Closing Bell - Closing Bell: Trading Rate Cut Uncertainty 8/25/25

Episode Date: August 25, 2025

What’s next for markets after Chair Powell led markets to believe cuts are coming – potentially in September? We discuss with Solus’ Dan Greenhaus, Charles Schwab’s Kevin Gordon and Truist’s Keith Lerner. Plus, we debate the Fed’s next move with David Zervos – who is said to be on the shortlist of Contenders for the Fed Chair spot. And, Jeff DeGraaf from Renaissance Macro tells us what he is expecting from the big earnings this week. 

All right, Brian, thanks so much. Welcome to closing bell. Scott Wobner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with stocks and rate cuts of whether one now needs the other to keep moving higher. We'll ask our experts over this final stretch, including a man who might just be the next Fed chair. David Zervos, Jeffries, he'll join me in just a little bit. Look forward to that. In the meantime, we'll show you the scorecard here with 60 to go in regulation, but a mostly down day for the majors.

NASDAQ is flat. The others are pretty much as well. And that's following Friday's big gain sectors. their mixed today. Tech and Com services are leading. Healthcare and Staples have been the biggest laggards today. We're watching CSX shares falling on reporting from both Becky Quick and David Faber today that a deal between that company and Burlington Northern owned by Warren Buffett's Berkshire Hathaway is unlikely. Elsewhere, NVIDIA, it's higher, ahead of its highly anticipated earnings report on Wednesday. It takes us to our talk of the tape. Now what? After Chair Powell

led markets to believe cuts are coming, potentially in September. Let's ask Dan Greenhouse of Solace alternative asset management. He's with me here that post nine. Nice to see you. Thank you for having me, sir. That was your takeaway, right? This is now done for September. Oh, yeah, I think this is 100%. What, until you got one day in the market out of that or what? Well, it's always hard to read into any day, especially late in August when no one's around except for me. It's, it's, I don't see any way, but there's no way he inserts the sentence he inserted about the likely path being lower without having some feeling with respect to the consent. census on the board that a rate cut is forthcoming.

Okay, so what does it mean then for this record-setting rally? Well, I think there's a lot of people who come on here and say who cares about 25 basis points, and there's a lot of truth in that, 25 basis points in one way or the other. It doesn't matter, but it is a signaling, a demonstration to market. It's a signal that you are aware the data has changed, which he acknowledged in terms of the labor market revisions that we got. It is a signal to market that he is aware that people are. pricing in a rate hike and a rate cut. And when you have probabilities as extended as they are

historically, very rarely do they deviate. So I think it does matter in the sense that, to use the phrase everyone uses, the direction of travel matters and lower rates are better than higher rates. But at the same time, on its own, 25 basis points isn't really the issue. Most of what I saw today in terms of commentary from the street was bullish. Sure. People either raising their targets or saying the trend is up and this only confirms that. Is that your belief? Well, My argument for a year or two now has been you don't need rate cuts for the market to move higher. The AI story is so dominant, so pervasive throughout markets and so rate insensitive in the

sense that a lot of this is being funded out of cash flow. Wait, wait, hold on. So if he would have, Powell, being he, if he would have been hawkish on Friday in Jackson Hull, you think the market would have been just fine with that? No. Well, listen, short-term movements aside, the question is, could the market have continued to move higher, the equity market, without the promise of a rate cut in September? maybe not in the short term, but in the medium term, it measured here in closing bell timeframes, several months.

Well, between now and the end of the year. Yeah, I think certainly you don't need a rate cut for that to happen. Because, again, the story driving markets right now is the economy is doing okay. It has decelerated somewhat over the last couple of quarters, more so than we originally thought prior to that revision. But what's been driving markets across the board has been that AI story, which is rate insensitive for all the reasons I just mentioned. Yeah, but I mean, you know, I think the AI story has been. question more of late than it has been in the broader picture, right? You have people talking about the possibility of bubbles with Paphx.

Listen, people are questioning it more, but not based on any. Not just anybody. I mean, it's like Sam Alton. Sam Alton said, that's fair. People like right in the mix. Howard Marks started talking about a bubble. But I would acknowledge and concede and have already done so. We'll do so again.

There's a bubble forming here. The problem with that as an investor is, what do I do with that? If you told me there's a bubble, one of my favorite articles that I have in my office is Floyd Norris in 1995 talking about a tech stock bubble. What good did that do me? Green's Irrational Exuberance speech was 1996, December. What good did that do me? So you have to, as an investor, keep an eye out on the fundamentals. And I know people are talking more about a bubble, and rightfully so. But at the end of the day, cloud growth was up, what, 30 percent? CapEx expenditures are still hundreds of billions. All right. So dance till the music stops. You know, Chuck Prince gets... I know. I was going to mention his name, but you did, so I didn't have to. Because we think alike, Scott. And for good reason. But seriously, that's the point you're making. Dance to the music stop.

Chuck Prince gets a lot of flack, got a lot of flack. I don't think anybody thinks about it anymore, but got a lot of flack at the time for saying you have to dance as long as the music is playing. But as an investing axiom, it is very true. You really, like, the story is still ongoing here. And I would counter, to the extent that we compare this to the 90s, bull market, and I know I've done that repeatedly, and others have as well. All the warnings that came about at the end of that cycle are nowhere to be found now. No company has restated earnings or has taken down guidance. CapEx is still going up. Profit is still extraordinarily high, and you haven't seen any of the yet. Well, hold on, you haven't seen much of the excesses

that emerged towards the end of that cycle. You would have said we don't need rate cuts because earnings just prove to you that that part of the story is good enough to justify where we are, that rate cuts are just the cherry on top. They're not the whole taste that you need right now to feel great about the market. Yeah. You think earnings are good enough? The earnings were great, as has been discussed repeatedly, I won't add to it. What we're talking about now are what we'll call what I'll call insurance rate cuts. The economy's, okay, people keep talking about does the economy need rate reductions? Does the stock market at all-time highs, credit spreads at tights need?

It's not about need. It's about we're taking out, I think, the way I'm going to look at it as an investor, is the Fed is taking out some insurance to ensure that some of the weaknesses that we've seen in the labor market, which could be a mix of immigration and tariffs and economic slowdown. We don't know yet, but let's take out some insurance to make sure that whatever weakness, or to help insure, that whatever we're in the insurance business. Well, the Fed's always in the insurance business, at least on the downside. They want to make sure that this doesn't metastasize into something worse than it otherwise has to be,

to the extent that we have 10 people in a room deciding what the cost of money is. So if that's 100% set that they're going to cut in September, 25, 50 doesn't make a difference for that particular cut. Although if they do a jumbo one in the market. I don't think it's going to love that. The broadening trade seems to be hanging in the balance for that decision. They cut in September and that trade, which has done well, leading up to Jackson Hole, uh... is the one to pay most attention to this month uh... if people don't aren't following it the s mp is underperforming midcaps it's underperforming small

caps uh... cyclicals are doing well cyclicals x energy are doing well in fact in the new york stock exchange fang indexes is i think down for the month don't quote me on that but it's pretty close to flatter or or down so you had this broading out i think partially on the idea that the the fed was poised to reduce interest rates and you also have the one big beautiful bill which from a tax standpoint from an interest deductibility standpoint, et cetera, is overwhelmingly favorable to small caps as compared to large caps, higher levered, more floating rates, et cetera. We know that story. So you're seeing some of that play out in the market. I think the pushback I have on the broadening out trade, and as a reminder for viewers,

I thought the market would broaden out earlier than it has, and that did not work out at all. The one pushback I would have is the narrative that's driving markets here from GE-Vernova to vertive, to train technologies, to Eaton, Vistra, et cetera, is the AI system. story. And that disproportionately favors large caps. And you see that in the indexes. Obviously, the last month has been different. But that story is so important to markets right now. I just find it hard to bet against it until someone in that space, those companies tells me otherwise. Small caps, big area that people assume is going to do really well if there are going to be cuts coming. You agree with that one? I don't know. I talk to people about small caps. I ask them,

name me 10 of the second 20 largest small caps. They have no. They can barely name five of the top ten stocks in the Russell or the S&P 600. Usually when people, you would say something like that, you're talking about yourself. Yes, none of that's stroke. I have a hard time. Yes, I have a hard time. Deflect. Yeah, well, no, but yes, that's totally fair.

But the point I'm trying to make is at this moment in time, I don't think that index or those companies are particularly important to the market. And yes, there's a possibly a short-term trade here. But again, those stocks don't have anything to do, more or less, at least the bigger ones, with the narrative that's been driving markets right now. And I haven't, we've been talking about small caps going back two or three years. I haven't been on the train. I'm still not on the train. Okay.

I'm happy to miss the first move for that narrative. Well, it sounds like you're never going to get on the train, which is why. Well, let me expand. Never's a long time. Let me expand the conversation. We'll bring in Charles Schwab's Kevin Gordon. He's with us here at Post 9. And Truist Keith Learn is joining us as well.

It's great to see you both. It's a good segue, Keith, to go. you because that is one of your principal picks, the small caps, which you upgraded. That's right. Well, great to be with you. I've been listening to the conversation. I actually agree with a lot of it. I mean, we're still bullish on tech. We're still bullish on large caps longer term. But on the short term, the weight of the evidence in our work has shifted to be at least somewhere incrementally more positive for small caps. Let me just walk you through those factors, Scott. One, we all know they've underperformed by a lot, even with this move up on Friday.

Over the last year, they've underperformed by about 10%. Over the last three years, about 40%. That's the most extreme divergence just around 2000. They've been cheap for a while. But one thing that's changed is the earnings. The earnings for the forward earning estimates for the sector have started to move up. That's tech, that's communications, that's financials,

that's industrial, so it's broad-based. I think Dan mentioned already the one big, beautiful bill is also a positive as well. And then on top of that, you throw on the technical position is also improving. We have the indexes in an uptrend. We had a breakout on Friday. Relative trends are improving as well. And then lastly, position in. We've seen, if we look at something like the S&P 600 small-cap ETF, you've seen the most extreme outflows on a three-month basis that we've seen in the last decade. You put that all together. I don't want to be negative the space.

Again, we upgraded it to neutral. We think there's potentially a trade that can last a couple months as well, and that's why we upgraded our view. I don't know, Kevin, there's a more polarizing positioning conversation to have in the market. Some people love that area of the market. Some people hate it, no matter if you're getting rate cuts or not. Yeah, it's polarizing because you really had to segment small caps and put them in their own category in the post-pandemic world because even if you date it back to 2022, you know, when he had started the new bull market for the S&P, a year after the beginning of that bull market, it was the first time ever that. that the Russell 2000 was actually lower

in the first year of a book for the S&P. So since then, it's been this really abnormal and unique cycle where the Russell hasn't been able to get back to its November 2021 high yet. Yet we've seemingly had multiple cycles in certain parts of the economy, whether it's manufacturing or whether it's housing, but you look at some of those areas

in the US economy, if it is manufacturing, if it is housing, they're still in a way stuck in their own recession, maybe housing more so than manufacturing, but the Russell is gonna be more tied to that part of the economy, vice versa, large caps, don't necessarily, you know, need that kind of stimulus, whether it's via rate cuts, whether

it's via fiscal, and that's really where we've been in the past four to five years. So it's polarizing in that sense, but I will say, you know, and to some of the points that Keith was making, if you do take a fundamental or characteristic-based approach to an index like the Russell, you can find some good pockets of outperformance. It's just that that index is so large, and there's a good chunk of companies that don't have any earnings that are saddled with a lot of debt that just don't do really well when the Fed funds rate is about 4% and when the 10 years is above 4%.

Speaking of Fed funds rate, I mean, you make the argument, you're kind of on the other side of greenhouse and saying it's not a done deal, September. He says 100%. Fed's cutting. Why don't you believe that? I'm not on the opposite where I don't think they'll cut. I just think that the data set we need to wait for, whether it's the jobs report,

whether it's CPI, PPI for this current month. I mean, that's going to be a pretty big determinant, maybe not as much for September, but I think if we're going to talk about policy momentum now starting to shift back into easing or cutting mode. I'm not sure that the Fed wants to just do September and then call it quits. That would maybe call into question what the purpose is of just going in September. If it's to not go against the market, I get that because it's pretty, as Dan said,

it's not necessarily consistent with history where they would just go against, you know, more than 80% off. So let me ask you this, then. Let's take it to the step two of that debate. Yeah. Does the market need a rate cut in September to continue to go higher or not? I don't think so. You can base it off of history. And if you look at the times when, you know, the Fed has reengaged in a cutting cycle after waiting more than six months, we have seven of those instances in history.

The range around the average, with the S&P 500 going up on average 16% in the 12 months after, there's a huge range around that. The best time being slightly more than 50%, the worst time being slightly more than 3%. And in that worst period, it was actually the recession that started in 1990. Short and shallow bear market, not a devastating recession, but still the macro conditions matter a lot more in which they're cutting versus just. just does a cut mean it's a bullish outcome for the market. Okay, what happens if they don't cut and the president fires Powell? Then what? Well, I mean, from a legality standpoint, there's still a lot of questions.

Not only care about that case. I mean, I think that volatility-wise, I mean, what we saw when there were news reports of that happening, where it was kind of that back to that early April moment, dollar down, yields up, stocks down. It was a short reaction because it was only a short time that that news was in, that that headline was in the news. But, you know, I would assume that that would sort of be the instant knee jerk reaction. Ask the question, you know, for the context of both, both questions, essentially, does the market need a rate cut? Because if Powell and company don't cut

rates, do you think the president's going to be happy? Yeah. He looks at the calendar and he's like, you know what? I might have all bounced this guy now. Yeah. Who cares what everybody else thinks? I'm just going to do what I want to do. Sure. He doesn't get it. It's one thing to say you're fired. It's another thing for Powell to leave the building. And I, to Kevin's point, the Supreme Court went out of their way to sort of put a foot in the ground here and say, maybe you can't fire him. So I'm not even positive if the president announced over truth, social, you're fired. Is the market want to have that fight?

Well, the point I was going to make, no, the market doesn't want to have that fight, of course. But the point I was going to make is it's not like wading in the wings is howdy duty. The people being discussed to be Fed share, if and when Jay Powell leaves, whether that's in September or that's in March or whatever. These are David Zervos eminently qualified to be Fed share. I don't want to single anyone out, although I guess I just did. He just did. Well, he is, it was kind of teasing his appearance on our program today. Thank you very much. Closing bell shortly, folks, tune in. Thank you very much. But all the other people on the list totally qualified as well. Again, it's not like it's a list of, of, you know, unacceptable people, let's say. Every one of them, more or less, would be acceptable

to the market. So yes, the market doesn't want to have, no, the market doesn't want to have that fight. But again, it's not as if you're replacing him with some person. that's going to come in and immediately cut 100 basis points irrespective of the data. So I think there's a little bit, that's a fun conversation to have. I'm not sure it matters that much. Keith, how would you answer that question? Well, I think it matters as far as on the interest rate side. I think what we saw on Friday and had the market's been trading is that interest rate cuts matter more for small caps to work.

For large caps, we're up 10% near to date. And, you know, these companies aren't relying on, you know, funding from the credit market. So I think the composition of the market depends a lot of what happens with the Fed and whether they cut one or two times or continue that over the next year. And then to your question around, you know, something happened to Powell, listen, on a short-term basis, the market would have a knee-jerk reaction likely, just like we had around terrorists because it's like, what does this mean? And then we'd have to digest it and figure it out. But I think that would also then hurt the upgrade that we just did. That would be a negative towards small caps. Again, not the base case, but, you know, that's the risk.

Keith, what do you think is hanging in the balance then for Nvidia? if we take it fully to the other side of the spectrum, from the smallest to the largest? Yeah, well, listen, I still think long-term, the dominant theme of this bull market is AI and technology. Expectations are high going into this report, but whether they beat or miss, I would zoom out a little bit. I think this underlying trend is still positive. You know, we just looked at a study on the technology sector over the last four months. It's up about 50%. Now, that's after a 25% drawdown, but that's the strongest four-month gain since 2000.

So that suggests, you know, the road band's a little stress, maybe a little bit of choppiness. But when we look at one-year returns, three-year returns, this is nothing comparable to the technology bubble as far as return. So, listen, if we had a little bit of a hiccup with InVIDIA, we would be using that as an opportunity to stick with tech because that is still where the earnings momentum is in this market. And at this point, we have not seen any change at all in that theme. Real quick on these names. Invidia, meta, Google, these stocks are not expensive. Again, for the millionth time, I'm not a particularly large tech investor, so take what I'm saying with a grain of salt.

But these are not screamingly expensive names. All of them on a peg basis are trading, you call it one and a half. I think maybe Oracle's over two. But I mean, some of them are trading, you know, well above their historical averages. But, P.E. Fair. But most of these companies are completely. different than they were three, five, seven, ten years ago. So comparing Microsoft

today to Microsoft 15 years ago, I think is probably an inappropriate comparison. Not that you're doing that, but I guess some might. These are totally different companies doing totally different things, and you have this cyclical investment cycle going on that is phenomenally powerful and beneficial to these companies. And even with that, yes, on a PE basis, they are expensive, but because of their growth rates, deservedly so. What about Walmart? What You're not Costco. These stocks are way more expensive than Pallantier aside, obviously, but way more expensive than some of the large-cap tech names. And you don't have people coming on here talking about a bubble in big box consumer staple consumption. I think that'd be a much

more interesting conversation. Maybe we should have that on a halftime report. You can have it with yourself in the car on your way out of here. Kevin Gordon, Nvidia, the importance to the market right now is what? Well, I think from a large-cap tech standpoint, you know, obviously a lot of the focuses on the AI CapEx. So to the extent that there is a signal around that and whether there's a slowdown, whether there's any, you know, tremors around that. We've gone through this before. You know, it's happened in 23. It's happened in 24. It seemingly happens, you know, every year now where there's a little bit of a, you know, nervous feeling the market gets if there's an adjustment to any of the Capback stuff. But we already have, you know, for the mega Caps

that have reported, we already have most of that story anyway. So, you know, I'm not a single stock analyst, but I think that to the extent there's any signal to be gleaned from a company that now has, almost four and a half percent, I think, of the S&P 500's net income. Of course, that's going to be a pretty big determinant in terms of forward earnings growth for the tech sector itself. So you don't think, the last thing before I should go, because I don't even think we showed the charts that you wanted to reference. We may have to tease the audience.

You don't think that the NASDAQ, for example, is in some kind of bubble activity. You brought a chart which shows the performance of the NASDAQ following what you call two important release dates. Yes. One being the release of ChatGPT, and the other being the release of Netscape, or the IPO of Netscape, in August of 95.

Yeah. It looks to me. Can we Bobby and the control? Let's show it up. Let's show it, because that looks eerily similar to me. I don't know about you. There's a longer conversation to be had here, and as long as the chart is not on the screen,

I'll just pretend. We're working on it. We got it. The charts overlay, the line charts overlay quite, and I despise chart overlays. They serve no purpose whatsoever from an investment standpoint. Okay, there it is. However, this is not saying this is that, therefore, going forward.

The point I'm making here is from the release of the Netscape IPO, which is Dan Ives as a reference that I've referenced in it, a couple of other people as well. If we use that as the quote-unquote start of what became the tech bubble, the point I wanted to make, and this is up on my Twitter feed, I think, where I make the point, is everyone talks about the 90s stock bubble as if the whole decade or the whole second five years was a bubble. It wasn't. Most of the time, it was a perfectly normal, exceptionally awesome bull market where people were concerned about valuations and excessive investment, et cetera, et cetera. But this is not just, this is identical to what we're going through today.

It became, we can put our faces back up here. Let's put the money makers, money makers back up on the screen. So it became a bubble. And by 99, there was enormous investment and enormous valuations that were broad-based. The top four tech stocks trading. at 120 times earnings. But then you've got the warnings. But my point is, today is not too dissimilar to them, but the good parts of them. Not everything has to be a bubble and a terror. All right. We have a director for a reason, I will just say. And thank you very much for being here. Just trying to add value. Dan, Kevin Keith, we'll see you soon. Appreciate your time, as always. To Kate Rogers now for look at the biggest names moving into the close. Hi, Kate.

Hey, there, Scott. Shares of home furnishing companies are falling today after President Trump announced a tariff investigation into furniture on Friday. RH, as you can see, lower by 5%. Wayfair and Williams-Sonoma also lower today. Ethan Allen and Lazy Boy, though, both higher on the day, though. They both make a relatively large share of their products in the U.S., of course. For more on this, rather, be sure to tune into Worldwide Exchange tomorrow at 5.30 Eastern when Ethan Allen's CEO will be joining the show.

And meantime, American Airlines lowered today after a downgrade to market perform from outperform at Raymond James. Analysts there say the risk reward is balanced for the stock, is it a price. approaches the firm's prior $14-price target, they subsequently took that target down to around 13.5. And Kyrig, Dr. Pepper shares are down sharply after announcing it will acquire Dutch coffee company, J.D.E. Peets, and subsequently split into two separate companies. One will house the coffee brands like Kureig, Peets, and Jacobs. The other will house the rest of the beverage brands like Dr. Pepper and Canada Drive. Scott, back over to you.

All right, Kate. Thank you, Kate Rogers. We're just getting started. Up next. We debate the Fed's next move with David Zervos. He is said to be on the list of contenders for the Fed Chair spot. He'll join us after the break. We're live with the New York Stock Exchange. You're watching Closing Bell on CNBC.

Welcome back, Markets once again, betting heavily on a September rate cut following Chair Pals. Much talked about Pivot in Jackson Hole on Friday. Joining me now to discuss David Zervos. He's Jeffrey's chief market strategist. Also said to be on the list of possible next Fed Chairs. Welcome. I think it's our first interview. I'm glad to welcome you to our program.

Good to be here, Scott. You happy with what you got from Jackson Hole? I am. I think it was a pivot toward a lot of what folks like myself and many others have been saying that this Fed seemed to be a bit stubborn with its views on inflation, with its views on tariffs,

with its views even on the employment situation. So I like the pivot. I like the changes in the long-term goals. as well. I think there were a couple things in there that made me happy overall. But, you know, it's a little late, Scott. There's no reason, really, other than political reasons that we've had to be waiting this long, I believe, for a sequence of rate cuts. Well, I mean, wouldn't you give them at least some benefit of the doubt in the fact that we all remember what happened in early April in the big show at the White House when the president held up the board with those high

numbers on there for what the tariffs are going to be. Can't you understand that Fed Chair Powell looked at that and said, okay, this is a little different than what we were anticipating. Now maybe we need to wait and see what happens. What's wrong with that? Well, I think two things are wrong with that. The first is that we know that this president is a tactician, that he's a negotiator and he has an art of the deal strategy. So this was, I think, very much in the spirit of all of his negotiations, little larger or more aggressive than usual. But I think it was the opening gambit in a game, a very high stakes game to try to get a more cooperative and fairer trading landscape built for the U.S. And I think that's largely what happened. And as these countries started coming to the

table and as it became very clear that this tactic was working and it was becoming clear relatively quickly, people got to the table fast when they saw those numbers, I think that you know, that a lot of the worries and, you know, constant allusions to uncertainty were not warranted. And the markets were really telling the Fed that. The markets were understanding what was happening a lot earlier than I think the FOMC was. Well, not initially. I mean, I think we all remember what happened in the market. I mean, as wearing your chief market strategist hat at Jeffries, you're telling me you didn't look at those numbers and think to yourself like, okay,

Maybe I need to rethink what the market may do in the weeks, if not months ahead, if these numbers are even close to the reality on the board. Well, again, I took the tax, Scott, with our clients and my writing and the conference calls and zooms that I held with our clients, as well as my appearances on CMBC as a contributor, to say that this was a tactic, that this was a, the goal was to get fairer, more open, trade to get tariffs actually reduced in the end that are put upon us, which has happened, to have a fair currency landscape so that our currency is not being manipulated in those trade negotiations and those trade structures. So I took it very much from a positive angle, recognizing the risks, recognizing the markets, and you know, you always have to be respectful of the markets. But I was a pretty, I think I was, I wasn't a lone wolf, but I certainly wasn't in the camp of many of my competitors that were instantly calling for recessions.

I believe it was a tactical game, and I think it came out to be a tactical game. Again, I don't want to say that it happened immediately, but I think by the time we got to May and June, the markets were really figuring out what this really was, and we were starting to come back quite dramatically, and it wasn't because the Fed was helping. The Fed was actually keeping this a little more, a little messier than it needed to be. Well, I mean, on that note, what's interesting to me is that here you have stocks at record highs. You have credit spreads, which are amazingly tight. You have the economy, by all accounts, still doing pretty well.

And I'm sure you would make the argument, and maybe you already have, that inflation, obviously, wasn't the problem that some thought that the tariffs were going to cause. So if I painted that picture for you, you would say, well, Jay Powell's a pretty good. good painter. He's actually done pretty well under all those circumstances. But why aren't you saying that? Because I think monetary policy is incredibly restrictive based on the models or I didn't even want to say models, but based on the history of where I think we've come from. If you go back to pre-COVID periods, we sat at 2% interest rates with a Fed balance sheet that was basically right around here in terms of its size relative to the size of the economy, about 20% of GDP. And I think we can have a rate structure that is significantly lower that would be not restrictive

that would allow this economy even more runway to take off, particularly as we transition away from many of the hangovers that we've had from the Biden administration, in particular the large government excesses, both the deficit and debts, as well. as many of the other programs on the regulatory side. So we're shifting this economy. We're going to go through what the Treasury Secretary is called reprivatization. That's going to create a couple of little bumps and wiggles for a few quarters. And maybe we've already seen some of that. We may see another little bit of that. Why have monetary policy stand in the way of that process or make it a little bit more complicated? It should be easing back and it should be respectful

of the idea that we may have some jitters or hiccups in the job market as we move jobs out of the public sector back into the private sector. And I think that's a big part of what's going to happen in the second half of this year and into, or we're already in the second half, but through Q4 and into 2026. So I really just think monetary policy isn't a necessary condition for us to do well going forward. I think we're doing pretty well. We're going to do even better. But why why tie one behind our back. Why make it harder when there's no reason to make it harder? This idea that everything's so good, things could be better. We could have a three and a half percent or a three and a quarter percent unemployment rate like we had back in 2019. That's 700,000 plus

jobs that are left on the table. You use the word shifting in part of the way you answer that question. In another way we're shifting, it feels like we're shifting in what we believed about free market capitalism. The government taking this stake in Intel. You have a problem with that? You know, it's not my favorite thing. I'll say I don't particularly, and I'm a small government libertarian economist trained in the Chicago School of Thinking. So seeing a big government anywhere doesn't make me happy. That said, I understand that if the government is actually in the business of coming in and either helping companies or subsidizing companies or for national security reasons, putting incentives for companies to stay domestic or grow their domestic

base and create jobs, that there should be something in it for the American taxpayers that are giving that subsidy to those companies. And I do believe that's the way the president is looking at this. This is being looked at not as a governance issue, not a government, a federal government coming in and saying, this is how you need to run your board. Well, how do you know that? make your compensation. But how do you know that? They said it's not voting. Well, I know, but that's one of the risks, isn't it? It's a slippery slope. How do we know that the government isn't going to dictate to intel, how it wants anything done? It was already

telling the company it had to fire the CEO. So how do we know what's going to happen? And by the way, since you mentioned you're a libertarian, I was looking at an op-ed from the Kato Institute, which is a bastion of libertarian ideas in which the vice president of general economics and trade at that organization said of this deal that it quote marks a dangerous turn in american industrial policy that decades of market oriented principles have been abandoned what do you think scott i i opened up my answer to your question is it's not my favorite one it's definitely not my favorite one of the policies But I'm rationalizing it with national security. I'm rationalizing it with the fact that the American people are giving incentives and taxpayer subsidies effectively to this company.

And if they are doing that, then they get something back in return without seeing that slippery slope that I give you. I would worry about it. I don't want to see Washington bureaucrats making decisions in private sector companies. We want to reprivatize this economy, not make it more of a public sector-driven economy. So I think if you listen to the administration, you look at the one big, beautiful bill, you think about all the deregulation that's happening. In the grand scheme of things, we are giving more to the private sector. We're letting the private sector run with more rope and not have Washington constrain them or hold them back.

how this particular deal feeds into that from a voting perspective looks consistent. I think what's happening is more of a tit for tat. If we're going to give you all these benefits, we should get something back, or at least the American taxpayer should get something back. I am listening. But I agree there's a switch. I agree we don't want that slippery slope. We do not want that.

I'm with you. I am listening to the administration. The president himself asked earlier today, quote, is this the new way of doing industrial policy? Trump, yeah, it sure, it's sure it is. I want to try and get as much as I can. I mean, that answer doesn't give you pause that what was a special situation here

because we were going to give them money anyway through a grant from the Chips Act just becomes, well, you know what, you want to do business there, you're going to give us a cut. We deem you to be an important enough institution to the United States. We're going to have some regulations,

regulations around that or maybe we want to take a stake in you there. I think that's the kind of stuff that people are thinking about today. Yeah, look, there's a lot to chew on there and a lot of ways to think about how that goes. To the extent that governance becomes a big part of this, I would get more concerned as the concerns that you're raising now, and I think those are very valid. If it's just that we're giving subsidies or we're giving special treatment to certain companies to get them back off of the ground when times were tough, like we've done with car companies or with our major banks, which we've done in the past, we've taken big stakes in those, or even what we did when we put the government-sponsored agencies, the Fannie and

Freddie, into conservatorship. So when times get tough, we do see this partnership come out. And there are times, I think, particularly in a national security situation, where you want some public-private partnership, because a lot of this is where national defense comes into play, and that inherently is a public sector, it's a public sector activity that we all need, want, and should have a high quality of in our life. So I'm reserving judgment. I opened up by saying not my favorite one of the policies so far, but I see a more broad deregulation, reprivatization story to twist this administration around

and say that somehow this is indicative of them becoming more bureaucratic or central, policy when you look at everything that happened in the one big beautiful bill and everything that's happening in dreg i think is a it's a real twist on the news that's not correct yeah i i'm i wasn't making that i wasn't twisting twisting anything around i mean i i was giving i was giving you the facts uh on the ground and then giving you the opinion of you know a a bastion of small government idea about that and some of the issues that that were raised there i hope I hope we're clear on that. I think we actually agree completely on all of that.

And I think the biggest issue will be if we sort of reset this in a few months or talked about it down the road, and all of a sudden we had government bureaucrats sitting on boards of companies making decisions and voting stock, that would be a very different story than what we're talking about here right now. I think we would, I think everybody watching here would agree with that. David, I appreciate it very much. Thanks. Be well.

We'll see you soon. Thank you. All right, David Zervos. Up next, top technician Jeff DeGraph. He'll join us on what he expects from Nvidia earnings later in the week, what they could mean to this market. We're less than the bill. Back to Kate Rogers for the stocks that she's watching. What's on the top of your list? Hi again. Scott. SoFi trading at 52-week highs and we'll have an all-time high closed today if it finishes above 255.

78. It's still shy of its all-time intraday high that it hit back in February of 2021. The stock has been on a tear as of late. It's up around 250% for the last 12 months and 100% over the last three. And Bitcoin is falling today in what's been a volatile month for the flagship cryptocurrency. It hit an all-time high of nearly 125,000 on August 14th. It's now around 5% below where it started the month. Scott? All right, Kate, thank you. Kate Rogers. Still ahead. Top technician, Jeff The graph is with me. He'll give us his forecast for NVIDIA's big earnings report later this week, what it means. We're now in the closing bell market zone. CNBC senior markets commentator.

Mike Santoli and Renaissance macros, Jeff DeGraff, here to break down these crucial moments of the trading day. Michael, I'll begin with you. What are your thoughts on the way we've traded today? Just modest slippage off of Friday's trend, taking the edge off some of those dynamics. So Friday we had this super broad rally, the average stock, small caps, the Dow outperforming.

You have those exact things underperforming. today. So I think the broad message is, cyclical stocks are leading. It's been a global move. The market is celebrating the idea that we're going to get perhaps a rate cut if all things line up without really needing one. That said, I'm attentive to the fact that the S&P 500 is kind of halted at the old highs. You know, things like Palantir and Crypto are a little soft today. So we'll see if we sort of pull back enough to really slingshot us higher or if it's just kind of a holding near the highest type of equation. Maybe it's a holding near the highs until we hear from Nvidia on Wednesday. It's the big moment of the week and arguably

holds the key to what Mike Santoli is wondering. I think that's right. I mean, obviously there's a lot of focus on Nvidia. We have it as a slight disappointment, so we'll see how that plays out. It tends to, about 65% of the time, it tends to beat earnings. But, you know, what's funny is the reaction is not 65% of times it's up, right? So that's a little, the game within the game is a little trickier. And we think there's some disappointment there. You know, we'd be favoring things like CrowdStrike that reports the same night. And it's almost oversold here. It's not quite oversold, but back to the 200 day. It looks like, you know, one of those types of names that has the ability to, you know, put up a decent number and actually respond well. I just worry that

any response from Nvidia is going to be hard given, you know, kind of the front loading that we've seen in some of the price here. Yeah, I'm about that stocks up almost 40% in three months. So, Mike, that raises the issue of whether a disappointment, if Jeff is correct in the way they're trying to score this out, means that the AI trade, which I think has been questioned a little bit lately, is at some degree of risk, at least in the near term. It has been questioned most specifically, like most of last week, those four days. What I don't know is if it's being questioned because there are genuine concerns about the big fundamental theme, or because you had crowded positioning, they had run a very long way in four months, you did have a little bit

of a backing off, a rotation away from them, and then we're filling in the blanks in terms of the narrative to say that there's a reason to be questioning it. So I don't know. I think that it could go either way with that. I think there's good reasons to think that we might be in a stutter step in terms of the AI trade. I don't know how much it's going to matter. I mean, Invidia, for as much as it moves itself a lot and defines the storyline going forward, it hasn't always been like a broad market bellwether. In other words, the whole market follows it in terms of how it moves off of earnings. Jeff, we get the two-minute one. of course, as we just heard. I read a story today that brought to the forefront how funds

are positioning for gains in emerging markets like China. And you've seen a big pickup in that regard. And I noticed from the charts that you sent us, you are looking at China as well for a breakout? Yeah, look at it broke out in our book, you know, as of last night. We've been bullish on the space for 18 months. And I will say it's been, it's taken longer to develop than I would have expected given some of the acceleration that we saw about a year ago. But it's finally coming back around, and it never did enough to dislodge the story. It just required more patience. This is a tricky business.

It's not always giving you what you want when you want it. But look, there are a lot of really good charts there. I mean, Alibaba, just to name one, is fantastic. But they're copper miners and some of their semiconductor names and their financials look good. So I think it's a really, really important story. And I would not just limit it to China. It's also Hong Kong. And keep in mind that, you know, the topics in Japan made a 35-year high.

I mean, that's as long as I've been in the business. So for the first time, it's a fresh high. So a lot of good things are happening in Asia. I don't know if that's, you know, how much of that has to do with tariffs or other things. But certainly those charts, we have taken note and we are playing aggressively. All right. I appreciate you being with us. Thank you.

Jeff the graph, Renmack, join us once again. Their topic is the bell is going to ring. Not any follow-through, of course, from Friday's big games. We'll finish down across the board, and that means for the majors and the Russell 2000. But that does it for us. We'll see on the other side tomorrow. In the meantime, he got over two to sound for it. That bell, Mark...