Closing Bell 11/07/24
40:22 Share

Cnbc has quick and easy to understand business news updates at the open midday and close every weekday. Markets, money and more from wall street to main street. I'm cnbc Jessica, adding to follow and listen to C, N, B, C. Business news updates wherever you get your podcasts.

Well, that was for your power. Following the decision to cut interest rates by twenty five basis points, the chairs saying the economy continues to expand at a solid pace that labor market conditions have eased. He was non committal on another rate cut in december.

Want to see what the major averages are doing pretty much tanging. One of those gains that does follow that massive day yesterday, that spend the outlier all day of one and a half cent of the S N P in the doub are also winners welcoming to closing baLance. Scott walter, live here post new york stock exchange. Let's bring in now double line capital C E, O and cio jeffrey unlock. Jeffrey, welcome back for our traditional visit.

The judge could be here again means good to have you.

So what is your reaction to what the feed share had to say today? He used couple of our words, the one we talked about last time, we calibration, and then remarkable, he said, when describing the resiliency of this economy.

Yeah, we celebration showed up again and that's a repeat of the last minute word of the meeting. And I think power feels very much that he is a good place now because since the july thirty first meeting we have, the two year treasury rate is up by almost sixty basis points and the fed funds rate is now down by seventy five basis points.

So he's gotten much more and sink with the bond market by A A movement of fed funds around over two years of one hundred and thirty five basis points of convergence in just basically two meetings. So I really think that we probably have one more rate cut coming in december because that, that would chew up the fed funds rate with exactly where the to your treasury rate is right now. So IT is interesting that we've had such a strong performance of the stock market since the last fed meeting, while we've had interest strates rising so that you had a tremendous outperformance of stocks versus at least treasury bonds since the last fed meeting.

And I attribute that basically to the the election result. So we had an incredibly consequential election result, very different than a lot of people probably were forecasting as a base case a few months back. And we've had one of the least consequent al fed meetings today with basically repetition of this idea that the the goals are Normalizing, the labor markets, Normalizing, you know, the quits rate and the job of things rates are of where they were, prepare the mic.

And so I think the fed is feeling very much that they are plotting along towards their goals. And he said so and fairly direct language today. So yeah, the the thing is, sorry, surprising me a little bit is that people are so willing to dismiss the soft ending jobs market.

I mean, the two thousand thousand jobs I know people want IT would be that to one of hurricanes and strikes and stuff like that. But I keep looking at the household survey. And the household survey over the last eleven months has spent a loss of jobs of over three hundred thousand jobs humanly over the last eleven months.

And so that typically is a little bit more real time at economic turning points. It's still not terrible. The household survey, it's very volatile. So we have to watch out for that. But IT is not showing tremendous of strength.

And the real problem that the board market seems to be having from my perspective and is being talked about much more in the open IT, came up several times at the press conference today, is that the supply of treasury bonds is getting to be rather astonishing. We have a two trillion dollar deficit. It's about six percent of GDP over the last twelve months, and we still have a growing economy and the interest expands on the debt, which I always talk about three years ago, was three hundred billion dollars per year.

It's now one point three trillion dollars per year. And we have a great volume of bonds that are rolling off with very low interest rates from five years ago or even even three years ago. There are being refinanced at substantially higher rate levels.

And this is going to continue to be a supply problem for the bond market. And for this reason, we are not positive on long term treasury bonds in spite of the fact the economy is sort gradually slowing down. It's just the supply of bonds is very troubling. And so we what we recommend investors stay is the inner media part of the treasury board market and not out in the twenty and thirty year bond sector.

In fact, I read the low and rates, but basically several weeks ago, we made another duration cut or maturity cut in many of our bond funds because we do not want to be exposed to this fiscal financing problem, which I think could very well lead to rising interest rates in spite of the fact that we might have a slowing economy. So into space are rising. We have an with the curve is not inverted any more tools to tens.

It's not very positive ly slope. It's a very flat yael curve. And we're anticipating that the fed will will cut rates again in december.

So not a lot to take away from today's meeting. That was pretty ty, much a repeat of the comments that remained by jp the last meeting. But I do think that he is much more in line with the bottom market.

And there he is correct in exhAusting the idea that he's a Normalize sort of a place and he is making progress towards towards the Mandate. The inflation numbers are are lower. Of course, the peace chores at two point seven. There are some inflation numbers in the low tools.

We believe that if we keep the Price of oil around the low seventies, which is spent a lot of resistance down around seventy, we think we're going to see potentially a headline CPI that's below two percent in about four, five months based upon the the structure that's there. So jay power will be able to pretty much declare a Victory. I also commanded j power for bringing up the legs on the rent rules.

The part of the inflation rate remains elevated is kind of rent rules. The the new rents are have almost no inflation, but the old ones, they come down with a leg. And so that part of the inflation picture is probably still going to provide something of of a ceiling on where the inflation rates going to be for twenty twenty five. I don't think under the base case, we'll see a three handle CPI inflation rate during the next twelve ve months.

Jeffery, bury me for a moment, if you would. Steve lessens come out of the room where he did ask a question to feed chapel. Steve going in, you call the statement splash less. That's the word you use, where there are any waves, if you will, in the comments that he just made.

No, I think what there was was a guy that was on the beach trying to avoid getting wet from any of the waves that might be lapping on the shore. Scott, as I would describe IT. And those waves include a new election, potentially huge new fiscal policies coming down the road.

You and jeff, we're just talking about the Spike in interest rates that out there and what's happening with the deficit. I think he didn't want to get involved in much of that today. He seemed to say, hey, all of that down the road, but I I just play for you. The one thing that hi, where we go with this and he says we're still going to neutral, is what he said.

We going to wait and and see how things come in, in december. I mean, it's I would put IT this way. We're on a path to a more or neutral um stance and and that's very much for wrong. That has not changed at all since september, and we're just going to have to see where the where the data leaders.

So Scott, that's where we're going. And he still sounded to me like maybe there's another cut, as jeff suggested, coming in december. I do think it's interesting what's happened, which is now the market seems a little bit more aligned with where the fed is and where, by the way, our fed survey is as opposed to the fed getting more line with the market, the market went way haywire in terms of expecting lots of right cuts.

IT came back up and now it's, I don't know, actually a little more restrictive than the p. But I think what we need to do, Scott, here and I faced by jeff, come, you got to be your toes. Things could change and they may take time and that's gona have an effect on the fed. But we just don't know how or when.

Yeah I mean the chair, I mean jet Jeffery did mention the the movement in in the two years IT becoming in more in line as the point you make with with the fed.

I want to ask you to react to one thing that we did hear a short time ago by chair pilots when he was asked by a reporter the political backdrop, certainly some concern of you know what the trump presidency would would mean for the rest of the chairs term, which goes until mid twenty six so he's got eighteen months or so. Let's listen to how how answered this and we can react quickly. On the other side.

some of the president, alex advisers have suggested that you should resign. Um if he asked you to leave, would you go no .

ah .

can you follow up on is is if do you think that legally he did not required to leave .

no .

epi c to find what do you make of the way he answered red um I think .

that he feels that the law does not give the president the authority to dismiss the fed chair. Most of illegal scholars i've talked about this issue suggest that he does not have that authority without cause and whatever cause means that would be like serious mouth reasons in the job and he's pretty a adamant about that he serves at the pleasure of congress um nominated by the president and if the congress wants to change the fetal reserve act to give the president the authority's with the fed chair look the ten of the tape, Scott, we did something. You member, he said the fed has no guts, no vision.

Back in two and nineteen when he one of the fed the cut and then he said he might demote the fed chair and that's when in twenty and twenty, he also said that he power said he would not go. And then this year, the president alex, I might, you might get rid of him. Then he said he's gone to keep him for my taste is not the more important issue is that this is got A A lot more fun to cover the federal reserve right now in terms of, you know, so but but I do think the thing to do with all this is probably to ignore IT.

I don't know that it's kind of any big effect on policy fit. He is just gonna his thing, act according to the law and the presidents going to make a lot of comments about policy. And it's just gonna be more interesting that IT has .

been under president. I did think I was an interesting exchange. Their Steve, thank you, Steve least band back with a jeffrey gunless. I mean, jeffrey, we talked about the back up in in yields. You certainly did.

I mean, what role do you think that might play, if any, in where policy does go from here? Paul said, quote, were watching that will see where where they are settle right now. It's not a major factor. And how we're thinking about things, do you think that needs to be a bigger factor?

Well, I think that one thing with the trump election and the senate going to the republicans and perhaps the house, if the house goes the republicans, there is going to be a lot of debt.

There's going to be higher interest strates at the long end, and you'll be interesting to see how the fed reacts to that because trump, he says he's gone to cut tax, at least he said so in the campaign and he's very proc ical stimulus as basically it's in as DNA. So IT looks to me that there will be some pressure on interest rates and particularly at the long end. So I think that this election result is very, very consequential.

And I think most people were surprised at how widespread the strength was for for the republicans. And maybe maybe was just a denunciation of all the law fair. I I think that was a really big, big issue in the election.

People, all these crazy law is being almost on the same day back a year ago. And people just don't like that. You don't want this kind of strange manipulation.

And I think that trumps authenticity is is something that attracts people. Unfortunately, he's very outspoken about the type of policies that are very stilted he wants to put in and he's always spent a dead guy. So i'm really worried about about that.

I'm glad that elon is a somewhat associated with this administration. I mean, they are talking about looking for some spending cuts. It'll be really interesting.

I like you on, if you're listening, give me a call. I can help you try to find a trillions or two of out of spending cuts because we certainly need that. But I think that we have a risk here of there being a back lash from the board market. And the stock market has done so well since over the past couple of months, and the bond market has not done very well at all.

And it's starting to be kind of interesting valuation as if I think golden sex was put out of paper talking about forward returns and how bonds are very, very competitive given the yield where they are today, where you can get seven percent years out of, not terribly risky, say, double b type of of a corporation ortons lio. I think I think it's quite likely that bonds will be much more competitive going forward than they were. But in particular, what's interesting is that the spreads on corporate ones are very, very small terms of the incremental yellow versus treasuries relative to history there, almost where they were really at the lowest for like junk bonds, it's owe about two hundred and seventy basis points harder than treasury ies investment corporate or inside of eighty basis points over treasury's.

But I don't think that, that means you should be avoiding corporate bonds. I never like the really low, low rated stuff, the triple seas and all that. But in single b, double b, weak triple bees, I really think that there's a reason widespread are so tight.

And it's because I think the corporate bond market is less risky on a relative basis than the treasure market. IT also reminds me of where I was back at the beginning of my career when the reagan came in pillar worried about the deficit. And if you had the higher quality bonds like IBM, for example, I remember at the time actually yelled less than treasury's because people thought IBM was safer as as a borrowing the training market.

And I think that's one of the things that's propelling this. Corporate bond performance has been very, very strong. The reward isn't very high, but the risk isn't very high.

These corporate treasures are smart. And when rates were so low, I mean, three years ago, the high heel bond market, believe or not, even three and a half percent. And so these treasurer locked in these very low rates and there isn't a material coming for the next few years.

And so will be interesting to see how the spread markets change. And we've already seen pretty much spreads tighten across the board, non treasuries, the treasury market. That's been the underperformer in recent months, and I I have a feeling that .

would continue. So you told me prior think you looted to IT here when talking about the tax cuts, you told me you were not in favor of reusing the trump tax cuts. So he obviously thinks he has a Mandate.

He, he, he may in fact have a wide enough margin in the house. But by the time is all said and done to to do that, you stand by that view that they shouldn't do that. And I also want to know what you think about that, Larry. Think of that in the journal the other day regarding the deficit, which you are obviously concerned about, that essentially you can grow your way out of this deficit problem. You just have to have a higher nominal GDP growth, in fact, to do IT.

I actually I agree with that point, except there's a covey and that is we have stop this deficit spending if you jay Powell said this in the press conference to his credit, he said we can't keep spending two trillion dollars more than we're taking in. The math just doesn't work. It's the ben Franklin said one of the great natural wonders of the world is compound interest.

But when you when you you're compounding your deaths, you you're running into a rule you a parablist compound interests curve that's working against you. So we really need to have less of a deficit. And I don't think that's gonna happen in in the quarters ahead based upon the strength of trump in this be resulting Victory.

Um I think I think a Harris actually underperformed biden and just about every county in america. It's kind of hard to believe that could be that widespread, but the lack of authenticity from herr's was really kind of fatal. And course he had an albatross ss around her neck with a approval rating of her boss that was just mired at forty or lower for the last few years.

So he really had a upheld battles that he had his force to climb. But I think that we're not going to get Better news on the deficit in the first of couple of quarters, may first year of the truck presidency. I really do not want tax cuts, Frankly, for anywhere in the economy because I don't think that we can continue on this path.

And if if we read up the tax cuts, that just means the work extending the timely on the steps of problem. I'm actually writing IT. It'll be up in the in the public in about a week or two.

I'm writing my own White paper about the the debt crisis is starting to come much more and focus, and I run through some basic aythur on that. And it's really rather so boring. So I do not like long term treasure bonds. The last thing idea of the long term treasure bonds was to sell them.

You have been calling for a recession at some point. Do you still think one's possible, likely? Or do you think that the election of Donald trun changes the calculus because he is going to theoretically have a more profound wth agenda, if you will? You certainly would have you have a lot of pent up demand as a relates to ma and other things. How do you view that now?

Yeah, I think I think that's right. I think trump is clear by the action of the stock market, not just not just yesterday and today, but really over the past couple of months, as the as as the support for trump s was on the rise kind of steadily for the sixty eight weeks part of the election. We see tremendous outperformance of stocks for a response getting rather stretched.

But I do think that is right to see the trump Victory as being as reducing the OS for a new term recession fairly substantially. And so I don't really like the voice going to be accomplished because I think that's going to lead to this problem on long term bonds. But we will see what happens. Certainly the ads of recession drop when you have this type of an agenda being promoted in plain english for the past three months by by mister trump.

does IT change the trajectory of the dollar, which is obviously one of those trades that had been a so called trump trade. We saw the dollar index rising, and IT seems to be on a higher trajectory from here. Is that what you see?

The dollar seems to be extremely core related to interest rates. If you take a look at the chart of the dx, y and x and overlaid on the chart to say to ten year treasury, it's the same chart. So what happens is our interest rates, you know have been going up and that supportive of the dollar, if i'm right, and there is still some potential for long term rates to be suffering under deficit fears, then the dollar will probably still go higher.

And so for the time being, we've been neutral on the dollar much of this year and spent trading and arrange between about one hundred and aid on the D, X, Y and x and one hundred. And low and behold, right at the dead center of that range, very nearly the dead center. And that's the same on the ten year treasury eld.

You know, I got down to three sixty IT, spent up around five percent or so. And the right in the middle of that. So the dollar is extremely influenced by movements in us treasury rates. And so I believe that is currently continue to be the case because I spent an extremely strong correlation over the past several quarters and there's no reasonably that's going to change.

IT seems as though you think that chair pol at this point in the cycle from when we started doing these interviews a couple of years ago, IT IT feels like at this point, should he, can he at this point, declare Victory? He obviously said today explicitly that he wasn't. And some like stand duncan Miller this week suggested that they might try and do that a little too early. But does he have a right at this point to declare Victory, given the trajectory of inflation where the economy is? Again, using the word remarkable to to describe IT, should he?

I think it's a literally on that, but I think he'll be able to do that come, say, march, April of next year unless we get some sort of a shock to commodity Prices, particular the Price of oil because we're going to get on, on the headline CPI. We're quite confident giving the current structure of the comedy complex and where rents are going in the like.

We think that the CPI is going to have a one handle on the twelve months headline number come march, April of next year. And if that happens, well, then I think you can start talking about declaring Victory at that point time. I think it's too early now.

He's too prudent. He's too careful of of a fed chairman to make that assumption. You know, he says we don't we don't assume he said those words in the press conference.

I applaud him for that. But the trajectory he's on, he's getting to he's getting closer. You know, we started these conversations.

The fed was so far back in the curve, they were so loose compared to the the obvious tragedy, inflation. And then he was too tight. And now he has Scott himself begrudging perhaps, but he's gotten himself almost online with.

I've said this, almost every conversation, scot, the fed falls the two year, and I know what people push back against me, but I can prove IT mathematically. And IT absolutely follows the two year, and he's almost exactly in line with IT. So Powell is is in the right spot.

Where is he says the labor markets Normalized. I agree with that. The inflation rate has been coming down. I think he deserves credit for what he's done once he finally started cutting and now this cut t seventy five, with the two year going up, he's right to be in a relax frame of mind. And his mood and demeanor and the press conference were very good.

I thought, I thought his answer to, are you going to be demoted or would you step down on trump asked you to I thought that was a great answer. Just no. No handwaving just no. He's not stepping down. So that's that's good and I .

think .

that's why played IT IT IT had a bit of um I don't know drama necessarily to IT but the the way that the chair entered that I mean, how do you view that? I don't know if it's a wild card or not. You know that cow obviously thinks he has some room head to continue to cut rates, right? He made that clear.

He he thinks they're too restricted to the degree of which they are. That's still unknown. But he also is potentially going to be dealing with reflationary policies from a new president at a time where the economic drop, jeffrey is, is pretty good. IT just creates ten, I think in the in the relationship, if you will, moving forward.

Yeah, I think that's right. I mean, I think I think there is a risk of reflationary policy. We don't know what the terrible car to look like. They could be you surgically applied, but you would be great because that's kind of work. IT was the last time or they could be just very heavy handed.

That would obviously be potentially inflationary depending on what method is used on these tariffs and of course, a tax cuts that he's talking about, a horrible for the deficit. So we're seen that. And i've just repeat one more time.

The truck became more likely to win. We've seen rates go up and we've seen in spite of those rising rates, we've seen stocks going up. So IT spent a very obvious sort of a trump trade.

I don't I don't know why that one should expect that to change in the near term. I am wish to see what happens come january, first week of january, but also monitor the right. So I trump very carefully and he will be probably trying to probe power into being less restrictive, if possible.

So it's going to be an interesting time period here that we've had quite the quite the week, I think hold tired. I think a lot of people had a late night on tuesday. And so this meeting is really very inconsequential. I think what we see december and then the first meeting of twenty, twenty five is really going to be very .

important in terms of the, I guess, the drama between president trump in and check pow. We've seen this movie before. We'll see if the seek is is nearly as dramatic it'll found to watch.

Let me ask you this of the trump trades, if you will. The one that we saw to the downside was china. You ve told me for many months that you like india. Do you like IT more yeah today because you anticipate higher turfs on china. How do you view that whole paradigm?

Well, I still I like a lot for the long term. I mean, it's obvious that they are on the accent, not just demographically, which is extremely strong demographics, but there clearly a beneficiary of production shifting away from china as as mexico probably. So I think that that's not something that I even think about is like as a three months for one month, i'm talking about a multiple year horizon.

I just think india is a great place to be for the long term. The dollar, the dollar is very stable. Oil has been very stable. It's really remarkable how we've seen such volatility in gold and silver being up so much. Now bitcoin is on a moonshot going to saw, I think did you go by some .

bit going on tuesday night?

No, no. I have no interest encysted currencies, but I do think it's interest that gold has been rising and silver has been rising relentlessly pretty much all year. And I think that's an anti deficit, anti central bank type of type of a mood that's going on.

Central banks are buying gold like crazy retail buying. Even costco is selling gold and the they can keep in stock. And I think people are viewing bitcoin and gold as not speculations as much as they were five years ago, but more as permanent portfolio allocations.

And I do have gold in in my portfolio, so I continued to hold gold. Bitcoin is for I A cow. I can't I can't stay stomach that type of volatility.

So that's why I do bonds primarily. You know, let the momentum guys have their fun. But I am a value guy primarily. And so don't have of a mechanism for valuing fear, values and big. And I stay away.

alright, will leave IT there. I think we covered so much. I so much appreciate your time. As always, jeffrey. Thank you.

See in the, I guess the next ones.

what's december now? I ceb, yeah. I i'll see in about a month, see what happens. All right.

right. Good luck, everybody.

Good luck out there. Yeah you as well that's jeffrey gun line joining a double line once again up next, much more on today's market reaction to the fed decision and chair pills news conference, instant expert analysis is coming up plus arbi and bay reporting top the hour all the key themes and metrics to watch for when that report process tape N O T for back up to this.

Cnbc has quick and easy to understand business news updates at the open midday and close every weekday markets, money and more from wall street to main street. I'm cnb, Jessica and good. Follow and listen to see nbc business news updates wherever .

you get your podcasts.

The closing bell .

markets one C, B, C senior markets commentator mike totally and vertus joe turn over here to break down these crucial moments of the trading data. Sped day plus your job sa has the set up ahead of a erp N, B earnings in over time. Joe out turn to you first. Your reaction to some of things that jeffrey gan luck said in reaction to what the ventures said.

I think Jeffery, spot on and identified that the potential for the long end to back up is A A significant possibility, I think Jeffery's right to identify. We're seeing the rally in some of the precious metals, but I also think that the jeffrey's tone is one that I share where I think you have to be optimistic about where we are in the investment environment. And I think we're making a tremendous mistake here.

We listen to chairman's power's press conference, we listen to IT. And I think a lot of skeptics about where we are in the marketplace where attempting to hear something that would disrupt this rally, you're not going to hear that. You're not going to hear that from chairman power.

And let's remember that the score board the score board for president trumped is the stock market when president trumped was elected in november of twenty sixteen. The first thing that happened in december while his transition team was working was the fed raised rates two thousand five basis points, and in twenty seventeen, they raised them seventy five basis points on three meetings. And then in twenty eighteen, they raised one hundred basis point on four meetings.

We're in a completely different situation right now. Scope, the fed is actually cut ing rates. We're looking for contention between the feed chair and the president that I don't think is real based on where we are today.

Candy, for for somebody who has made a career of hoping for low interest rates, I mean, it's just what you do and how you do IT. That's what you want to make up.

I mean, maybe it's the slow pace and the way and see posture that at some point create a little more static. But right now, I think the market was really expecting much beyond confirmation that the plan is in place. They think that rates are too high for where inflation is.

You've thought that for a while, they're Normal alizon IT. They are hoping to treasure o curve Normalizes. People could not be pulled into making grand declarations about the message of long term yells going up because honestly, I don't know why there's this much fixation on a four point two or four point three percent ten year treasury.

You were here july thirty first ove in April yet, but went up quickly. But that's because we entered and then immediately reverse that of a girl scare. It's not about some kind of critical tipping point level.

So I think all that is, is to the good and in terms of the stock market, I mean, look, the overheated stuff yesterday is back and on bank stocks, giving up two percent after a massive move transports down. Otherwise it's definitely people want to remain involved. You have A A final hour lift here, basically driven by procrastination.

You don't have enough exposed. There is a question as to what roll the back up and may play in the trajectory of fed policy at a time where you have is the chair himself called the reason to the economy remarkable if you have the possibility of the back up and yields going even further, they're not exactly sure where neutral is. You know, they're too restrictive. So they're still a .

lot of wild cards. There's plenty of play in, in all of these questions. And I do think that's why it's probably into next year that IT becomes a little more touching go because another quarter point from here, they're still not gonna at neutral.

They're still not going to be near neutral. What they believe is usual if they'd start to really blow out because inflation data or inflation expectations are really gathering steam, that's gonna an issue for the economy, for equity multiples, for what the fed things that needs to do. But until and unless that happens, I don't think that, that that's the thing specifically to worry most about.

I focus on positioning. And let's remember, we're still not certain that IT was fundamental forces that we got that pack up in yields from the last fed meeting until the current fed meeting. I think a lot of IT was tech into nature.

I think you had a market as a related the treasury market was speculators. I got very long because they thought the economy was cooling. They thought they we're going to get fifty places point consecutive cuts beyond september. And I think now you've got a treasury market with speculators are actually very short the market. So I like the chairman Powell gave the example of the last time that a ten year went up to five percent and he kindly dismissed IT basically said, oh yeah, I went back up to five percent and he came back back off .

that's why he said. But right now, it's not a major factor in how we're thinking about things. We're watching IT. Let's see where where they settle. IT was not exactly fully dismissive of IT, but certain ly didn't sound concern. Let me ask you this as an investor, yesterday was such an enormous move in so many things within the market.

Does that color your opinion on where and how you would put money to work from here forward? Because so much happened yesterday in so many different parts of the markets like, well, well, I like bitten before, but wait a minute that was like above seventy five thousand. I of like growth cks like test la, but I that was up like twenty percent this week.

How do you play IT now? So I think where momentum was working um that intensified and momentum in by itself is a very powerful force. I think you stay with that.

But I also think we were reminded of the opportunity regarding just investing in the U. S. Itself because you looked at yesterday's tape and what did you see? You saw large strength here in the U.

S. But not so much beyond the U. S. IT. Doesn't mean that you want to have some exposure outside the U. S, but i'm not necessarily sure that you need you.

I also think a lot of what we saw yesterday was the expectation that finally, the rustle two thousand comes out of its earnings recession, that you could see profit more to expansion in our grow percent. IT was up six percent yesterday, and today it's pulling back slightly. I still think you stay with cap and large cap. You play the broadening out in mid cap and large cap and what the Russell really prove itself that is going to come out of the earnings .

recession would come back to guys in the section of the boss. Now on what to expect with A, B and b and O, T, D.

I've Scotts all about bookings and demand. Expections lost quarter might remember the company warned of slowing us demand. Pair olympics likely provided a boost for its latest core.

But most importantly, how was the upcoming holiday season looking? When I chatted with see a branch sk a few weeks ago, he said he was very confident over the long term that demand is going to remain strong. He's encouraged by the transit.

He was seeing some curious to learn how he plans to capitalize on those trends as well as how he will continue to build now that the company is in growth mode. Another area to watch is marketing spend as airbnb increasingly shows out to compete with the other O T A home sharing unit um and how that could impact margins. Scott.

thank you. Will see what happens your boss and make up. I turned back to you curious to what you think about the fetch is pretty confident that inflation is going back towards the sustainable I think is the the word that he used, gn life thinks that make a lower than target, and he's been pretty consistent on that code. If we keep the Price of oil around low seventies, we're going to see headline inflation below two percent and .

four to five months, right? I mean, I I do think that kind of word that I have get you maybe at least on CPI. And sure.

I mean, I think was interesting in the press conference when how was about the removal of that phrase in the statement where they had previously that they're confident that inflation is heading to a target. Any base said, no, that wasn't really a coded signal to suggest that we're losing confidence or that are the trajectories changed. The market took some heart in that.

Interestingly, too, he was also asked if they would like to see inflation go well below target for a while, spend some time there, because they had this idea, while back when inflation was too low, that you had to let IT sit higher than two percent for a while to even out the long term. He say, basically just draw cold water. On that note, we're not playing that game or two percent of target.

So we're not going to fight for super law inflation. And so I think right now, those are all questions for once. We get closer to target and closer to neutral in terms of the rain.

I also thought jeffrey gundlach highlighted something that was important related to the difference between how the treasury market might be trading, but how the corporate bond market is trading. The corporate bond market is trading incredibly well. Issuance is coming up right retype.

Any new issuance is very strong demand for that new issuance. They were going to see a lot of new issuance coming out. On the other side, I also think we're going to go through this period here as we move into the new year where the animal spirits return, where you see ema return.

And the other thing is you have people to saying, okay, well, potentially we're going to have a lower corporate tax, I possibly, right, but we're not going to feel the effective IT. Yes, you are. C, F, O, are going to see that. They are going to know it's coming and that's .

going to increase country of high yield trade. The animal spirits idea you introduces the idea of more risk taking. He was pretty clear that he wouldn't go too far out in the high heel curvier of thinking about where you want to take.

See, right now, something went wrong, right? Know the world. It's not like you're going to go out and issue a lot of paper, a triple c as a fresh as a fresh deal. So I think what he's basically saying is don't look at the broken merchandise. You get a decent risk ward and good.

right? You don't have to read that being said.

this idea that animal spirits have been dorit is a joke. okay? The markets been ripping for a long time. Credit spreads have been down for a been tight for a long time.

Flows have been pretty healthy. And it's. Corporate activity. Corporate activity.

and that's probably .

good for small caps.

is a lot of .

those companies where they leave the index, they get bored and it's probably good and it's actually good for the investment. thanks. But by the way, golbin sax stock has been going almost vertical.

And yesterday I went literally vert, okay. So this is not under explore territory here. We're here, guys. It's not the beginning of a cycle. IT might be the acceleration of side.

Well, IT could be the beginning of a seminal, which I.

I T .

ara. In yesterday. My thank you, joe chen, thank you as well. That does IT for us. We do afternoon coming up. We will go Green across the board that that far from six thousand on the S N P. Either to see if we get there tomorrow and reach with M B.

Cnbc has quick and easy to understand business news updates at the open midday and close every weekday markets, money and more from wall street to main street. I'm cnbc Jessica, adding to follow and listen to see abc business news updates wherever you get your podcasts.