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Stocks Sink After Weak Jobs Report, the Trillion Dollar Man, and the Return of Rapid Fire 9/5/25
00:43:53
Stocks hit fresh highs before turning lower after August’s jobs numbers disappoint. Tesla proposes a new pay package for Elon Musk. Plus, three stocks in less than three minutes…Rapid Fire is back.
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- [00:00]
Melissa Lee
Hey, Fidelity, what's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs.
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Mike Santoli
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Melissa Lee
That's music to my ears. I can only talk.
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Mike Santoli
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Melissa Lee
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Mike Santoli
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Steve Kovacs
Details@fidelity.com commissions Fidelity Brokerage Services, LLC Member NYSE SIPC.
- [00:32]
Mike Santoli
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- [01:01]
Melissa Lee
You're listening to the Exchange. Here's today's show. Thanks, Frank. Happy Friday. Welcome to the Exchange. I'm Melissa Lee along with Mike Santoli. It was an early rally that quickly fizzled with the three major averages hitting new highs at the Open now all of them in the red, the S and P and Nasdaq still on track for weekly gains, though treasury Yields sharply lower the 10 and the 2 year hitting the lowest level since April, the 30 year hitting the lowest level in a month and Gold hitting another all time high, now on pace for its best week since May. We do want to start off with the market's message because what is that message today with the, with the jobs report? Mike?
- [01:37]
Mike Santoli
A little bit of a chilly breeze blowing through the market on the growth front. You know, the market have worked itself into this position where it was priced for some pretty ideal set of circumstances, which would be the likelihood of Fed rate cuts in September, maybe more to come, but without the pain of having to worry about the economy stalling. We mostly have that intact. I mean, you obviously had an undershoot on the jobs number, but I do think there was enough of a case for the potential for downside risk here. Consumer weakness. You're seeing the consumer cyclical stocks, the bank stocks kind of roll over intraday.
- [02:12]
Melissa Lee
Yeah. And obviously next week we're looking forward to cpi, which is going to be another key input in terms of the Fed decision whether or not we get a 50, whether or not we can't get a 50. That'll be key. But in terms of today's session, you know, the 10 year yield being at 4.07% right now we're looking at, I think the, the Low Close was 3.99, let's call it 4% or so. So obviously that level is going to be really key in today's session as we head closer to the that was.
- [02:39]
Mike Santoli
The depths of the April tariff panic, that level. And in fact if you look back for let's say three years, that's what this equity bull market is run just about. You don't really want it much below 4%. We haven't traded much below 4% of the 10 year unless you've been in a growth scare or the recession risk was perceived to be pretty high. So we've gone from worrying that the long end of the treasury curve was going to get out of hand to the upside to oh no, maybe bonds are a little bit too strong here. So I do think that's this delicate act. I do think you have to also mention though the trade has gotten a little bumpier just today because it seems like it's a little less. Everybody wins in video and Microsoft down and broadcast. All right. Well a 50 basis point rate cut this month perhaps. Now back on the table and in the last hour a new attack on the Fed. This one from Treasury Secretary Scott Bessant. For more, let's bring in senior economics reporter Steve Liesman. So the pressure keeps coming, Steve.
- [03:35]
Steve Liesman
It does, Mike. I'll get to that in a second. But let's talk about that lackluster jobs report cementing the outlook for not just September rate cut but now for three cuts this year instead of just two. Let's look at the numbers. Non farm payrolls, just 22,000 by the way, June revised to negative. That's against the prior month of 79,000. In July unemployment ticking up to 4.3% the highest we've seen since 2021 when we were coming out of the pandemic. Average hourly wages trend like 0.3. That's okay. But the year over year, 3.7%, that's going to not look so great when we adjust that for the new inflation numbers next week. So what's the big job? What's going on here? The questions are what? Whether or not these are temporary effects of tariffs and uncertainty. Also immigration and deportation impacts, reducing labor force growth, lowering the break even rate for keeping that unemployment rate stable. But then as Mike said, the bigger question is this a part of a broader economic slowdown? I just spoke with treasury adviser Joe Lavornia, he tells me, quote, the pro growth supply side policies that stem from the tax cuts and deregulation have not kicked in yet. So he thinks that is to come. Well, here's the probabilities of what the market thinks are to come. 100% chance now of a first cut in September with a 10% probability of a 50. October now at 85, December at 78. So three cuts at three successive meetings now priced into the market. Meanwhile, Treasury Secretary Scott Bessant penning a sharply critical essay in International magazine of the Federal Reserve. I'm told he had a draft of this nine months ago and it was withdrawn by when his name was floated to be Secretary. It is virtually unprecedented for Treasury Secretary to weigh in publicly and in such detail about the Fed and its policies. What did he say? He calls for an internal review of Fed policies, mostly saying those policies have failed. He suggests stripping the Fed of bank regulatory functions, putting it over to the FCC and the FDIC since Fed policies led to inequality, undermine its credibility and threatened its independence. Suggests scaling back of quantitative easing. Meanwhile, he's continuing to back an independent central bank. But he said that the Fed needs to scale back distortions it caused in the economy and must re establish its credibility as an independent institution. He said, quote, the Fed has become beholden to its self interest at the cost of the national interest. The context of this of course is sharp and repeated criticism of the Fed for not lowering interest rates from the President and, and the effort of course to remove Fed Governor Lisa Cook for alleged mortgage fraud, which she has denied. The impact of this is going to depend on whether the Fed embraces any of its recommendations or of course, if Congress sees the article as a potential blueprint for Fed reform. Melissa.
- [06:20]
Melissa Lee
All the mentions of Fed independence in that paper, Steve, is the irony is not lost. But I wanted to go back to the jobs report and how it impacts the markets and how we view the probability not just for September but for October. I mean in terms of next week. The data, I mean, dare I throw out, what if CPI is hot? I mean that would be, I think the ultimate sort of market quandary in terms of what, what we should expect here from the Fed.
- [06:45]
Steve Liesman
All right, I'm going to tell you what the story I was going to propose for Monday is. And the story was going to be headlined we got the stag. Now what about deflation? Okay? And if you put up those probabilities again, you can see the Fed cutting three times. If you close one eye and look at only one part of the mandate, right? Oh, I got weakness in the jobs numbers in the economy, I can cut rates. Well, what if you open both eyes and say wait a second, what's going to happen on the inflation side? I'm waiting. In about 54 minutes we'll get our official Dow Jones estimates for the inflation numbers. Next week we'll see what, what they're expected to be. But the key here is the Fed may have an additional issue next week in a conundrum when it comes to this possibility of hey, is inflation going higher here and is it really that prudent to certainly they cut in September, but perhaps give less of a rosy outlook for future rate cuts down the road. I think one of the keys here is going to be does it look like it's just tariff related price increases or, or as Austan Goolsbee very much singled out this notion that he saw in the last report, it had spilled over into services. We just got to watch that next week.
- [07:58]
Mike Santoli
Steve, if we go back to how Chair Powell over the summer was substantiating his wait and see preference right to let to be data dependent and not commit to September before Jackson Hole, he was basically saying, look, we decide which one of our legs of our mandate is farther away from target and you know, inflation might be away from their 2% target, but it isn't moving fast away from it that we know of. Whereas the jobs picture has probably deteriorated more than perhaps the Fed anticipated, although I guess the outlook was for a rise in the unemployment rate to 4 and a half percent by the end of this year.
- [08:34]
Steve Liesman
So we'll see if Jackson Hole Jay Powell prefers to have listened to prior Jay Powell or current Jay Powell. And that's really the question. You only have a problem here if it starts to spread. There are economists out there, Mike, I think the phrase you use was as of now or so far that who believe that the substantial part of tariff price increases are yet to come and that we have only seen and they look at the data that show here is what we've imported. Here's the average price paid and I've seen numbers like 9 or 10% average tariff rate. It could be because they're working their way around the tariffs. It could be because not a lot of it was necessarily brought in under the full tariff regime. But they think that 10% is going to 18% and they also think that retailers and those are companies facing the customer have not fully passed along their price increases. So we could yet have that to come. It could still be temporary price increases. But the question is what is the number of what is the differential? How far is the Fed away from its target while it's cutting interest rates? At some point they could be undermining their own credibility here, Mike, in terms of their how, how, how committed they are to their 2% inflation target.
- [09:57]
Melissa Lee
Steve, thanks. I look forward to your story on Monday. Steve Liesman well, Lululemon is disaster du jour, down more than 18% now in weak guidance. The company saying it's lacking predictability when it comes to the president's trade policy, particularly the end of the de minimis loophole. The CEO also blaming the company's recent lack of innovation.
- [10:18]
Steve Kovacs
When I look at competition, we know when we deliver, we win. We've delivered innovation in our performance apparel. We've grown that, we grew that in quarter two and we grew market share in that. Where we lost the opportunity is in.
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Mike Santoli
The lounge and social.
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Steve Kovacs
We became predictable. Our guests weren't reacting and that's the.
- [10:38]
Mike Santoli
Opportunity we disappointed them more focused on.
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Steve Kovacs
But with competition, we have a brand that is uniquely positioned, a guest that's incredibly loyal.
- [10:46]
Mike Santoli
We just know what we need to.
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Steve Kovacs
Do and do it better in particular.
- [10:49]
Mike Santoli
In a couple of key categories.
- [10:51]
Melissa Lee
All right, here's the take on the Street. At least six downgrades today citing everything from lack of catalysts, growing competition, tariff signs of consumer attrition and a longer turnaround timeline. And that brings it to 10 buys, 21 holds and 2 sells currently. I think the issue is a credibility issue on the part of management. This is the second time they've cut full year guidance in the past three months. So a very short time frame here. And also the notion of saying trust us, we will provide new product and innovation next year and we will return to growth will grow next year. I don't know if you can believe that when it comes from a management team like this that has been having to, to renege on its promises to investors.
- [11:33]
Mike Santoli
Now the Street's definitely withdrawing the benefit of the doubt. They're not going to defend the story anymore. It's actually now being treated I think by, by analysts and by investors as quote, post growth, right? This is one of these beloved names. Had this premium valuation. It defined its category. I long ago started comparing it and it actually moved in stock terms with Chipotle as basically they define their own category. They were worth a premium. They were kind of had the cool factor and they had low penetration. They none of that's really true anymore. I think that's the issue and look, maybe it's getting cheap enough. I mean, on earnings basis, like 12 and a half times earnings.
- [12:09]
Melissa Lee
Right.
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Mike Santoli
That's like basically where the like the mall chains like American Eagle and Kirby and Fitch trade. It's also below price to sales of Nike. So, you know, it's getting to that point where you could argue that a valuation cushion is being built in. But what's the turn, I wonder though?
- [12:25]
Melissa Lee
I mean, I like that comparison with Chipotle. Tim Seymour was making that from Fast Money earlier today on our call. But at the same time, Chipotle defined its own category, but there aren't direct competitors offering the same sorts of products right now. So you could even argue that Lulu is facing a bigger sort of bear narrative in that maybe it can't recoup those days of high growth because before there weren't the allos and the viewer of the world out there and now.
- [12:51]
Mike Santoli
There are, and now there are. And now part of those brands is we're not Lulu because.
- [12:57]
Melissa Lee
Right. So ubiquitous anti Lulu.
- [12:58]
Mike Santoli
Yeah, it's a tough spot. All right, let's turn to tech. Broadcom shares are surging today on strong earnings and news of a mystery customer that has secured $10 billion in orders. Christina Fortune novelist has the details in today's tech. Christina.
- [13:13]
Diana Olek
Hi, Mike. Well, 10 billion in orders from a fourth customer for Broadcom's custom AI chips with shipments are they're supposed to begin as of next year, 2026. Analysts at JP Morgan, Morgan Stanley's and the FT actually believe this is open air, joining Google, Meta and ByteDance as Broadcom's latest mega customer. I reached out to Broadcom, confirmed that. But this deal does underscore a shift in AI compute by betting on Broadcom custom chips over Nvidia's powerful but pricey GPUs. OpenAI is making its clearest break yet from Nvidia's ecosystem because so far it uses chips from Nvidia and AMD only. The contradiction is stark. Nvidia CEO Jensen Huang has been dismissive of custom chip threats. He believes most custom chip projects, which are called Application Specific Integration Circuits or asics or won't do much because, quote, what's the point of building an ASIC if it's not going to be better than the one you can buy? In other words, if the ASIC is not as good as its GPUs yet Nvidia has quietly established its own ASIC division, according to the Commercial Times, aggressively recruiting talent from Taiwan's chip firms, taking the competitive threat pretty seriously. Despite Jensen Huang's public dismissals. Broadcom expects the total addressable AI chip market to hit about 60 to 90 billion dollars by 2027. And with Open Air's $10 billion order representing massive validation of the custom chip model, Jensen Huang's dismissive comments about canceled projects may prove wrong, as this deal could mark the beginning, dare I say, of the end of Nvidia's monopoly pricing power. OpenAI's massive bet on Broadcom signals a new phase in AI infrastructure competition, no doubt.
- [14:50]
Melissa Lee
All right, Christina, thank you, Christina. Parts and nebulous. And you see that playing out in the markets today. Broadcom Avgo hitting a new high in today's session. Nvidia pulling back the the valuations are disparate as well. I mean, Broadcom is 50 forward. Nvidia is 39. And what are you getting from Nvidia versus the message from broadcast that we got yesterday that the AI pipeline is accelerating, actually picking up speed, not slowing.
- [15:16]
Mike Santoli
Down at all for the parts of AI that it's addressing. And it is worth keeping in mind, of course, that Broadcom is more diverse than just the AI chip business. Like two thirds of it is, is other stuff, right? It's software, it's infrastructure. But it is interesting how the street seems to be pivoting toward where there's the near term momentum in terms of Broadcom. And by the way, the two stocks are 10% of the S&P 500 at this point together. So it's kind of remarkable that maybe it's going to be kind of an Intel AMD situation back in the PC days or it's just going to be, you know, they trade off leadership or at least perceive leadership among investors.
- [15:50]
Melissa Lee
We got a big reaction from the mortgage market, today's jobs report. Let's get to Diana Olek with the very latest on that. Diana?
- [15:57]
Diana Olek
Melissa, this is the biggest one day drop in rates since August of last year. The average on the 30 year fixed dropped 16 basis points this morning to 6.29%. That according to Mortgage News Daily. And that is the lowest rate since October 3rd of last year. So we're finally breaking out of this high 6% range that it's been in for many months. Mortgage News Daily's Matt Graham also says many lenders are priced better than this at rates of 6.125%. And many lenders will be quoting in the high fives today. So it's a major difference from May when that rate went over 7%. So let's do some math here. If you're buying a $450,000 home, which is around the national median, using a 30 year fixed with 20% down and not including taxes or insurance, your monthly payment at 7% would be $2,395. Today it would be $2,226. That is a difference of $160 per month. Now that might not sound like a ton, but it's definitely making the homebuilders stocks happy. Names like Lennar, Dr. Horton and Pulte, those first two up over 3% on the day. And how about the Homebuilding ETF ITB? It's been running hot for the last month as rates move slowly lower. It's up close to 13% now over the past month. The big question is will this be enough to really get home buyers back in the market? Rates, as I said, have been falling all month slowly. And mortgage applications to buy a home, they have not really responded. Some say you got to get a 5 handle on that rate to really make a difference given how high home prices still are. Guys, back to you.
- [17:35]
Melissa Lee
And I guess that was sort of my next question, Diana. And that is, you know, the drop that we saw in today's mortgage rate is based on a drop that we saw in rates days before. And so when we see the 10 year yield right now at 4.0 plus percent, we could see that show up in even lower mortgage rates next week.
- [17:51]
Diana Olek
It could be, look, mortgage rates loosely follow the Yield on the 10 year treasury, but not directly. And there are a lot of other things impacting it, like what does the future look like, what do mortgage buyers, those buyers of MBS think about the future and you talk about the CPI, etc. So there's a lot that plays into these rates but really if you're focusing on that home buyer, they're concerned about prices. They're also concerned about the broader economy, uncertainty, jobs, etcetera, etcetera. So that plays into it as well. Yes, you do buy that monthly payment and you know, you date the rate they say. But again it's going to have to be are they feeling good about their personal economic financial situation to make such a big investment, you know, which is a home. It's the biggest for everybody, right?
- [18:36]
Mike Santoli
Exactly. The confidence piece is, is huge. Thank you, Diana. Coming up, Tesla proposing a new pay plan for Elon Musk that would expand his voting power. The details behind his potentially trillion dollar pay pack.
- [18:49]
Melissa Lee
Plus President Trump asking the Supreme Court to let him fire FTC Commissioner Rebecca Slaughter. She'll join us exclusively with the latest on her legal battle to keep her job. The exchange is back right after this.
- [19:02]
Mike Santoli
This is the exchange on CNBC. And now a next level moment from AT&T business. Say you've sent out a gigantic shipment of pillows and they need to be.
- [19:15]
Steve Kovacs
There in time for International Sleep day.
- [19:17]
Mike Santoli
You've got AT and T5G so you're fully confident, but the vendor isn't responding.
- [19:21]
Steve Kovacs
And International Sleep Day is tomorrow.
- [19:23]
Mike Santoli
Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows.
- [19:27]
Steve Kovacs
Will get delivered and everyone can sleep soundly, especially you.
- [19:30]
Mike Santoli
ATT 5G requires a compatible plan and.
- [19:33]
Steve Kovacs
Device coverage not available everywhere.
- [19:34]
Mike Santoli
Learn more@att.com 5G Network.
- [19:41]
Melissa Lee
Are you ready to get spicy?
- [19:44]
Mike Santoli
These Doritos Golden Sriracha aren't that spicy.
- [19:48]
Melissa Lee
Sriracha sounds pretty spicy to me. A little spicy, but also tangy and sweet. Maybe it's time to turn up the heat or turn it down.
- [20:00]
Mike Santoli
It's time for something that's not too spicy.
- [20:02]
Melissa Lee
Try Doritos Golden Sriracha Spicy but not too spicy. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu welcome back to the exchange. Tesla shares up 4% after the board proposed a new pay plan for Elon Musk that would expand his voting power and potentially award him nearly $1 trillion worth of shares. Phil LeBeau joins us now with all the details.
- [20:40]
Phil LeBeau
Phil Melissa, these are eye popping numbers that Elon Musk could eventually earn and that may have some people saying, wow, is anybody really worth a trillion dollars? If you're a Tesla shareholder, the reason the stock is higher is because this is a pay package designed to keep him motivated and in place as the CEO of this company. Let's run down some of the particulars here. We're not going to do the entire thing in terms of the tranches and what needs to be hit basically comes out to this. It's 423 million shares potentially that could be awarded to Elon Musk. That would ultimately result in a 29% equity stake in Tesla, just under a trillion dollars. 12 tranches with specific targets that would have to be hit over 10 years and they're tied to Tesla's performance and what Elon Musk has to do. Here's the chairman of Tesla, Robin Denholm, explaining their philosophy with making this offer to Elon Musk.
- [21:36]
Melissa Lee
If he doesn't hit any of the.
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Diana Olek
Milestones, he gets zero. This is not a compensation package, it's a performance package. And so if he performs, if he hits the milestones, the super ambitious milestones that are in the plan, then he gets equity.
- [21:54]
Phil LeBeau
And they are ambitious targets. Again, we're not going to go over all of them, but some of the more notable ones, delivering 20 million Tesla vehicles, 1 million robotaxis in service, and delivery of 1 million robots. As we've talked about for some time, robotics is at the heart, along with artificial intelligence, of where Elon Musk would like to take Tesla in the years to come. As you take a look at shares of Tesla, keep in mind this still needs to be approved by shareholders. There will be the annual meeting coming up in November or the shareholder meeting in November where they will vote on this pay package. Guys, back to you.
- [22:30]
Melissa Lee
You know, a lot of people at first Flushville would say that is nuts. But at the same time, the last pay package set what seemed like crazy numbers, crazy incentives, and you hit them.
- [22:40]
Phil LeBeau
Yep, exactly. And that's part of why Tesla is looking at this, saying we've got to come up with big numbers and big goals so that Elon Musk is motivated, stays engaged, and we can potentially grow as a company. This is not simply Elon Musk will get $1 trillion or potentially $1 trillion over the next 10 years. It's if they hit certain targets, which, by the way, it would take their market cap from essentially a trillion right now or a little over a trillion, it would take it up to eight and a half trillion. And I think most Tesla shareholders would say, well, you give me a company that's worth eight and a half trillion dollars ten years from now, I think I'd be pretty comfortable giving that pay package to the CEO who could do that. Now, that's one philosophy. I know there's going to be some people who will say nobody is worth that money, but that is what Tesla is banking on.
- [23:30]
Melissa Lee
Well, Phil, thank you, Phil LeBeau. And it's worth noting, Mike and I were discussing this just before the segment that a lot of the other EV makers are actually much higher today. And it might be a combination of, well, if, if Elon Musk can hit these goals and maybe it's, it's blue sky market bigger or rates or rates.
- [23:47]
Mike Santoli
Or they kind of trade similar and they have similar shareholder base. By the way, the fact that there are these fundamental targets that he has to hit as opposed to just the market cap one.
- [23:54]
Melissa Lee
Right.
- [23:54]
Mike Santoli
It changes the whole ballgame it's not just about he can't hype his way to it exactly as he maybe could the prior one. All right, coming up, President Trump taking his legal battle against the FTC to the highest court. We'll speak exclusively with Commissioner Rebecca Slaughter about the president's effort to fire her just ahead. And now a next level moment from ATT Business. Say you've sent out a gigantic shipment of pillows and they need to be there in time for International Sleep day. You've got AT and T5G so you're fully confident, but the vendor isn't responding.
- [24:28]
Steve Kovacs
And International Sleep Day is tomorrow.
- [24:30]
Mike Santoli
Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows.
- [24:34]
Steve Kovacs
Will get delivered and everyone can sleep soundly, especially you.
- [24:37]
Mike Santoli
ATT 5G requires a compatible plan and.
- [24:40]
Steve Kovacs
Device coverage not available everywhere.
- [24:41]
Mike Santoli
Learn more@att.com 5G Network.
- [24:47]
Melissa Lee
Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more@capella.edu welcome back to the Exchange. Interesting day in the markets as we have digested the jobs report from this morning, which all but cemented a September rate cut. But then as the day progressed, we backed off the highs that we hit on the S&P 500. We're now down 29 points and we're thinking what? Maybe there's a growth scare in store. We should note the Dow, which is down by 252 points right now. The only index on track to end the week lower, the nasdaq. Actually the outperformer here set to finish higher by just about 1%. That's thanks to gains in big tech names like broadcom, which is up 11%. Alphabet, Apple, Tesla and here are some of today's big movers. Some Sarah soaring after beating on both the top and the bottom lines. Third quarter guidance also slightly better than expected. Shares of dash cam and GPS company on pace for the best day since April 9th. And the CEO will be on overtime. We should mention today at 4pm eastern time. DocuSign also higher and better than expected results and guidance shares are up just about four and a half percent today, still down about 11% so far this year. Let's get to Kate Rogers. Now for a CNBC news update. Hi, Melissa. In a truth social post today, President Trump said the Justice Department has, quote, done its job in releasing records from Jeffrey Epstein's case. Earlier this week, Representatives Thomas Massie and Ro Khanna circulated a discharge petition for a House vote for the DOJ to hand over the files to Congress. Now the House Oversight Committee on Tuesday released about 33,000 pages of documents from the DOJ, most of which had already been made public. Canada says Ukraine's allies are preparing new sanctions against Russia. Prime Minister Mark Carney said today the sanctions are part of a campaign to pressure Russian leader Vladimir Putin to end the war in Ukraine, adding Putin is, quote, the reason for the killing. He's not going to dictate peace terms. And Lego will release its most expensive set ever next month. The toy company said the ultimate Collector series, Death Star contains more than 9,000 pieces and 38 minifigures to recreate iconic scenes from the Star wars franchise. It's the largest Star wars set ever and it will cost shoppers $999.99 plus tax.
- [27:29]
Rebecca Kelly Slaughter
Melissa, back over to you.
- [27:30]
Melissa Lee
I can't imagine what the instructions are like. I mean, just, I don't even want to know.
- [27:34]
Mike Santoli
Think about how much fun it'll be to blow it up once it's done.
- [27:37]
Melissa Lee
Too pieces you'll step on. Kate, thank you.
- [27:40]
Rebecca Kelly Slaughter
That's what I was thinking.
- [27:41]
Melissa Lee
Exactly. Kate rogers. Coming up, it's PG over P E. The case for profit growth over price to earnings ratios. We'll explain that next. And we want to let you know about a can't miss event that is coming up December 11th. Fast Money Live is coming back. We're trading the holidays at the NASDAQ in New York City's Times Square. Scan that QR code on your screen or head on over to cnbc.com/fast money to buy your tickets. Join the party at the Traders 2026 playbook. We already have folks coming all the way from France, Canada and Alaska. You won't want to miss this one.
- [28:18]
Mike Santoli
Welcome back to the Exchange. Stocks retreating from record highs as a weaker than expected jobs report renewed concerns about the economy. But the data also strengthened the case for a September rate cut, something my next guest believes is positive for stocks and is still that keeping him bullish on tech. Joining us now is David Lefkowitz, head of US equities at UBS Global Wealth Management. David, it's, it's good to see you. So look, the market's having this modest rethink I guess of the perfect scenario of getting rate cuts into a strong economy when tech continues to lead. You think anything has changed with today's numbers?
- [28:52]
David Lefkowitz
Yeah, Mike, I don't think anything has changed significantly. I mean, the economy has been slowing down. We've seen it in some of the recent payroll reports, obviously this one this morning confirming that. But I think the important point here is that we're not picking up signs that the economy is slowing too much.
- [29:10]
Steve Liesman
Right.
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David Lefkowitz
We just saw the ISM manufacturing index earlier this week. New orders popped into expansion. I think that's really important to highlight, you know, claims for unemployment insurance. Those remain very low. And we're just, you know, we just got through an earnings season that was, was fairly strong. So mixed signals for sure on, on the economic data. But overall the numbers that we saw this morning, I don't think change the story in terms of a slowing economy, but one that's not slowing too quickly.
- [29:40]
Mike Santoli
And I guess the question of whether the market has already kind of raced to a point of pricing in a lot of good news there obviously some attention on valuations. You don't necessarily think that's going to be too predictive of how the market performs from here?
- [29:55]
David Lefkowitz
Yeah, I think valuations, you know, obviously they're very important. But as, as I think most investors know, they really don't have a good correlation with shorter term returns. What's going to matter much more in the short term is what happens to profit momentum, what happens to earnings growth? I mean, you can see, you know, it's obvious when we, when you talk about it, if companies are beating earnings, they tend to go up. If they miss earnings, they tend to go down. It's not just valuation by itself that is a catalyst. So you know, in our view, if we've got an economy that is slowing but not falling off a cliff, we think that is bodes well for further corporate profit growth. And you're going to now get going to get an assist from those Fed rate cuts that look a lot more likely after today's data and that should help some of the more cyclical parts of the economy. And at the same time, I mean, we just heard in second quarter earnings season growth in AI investment and adoption is likely to continue at a robust pace into 2026. So we think all the signs are pointing to continued growth in earnings and that's what we think is going to drive the market higher.
- [31:08]
Mike Santoli
It may not be that valuations are predictive of relatively short term performance, but you know, you could note even the last year or so the s and P500 been unable to break above this like 22 and a half times forward earnings. It's allowed earnings to grow into those stock prices. And Even the NASDAQ 100, it's basically bumped its head on 28 times forward three or four times in the last couple of years and backed away. So I guess as your point is, your S and P targets essentially just going to be tracking the pure growth in the underlying earnings.
- [31:38]
David Lefkowitz
Yeah, I think that's a great way of putting it, Mike. I mean look, we, I think from here a lot of, yeah, there is a lot of good news priced in. So there's not a lot of skepticism these days around sort of the soft landing, the good outlook. And so the scope for further valuation expansion I think is a bit more limited in our base case. But yeah, I would say from here it's going to be more about the earnings growth. That's exactly right. So we think the bull market continues. We've got a June 2026 price target of 6,800 on the S and P. Yeah, which, which is okay, upside. But our main point is that we don't see the downside risks as being excessive here.
- [32:20]
Mike Santoli
Got it. David, thanks very much.
- [32:25]
Melissa Lee
We've got a news alert here on Roadblocks. Steve Kovacs got that story, Steve.
- [32:30]
Steve Kovacs
Hey there, Melissa. Yeah, I'm in San Jose, California at the Roblox Developers Conference. CEO Dave Buzzuckie, he's on stage right now going through a slew of announcements. Let me give you some of the most important ones on Roblox. On the artificial intelligence front, of course, that's what we care about. A new generative tool for creators within Roblox to make actionable items. You're seeing some examples of that here. You basically give it a prompt and say this is the item I want to create and it does it for you. This is really important because that's the product primary way Roblox makes money. These virtual items that are sold for virtual currency. And of course the creators take a rake and then Roblox, the platform itself, take a rake on top of that. Also on the AI front, some real time translation tools for voice chat is also coming. That's pretty self explanatory. Going to start in a few languages at first before expanding to more. And then there's another thing, a kind of social network of sorts called moments. Think of it sort of like TikTok or clips you might see on YouTube. Letting the creators of these games and players of these games show off what they do in little video clips they can edit within the app. I'm showing you that right here, right now. But look, obviously any time we talk about Roblox guys, we also talk about safety. This is a platform dominated by young users, children and teenagers. There have been a number of safety issues around this company. I don't have to rehash the them. One of the key safety announcements though this week was age estimation for everyone. Meaning you take a selfie and the system kind of estimates what you look like and what your age is and based on that, what experiences and what you're allowed to do in chat and so forth. And by the way, there are so many more safety issues to go over and these announcements, I'm going to have CEO Dave Buzzuckie on with me at 4:15 and closing bell overtime to go over all of this. So tune in, you don't want to miss that, guys.
- [34:19]
Melissa Lee
Steve, can I ask you a potentially stupid question? But I mean it's a question that I have and I'm not really that familiar with Roblox, but in terms of how it fits into the business model, these AI tools, it helps creators create things. At what point can I actually displace creators role on the platform in some way and do they sell these tools?
- [34:38]
Steve Kovacs
The tools are part of the creator platform, so you don't need to buy the tools, but you do get to use them to sell stuff. And that is actually something I want to talk about with Dave Bruzuki when he's on with me in a couple of hours. Here is when are we going to get to the point, Melissa, where someone like me who has no coding experience, I don't know how to make a game, can go in here and just tell it what I want to do instead of drawing it or designing it myself. You can kind of see the opportunity here, if you're not necessarily well versed in this kind of stuff, to be able to go on there and make money. And by the way, for every bit of money someone one of these creators makes, Roblox of course takes their own rake too as the platform owner.
- [35:16]
Mike Santoli
Air tools.
- [35:17]
Melissa Lee
Yeah.
- [35:17]
Mike Santoli
Digital currencies. Social like for virtual. Virtual friends. No wonder the stocks tripled in the last year. The margin the market's obsessed with right now.
- [35:28]
Melissa Lee
Thanks, Steve.
- [35:29]
Mike Santoli
Coming up, President Trump taking his attempt to fire FTC Commissioner Rebecca Kelly Slaughter to the Supreme Court. But Commissioner Slaughter still in office. Office. And will rejoin us here on the Exchange to discuss her next steps in an exclusive CNBC interview. That's next. We've got a news alert involving Ken View. Angelica Peebles has that story. Hi, Angelica.
- [35:56]
Melissa Lee
Hey, Mike. The Wall Street Journal is reporting that HHS is set to release a report that will link autism to Tylenol use during pregnancy. And that is according to people familiar with the matter. Now, this is a long awaited report. If you remember, Secretary Kennedy has been talking about how his administration is seeking to find the root cause of autism. This has been a question that people have wondered for years and years and he's been promising by September that we'll get that answer. And now the Wall Street Journal is saying that according to the people they've talked to, they're going to link it to both the use of Tylenol during pregnancy. It also folate deficiencies. Now, we've reached out to Kenview. That makes Tylenol. We have yet to hear back, but Canvu telling the Wall Street Journal that nothing is more important to us than the health and safety of the people who use our products. We have continuously evaluated the science and we continue to believe that there is no causal link between acetaminophen used during pregnancy and autism. But you can see that stuck now down about a little over seven and a half percent, guys. All right, Angelica, thank you. Angelica Peebles. Another chapter unfolding in the attempted firing of FTC Commissioner Rebecca Kelly Slaughter. Lower courts ordered her reinstatement earlier this week, but last night, President Trump asked the Supreme Court to pause that as he appeals the case, effectively asking for permission to fire her. This move follows months of back and forth between the president and the commissioner. Slaughter sued Trump back in March following her initial firing. A D.C. federal judge then ruled it illegal in July. Back with us once again in a CNBC exclusive is FTC Commissioner Rebecca Kelly Slaughter. Rebecca, great to have you with us.
- [37:31]
Rebecca Kelly Slaughter
Thanks so much for having me. I'm happy to be here.
- [37:33]
Melissa Lee
You're fired. You're not fired. I mean, it's a tough position to be in. What are your next steps at this point?
- [37:39]
Rebecca Kelly Slaughter
Well, my next step is focusing on the job. I love the job that I have. I love the work of the ftc. I've been doing it since President Trump originally appointed me in 2018. And so my mind is pretty singularly focused on protecting American workers, businesses, consumers from anti competitive and unfair practices.
- [38:07]
Melissa Lee
I do want to read the White House's statement on Trump's appeal of your reinstatement. A White House spokesperson said President Trump acted lawfully when he removed Rebecca Slaughter from the ftc. And hopefully after this ruling, the lower courts will Cease their defiance of Supreme Court orders. You've always seen this as a fight that's much larger than your job. Specifically. Already, Lisa Cook's team, Lisa Cook, the Fed governor, her legal team has filed an additional brief citing your reinstatement as precedent. How important do you think this is in terms of just the protection of the independents of regulatory bodies?
- [38:43]
Rebecca Kelly Slaughter
Yeah, I think the fundamental principles here are the thing that are really important. You know, I love my job, but it's actually not about my job or my work. It is really about the Constitution, the rule of law, and the fundamental institutions that protect market stability. I know a lot of market participants are sort of riding high on AI right now and not paying a ton of attention to the chaos. But when this bubble bursts, and it's, I think, a when, not an if. You know, we've seen before what happens when warning signs are ignored. And in the past, it is the institutions of government, especially the independent financial regulators, that are there to ensure that the market can pull itself back together and the economy can keep running. But I think in this case, when that happens, investors are going to look up and find inflation entirely transformed. Institutions, all the independent agencies, the sec, the ftc, the Fed that protect market stability, are being transformed into political actors. And that's already true. But it will be even more true if the President is allowed to defy 90 years of Supreme Court precedent and clear congressional law that says commissioners cannot be removed.
- [39:59]
Melissa Lee
Do you believe that the FTC has opened investigations that are politically motivated? You posted on X. The FTC should not be using its tools to target political adversaries, advance political grievances. If you've received an improper inquiry from the ftc, please reach out to me directly. Have you gotten many responses?
- [40:18]
Rebecca Kelly Slaughter
Well, I just posted that earlier today and have not checked yet, but I do think it's something I'm really concerned about. You know, I cited an article in which a federal judge was talking about being alarmed by a politically motivated investigation, and that's just one that has gone to court and that we know about publicly. That kind of thing is exactly why we need bipartisan, independent commissioners at these agencies to provide transparency and accountability when that kind of lawfare is taking place. And so it's the kind of thing that I want to look into, and I take the obligation to provide that transparency, transparency and accountability very seriously.
- [40:58]
Mike Santoli
Does that suggest, Rebecca, that you feel as if parts of your agency are already kind of operating, you know, beyond your purview and control at this point?
- [41:08]
Rebecca Kelly Slaughter
Well, that's certainly true. I mean, listen, the minority commissioners are not in charge. They don't run the agency themselves, but they do have an important responsibility in agency oversight and management. And I do think that the agency, even in the couple days that I've been back, looks entirely transformed from the one that I served on for seven years. I've had a couple of all staff meetings. I'm trying, working hard to sort of take the temperature and figure out what is going on and do a ton of reading. But it is stuff that I'm very worried about.
- [41:45]
Melissa Lee
What happens, Rebecca, if you're not reinstated, if there are two other Republican FTC commissioners appointed, if the three Republican commissioners that are currently in place just continue to operate on their own, what happens in terms of, in your view, Big Tech? I mean, the perception might be that, okay, that's a free pass for Big Tech to go and become bigger, to stamp out competitors, smaller competitors, etc.
- [42:09]
Rebecca Kelly Slaughter
Yeah, I mean, that's absolutely one of the concerns. You know, the President is hosting big tech CEOs in the white House even as we're reading about truly horrifying reports of chatbots engaging with small children. In January, under Chair Khan, the FTC publicly announced that it had referred a complaint about snap's chatbots to the DOJ and their chatbots engagement with children. And we don't know what has happened to that complaint. The public does not know what has happened to that complaint. And that's the kind of thing that I think people deserve answers on rather than sort of just glad handing with big tech CEOs.
- [42:49]
Melissa Lee
What are your next steps at this point, Rebecca? Do you just wait?
- [42:52]
Rebecca Kelly Slaughter
I don't wait. I work. That is my goal and job. The litigators are going to litigate and I'm going to focus on the work of the American people.
- [43:03]
Melissa Lee
All right, Rebecca, great to have you with us. Thanks for sharing your perspective. Thanks, Rebecca.
- [43:07]
Rebecca Kelly Slaughter
Kelly Slaughter, thanks so much.
- [43:10]
Melissa Lee
Coming up, the return of rapid fire. Three names, three hot takes, including on this name, down to a 23% this week. That's right, 23% this week. The exchange will be right back. We do have a statement from Kenview now the company saying nothing is more important to us than the health and safety of the people who use our products. We have continuously evaluated the science and continue to believe there is no causal link between acetaminophen used during pregnancy and autism. To date, the FDA and leading medical organizations agree with on the safety of acetaminophen, its use during pregnancy and the information provided on the label. We did see that stock take a dip right after the news came out that the HHS would be releasing a report that ties the use of acetaminophen during pregnancy to autism. And the stock right now is at session lows, down almost 11% right now. We'll keep a watch on this story. The exchange be right back. Let's catch you up on a few stock stories that should be on your radar. It's time for Rapid Fire, where Mike and I break down all the headlines. First up, Figma shares extending yesterday's losses down another 2%, lower by more than 24% just this week. Figma reporting breakeven earnings and a revenue beat in its first report as a public company, but shares still higher by about 60% since its late July debut. And this is all about lockups.
- [44:31]
Mike Santoli
Yes, big part about lockups, but also in part about how these hot IPOs have traded. It's up 60%, but all of that was that initial pop. It has not been after the first day. So all. All these IPOs are down big from the initial pop.
- [44:43]
Melissa Lee
Yeah. Clock. The timing is like a bomb.
- [44:48]
Mike Santoli
Exactly.
- [44:49]
Melissa Lee
Anyway, next up, wild ride for gold these past few days, but back at record highs after that disappointing jobs report. The precious metal on a tear this year up 38%. I mean, the bull case for gold is. Is long. I mean, you got everything you want for the bull case for gold right now.
- [45:04]
Mike Santoli
Just read into any headline you.
- [45:06]
Melissa Lee
Exactly.
- [45:06]
Mike Santoli
Dependence, fiscal fiscal profligacy around the world. The currencies around the world looking a little bit shakier. And then just technical momentum.
- [45:14]
Melissa Lee
Right. And then take a look at the miners. Right. And the rule of thumb for the miners is for every 1% moving gold, it's a 2% move for miners. So that's obviously a big one to watch.
- [45:22]
Mike Santoli
Yes.
- [45:23]
Melissa Lee
All right, look, 22, I think we got to, like, put more stories in here or something.
- [45:26]
Mike Santoli
Reallocate.
- [45:28]
Melissa Lee
Finally, big buys for small caps. The Russell 2000 outperforming the major averages today. Bank of America reporting small cap saw their second highest inflows since 2008 last week. The firm expects the Russell to outperform in the near term after Powell's dovish Jackson Hole speech. And lower rates. I mean, it's all about lower rates. When you invest in small caps, it.
- [45:47]
Mike Santoli
Is largely about lower rates. I think you still need a pretty particular combination of circumstances for them to work in an enduring way, which is lower rates. But also the economy hangs in there pretty well.
- [45:58]
Melissa Lee
Right.
- [45:58]
Mike Santoli
The flow story has been deeply negative for small caps, all up to this point. So actually part of the bull case on small caps is, hey, they're off the lows and nobody wants to chase right now. They started to chase them a little bit.
- [46:10]
Melissa Lee
Yeah. We should note as we are approaching the final hours of the Friday session that we are seeing an interesting move in technology in terms of the transfer away from Nvidia and Microsoft in particular. We're seeing Microsoft pretty much at session lows here, Nvidia as well. And we see Broadcom hitting new highs on this notion that there's, there's a transfer. You're moving to where the next part of the story is, despite the valuation of Broadcom.
- [46:34]
Mike Santoli
Yeah, Broadcom has been an expensive stock for a while. I would note too, that tech and the Mag 7 type stocks or Nasdaq 100 stocks, they peaked against the market about three weeks ago. So we've been actually making new highs in the S and P without them dominating.
- [46:47]
Melissa Lee
Yep. All right. Well, I will see you tonight on Fast Money. The chartmaster Carter Worth is laying out what he for yields after today's weaker than expected jobs numbers. Higher for longer is quaint.
- [46:59]
Mike Santoli
Absolutely. Lower for who knows how long. That does it for us on the Exchange. Power lunch starts now.
- [47:05]
Melissa Lee
You've been listening to the Exchange.
- [47:07]
Diana Olek
Make sure you're subscribed to get each.
- [47:09]
Melissa Lee
Episode every day, same time, same place. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.