Closing Bell - Closing Bell: The Strong Stretch For Stocks 9/30/24

Episode Date: September 30, 2024

How long can this bull run for stocks last? Solus Alternative Asset Management and BMO’s Brian Belski debate their outlooks. Plus, top technician Ryan Detrick tells us why he is banking on a rally into year-end. And, Carnival shares sank despite strong earnings. Seema Mody explains why – and what it could signal about the rest of the travel space. 

All right, guys, thanks so much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. And this make or break hour begins with the stretch run for stocks and whether the strong year thus far can keep going. We'll ask our experts over this final stretch, including Brian Belsky, whose S&P target is higher than anyone else's. First, let's look at the scorecard with 60 minutes to go in regulation here. We've been mostly weaker today, and that's where we stand now. Dow's down by one half of one percent a month, a quarter, all coming to a close today. Tech, it's mixed as well. Apple rising. NVIDIA, not so much. There's some defense of the iPhone and demand there, and that is leading shares higher of about one and two thirds percent.

We'll check yields, too. They're higher, and that's an interesting part of this late-day developing story in the markets. The Fed chair, Jay Powell, saying just a little while ago that the economy is in solid shape. And speaking of, it's a big week for economic data culminating with Friday's jobs report. Does take us to our talk of the tape this hour. The bull run for stocks. How long can it last? Let's ask Dan Greenhouse, Solus Alternative Asset Management's chief strategist, and Brian Belsky, the chief investment strategist for BMO, both here with me at Post 9. It's good to have you guys. Dan, I'll begin with you. Let's just react to the Fed share, because the market really didn't love what he had to say in terms of the space, the size of the rate cuts that we think that we're going to get, right? He sort of

tamped down expectations that it's just going to be, hey, let's just set it on 50 basis points next meeting and the one thereafter, and then we're good. That's not really what he said. No, I mean, I read the speech on the way over here, and I don't think he really said very much at all. Listen, I think the important thing for investors at home, and this can't be said enough, and I've said it plenty, but it bears repeating. The important thing for investors at home to remember is that 25 versus 50 didn't matter last time. 25 versus 50 doesn't matter next time. The path is clear. The Fed is in the process of reducing interest rates by, call it, another 1 to 200 basis points by the end of next year.

That, more than any interval or any specific meeting is what matters you're shifting from an environment where the fed was getting constrictive was staying constrictive and is now transforming itself into a more accommodative fed and that's what matters how do you invest in that environment compared to what we've seen recently well brian i mean the market's pricing in more than 25 or each for the next two meetings. I mean, isn't that an issue? How much of an adjustment does the market need to do, you know, respectfully to Dan's points that he made? Well, it's an honor to be on with my good friend and long-term colleague here, Dan.

You know, listen. I wish we could start just one of these without that. Can we just please answer the question? Well, listen. So we didn't know it was going to be 25 or 50 when we upgraded our number. We just know, like Dan said, that the trend is your friend. The trend is your friend in terms of the trend of the Fed. That's number one. Number two, I really believe, and we've been saying this now for two years, we'll probably say it again for our forecast next

year, that we are on a path to normalization. What does normalization mean? Well, 0% interest rates, not normal. The kind of up and down volatility in stocks the last five years, not normal. With respect to valuations, not normal. So what does that mean? It means 3% to 4% 10-year treasury. It means 10% to 15% earnings growth. And it means 10% to 15% CAGR, compound annual growth rate of the United States stock market, which is the average when you put in the yield. So what does that mean for next year? If you're still looking at double-digit earnings growth, we're very comfortable with the market continuing to head higher into next year, albeit with performance spreading out. So I think the Fed is doing its job.

I think, actually, they've done a wonderful job. And with respect to your specific question in terms of Fed funds, a year ago, remember a year ago, they were looking for six cuts in 2024. They were wrong. So I think don't, I would stress to people, do not focus on Fed funds futures. Focus on what the Fed is actually saying and what the market is telling you. All right. So your 6,'re sixty one hundred price target on the S&P you're comfortable with no matter what the chair said. I mean, look, it's the economy's good. OK. Yep. He said as much. Now, yields are moving up, I think, in in respect to that comment and also the fact that, OK, so they're not going to be as aggressive as perhaps the market seems to still be pricing in.

Thus, you know, the two year, for example, the yield is higher today than it was, you know, pre cut. That speaks to don't listen to the Fed funds futures and they have to they have to build rebuild their credibility, I think, Scott. And I know that I say this, like I said this before, but this is 1995-96 all over again. We're heading back into that environment. And I think that's what abodes well for these large cap stocks, not just the nifty 50s, which are now the Meg 7. But we saw the nifty 50s in 1995-96 spread out into other areas, including consumer discretionary, telecom, which are now communication services, but most importantly, tech. And that's going to be the main driver over the next two to three years. And I think the most interesting part about this is, and you were talking about this on the Halftime Show today, you've seen the broadening out in the market, but it hasn't

come at the expense of the Mag 7. When you look at those charts, except for Google, which is having a little bit of its own trouble, the rest of those names are doing very well. Meta is at an all-time high, basically. So while you're getting this broadening out into real estate, into utilities, into industrials, it's not as if those stocks are coming down. And that, more than anything else, is incredibly bullish. So you don't think that if they go 25 next time and 25 after that, it matters at all to not only what the market itself does, but the broadening trade, which may have been pricing in a more aggressive Fed. And that's why those kinds of cyclical stocks were working over the last few months. I agree with that latter point. Do I think it matters? OK, it matters. But I think it matters in a shorter term time frame. If you're an investor

with an investment horizon beyond a day, a week, a month, if you're looking out, as Brian does, a year and saying the S&P is going to get to 6,500 or whatever it might be next year, whether the Fed cuts 25 or not doesn't matter. What really matters is whether the economy continues to expand and corporate profits continue to grow. And both of those linked together are expected to do so.

Okay, so you guys are in the Tony Pasquarello camp as well. When he lays out in his recent note, let's not make this any harder than it is. I'll reduce everything to this. Fed's easing, U.S. economy picking up speed. So the path of least resistance remains higher. Sounds exactly what you guys are arguing, Brian. Exactly. So that's why we were at 5,600.

By the way, we rarely up our target twice in a year. So even with three months to go, we felt really comfortable that we wanted to add value to our clients. We upped the market at 5,618. And so I can't be sitting out there and publish saying a 56-year target and not, and what all we've been saying that prices are going to go higher by year end. So we're very comfortable with 6,000 plus. We came out with 6,100 because that's what our dividend discount model said in terms of where risk-free rates are, Scott. But I think the momentum trade is starting to unwind, quite frankly, and we're going to start to see more strength from other areas. And we're actually seeing that. What an awesome month of September in this quarter with respect to broadening out from the sector

perspective. Dan talked about REITs and utilities. If you remember early in the year on the Halftime Show, my pick to click in terms of a contrarian idea for all of 2024 was REITs. Didn't really work out for a while, but now it is. 16% in the quarter for real estate. Utilities up 18. Industrial is almost 11. Financial is almost 10. But before anybody starts at home goes, well, of course, utilities and REITs are doing well. Interest rates are coming down. Before we do that, take a look at the chart of McDonald's and Home Depot, let's say. Two stocks, two companies that not that long ago, everyone was citing as a reason why the economy was rolling over. McDonald's is definitely back at a new high. Home Depot is pretty close. Look at

the hotel stocks, Hilton, Marriott, Hyatt, all basically at highs. There's any number of stocks that you can look at that are doing extremely well that have nothing to do with whether the Fed cuts by 25 or 50 basis points. But don't they have something to do with whether interest rates fall faster or slower? But I mean, if the market needs to adjust its own expectations as to where yields are going to be, doesn't that matter? It matters in the short term, but I don't think... But we're talking about the short term. Like, what's the short term?

Between now and the end of the year? Well, you're pricing in 50% chance of another 50 basis point hike at the next meeting. If, for some reason, the Fed goes 25, there might be a little short-term adjustment here as futures markets adjust. What do you mean, if for some reason? I mean, let's assume that they're going to go 25 at the next meeting. Yeah, the floor is 25. Because the Fed chair, without telling you that they're going to do that, seems to be now the base case. I think the base case should be 25. It's not like, well, in case they go 50. It's like, in case they go 25, it sounds like they're going to go 25. We agree. The base case should be an expectation of 25 at each of the next two meetings. That's right. The risk, so to speak, is that they do

50 at the next meeting. If something on Friday, for instance, if the jobs number prints 110,000 or something, on that point, I would draw your attention just to private payrolls. Private payrolls have been sub 100,000 in two of the last three months. Now you know what's going to happen if they go 50 at the next meeting. Everybody's going to be like, uh-oh, what's going on? What do they know that we don't know? But I think what Dan was saying... They don't know anything we don't know. Rightfully so.

Yeah, I think so, too. He just said the labor market's strong. The economy's in really solid shape. Yes, the labor market's cooled. 25 seems to be right. These are my words, obviously not his. But that's the case that he's made. By the way, oil prices are now down, which means gasoline prices are down, which

is a boost to the consumer. Right. So that's why, I mean, the more consistent he is in his language, oh, by the way, which he has been, number one, in a path of 25, 25, 25, with your view in terms of another hundred over the next year. And then you're talking about specific stocks. It's really interesting. Everyone was worried about the consumer.

But each one of those names that you talked about has a very specific theme and why they worked on the consumer. The consumer in the United States is really smart. And they've been very smart with their money. And, oh, by the way, when interest rates go down, they have less pressure on their debt. So they're going to have more money to spend. Yeah, but are you making the case that the consumer is stronger than people think? Yes, I am, because we've done backtesting of sectors through years and years and years. When GDP actually slows, the consumer discretionary sector, Scott, outperforms the S&P 500. When GDP decelerates,

whether or not it's decelerating or stabilizing, it was higher a few years ago. So guess what? We have seen decelerating GDP. And that's why I think the sector in general, aside from Amazon, I think is a great tracking error sector because you can actually pick great stocks and themes in consumer discretionary. And it's not an opinion. We just revised the GDP data that showed gross domestic income, another sort of measure of economic output. We revised it up by about $800 billion or so, which took the consumer savings rate from the low threes to the low fives, meaning the consumer, which I was not particularly concerned with to start with, is in even better shape. The savings rate's 200 basis points higher

than it otherwise would have been. That is, all else equal, another incredibly encouraging data point for the economy and the consumer. So then if all things are equal, then, Brian, you would urge people to buy other areas of the market today for the stretch run of the year. We didn't even talk about the election. Yeah. For the stretch run of the year rather than mega caps. We would. We would not.

Okay, first of all, we would not be buying ETFs. We would maintain our positions in big cap tech. We call those the consumer staples tech. We'll have their Microsoft, Apple, NVIDIA as consumer staples now, by the way, Netflix, Google. But then we would trade down into the Oracles, AMDs, Broadcoms, Qualcoms.

We think that's the next level. And oh, by the way, you know I love financials, financials. I think financials are under-owned by institutions. And I think that there's two predominant themes. The really big banks and the really small banks they play an important business theme for on both sides of the spectrum and then from a scale side of things asset managers which includes private equity asset managers and in brokers because of the scale you name two two tech names obviously out of the mag 7 but with

completely different performance in the quarter Oracle is one of the Mag 7, but with completely different performance in the quarter. Oracle is one of the better performers out of the tech space. Qualcomm, not so much. So you lump those together as if they're all the same thing. No, but I think that's why you want to trade down into the next level of tech. I think Oracle has been one of our main, main tech positions for all of 23 and all of 24 we've been adding. Just because of the cash there. I think Qualcomm could be that barbell to NVIDIA with respect to not only valuation,

but performance. So I think Qualcomm would be one that you should be adding to in terms of diversifying your portfolio. But I think you can add these names and own these names. We just showed the charts of the quarter to date, And they tell two very different stories. One has been able, Oracle, been able to capitalize on the whole AI craze. And the other one, Qualcomm, has been going in the opposite direction. Totally different. Oracle, we know, is a big software name. We know that Qualcomm, with the semiconductor side of things, it had some of the noise with respect to this potential Intel thing, which I think was more sideways of anything. If you take a look at a semiconductor stock with steady earnings, pays a yield, and has cash flow,

that's your Qualcomm. That's why you want to buy stocks when they're down, by the way, not when they're just only going up. And we think that Qualcomm can be that barbell to Nvidia's continued strength. You like the financials as much as Brian does? I mean, I do. It's important to remember when we say financials now, as Brian does? I mean, I do. It's important to

remember when we say financials now as a sector. I'm talking about banks. I think we're talking about banks. Morgan's, Goldman's, Morgan Stanley, Bank of America. Talking about those? Yeah. An expanding economy, lowering interest rates. The banks are attractive. But a lot of that move has already happened. The point I was going to make is in the financial sector now in the S&P 500, you now also include the card companies, particularly Visa and MasterCard. And the point I wanted to make, just getting back to the consumer, because again, that's where I spend a bunch of my time. If there was something really wrong with the consumer, American Express would not be doing what it's doing. Capital One would not be doing what it's doing. Neither would Visa

and MasterCard. But getting back to the financials, yeah, listen, this is something we talked about all year with respect to the broadening trade. If you were going to have a broadening out, financials were going to have to participate. That's happened. I think everybody immediately gets into the big bank versus small bank discussion, and to some degree, rightfully so. But when you look at those big banks, obviously there's variation. Some are more trading-oriented. Some are more consumer-oriented. But those charts look good.

The performance looks good. Obviously, you still have Jamie Dimon out there warning about the hurricane, and that's obviously something to pay attention to. But fundamentally, those companies continue to perform pretty well, although, again, I don't know that I'm— On the banks, I think there's something that people are missing. So there's the really big banks, there's the smaller banks, and then there's the really small banks.

The really, really small banks under $50 billion or $25 billion, from a fundamental perspective, they're killing it because their cash flow is great, their balance sheet is great, they have great management, and they're garnering a lot of small business volume, where the big banks, they're going to benefit because of the balance sheet side of things. Scott, I really think the regionals, you're going to see more consolidation because they can't compete with J.P. Morgan or Citigroup. Why are the big banks then down over the past month?

Well, I think because... Falling rates is not good for net interest. No, I think it's because you have Jamie Dimon coming out there kind of talking everybody down. He's been doing that for 18 months. They've had a very good run for a long time. They've had a really good run and you might be seeing some rotation. I still think those

banks are in very good position and they're going to head into the quarter and guess what? They're going to beat the quarter, they're raise their dividend. And oh, by the way, their reserves are not going to be as bad as everybody thinks the stock's going to go up. And Brian mentioned something that gets almost no attention on the network, which is the asset managers, the KKR, the Aries. There's a whole group of stocks, most of which are not in the S&P 500, so they don't get as much attention, that fundamentally have been doing super well. Yeah.

And the charts look screamingly attractive. What about health care? Cover of Barron's this weekend. It's up 5% in the quarter. They laid out a very bullish case for that space. Do we like it? Do we not? Why are you apprehensive?

You know, it's really interesting when the market was weak in those periods in July and then parts of August, parts of September, we saw massive rotation into health care. And then they came right back out again. Lilly is the largest stock in the S&P 500 health care. I own it, obviously. I'm a little nervous about it that everybody owns it. From a value perspective, names like Pfizer and Merck kind of look interesting to us. But I think from the discernibility of growth going forward, Scott, I think given the fact that it's the second largest sector in the S&P 500, you absolutely

positively have to be aware of what's going on there. I think it's a classic neutral here. It's not growth. It's not value. It's very garpy. You have to maintain positions. You worry that GLP-1 prices are only going one direction from here and that's lower? And thus that's going to weigh on those businesses at all or the stock prices, if nothing else? I think so, Scott. And I think you're going to have more consolidation there, too. And I think you want to buy those areas that with big balance sheets and great pipelines, like a Gilead or something, Amgen is now becoming a big dividend growth stocks. And Lilly is going to do what Lilly does. But I think you have to kind of be careful with respect to owning too much health care in here,

especially given the fact of other areas. But isn't it a looming positive that eventually these drugs are going to get government reimbursement approved, in which case now you have 8%, 9%, 10% of the population on them. That number is going to go to 25%, 30%, especially when every day we hear that it solves a new malady. Yeah, we'll see. But I think there are going to be a few winners in that, not across the entire sector. So that's why I think we're betting on the entire sector to be like that. What about U.S. versus other areas? Now we're talking more about China than we have in like two years, at least in a positive way. Right. You see these stocks having the best day since 08. You could look at a number of the tech names, for example, are doing quite well.

Is now the moment, even though those stocks are up a lot since the stimulus announcement? Well, you know, we've never been believers in the China market. It's massively underperformed for 10 years. Whether or not this is the bottom, we've had this big V-shaped recovery from the lows. I mean, obviously with the bottom. We've had this big V-shaped recovery from the lows. I mean, obviously with the stimulus. But remember, too, from a secular basis, we have to teach that population how to spend money. The majority of their growth was all through the industrial side, through buildings and roads and highways and railroads and airports are amazing. The infrastructure there is amazing. But from a

consumption side of things, Scott, there's still wages are high, aging demographic, shadow banking system. I think this is a big, obviously, big bonds can be really difficult to try to discern where the top of this is. I believe it's more of a short-term move than a secular move. So you're not like buying, you own Freeport, don't you own Freeport, if I remember right? Sure, yeah. But Freeport's not a consumer name. No, obviously not. But I mean, you have, it's not? It's not. But obviously, you've had, you know, materials names like Freeport. You've had industrials like Caterpillar. You've had tech names like Baba. And I could go on and on and on. Casinos like Wynn. All of those kinds of stocks were up a lot on that announcement. Yeah. Is it a game changer of sorts for the way you need to look at those names?

I think you have to now. Freeport obviously has been so volatile the last few years, Scott. You have to now believe in the momentum there and the fundamentals there. And it's not just the China name. It is an overall global growth name. And it's the preeminent leader in copper. So you have to continue to maintain the positions there. But, you know, if you want, obviously they had a big move.

So you have to be kind of careful at these levels. I would just add, to some degree, I think it is a game changer. Listen, there's a lot of criticism about this particular package of adjustments on the idea that it's not sufficient to generate the kind of domestic demand you need to really get growth up above their 5% target. And ultimately, the property market over there is the biggest problem, and that's what they're trying to address. That said, the government has come out and, I don't want to say put a line under things, but has put a line under things and said, we're willing to do what's necessary, or at least the first inclination. This is kind of like whatever it takes moment. You could argue that this is the first look at the Chinese whatever it takes moment. And if things get worse, they've suggested they're going to do more. They're going to support the stock market.

They're going to support the stock market. They're going to support the property market. I think to Brian's point, they have a very high precautionary savings rate. The consumer over there doesn't have the safety, the social safety net that we have. And so they just don't think about consumption the same way we do. If you can figure out a way over the next few 5, 10, 15, 20 years to change that behavior, that's a whole different story. None of this does that. We're good. Thanks, guys. Thank you. Brian and Dan, I appreciate it. Thanks for being here.

We'll see you again soon. Thank you. Seema Modi now for a look at the biggest names moving into the close. Hi, Seema. Hey, Scott, 39 minutes left in trade. And CVS jumping by 2.5% on news that hedge fund Glenview Capital will meet with top company executives to propose fixes for the pharmacy giant. This after Glenview reportedly amassed a sizable stake in the company,

which could be a forerunner to an activist push. CVS still down about 20% year to date. And Echo Star down big after it completed the sale of Dish and Sling TV to DirecTV. The company's CEO saying on Squawk on the Street earlier today that the deal would allow the company to negotiate better deals with programmers. The stock still up about 50 percent so far this year. Scott, I'll send it back to you. All right, Seema. Thank you, Seema Modi. We're just getting started. Up next, top technician Ryan Dietrich is breaking down the charts, revealing where he thinks stocks could be heading from here. We're live at the New York Stock

Exchange. You're watching Cl bell on cnbc we're back automakers are slipping in today's session there you see stalantis the biggest loser down 13 philip bowe is going to tell us why these other ones are down as well. Phil, what's going on today? It's the whole auto complex, Scott. And this really started last week when we heard from Volkswagen before that, Mercedes-Benz and BMW. Now you're hearing from Stellantis, though for slightly different reasons, it is issuing a warning today. Today, Stellantis and Aston Martin both out saying, look, we are

not expecting to do as well as previously expected in 24. For Stellantis, it's North American production. We've talked about that for some time. Too much inventory. That's the primary concern for Aston Martin. The China market has slowed down for luxury automobiles and the supply chain has caused issues for them. With regard to Stellantis, they have cut their free cash flow guide dramatically for 2024. They're also cutting their margin guide. I mean, this was a brutal warning any way you look at it. That stock is down 51 percent in the last six months. As for Aston Martin, take a look at these shares. They are falling on the concerns about what's happening in China. Not a surprise here because we've seen the luxury market really come under pressure there. And this has extended into concerns about overcapacity with the rest of the market, whether it's GM, Ford, Toyota, whoever it is.

All of them are feeling pressure today. Remember, tomorrow, Scott, we get the Q3 sales from General Motors and Stellantis. And then we get from Ford the Q3 sales on Wednesday. Scott, I'll send it back to you. All right. Good stuff, Bill. Thank you, Bill LeBeau. Well, you know, by now, last day of the month, last day of the quarter, stocks are taking a bit of a breather on this day. We're still sitting just below record highs, though.

Our next guest setting the stage now for a market rally in the year end. Joining me now, Carson Group Chief Market Strategist, Ryan Dietrich. Welcome back. Thank you, Scott, for having me. Appreciate it. Why is this stage set? Yeah, great discussion you had earlier. And real quickly, obviously, thoughts got everyone impacted by the hurricane. So let's just look at what's happened so far this year.

This year, Scott, right now, is like the best start to a year for the S&P 500 since 1997. Now, you think to yourself, okay, well, maybe we're stretched, right? Up 10 of 11 months. That's getting up there. Maybe October can have some volatility, but the reality is this. I've come on with you for a long time now saying this economy is stronger than people think. Earnings growth continues to improve. The rotation trade into many groups continues. Yes, we are stretched near term. October is the worst month. I know I sent something to you last point here on October. You know, when you're up 20 percent for the year, Scott, October actually usually doesn't do that well. OK, it is what it is. You're up a lot, down seven out of nine times, down about three percent

on average. So I think the key thing is if we get some volatility this October before an election in an election year, October is usually not that great to begin with, would be perfectly normal. With the underpinnings that have got us to 42 all-time highs this year still in play, and we still think, you know, once we get through this, we're still going to be a good deal higher before the end of the year. I know. Those historical things, I feel like they mean nothing, right? We came into September. Everybody's like, uh-oh, it's a historically bad month, worst month of the year for stocks. And here we are having this conversation. No, I can't disagree. Obviously, that caught a lot of people with the September. We had that volatility to start the month. I mean, I was in New York with you two months ago. We had all that volatility around the yen carry trade.

That was August 5th. That was like almost two months ago. No, exactly. But just remember how worried and scared everyone got. Now here we are, obviously, well off that. But you're right. I mean, that's the seasonals. Let's look at what's going on just last week. I mean, just last week we got those revisions in GDP. GDP in the U.S. last four years was revised well up over 1%, real GDP. Just to put that in context, Germany grew 0.3% over the past five years of their GDP.

Incomes have really gone higher. The savings rate, which everyone said was bearish, the savings rate was 2.9 percent, was revised higher at a 4.9 percent. OK, the reality is, yeah, things are perfect, but the underlying pittings are still there. It's still a strong economy and there's record earning. I mean, forward S&P 500 earnings growth is at an all time high, 267. That's the most we've ever seen. You know, we can talk about worries, too, but I haven't been bullish for a while, Scott. We still think this is the way it's going. There's reason to be optimistic. I mean, the Fed chair himself was just talking how good the economy is.

I mean, I know people want to knock this about it or that about it, but the overall economy is pretty solid, as he said. Labor market, though, softening a bit, still pretty strong. But that leads to my next question. Are you prepared for smaller rate cuts going forward? Because that seems to be the table that the Fed chair himself has set. Yeah, we think that's possible. I mean, a couple 25 basis point cuts is fine. I don't think another 50.

Honestly, do another 50. It might mean the economy is kind of weakening even more, and we don't see that, right? So that's something to think about. Just one other thing. You talked a lot of good talk about rate cuts earlier. We took a look, Scott, when the Fed cuts within 2% of all-time high. It's actually happened 20 times. It's not as rare as you think.

Back in 2019, we saw it. This is one of those it is what it is. Let's just not ignore it. One year later, S&P is higher 20 times of almost 14 percent on average. Lots of other stuff to look at. But the reality is, again, the Fed is now cutting. The Fed is now more dovish. That is a tailwind when you have the reality of the economy strong. Last comment on this. I mean, the Fed's cutting for a couple of reasons. Really, we think it's because inflation's last year's problem. I've been saying that for a while now. Just on Friday, the Friday. The PC data said, again, inflation's not really a problem. We don't

need interest rates over 5%. That's why cuts are coming. What about the broadening? We've had a lot of broadening over, you know, this quarter is going to be remembered as finally when you had the equal weight outpace the market cap weight. Is that something that continues or no? No, we think it does. I mean, I've come on, you know, we've decided why we're more neutral technology. Three months ago, people thought we were crazy to say that. We've thought this broadening out is going to come. It's going to start when the Fed finally starts to cut. And I know small caps are a dirty word. A lot of times small caps historically start to outperform when the Fed actually cuts. But mid caps have been our largest overweight all year. Mid caps quietly have done really well.

So with the cutting in play, we think this broadening out theme that we've been talking about all year is alive and well. We do think it's going to last more than just a quarter or two. This might have a couple years to it, Scott. I mean, last comment here, small caps are open to large, historically cheap since 1999. That kicked off a 12-year period of small caps outperforming large caps. Not saying that's going to happen again. We're just saying there are parts of this market that are cheap, and those are some areas you probably want to look into. All right, we'll leave it there. Ryan, appreciate it very much.

Ryan Dietrich. Thank you. Carson Group. Up next, Fed Chair Powell saying the Fed not on a preset course when it comes to future rate cuts. Former Dallas Fed President Richard Fisher, he joins us next with his first take on the speech. What he thinks happens next. We're back after this. We're lower heading into the close today.

Fed Chair Powell signaling that smaller rate cuts are on the horizon. Joining me now, former Dallas Fed Chair Richard Fisher, Dallas Fed president, we should say. Mr. Fisher, welcome back. It's good to see you. Thanks, Tom. Thank you. So I'm assuming that you did see Chair Powell today and he really did seem to set the table or at least to bring back market expectations. That's going to be twenty five and twenty five at the next two meetings. Is that your take? And what's your reaction? I'm not surprised one bit. I wasn't expecting another 50. They'll be measured. You have to remember, Scott, they're looking as well as they can, really, when you set monetary policy,

18 months out or almost that much. So I think it was important they did 50. But now I think it's very important to take smaller cuts and make sure you're comfortable with where things are going. We're going to get some more data by the time of the November meeting, certainly more by the time of the December meeting. And the Atlanta Fed now is still showing really nice growth, 3% plus. So the plane has not landed. It's not a soft landing, not a hard landing.

I think they're gliding it just right and another two quarters sounds to me just about right okay so what if what if we said well everything you say is right i mean he you know the economy obviously is is strong i mean gdp revisions were were strong but the the rate where it is now, it just doesn't make any sense relative to where inflation is. They're too restrictive. They're just more restrictive than they need to be. And by the time they come down from that, it's going to be too late. No, I don't buy that argument. I'm not sure they're more restrictive than they need to be. Things have really changed as we've progressed through time in our markets here in the United States in particular.

But globally, there's a lot of liquidity out there, Scott. And spreads are still narrow. We have a lot of private lending and institutions coming in to lend, taking a lot of space from the banks, the insurance companies, the pension funds. The dollar remains relatively strong. So given that financial conditions are quite accommodative, I would argue that with another two cuts, we're not going to be too restrictive. That's my stance. Why do you say 50 was right then for the move in September? I mean, there was a dissent. Bowman only wanted 25. Why do you say 50 was right, for the move in September. I mean, there was a dissent.

Bowman only wanted 25. Why do you say 50 was right, given the case that you just made? Well, I think I might have argued for 25 if I were still at the table. But I think it's important to sort of remind the marketplace the Fed can run a very tight monetary policy, lead to a very tight monetary policy, lead to a very tight monetary policy. At the same time, to make sure that they don't overdo it, they can reverse course. So I would have argued and accepted 25 or 50, but they did 50. And I have no complaints about it. But you also suggest that no landing, soft landing. I mean, what happens to this economy?

And why don't you think that Chair Powell at this point has every right to declare victory, that he's all but landed the plane at this point? How better, I think, than anybody arguably would have expected at this point? You know, I have high regard for him, and I think he's done a good job. The plane has not landed. And his taking a victory lap really won't take place till after he leaves the Fed in April of 2026. He still has that period to serve.

I know him as a friend. He's a driven public servant who wants to get it right. It's not done. His job is still out there until the spring of 2026. And only then will we be able to declare victory, if indeed he is victorious. I'm going to ask you one more question. I'm going to ask you one more question. Wait, you're going to ask me about the Texas stock exchange?

I am. I am. I am. You're reading my mind because I was going to ask you about that because I'm reading here. Are you involved in that? And to what degree as they're they're naming the leadership team of what some are calling Y'all Street? Y'all Street. We like to refer to bull markets also, because we're Texans. But yes, I am their strategic advisor. They've asked me to consider being the chairman of their listings advisory committee. The reason for the Texas Stock Exchange is pretty straightforward. This is the seventh or eighth largest economy in the world. We're about to overtake France in terms of our output. We have so many companies, S&P companies and others coming to list here, coming to reside here, run their businesses here.

And I think it's important not just to have a duopoly, but rather to expand the ability to access liquidity and to have a good trading market. So there's a lot of logic to having it here. I love New York. I live there. I'm Senior Advisor Jeffries. But frankly, New York is no longer the Empire State. The Empire State is Texas. This is where things are growing. Everybody is pro-business here. Those are fighting words, Mr. Fisher. I knew they would be. They definitely are. They definitely are, because I mean, I appreciate your love and everything

for the state of Texas, I mean, but come on. And for you, and for New York. I'm sitting in the heart of capitalism right now. I know, but maybe 40 years from now, it may not be so. But the point is this. We can't, I mean, companies want to have access to markets. We have Duopoly here, the NYSE, we have the NASDAQ. Ours will be totally

apolitical. It'll be driven by what's best for the return on shareholders. And we have so many companies here that have supported this, including BlackRock, by the way, who's a major backer of this enterprise. And Scott, we'll just have to see how it works. We have a long period to go here. We're determined to get this up, make it run, make it good, make it helpful for all those who want to raise capital and extend the ability to do so. And so that's what it's all about. I don't know if it was a Freudian slip earlier or what have you when you said a lot of companies down there that they list down there. Do you actually think that you can take listings from the New York Stock Exchange and or the NASDAQ? We'll see. But some people like to co-list. Right. So we'll have to see. We want to provide a service and hopefully that service will be provided.

What you ought to do, Scott, is get Jim Lee, who's led this whole exercise and made it happen. We announced it this morning at the governor's mansion in Austin. Get him on the show and let him explain it. It's a very thoughtful, well-worked-out process that has been going on here. And Jim and others have worked on this for over a decade. And now it's time to bring it to fruition. I think by 2026, we should be able to offer a good exchange, well-capitalized. We've raised $135 million so far. No exchange was ever founded on that much capital. But these are modern times. We'll just have to see. And the point is to add to the possibility

of anybody seeking financial backing, but also, importantly, the kind of liquidity one wants in trading markets to extend the good that the NYSE and the Nasdaq have done. And we'll have to see how well it works. We believe it will work very effectively. We will have this conversation again. I appreciate it so very much, Richard. Thank you very much. Always good to catch up with you. I'm always honored to be on your show. You know that. Thank you. It's great to have you. That's Richard Fisher. Thank you. Up next, we track the biggest movers into the close. Seema's back with us for that. Hi, Seema. Scott, I too am honored. Semiconductor ETF is on track for gains this month, but down in the third quarter, we're going to reveal one of the key laggards

and tell you why after this break. We're less than 15 from the closing bell. Back to Seema Modi now for the stocks that she's watching. Tell us what you see now. All right, Scott. On semiconductor dropping about 4% due to its exposure to the auto sector. Stellantis weighing on the stock after reducing its 2024 estimates. This comes after a prior drop about 10 days ago when Mercedes-Benz lowered its estimates, really as shares of NXPI and analog devices, which also had that auto exposure down as well.

Let's turn to GE Venova, up about 1.5% after a positive note from Morgan Stanley was released this morning, identifying GE Venova as the beneficiary of an increase in power consumption as more data centers pop up across the nation and need more equipment suppliers to help manage the grid. Evercore ISI is separately also raising its price target on the stock to $2.85 from $2.41. The stock has been in record high territory the last couple of days now, Scott. All right, Seema, thanks for that. Seema Modi still ahead. We're going to drill down on what is sending Carnival shares lower today despite a big earnings beat. That's coming up. The bell is coming right back. All right.

We're now in the closing bell market zone. CNBC Senior Markets commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, Apple shares leading the S&P 500. Dave Kovac, Steve Kovac will tell us more about that. And Sima Modi is back. We're like carnivals lower despite topping expectations in the third quarter. Mike, I'll turn to you. Now we're positive.

Maybe the market coming around to the idea, stronger economy, better than bigger cuts. That's generally the case, think for sure although I think what we did is we clicked into whatever mechanical quarter end truing up trades needed to happen by the close so that seemed to be we were still within hailing distance of positive territory. I think that the point is is well made though because all Powell did is reiterate what was in the summary of economic projections a week and a half ago which is if the economy does what we think it's going to do, we have 50 basis points, more cuts this year. It was not, I don't think, intended as, hey, let's pull the market back from its current estimate of things. So for now, good news remains good news. But we're on a short leash because soft landings are always contingent on the last data point. Steve Kobach, we've heard

a lot of negativity about iPhone demand heading into today, and that wasn't until today, because we got some positivity from a couple of notes on the street, right? And that makes a difference in the stock. Yeah, and what a difference a week makes here, Scott, because we're getting some positive signals now for that iPhone 16 demand.

J.P. Morgan and Morgan Stanley out with notes this morning, and they've been tracking those shipping windows for all of the iPhone 16 models. Both of these firms say demand appears to have stabilized now, especially for those pro models. Those are the most important ones. Morgan Stanley calling it, quote, a positive development worth watching and also saying lead times are similar to the iPhone 12 and 13 super cycles. Meantime, JPM is saying that it looks like slower demand at first in this cycle and it's, quote, starting to correct. And also, since pre-orders began a couple of weeks ago, lots of concern around those shipping windows were shorter than in previous years, meaning fewer

orders. By the way, still unclear how Apple intelligence launched next month and over the next several months are going to affect sales. But for today, Scott, some positive data coming out. Steve Kovac, thank you very much. Tasima Modi on Carnival. What's happening today? Well, Scott, this was another strong quarter. The prices anticipated to go up next year as it comes as other parts of the travel sector have seen weaker demand, hotels, airlines, car rentals.

Here's why Carnival CEO Josh Weinstein says cruising has remained popular. And if that's true, that the consumer is slowing down in other sectors, that really bodes well for us to be able to take them into our demand profile, because we will be of value. We give a better experience at a better price than they could achieve elsewhere. Stock is falling on a slightly weaker than expected fourth quarter guide down today. Scott, back to you. Okay, Seema, thank you very much. That's Seema Modi. All right, the broadening, is it going to continue into the fourth quarter? That's going

to be the big question. It is a big question. I mean, most of the signs are positive, even if a little bit overbought internally. Something like 70% of S&P stocks have outperformed the S&P over the prior two months. That's a pretty good run. You are seeing some weakness, though, even aside from the autos in consumer cyclicals today. So I think it's a it's a push. But we get ISM manufacturing tomorrow as well as Joltz. So that's a good test of whether the market continues to crave, you know, reassuring economic news, which would mean fewer cuts or the whole world. Jobs Report Friday. That's big, too. All right. The month is over. The quarter is over. Stocks up 10 of 11 months.

That does it for us. I'll send it into overtime.