Transcript
0:00 Tom Lee, also a CNBC contributor today. Certainly is kind of a face ripper, not not just with stocks, with crypto as well. We'll get to that in a minute. Was there a a catalyst? I missed what happened. You know, Brian, I think last week was maximum pain, maximum pressure because we had a Fed hiking very hawkishly and we had high oil prices and rates high. And as you know in the last few days and over the weekend oil cooled and rates are behaving and now we have a maximum hawkish fed that could walk back. And so I I think it is all the ingredients for a face ripper especially given how oversold we are >> is is what's what's and I'm I'm talking my book as the energy guy. I get that.
0:44 But like is how much of a deal is oil's decline because it brings bond yields down. Bond yields have been following oil. So oil goes down, bond yields goes down, stocks go up. Is that is that kind of the formula? Yeah, I mean it is because you know if you look at the CPI components that are still elevated like airline fairs and transport services, those are all energy related and you know last week the JP Morgan report about how they don't even have a base case for oil kind of just told everybody oil is just high and and deal with it and I think that was a maximum pain point too.
1:15 >> And and are you factoring diesel in there too? Because when you look at the price of diesel and and it was shocking for me even filling up with unled to look over and see the price for diesel above I think it was 680 when I saw it 681. >> That's shocking. And I'm hearing from completely unrelated industries, casino industries, guys are worried about what their construction costs are going to be because of the the trickle down impact from diesel.
1:39 >> Yeah. And diesel, as you know, is widely used as an industrial fuel. I mean, so yeah, it's a it's a problem. And if there's shortages, you can't really substitute diesel. So, I think there are valid reasons for why people should be concerned about energy. >> Yeah. But today, they're not. I mean, today the AI trade is back in full. And we've got Steven Bird and Morgan Stanley coming up a bit later on in the shower.
2:01 Let's shower >> that would go. You know what, Stephen Bird? I mean, hey, no, let's let's add another voice on this big market. Say Jay Woods of Freedom Capital Markets, also a CNBC contributor as well, will join us on the show right now. Jay Woods, thank you very much for joining us. I know in your heart of hearts, you are a technician. You love the charts. So, was there again some sort of a trigger, a catalyst that caused today kind of came out of nowhere?
2:29 >> Yeah, it did. And it's technology. I I just wrote a piece this weekend and I called the market the ultimate tease between the bulls and the bears. this 7,600 level. We broke down from it last week after the Fed. We rallied back. Now we're breaking out. So you have to look as Tom was talking about that leadership, the MAG 7 breaking out to new highs. Then you look at those stocks that can take us to a face ripping rally. we've got them in play. Now here's where I want to throw a little cold water on this face ripping rally.
2:58 energy, we're down one day. Nothing has changed. To your point, what has changed today? Nothing. We are risk. There is hope the Trump cheese summit goes well. There's really nothing on the earnings front this week unless you count Cracker Barrel and General Mills. Costco is interesting, but next week is where we're going to really see where the rubber hits the road when Micron reports. Micron is a stock, one of the top 10 in the world. That has another 10% to go. I think that and these semiconductors along with the software rallying together today will get us back to this old high around 7,800 in the S&P 500. But I don't think we're going to have enough momentum with technology alone to get us to new highs and get us to this face ripping rally.
3:42 it's a good rally, don't get me wrong, but not to the extent as we go into the midterms where we should be all, you know, all in in this market. >> Yeah, I mean I I'd agree with Jay. I think that there is fuel here. I think maybe where I'm going to disagree is I think sentiment is still quite bearish. You know, last week AI had a plurality of bears, you know, majority, which is basically rock bottom sentiment, and I know our clients were de-risking.
4:06 There's been a lot of de-risisking because they don't want to be buying stocks into a rising Fed. So, I think people are off sides. I I think that this is the potential to take the S&P above 8,000 before the end of the month. >> But, but you have AMD hitting a 1 trillion market cap today. You've got Meta up 25% this month, Intel up 35% this month, and the last time I checked, it was up 11% today. So, what what gives you the confidence that there's still room to run here?
4:34 >> Well, I mean, these are examples of names that people wrote off since end of June saying, "Hey, these are large names that AI trades over." And then look at how explosively they moved. There's still a lot of names that have a lot of catching up to do. And, you know, AI stocks are still below their June high. So, I I not only do I think there's leadership coming from there, but as you know, crypto moves typically lead S&P moves by about a month. And, you know, crypto made a pretty big move in August.
4:58 And I think that's why we're seeing equities in September. >> You know, Jay, I've got my my Power Insider newsletter coming out tomorrow. And my theme this week is kind of like I don't know anything. I mean, that's basically it because we don't no one no one does. JP Morgan admitted that like we we have no base case because we don't know what's going to happen tonight or tomorrow. If we see some reescalation, I know it's a big if. If oil prices were to go back above a hundred, would this kneecap, this mini rally or whatever you want to call it that we're having? You heard my question to Tom. How much oil and thus bond yields matter right now?
5:31 >> Well, I I think technology is still the place to be and it can deal with some of these higher energy cost, but when you look at the market, it is a confusing market. So, you have to go where the puck is going. And right now, when you look at the charts, which we do, we're seeing breakouts in these big technology names. The cyber space looks phenomenal. Look at a stock like Zcaler which I wrote about on CNBC pro last week. It is just breaking out. Room to reverse. Then the leadership crowd strike PaloAlto. So there is great room to go in this technology trade. But overall the market breath is weak at best. The AD line in the NYSC has broken down. 25% of the S&P 500 is making new lows compared to what we're seeing. It's actually 5% making new lows today on a four-week basis, it's 25%. So there is underlying weakness that while we were treading water in those max seven names and they're lifting us today, I don't think this is all right, all clear. Let's let's buy anything with this symbol kind of rally. but I think the tech has more legs to go despite what we may see coming out of the energy market.
6:37 >> It's interesting, Tom, when you bring up crypto as a prognosticator. If we're going to talk a little bit more and dive into crypto, you hear you have Bitcoin up almost 6% at 85,975. That's the highest since January. Ether now is at 2746. It's up four and a third. Is the crypto winter behind us, Tom? >> Yeah, the crypto winter looks like it's largely over. I mean, it may be a couple weeks early. Crypto has had an immense headwinds. Clarity Act failed. interest rates are rising. there's been some high-profile disappointments and yet crypto prices are up. I think that's the ultimate bottom signal when you rise on bad news.
7:19 >> It's kind of like your thesis about the market where everybody seems like they're bearish, which may ironically be the ultimate bullish. >> That's right. The last seller probably sold last week or repositioned last week and now we have a face ripper. Maybe a couple days delayed. You know, I was expecting it earlier. Quickly, how much are you paying attention to the midterm elections? Not as a citizen, but like as a market guy, November 3rd, I mean, that's not that far off. And some people say, "Listen, could this be the election that sort of hits the rally where people maybe take some time off ahead of it because they just don't know how it's going to turn out?"
7:52 >> Yeah. I I heard your segment earlier with the Wolf Strategist and he thinks the Senate stays Republican. You know, the prediction markets have been very good with elections and they're talking about a flip. I think that the market is pricing in a Democratic sweep. That's probably good news for stocks because it means gridlock in markets like prefer gridlock over trifectas. >> Well, and even the prediction markets might have a rude awakening depending on who stays in power in DC and and how the administration goes toward what does that mean?
8:25 >> Well, there's bills right now pending in Congress that would significantly restrict what prediction markets are able to offer for markets. Plus, there's the whole legal case that would take those out. So, we'll have to wait and see whether elections, as some lawmakers have suggested, get stripped out of prediction markets and cryp and there could be a different reckoning with crypto. There could be a different reckoning with AI. So, Jay, let's ask you the same question. When you look at what's coming down the pike, where we are now in September versus a month and a half from now, how are you factoring in your your particular investments?
9:02 >> Well, I agree with Tom. gridlock is actually a great thing for the market and seasonally we're going to see the market continue to go higher. So I I think we're set up for a good year end rally and to kick off the year fine regardless of what happens in Washington if it's all democratic or total split. and to his point on Bitcoin, I I I think that broke out. It put in the perfect bottom. So I think that is a great place to be even if we get some turmoil in the market going into the election.