealt with the two biggest issues this week. Where do they stack, in your mind, to setting us up for what might take place in the next few weeks, months? Well, to me, the question of Fed Independence is an ongoing question, but I don't think it is the key driver for the markets. I think it's really about whether we do get that rate cut in September. and a couple of more this year. That's really the key determinant.

And the second one is this question whether AI momentum is decelerating. And I'm certainly not in that camp. I think quite the opposite. We're still accelerating. So those are the two most important questions. My take is that we do see that rate cut in September. Mohammed said it's 85, 87% probability.

I think we go higher than that. We see it realize because it is all about the labor market weakness, Scott. We go into next week. We're looking at a lot of jobs data that's coming out, and I think it's going to confirm the story that we've been seeing in August, which is labor market is sort of on this precipice of weakness. And if we don't want to go there, we have to deliver the rate cut. Well, we'll get the jobs report next week.

So, you know, we got PCE, and now we're going to get another read right in our faces. That may help us answer that question. I think it will. So first point on PCE, I actually found it to be incredibly encouraging. And I think it actually sealed the deal on the September rate cut. Was that right? Okay. That's right. And I say that because the core goods inflation is clearly rising, but everybody knows it, everybody expects it. But what actually didn't rise out, all the other categories within PCE,

and for example, if you look at services, services inflation is running about 2.5%. Guess what? It was running at 2.5% year over year this time last year when the Fed embarked on the rate cut. Also, if you look at gasoline prices, they're declining. Food costs, they're sort of stable. So I think the Fed is likely to look at this and say, We don't have this pervasive rise in inflation that's sort of infecting other parts of the economy outside of goods. Let's leave the Fed and go back to AI because you said there's, you know, there still is a lot of momentum. Of course, there's momentum around the investing, the spending, and the idea that this is going to continue to be an investable place and a good place to be. All of that is different from whether the stocks are going to continue to work as well as they have.

have after sputtering a bit this month? No. What does that movement, the price action and the names tell you about your whole idea of where we are? Well, I think it's readjustment to the fact that the growth rates are slowing down. So the reason why investors on the surface were disappointed with NVIDIA is because Top Line is not growing at over 200% year over year as it was. It's growing at maybe 50 or 60%. But I think what's really encouraging, Scott, and to your point, should continue to drive stock performance of the beneficiaries is the fact that hyperscalor capax next year is projected to be $400 billion.

A couple of years ago, it wasn't even $100 billion. So that's still all of that is to come. Some of that will be allocated to Nvidia chips and some of the others, but a lot of it will be allocated to things like data centers. And it's not just putting up a box, but it's putting up the connectivity, it's putting up the cooling,

it's putting up a lot of the services that go along with it. So I think as the total addressable market growth materializes, that's what ultimately drives those stocks higher. The derivative on both fronts, right, of Fed cuts and AI trade is what happens with the broadening trade. Fed cuts seemingly good for the $493, so to speak. The AI trade, depending on how that goes, is going to determine in some respects how that broadening trade goes as well. Well, let's talk about the broadening of the AI trade first, actually. You know, it's clearly been all about the semiconductors. And look, we're still looking for something like a 40% K-GER

in terms of semiconductor, total addressable market growth. But, Scott, if you look at what's actually likely to outpace that growth, it's actually the business application software. And I think that's what investors are starting to rotate to and will continue. So that's the broadening of AI. I think investors have to consider that what's out there beyond Nvidia. By the way, a lot of it is out there in private. markets as well. So that's the first point. The second point is I do think there's the

broadening trade to talk about as well. And, you know, consumer could actually be very significant beneficiary of it, because you saw the spending numbers today, they're solid. And if on top of that we do get the catalyst of a rate cut to cushion the labor market that could definitely be supportive. Are you one of those who argue small caps are going to have their moment? because I feel like that crowd is kind of growing larger against a backdrop that may not be so stimulative for that trade. And one of those people who thinks private equity,

middle market growth companies will have their moment. And that's what we see clients increasingly look to is not the small cap allocations, but what can they do in private markets? And Scott, one of the reasons for that is that if you actually look at the earnings growth in some of those P.E. back companies, It's about double what you see, for example, in the public markets.

If you look at the margins in some of those P.E. back companies, they're actually more robust, more resilient, and we have the ability to build those margins over time. So I would say a lot of clients are looking to the private markets for those allocations versus the publicly traded small caps. Russell 2000 has had its longest monthly win streak since 2021. We'll take it. That surprised you? No, it doesn't. First of all, it's all about the rate cuts, and that has been supportive.

And, you know, if I look at the coverage ratios, for example, they have troffered about one and a half times as the Fed cut rates that improve to 1.8. As we expect the Fed to cut more, they're going to improve further. So that's been a big boost, I think, for small caps. But it's about earnings growth. I have a good long weekend. Thanks so much. And we'll see you soon. And Estasia Amoroso.

We're just getting started here. Up next, owning the runway, surprising new numbers on who's really winning over the high-end consumer and the impact on investors. You might be surprised by what we're about to tell you next. We're at the New York Stock Exchange. You're watching closing bell on CNBC. We are back on the bill. this week with several lower-end names outperforming. And speaking of outperforming, that's exactly what some higher-end brands in the U.S.

have been doing to their European luxury counterparts. Courtney Reagan joins us now with more. It's good to see you. You know, I saw this piece in the journal today, and it surprised me. It said, sorry Europe, American luxury brands are in, and it showed how high-end U.S. fashion houses are outperforming their European counterparts, total annual shareholder return over the last five years. And frankly, it's not even that close. Should we be surprised by that? And why do you think this is? Yeah, I mean, I don't think so.

If you pay attention to what's actually going on under the surface of some of these brands, but I don't know, maybe it is an American luxury brand way of coming back with their own hit on the quiet luxury trend. But if you look at a name like Ralph Lauren or Tapestry, which I'll remind you owns Coach and Kate Spade and Stuart Whiteman, I mean, the management companies there have really been working through a lot of sort of changes at the fundamental level. Ralph Lauren especially Patrice Louvre has been there for a number of years, but it's taken a while to sort of reinvent that company. Remember Ralph Lauren himself was at the helm for a while and handed over the reins somewhat temporarily to Stefan Larson, who ultimately ended up at PVH before Patrice

Louvay stepped in and really took his time examining the company and saying, look, this is a strong American brand. We've got to fix the operation so the brand can really shine. And that's what's happening. They've been able to drive up AUR, the average unit retail. So that certainly helps with things like margins, but also with that brand halo, with the equity, right? You don't water down the brand so much that it's available anywhere to anyone, which frankly is sort of part of the tenants of what luxury is. Now, I would argue that Ralph Lauren and Coach are not exactly luxury the way a Arames is, but not everybody can afford an Aramese bag. And I think that's where they're winning. They're able to introduce a high-quality,

piece to someone that maybe either doesn't want to spend thousands of dollars or a bag or maybe can't, but still feels like they're getting a quality piece that's fairly special. The point on that, too, is what the retailing legend Mickey Drexler was discussing yesterday with me right here, where he said the high end is extremely high end. And I think people wear less expensive. In other words, kind of to your point, the U.S. luxury brands have made themselves feel more luxurious, in a way, without having prices to match what's coming out of Europe. And in the current environment we're in, that's made a huge difference. Absolutely. I think there was a number of years where everything was splashed with a lot of logos. And that's gone away

a little bit and more of that reintroduction of quality hardware or leather, which then also, you know, kind of ups the classicness, say, of a bag, which then may sort of say, hey, maybe I can invest a little bit more money in this. But am I really going to spend $5,000, $10,000 on a bag when most of the time I don't even wear dresses or suits or blazers anymore? I mean, think about that, too, right? There's some level of casualization of many of us in the way that we live and work. And so maybe it doesn't make sense to spend that much money on a super high-end piece, but you still want to have something special. And also, there's a lot of value in grabbing a younger consumer and maybe their first big purchase. I remember the first, I'll call it, you know, nice handbag that I ever bought. And

it was an introduction to those brands. And there's also this nostalgia value that is really hard to put a price on. And so I think that is something valuable when you retain a customer for a lifetime, too. And I think that's what some of these American brands have done. Now, one thing I've been a little surprised about is everything that's going on here in the United States with sort of our nationalistic policies under President Trump is that there hasn't been more discernible backlash against very American brands internationally. I mean, when I think of American brands, Ralph Lauren is very, very high in the top, especially with that very identifiable polo.

And so I think we just want to watch out for that a little bit as things continue. Last question. Bank of America says American consumers are spending the lowest share of discretionary income on luxury since 2019. On that note, what's your takeaway this week then from the retail numbers that were delivered because it seems as though, like I said in the intro here, the lower end is faring pretty well. I mean, five below, TJX, Dollar General. What's your take? Yeah, absolutely.

I think, look, times are tough. I would overall say I'm pretty impressed with how retailers have been able to manage through a very difficult macroeconomic environment, the cost pressures that they're having. But at the same time, the consumer shown that they're willing to spend when you give them something that's worth their money. So even some of the middle market players have found success when they're talking about innovative products or new fashion. But if you're going to offer me something basic, I'm not going to pay any more for it than what I really think I need to, which is why I think you're seeing Walmart continue to win. And to bring the whole conversation around, they've captured this higher income consumer maybe with their grocery offering, but they've kept them in to switch over to general merchandise because those numbers are actually improving too. All right. Good stuff, Cort. Thanks. Courtney Reagan. With the retail insight, up next, your September setup. Top strategist. Ryan Dietrich is back. Where is the market going in what has been a historically rough month? His take next.

We're back. What will September hold for the markets? Ryan Dietrich is Carson Group chief market strategist. Sounds to me, as thank you for coming back. Much of the same story, this bull market rolls on. Yeah, we think so, Scott. Thanks for having me back. Happy a long weekend, everyone, and good luck if you're trying to win a billion dollars in Powerball this weekend. Listen, overall, we're still bullish, yes, but I don't want to talk about September for a second because I know lots people are going to be pointing this stuff out. Since 1950, it is the worst month on average. The last 10 years, again, the worst month. The last 20 years, the worst month. And in a post-election year, it's like the third worst month. Now, one more thing to think about. I get it. August, obviously just higher. This will be the first time August was higher with the second term president

going back to like World War II. But it is rare, Scott, to see August and September both higher in a post-election year. It's only happened three times going back to the last 18, you know, four-year cycle. So we're still a bull market, yes. But I wouldn't be shocked if we had a little bit of kind of seasonal weakness and we can get into kind of why. But I think it's possible after a 30% rally in a four-month, four-month win streak here. I know. But in all of that, including the wishing good luck for the Powerball and all that. I don't think I heard a reason as to why the market's going to continue to go up into the fall. Why September won't have a historical repeat? Yeah, well, listen, I like, I'm a big message of the markets person, right? Like,

what's the market telling us? Well, if you look at kind of the leadership, I love it. What's even lagging, even like more. Look at Staples. Staples relative to the SB 500 is making like new lows right now you want that area to lag on the offensive side you've got like high beta some of those things doing very very well obviously consumer discretionary relative to staples so the message is still very solid now one more thing i know last week i didn't get to join you but last week was a 90 90 90% of the stocks list is last friday 90% of the stocks so the new york stock exchange were higher and 90% of the volume that is extremely rare going back to 1980 it's only happened 12 other times scott a year later smp is up 11 times and up

over 20% on average. Even stronger returns you in the near term. So if we have a little seasonal weakness after a 30% rally, I think it's going to be contained, say 4% to 6% and there's still a lot of reasons the underlying pinnings that got us to this bull market are still healthy. So you don't really buy the broadening, it sounds. I mean, beyond what we've already had from a big cap standpoint. If you want us to stay overweight, industrials, financials, and technology, in other words, stay the course, don't overcomplicate it? That's right. You know, I know small caps got a heck of a rally. We get it.

But, you know, Amarosa and you just had a great discussion about kind of the PC. I'll take the other side of this. Anastasia. Anastasia. Apologies. Anastasia. Sorry. We're taking the other side of this, though.

If you look at like 178 components of core PCE, 45% of them are above 3%. What in the world does that mean? It was 40% at the start of the year. So we are seeing more of a broadening out on inflation. So what I'm getting at, the Fed's probably going to cut a couple times. We know that. coming. Maybe they don't cut the six times that are priced in over the next 16 months because inflation's a little higher. And what does that mean? Well, I stick with who brought you to the

dance. Those large caps. And again, industrials, financials. And small caps are an area. We have exposure, yes, but we're not overweight small and midcaps here. Does the Fed cut in two and a half weeks? Yeah, we think so. We think so. And you have some other great discussions before I came on. I think the stage is set there because they kind of have to, I think, for lack of better word. the camp, I think I came on earlier this year, saying they should have been cutting back in the first quarter. Then they didn't. Then tariffs happened. But, you know, there are some worrisome parts of inflation. But the reality is, yes, the labor market is obviously weakening as everyone's been talking about. So it makes sense. We don't need four and a half percent interest rates right here,

Scott. We think, you know, probably two more cuts this year and then we'll see what happens next year. Ryan, we'll see you soon. Have a good long weekend. Ryan, Dietrich. Appreciate it. Thank you. Coming up next, we track the biggest movers into the close. Christina Parts of Nevalosa standing by with that. Tell us what you see. Wow, we have big moves today. food company, rockets higher on breakup buzz, a computer maker falls on margin concerns and industrial stocks are flashing warning signs. We'll break it all down after this break.

Happy Friday. All right, we're about 15 from the bell. Let's get back to Christina now for the stocks that she's watching. Tell us, please. I have a few. Kraft Heinz on the rise today after Wall Street Journal report that the company could announce a breakup as soon as next week. It would be the latest high-profile split in the space.

Kyrug Dr. Pepper announced a split earlier this week, and that's why shares of Kraft are up almost 3%. Meantime, Dell is tumbling after, despite actually a Q2 beat and increasing its guidance, its gross margins that missed estimates as Dell focused on rapid AI server growth and with growth comes a cost. Analyst, and Morgan Stanley called it

an empty calorie story where every billion in AI revenue just adds less than 10 cents to earnings. Shares down 9%. Last but not least, Caterpillar shares falling after announcing a $1.5 to $1.8 billion hit from tariffs for 2025. That is a higher number

than what they said just a few weeks ago on their earnings call. It could also be an early indicator of industry challenges as manufacturing companies face pressure from rising steel and aluminum prices. Caterpillar down was 4%. Scott, it's the weekend. Yay.

Enjoy it. God, you could be more enthusiastic than that. Well, I mean, I'm thinking about the other things I still have coming up in the show. I wasn't prepared for... I'm sitting here. Sorry, go ahead. The level of enthusiasm you had. Obviously, you're done.

No, I'm not. I'm going to do markets hit at four, but have a great weekend. Everyone gets watching. Well, you stay focused for that. Thank you, Christina Poncello's. Still ahead. Game on, sports betting's biggest season about to get underway. Contessa Brewer breaks down the stakes.

We're now in the closing bell market zone. Mackenzie Segalos is here with Crypto's September set up. Contessa Brewer tracking what could be a big uptick in sports betting. Thank you, NFL. And Robin Hood, Stephanie Gill, breaks down the final moments of this trading day, looking ahead to a new month, and we're glad to have everybody with us. Mackenzie, you first. What is the setup now into the fall for crypto?

So, Scott, it has been a rough August for Bitcoin. It's now given up all of its summer gains. And Ether, which started the week, hitting a record high near $5,000, is now outpacing Bitcoin's losses since Monday. But Zoom out and Ether is still the outperformer, up more than 14% in August, while Bitcoin is down nearly 9%. Now, those corporate Treasury stocks mostly took a hit this month as well, ETHZILA backed by Peter Thiel and Sharplink Gaming, both Ether plays falling in August,

micro strategy, which tracks Bitcoin, also lower. The big exception here was Tom Lee's Bitmine immersion, which is an ether proxy trade, but it's up 37%. Now, on the institutional side, ETF volume has been light. Net inflows into spot Bitcoin funds at about half a billion since Monday. And then looking ahead to September, investors are watching macro data and hoping a mid-month rate cut could give crypto a fresh tailwind to trade on. Scott? Mackenzie, thank you very much. Mackenzie Segalis.

Sports bettings, big season, about to kick off, right? NFL season. It kind of sounds like it right here on the training floor, isn't it? Yeah, there was a blow in a whistle over there. It's a big opportunity for the sports books. It's a big opportunity for them to win new customers. It's a big opportunity for them to grow the pot of wagers. And the industry is now expecting an 8.5% increase in handle. Americans expected to wager $30 billion this NFL season, according to the American Gaming Association. If you say handle to your friends this weekend, you'll sound like a gaming expert.

The lion's share of that will go to FanDuel, owned by Flutter, and Draft Kings. Those two dominate this space, and both are seeing double-digit gains in their stock price this year. But they're facing growing competition from BetMGM, which is jointly owned by MGM and Entain. And after losing ground for a couple years in terms of market share, Bet MGM has now reversed course. It's in solid third place. It's showing profits that pleasantly surprise the street. And Sears is also posting profits in its digital space. But its shares stand out from the crowd this year, a year to date, down almost 20 percent when the competitors are up, double digits.

So keep your eye out for that. And, of course, we know that the predictions markets coming in Robin Hood, Cal She, crypto.com has a separate tab up there, polymarket. I mean, that could be big business. With numbers, like you said, up eight and a half percent, I think, was the number. Where's the marketing spend for these companies, which has been long criticized as spending so much money, the acquisition cost, I think they call it or something like that? Yeah, customer acquisition costs or cap. Where are we on that? Much more restraint. And they're using better algorithms and maybe AI to help them better

target customers. So they're not going to, they're not going to be offering. you know, bet $200 and win $1,000, it's going to be, if you're a small time better, you're not going to get the same kind of promotions that you once did. That's what I was wondering. Thanks for answering the course. Contessa Brewer. Thank you very much. Speaking of Robin Hood, Stephanie Gild is with us right now, the chief investment officer.

It's always good to have you on the program. What's your take on where we're going here in a new month? I mean, I think we're at a point in the market where we've seen a lot of gains. And obviously, you've had some news out that is. starting to show that perhaps valuations have reached expectations. And I think we're at the point in the market where, you know, my target was $6,500. And I think we're going to just grind around here. You always get to a point where things are going to consolidate. And that's where I think we are. So I think the S&P is going to have a tough time getting much higher. But below the

surface, there's a lot of movement. And, you know, we're seeing that in tech versus financials today, for example. And that's why I think you're, that's why I think you're going to have a hard time seeing the S&P really rally much higher. And obviously, there's a lot of other drama coming up between tariffs and as the Fed turns, as we like to say. So, you know, I think there's a lot of reasons why I think I would be a little bit more cautious going into next week. But I still think longer term, you know, earnings are there.

And obviously, if we continue to get more rate cuts, depends on the reason, though. On the earnings front, did you come away from NVIDIA feeling just fine about where the AI trade is heading from here? It's hugely popular with the cohort that Robin Hood represents, obviously. Yeah, I mean, our customers tend to trade around it, so it's been a place that they, you know, have been adding on this dip. But I think from a fundamental perspective, the earnings showed that they still have a very strong business. There's a lot of questions about their business in China, which makes up about 12% of their revenues. or has historically. But I think there is, you know, the fundamentals are still strong. It's just all about expectations and expectations have met where they are. They're just not

beating as much as they used to. I mean, there's the debate over whether what we witnessed this month in terms of stock performance is a precursor to what lies ahead. Now, that's not necessarily a bad thing for the market if you get a sizable enough rotation from AI-related stocks into more broad areas of the market. How do you feel about that? Yeah, I think the rotation actually started at the beginning of July, and you kind of see it in even on our flows at Robin Hood, and you kind of see it in the way markets have been moving, and I think that rotation has just been a little hesitant here and there, because you still have growth in the tech sector, and there's still a lot of, like, opportunity,

maybe not necessarily in the biggest names, but certainly in some of the, you know, the smart, maybe the mid-cap or just not as well-owned names, like pure storage yesterday, you know, obviously really trounced expectations. So I think that that rotation will continue through September and through the end of the year. But I wouldn't be surprised to see a bit of a correction or consolidation started, you know, in September. Do you like financials as much as everybody else seems to? I do like financials, but we've been biased towards regional banks because they seem cheaper. I also think they could end up benefiting from deregulation a little more. perhaps a steeper yield curve, and also M&A, I think that's where, you know, they'll end up seeing

them maybe a little bit more positive there than in the large cap space. Well, that makes me think that do you translate that into liking small caps overall? Because a lot of the regionals fall into that category, no? Not as much. I still get a little worried about the overall, you know, just buying broad-based small caps because I just think there's still an issue with debt. I don't think you're going to see long end of the curve come down a lot. And, you know, there tends to be a lot, a little more debt on average in the small cap space. So I tend to like the midcap. I, you know, I kind of call them the ignored middle child, but I prefer midcap space. All right. We'll talk to you soon.

Stephanie, thanks. Stephanie Gill, joining us with Robin Hood. We're approaching the close. It's going to be a red one for certain. Across the board here, a lot of chip names under pressure today. Invita really hasn't traded all that well from its earnings. Some of the other names in that Universe, AMD, Broadcom, Micron, for example, lower that journal story today talking about Ali Baba coming up with his new chip to make up to the void of Nvidia in China. She needs to be weighing on that space. So there's the bell ringing in the long weekend. We'll see on the other side for what is going to be a new trading month.

We'll go to it.