Trading stocks as yields rise: Here’s what investors need to know

176 POINTS. EARLIER WAS UP ALMOST 300 POINTS. THE S&P UP JUST ABOUT THREE QUARTERS OF 1%. THE NASDAQ AND THE NASDAQ 100 BOTH UP OVER 1%. HITTING NEW 52 WEEK HIGHS. TAKE A LOOK AT THE TEN YEAR 5.264 DOWN ABOUT FIVE BASIS POINTS FROM THE LEVELS THAT WE SAW YESTERDAY. AND REALLY JIM I THINK THAT'S WHERE WE HAVE TO START THIS CONVERSATION. BOND YIELDS PULL BACK A BIT AFTER THAT SOFTER THAN EXPECTED JOBS REPORT. AND WE'RE SEEING TECH TAKING OFF AND NVIDIA HITTING A 52 WEEK HIGH AS WELL. >> WELL I THINK YOU'RE. >> STARTING IN THE RIGHT PLACE WHICH IS THE TEN YEAR YIELD. I MEAN THIS BOUNCE BACK FROM THE TEENS TODAY. AND NOW IT'S AT 526. I THINK THAT'S JUST A LITTLE MUSCLE MEMORY FRANK. I DON'T THINK THAT'S REALLY THE TREND THAT WE SHOULD BE LOOKING AT, BECAUSE THIS WEEK WE'VE GOTTEN A LOT OF DATA THAT TAKES A LITTLE BIT OF THE HEAT AWAY FROM THE FED IN TERMS OF RAISING RATES. AT LEAST THIS MONTH, WE GOT THE PCE THAT WAS A LITTLE LIGHTER THAN EXPECTED. AND THEN THE JOBS REPORT TODAY WAS KIND OF GOLDILOCKS. IT WAS GOOD ENOUGH THAT WE DON'T HAVE TO WORRY ABOUT, YOU KNOW, A MEANINGFUL SLOWDOWN. BUT IT WASN'T SO HOT THAT THE FED REALLY NEEDS TO GO THIS MONTH. I THINK THEY WOULD BE UNWISE TO RAISE RATES THIS MONTH, BY THE WAY. I THINK THAT JUST WOULD PUT A CROSSHAIRS ON THEIR BACK ONE WEEK ABOVE IN FRONT OF THE ELECTION. SO WHERE YOU ARE RIGHT NOW IS THE ODDS OF A RATE HIKE HAVE GONE DOWN TO ABOUT 20% THIS MONTH. I THINK THAT SHOULD PULL THE TEN YEAR YIELD DOWN WITH IT. I KNOW THE TWO YEAR, BY THE WAY, IS STILL PREDICTING ABOUT FOUR RATE HIKES TO COME. HERE'S MY CALL. YOU CAN DISAGREE WITH IT. I THINK THE TWO YEAR IS WAY AHEAD OF ITSELF. OKAY HERE'S WHY. IF ENERGY PRICES JUST STAY WHERE THEY ARE, LET ALONE GO DOWN, WHICH THEY'RE DOING TODAY. BUT IF THEY JUST STAY WHERE THEY ARE, INFLATION OVER TIME COMES DOWN BECAUSE AS WE ALL KNOW, IT'S A RATE OF CHANGE, NOT A PRICE INDEX. SO THAT BEING SAID, I THINK YOU CAN SEE INFLATION COME DOWN TOWARDS THE TARGET. THE FED ISN'T AS ANTSY TO RAISE RATES. BY THE WAY. YOU HAD THAT GOOD MICRON RESULT A COUPLE OF DAYS AGO. THERE'S A LOT OF REASONS TO MAINTAIN A BULLISH ATTITUDE, AS I DO FOR THE END OF THIS YEAR. >> SO JUST TO YOUR POINT VERY QUICKLY CME FEDWATCH TOOL 77% CHANCE OF A HOLD TODAY JUST A WEEK AGO WAS ABOUT 36%. I WANT TO COME OVER TO YOU AS WE'RE LOOKING AT THE MARKET RIGHT NOW AGAIN THE NASDAQ HITTING A 52 WEEK HIGH. IS THIS TRADER SAYING THAT THEY DON'T BELIEVE THE FED'S GOING TO RAISE RATES. IS THAT WHAT'S GIVEN THE MARKET CONFIDENCE. >> I THINK GOING INTO MIDTERMS YOU KNOW OBVIOUSLY NOVEMBER IT'S A VERY LOW LIKELIHOOD THAT THE FED DOES ANYTHING I THINK UNTIL THEIR DECEMBER MEETING JUST THEY WANT TO STAY OUT OF THE WAY OF BEING LOOKING TO BE POLITICAL AT ALL IN EITHER WAY. AND SO I THINK THE FED IS ON HOLD THROUGH AT LEAST DECEMBER. I AGREE WITH EVERYTHING THAT JIM JUST SAID. THE TWO YEAR IS TELLING YOU THAT WE'RE GOING TO HAVE MULTIPLE RATE HIKES. IT'S TELLING YOU INFLATION'S HIGHER. AND I THINK THE TWO YEAR HAS OVERRUN ITSELF. AND SO I THINK THAT AS INFLATION CORE INFLATION CONTINUES TO COME DOWN, I THINK WE'LL SEE THE TWO YEAR ACTUALLY START TO SETTLE IN MORE TOWARDS WE'LL SAY FED FUNDS RATE THAN THAN CLOSER TO THE TEN YEAR WHERE IT'S MOVING DIRECTIONALLY. AND THAT'S REALLY POSITIVE. I THINK ONCE WE GET THROUGH, YOU KNOW, OCTOBER HISTORICALLY IS UP ABOUT 58% OF THE TIME. OBVIOUSLY, EVERYONE REMEMBERS THE CRASH OF 87, BUT THAT'S MORE THE ANOMALY. AND I THINK THIS THIS MIDTERM ELECTION CYCLE IS A REALLY GREAT TIME TO DOLLAR COST AVERAGE INTO NAMES YOU LIKE, LIKE, OR ETFS. IF WE DO HAVE THAT TRADITIONAL MIDTERM VOLATILITY. >> SO YOU DIDN'T SEE THIS. JIM DID A LITTLE CELEBRATION DANCE BECAUSE YOU AGREED WITH HIS POINTS. AMY I WANT TO COME OVER TO YOU. IS THE MARKET PERHAPS DOING A BIT OF A PREMATURE CELEBRATION DANCE? I MEAN REMEMBER WE DO HAVE A CARRIER GROUP GOING INTO THE MIDDLE EAST. THE IRAN SITUATION HAS NOT BEEN RESOLVED. TO JIM'S POINT, BRENT CRUDE IS DOWN THREE QUARTERS OF 1%. WTI DOWN 2%. BUT CERTAINLY THERE COULD BE ANOTHER ENERGY SHOCK. AND WE ALSO HAVE SOME INFLATION REPORTS COMING UP THIS YEAR. HE SEEMS TO SAY MISSION ACCOMPLISHED. IT LOOKS LIKE THINGS ARE MOVING DOWN. >> THAT'S THAT'S OVERSTATED. >> THAT'S OVERSTATING DIRECTIONALLY. YOU'RE SAYING THAT IT LOOKS LIKE WE'RE GOING IN THE RIGHT DIRECTION. THANKS FOR CORRECTING ME, BUT SHOULD WE BE A LITTLE CONCERNED? IS THIS THE RIGHT TIME TO HAVE BULLISHNESS WHEN IT COMES TO STOCKS? OR IS THIS A TIME FOR CAUTION IN Q4? >> LOOK, I THINK IN THE NEAR TERM WE'RE OKAY, BUT LONGER TERM. SO I'M NOT AS FOCUSED ON THE NEXT FED MEETING OR EVEN THE DECEMBER MEETING. I THINK IT'S GOING TO BE HARD TO GET RATES DOWN SUSTAINABLY WITHOUT A SLOWDOWN IN ECONOMIC GROWTH. SO IF YOU THINK ECONOMIC GROWTH IS GOING TO BE ROBUST, AND I THINK MOST PEOPLE DO, AND THAT'S SORT OF THE TREND THAT WE'RE HAVING, I THINK RATES STAY AT THESE ELEVATED LEVELS. AND I DO THINK EVENTUALLY THAT PUTS PRESSURE ON THE S&P MULTIPLE. IT JUST ALWAYS HAS. AND I THINK IT WILL. I'M NOT THAT'S NOT A ONE QUARTER PROJECTION. BUT I DO THINK TO GET RATES SUSTAINABLY LOWER YOU NEED MUCH SLOWER ECONOMIC GROWTH THAN WE'RE SEEING RIGHT NOW. >> YOU KNOW, SPEAKING OF THE S&P MALCOLM S&P TRYING TO AVOID ITS THIRD DOWN WEEK IN THE LAST FOUR. BUT IT'S ALSO IMPORTANT TO NOTE IT'S STILL ABOUT 1% FROM A RECORD HIGH AS WELL. >> YEAH. I THINK REALISTICALLY FOR THE NEXT MONTH AT LEAST UNTIL WE START TO GET EARNINGS FROM THE TECH COMPANIES, THAT WILL INCLUDE GUIDANCE FOR WHAT THEY SEE SPENDING WISE AND EVERYTHING ELSE. IT'S GOING TO BE A LOT MORE OF PLAYING OF THE OLD HITS. SO THIS WHOLE YEAR WE'VE OR AT LEAST SINCE FEBRUARY, WE'VE HAD THIS ISSUE. WITH THE TEN YEAR BEING ELEVATED INCREMENTALLY. IT CREPT UP AS THE WAR CONTINUED ON, ENERGY PRICES STAYED HIGH. ALL OF THOSE THINGS HAVE BEEN TRUE THROUGHOUT THIS ENTIRE YEAR, AND THE MARKET HAS NOT CARED. STOCK INVESTORS SPECIFICALLY HAVE NOT CARED. I THINK THAT THAT TREND PROBABLY CARRIES THROUGH THE MONTH OF OCTOBER AT LEAST. YES, SEPTEMBER WAS ROUGH. SEASONALLY. IT IS A ROUGH MONTH IN, YOU KNOW, HISTORICALLY ANYWAY. BUT I THINK A LOT OF IT HAD TO DO WITH THE AI HUMORISM THAT WE GOT THAT WAS STARTING TO MAKE PEOPLE QUESTION WHETHER SOME OF THE THINGS THEY'VE BEEN HOLDING ALL THESE MONTHS AND YEARS THAT THEY FELT SO STRONGLY ABOUT, MAYBE THEY'RE STARTING TO BE CRACKS FORMING NOW THAT THAT IS KIND OF FADED A LITTLE BIT. WE'RE PROBABLY GOING TO GET AN IPO FROM ANTHROPIC IN MID NOVEMBER. AT LEAST THAT'S WHAT WE'VE BEEN PROMISED AT THIS POINT. THOSE THINGS WILL LEAD TO PEOPLE BEING A LOT MORE WILLING TO CONTINUE TAKING THE SAME RISKS THEY'VE BEEN TAKING, REGARDLESS OF WHETHER OIL CRACKS 125 OR 150, REGARDLESS OF WHETHER THE STRAIT OF HORMUZ OPENS TOMORROW. LIKE THOSE THINGS HAVE BEEN HERE ALL. >> DAY TWO OF Q4, OBVIOUSLY SEEING SOME BULLISH NOTES COMING OUT TODAY, ONE FROM CITADEL, SCOTT RUBNER CALLING IT THE Q4 RELOAD. I WANT TO GET YOUR TAKE ON THIS RETURN TO MORE CONSTRUCTIVE. ON U.S. EQUITIES IN Q4. SEPTEMBER DELIVERED MUCH OF THE RESET. WE WANTED TO SEE LEVERAGE CAME DOWN. RETAIL COOL. SYSTEMATIC SOLD VALUATIONS COMPRESSED. THE MARKET ENTERS Q4 FROM A CLEANER STARTING POINT WITH CONSIDERABLY MORE CAPACITY TO REBUILD EXPOSURE. JIM AGREE DISAGREE AGREE. >> AND LET ME JUST QUALIFY WHAT I WAS SAYING BEFORE WHEN I SAID NOT MISSION ACCOMPLISHED, I MEANT THAT IN PARTICULAR OVERSTATED. >> THAT WAS. >> MY NO. BUT I MEANT THAT IN PARTICULAR WITH REGARDS TO IRAN, I AM BULLISH. I AM IN AGREEMENT WITH THE CITADEL COMMENT ABOUT WHAT THE NEXT FEW MONTHS CAN BRING. AND I JUST WANT TO RESTATE, FOR THE PURPOSES OF BUTTRESSING THE ARGUMENT THAT YOU DON'T NEED OIL TO GO DOWN, YOU DON'T NEED DIESEL TO GO DOWN FOR THINGS TO CALM DOWN. YOU JUST NEED IT TO STOP GOING HIGHER. AND I THINK TO THE EXTENT THAT EVEN IF WE START BOMBING AFTER THE ELECTION, OKAY, I'M NOT HOPING THAT THAT HAPPENS. BUT IF WE DO, YOU KNOW, THERE HAVE BEEN A NUMBER OF WORKAROUNDS AROUND THE STRAIT OF HORMUZ ALREADY. SO I THINK WE'VE ALREADY STARTED THE DECOUPLING PROCESS. THAT WILL TAKE YEARS, BUT WE'RE WELL INTO IT NOW FROM THE STRAIT OF HORMUZ. WITH REGARDS TO THE REST OF THE SETUP, I MEAN, WE'VE GOT GOOD ECONOMIC GROWTH. ATLANTA FED GDP AT 3.7%. SOME WILL SAY, HEY, A WEEK AGO IT WAS 5% TRUE. IT WAS. BUT STILL 3.7% IS DARN GOOD. WE KNOW ABOUT THE PROFIT GROWTH, THE LABOR MARKET. I'M GOING TO SAY IT'S GOOD. PEOPLE LIKE TO SAY IT'S STABLE, BUT I'D SAY IT'S GOOD WHEN YOU'VE GOT WEEKLY INITIAL JOBLESS CLAIMS BELOW 200,000 FOR TWO MONTHS RUNNING. SO I SEE THE FUNDAMENTAL SETUP LOOKING VERY GOOD FOR THE REST OF THE YEAR. >> ALL RIGHT. FUNDAMENTAL SETUP IS GOOD. BUT WHAT ABOUT THE BREATH? MALCOLM, I WANT TO COME OVER TO YOU. YOU AND I HAVE TALKED ABOUT THIS QUITE A BIT. BANK OF AMERICA'S MICHAEL HARTNETT COMING OUT SAYING IN PART 400 OF THE S&P STOCKS ARE TRADING BELOW THEIR 50 DAY MOVING AVERAGE. IS THAT CONCERNING FROM A TECHNICAL BASIS AND JUST IN GENERAL, THAT IS SO MUCH NARROWNESS IN THE MARKET. AND YOU WERE TALKING ABOUT THIS ANTHROPIC IPO. SO MUCH OF THE ACTION IS IN TECH. >> YEAH. YEAH. IT WOULD BE CONCERNING IF NOT FOR THE FACT THAT THAT'S BEEN THE CASE FOR FOUR YEARS SINCE CHATGPT SET THE WORLD ON FIRE, RIGHT? LIKE, I MEAN, WE'VE HAD THESE ROTATIONS OR THESE HEAD FAKES, I WOULD EVEN CALL IT THROUGHOUT THE SUMMER WHERE IT LOOKED LIKE THE BROADENING WAS GOING TO TAKE SHAPE. IT LOOKED LIKE OTHER SECTORS WERE GOING TO MATTER. BUT I'VE BEEN MAKING THE ARGUMENT FOR SOME TIME NOW. A LOT OF THE SECTORS THAT WE'RE SEEING THE SPILLOVER INTO ARE ALSO RELATED TO THE AI BOOM, RIGHT? SO WE'RE TALKING ABOUT THE INDUSTRIALS. WE'RE TALKING ABOUT THE HEAVY EARTH MOVERS, AND WE'RE TALKING ABOUT THE HVAC COMPANIES. AND LIKE THE SECOND AND THIRD ORDER EFFECTS THAT WE SUDDENLY BECOME AWARE OF AND THAT THESE COMPANIES EXIST AND HAVE TICKER SYMBOLS BECAUSE THEY'RE HELPING TO POWER THE AI BUILD OUT. AND SO UNTIL WE'RE GIVEN A REASON TO STOP BELIEVING THAT OPENAI AND ANTHROPIC ARE GOING TO SOMEHOW FIGURE OUT A WAY TO BE ABLE TO SPEND AT THE LEVEL THAT THEY HAVE COMMITTED TO SPENDING AT THESE HYPERSCALERS. AGAIN, I SAID IT BEFORE, IT'S GOING TO BE A PLAYING OF THE OLD HITS. THAT