... is it different than that, or does that kinda tell the real story?

Well, I think it's funny.

You really can't make people happy.

When it was the 493 that was working, people were complaining that the AI stocks weren't involved.

Now that is just kind of large cap tech that's driving the story.

Everyone's worried about the breadth divergences.

So I think we've gotta put this in a little bit of perspective.

... today.

... of a mistake?

Scott, I, I think the debate is, and we're having it ourselves, i- is the market kind of unsettled here because the Fed won't hike and they should? Or is the market unsettled because the Fed's about to hike into what's a slowdown when you look at say like industrials-

It should

... or discretionary.

Listen, um, I know the market's at a coin toss here.

Uh, look at two-year yields versus Fed funds.

Two-year yields are about 50 bips above, uh, Fed funds right now.

That is not screaming hike.

Well,

Brian, we look at the world through the lens of price action.

And when you think about what happens in uptrends, you tend to get surprised to the upside in uptrends.

And after 12 months of digesting what was a remarkable 24 and 25, the surprise here was to the upside.

This entire one year of digestation NVIDIA never broke below its 200-day.

So I think when you look at what the resolution here is, higher above 230 is the call.

I would also note, Brian, today you have software and semis up.

chris ferron my question to you is what level bond yield does all of this

Uh, the polls are really going one way, and you have to imagine, as you just said, as you head even closer to the midterms, it's going to get megaphone-ish.

Well, I think it's important.

These are corrections and uptrends for a lot of these names, whether it's Caterpillar or Cummins or Quanta.

They're still in good long-term uptrends.

If you're gonna follow the typical midterm pattern, they should bottom ahead of November, and we'd look for that to kinda lean into some of, um, the strength here.

And I think, uh, additionally to that, when you look globally, banks still act great throughout all this as well.

Is that data center debate driven?

You know, I would be more worried about it if that move out of the semis was move out, was a move out of the asset class of equities, but that's just not what has happened here.

Okay.

Okay.Money doesn't wanna leave the asset class of equities.

Uh, I mean, we're in this remarkably rotational, um, tape right now, and I think it speaks to the idea that until we find what level of interest rate is truly competitive to equities, you're gonna stay in this highly rotational tape.

I, I go back to, uh, the prior S&P high on June 2nd.

You only had about 50% of the S&P above the 200-day average on June 2nd.

Today, we sit here today with 75% of the S&P above, uh, the 200 day.

So even as the market has churned for the last eight weeks, the internals have gotten better, not worse.

... i- i- in Europe than they are in the United States.

Did we get that a little wrong? Are we over our skis?

No, Scott, that's still the camp that I'm in here.

I think there's maybe three things to focus on.

Uh, number one, the forward inflation breakeven rates are still very benign here, even with oil back up, uh, over the last week or so.

I think second, let's remember, PMI is 53 and a half right now.

You typically don't reawaken the Fed until that number is north of 58, 59, 60.

And go back to last week's payrolls.

Market doesn't really seem concerned all that much about the Fed, and one day doesn't make anything, obviously with the move today a little bit higher in, in rates, because earnings are expected to be so incredibly robust.

I

certainly agree with the narrative.

I think the arbiter for when it matters is when the bond market tells us it matters.

And I mean, even two weeks ago, 10-year yields trade as high as I think, what, 467, 468.

But frankly, in a pretty orderly fashion and then back right off.

I think if there's one thing we've learned over the last number of months, it's going to take a bond yield materially higher than I think many originally thought to get money to leave the asset class of equities.

Ultimately, If history has told us one thing, when you're in these bubble-like melt-up environments, it takes a yield so much higher than you think.

You said

... of what goes on day in, day out on the indices.

Y- you know, listen, I think we're, uh, about 170% above the 200-day moving average on Micron alone.

Uh, SK Hynix has doubled over the last 18 trading sessions.

You can go stat by stat.

Uh, it is in that mania, manic-type meltup mode.

And, you know, it would be foolish to say that we know the hour or the day when, when that comes to an end.

These can take a life of its own, as this certainly has taken a life of its own here, uh, over the last couple months.

Mm-hmm.

'Cause we already had a really fast melt up.

I think ultimately into the SpaceX IPO, which maybe let's call it mid-June, uh, maybe late June, you could see 75, maybe 7,600 S&P here.

Now, let's put that in a little bit of context.

If you look at the prior big melt up periods, Japan in '89 or NASDAQ in '99, part of that was also rates going parabolic as well.

The last phase of a melt up is typically equities up and rates up.

So we have that similar flavor starting to come together here.

Now, ultimately doesn't end well, and if you think about how the curve here is changing shape with a flattening-

beUh, address, just keep riding tech? Is that your, the, the play, do you think?

Yeah.

What I think is interesting is when you juxtapose what tech looks like today versus what it looked like in '99, 'cause there are certainly some parallels here, right? We're in that, and we wrote about it, uh, this morning.

There is a melt up type feel to this market here.

The velocity with which it has come back is a little bit reminiscent of coming out of LTCM.

The narrowly focused leadership is certainly reminiscent o- of '99.

But if there's a difference with today versus tech then, tech, there was no discrimination being paid among different groups within tech.

Software worked, semis worked, internet worked, telcos worked, and then one day they, and then one day they stopped working.

Yeah.

What does that mean, grossed down?

It mean risk ha- has come off the books over the last three or four weeks.

Now, one place I might push back, this was a good day internally.

This was not a spectacular day internally.

You know, go back to last April 9th, that Liberation Day rally.

You were 50 to one on the upside on the Russell 3000.

Today, you were four and a half to one.

... what are the charts saying?

Okay.

But what I think you wanna care more about is what do the daily advance decline data look like? You know, we've rallied off this low over the last six, seven, eight days.

We really haven't seen anything too profound, uh, under the, um, under the surface o- of this tape.

We want 90% up days.

We haven't gotten that.

We want days where advancers overwhelm decliners.

We haven't seen that.

Citi

Marriott, first chart.

Yeah, you know, I think what's interesting, sometimes in this business, the less you know, and you would not have expected travel stocks to hold up as well as they have, uh, over the last number of weeks.

But Marriott is an example of a name that, you know, frankly outperformed pre-war, it's outperformed during the war.

It's also outperformed as the market has rallied the last couple days.

So in the spirit of identifying strength, uh, Marriott, uh, an example of that.

It went positive in our relative work.

This is Marriott relative to the S&P, uh, earlier, uh, in the year.

[laughs] What, what do you make of the move?

Was that $120 crude, 35 VIX, uh, or are we still figuring that out?

I think we're still figuring that out here.

You know, I'm, I'm just not convinced that, what was it, Monday's open was the real flush internally, and I think two things can be true at the same time.

You can be in a long-term uptrend.

That is still our call, the 200 moving average upward sloping.

Um, at the same time, uh, I don't think we saw that, that real good oversold condition develop, uh, earlier this week.

On Monday morning we had about 40% of the S&P make a one-month low.

... right now in terms of what might do it?

Chris, walk us through.

Hey, Melissa.

Yeah.

Listen, I, I think it's certainly been a pretty remarkable week in terms of the resiliency that the tape has exhibited, but, you know, let's start by talking about what has been most important in this market really over the last three or four months, which has been that equal weight S&P, uh, the RSP, uh, as they say.

Um, what we always look for in uptrends, and, you know, when you go back to basically November, this has been lower left to upper right for RSP.

We look to the trailing three month low line to be a very good area of support in bull markets.

Um, that hasn't even been tested here.

It's hard to know if that's just kind of mechanical mean reversion.

Here, Christopher Verrone on equities.

So I think that trend that began really in late twenty twenty-four, uh, continues here and continues in a very big way.

Um, if you look at US market cap as a share of global market cap, that peaked in the fourth quarter of twenty-four, so we're almost eighteen months into this, into this transition.

Um, put aside the dollar considerations for a moment.

Go ahead.

Where do you not have a new high? Triple Qs, S&P, right? The, the price action is telling you the character-

But it's not.

Oh, I, I know.

That's the irony, right? I mean, we're sitting here...

You know, I wonder almost if it does, is that actually, like, the bullish outcome here? Because if you need something in a world where, like, nominal growth's pretty high to keep the Fed easy in '26 and '27, is it the unemployment rate going from three and a quarter...

Or, sorry, from four and a quarter to five and a quarter.

Is that kind of that structural sif- shift in employment that gets the new war Fed to cut 100 bips when everyone thinks they're only gonna do 25 or 50? That, I think, is the big question.

Is the asset bubble actually in front of us if we're cutting into what is otherwise a pretty sound economy here?

Okay.

You've liked the setup for a while here.

We have.

We've talked about how this very cyclical pulse has been beating through market.

And you really have seen it basically since mid-October, early November, where you saw the transport start to turn, all the banks started to break out again, the brokers.

I think what you've seen with discretionary, again, taking the upper hand here in terms of the leadership sector, is very much on beat with this cyclical pulse.

You know, frankly, you're seeing it in the rate market here as well.

Ten's pushing up against 420.

That's where you need to have more of your focus than just pure playing the S&P for the market cap weighted gains that we've seen because of the tech heavy weighting.

Before

we get to just how insane and the ups and downs and the twists and turns of the year were, let's also first start by just saying how consistent a few things were throughout the course of the year and really have been so consistent for two or three years.

The premise of our call for two years has been so long as banks are involved and so long as credit has come, The trend of the market's probably still up.

And if you look at what's continued this year, all the bank stocks have continued to work.

Credit conditions have remained remarkably calm.

I think until those change, we would be reluctant to kind of move away from the bull call here.

Now, put this in context of what was a very nuanced year from point to point.

You

So in that environment, when we think about cyclicals, it's not that I'm anti-cyclical, but I would say very much focused on the profit growth next year as opposed to this tactical bounce in the economic growth landscape.

How do you see it? Scott, I think it's more than tactical.

I think when you look at the last year, remember, we're coming off a year of easing around the world.

this handoff from, I think, what I would call the speculative economy to the real economy.

You see it in KRE.

You see it in transport.

You see it in small caps.

And then kind of all bets are off.

the Brad Pitt

of the stock market.

Well, you certainly can't blame people.

What does it reveal? It reveals where the positions are crowded, where maybe the emotion is most heightened.

And I think that's been the story with the stock the entire time.

What I think people are missing, though, is, like, take, for instance, on Thursday and Friday.

You know, Thursday's the big reversal.

You

So what do you think? I mean, I know you track the charts, but I mean, the Fed factors into the fundamental story here, too.

Well, I think the market agrees with Waller here.

When you look at the weakness we've seen on a relative basis in consumer discretionary, we've seen cyclicals weakened relative to defensive.

If we're going to use the market as our gauge to how the economy is perceived here, I think there's certainly been a change in character over the last two or three months.

We've talked about it, you as well, with health care turning up, with utilities really assuming their leadership.

So there's certainly a more defensive streak.

We're sitting here with the two-year yield roughly 355, 360.

on this trade.

What do you think about

that? I mean, I understand the I think the data point that maybe a lot of people who are more optimistic about the private credit issue maybe lean on is, you know, credit as a percentage of disposable personal income.

Or if you look at the household sector, even the financial sector really not being leveraged nowhere near where it was in the lead up into 07, which is the proxy that a lot of people want to use.

So I don't necessarily think it's a repeat of that.

And the tough part about private being private is that it's private.

So there's an opacity there that we just don't, you know, a lot of us don't have access to.

You can look at some of the private equity names in the public markets that have traded pretty poorly lately.

So as long, Keva, as the CapEx numbers remain robust, the stocks do as well?

In that arena?

Right.

It's either the market tipping its hand and exposing where some of the vulnerabilities may lie, or it's the more pragmatic view that if we're going to deregulate money center banks, you'd rather own Bank of America or Citigroup than you would APO.

So I think it's a little bit of both right here.

What I'm comforted by is public credit has not deteriorated here yet.

So if you look at double B spreads or even triple C, go way down the quality ladder.

Credit conditions still largely remain pretty good.

But you want me to get

Is now the time to keep that momentum going and play that momentum or to be a little bit more cautious about these sets of record highs?

Well, listen, we know where we are, Dom, with the calendar.

It's the middle of September.

We know September's reputation as not being one of the strongest months.

You know, internally, the last week or so has been a bit lighter than we would have wanted to see.

But listen, at the end of the day, the Equal Weight S&P is at new highs.

The leadership is still very much banks, discretionary, industrials to a degree.

look good