last hour of trade, we'll see what happens with ed. can't wait to see what he says at 3:00. "final trades" is what, bryn? >> rsp. i think the market will continue to broaden out. >> bill? >> ggx. >> josh, what do you got? >> i think it's pronounced pfizer. >> "the exchange" is now. ♪ ♪ >> thank you all very much. welcome to "the exchange." i'm kelly evans. here's what's ahead. did cpi just cement a september rate cut? our guests say the door is wide open now. we'll look at what who could close it again, plus some of the downside surprises beyond the headline numbers and how to position from here. plus, universa is known as the black swan, but the firm sees the s&p hitting 6,000 by the end of the year.

and costco today, the stock giving up gains now, down 4%, call it profit taking, up 30% this year. look at that pe, more expensive than nvidia. should you own it at this juncture? one analyst says yes. she will join us to make her case. before all of that, though, let's start with today's markets with bob at the new york stock exchange. i'm scratching my head about it, bob. >> it's really exciting. this is one of the most interesting days all year for stock investors and traders in general. here's the bottom line. a below expected cpi is causing rotation in the stock market. interest rates to drop and cementing the belief that the fed will, indeed, cut rates beginning in september. look at this strange major indices today. the s&p 500 is down almost 1%, the nasdaq is down almost 2%. wait a minute, the dow is up.

the russell is up 3%. do you know the last time this happened when the s&p was down? that was in october of 2008 that's how unusual this is. so here's what's going on here. this is a classic rotation situation here. look why the s&p is down. big cap tech is down. this is why. the dow is actually fairly flat. apple down 2%. microsoft, meta, everything is down 2, 3, or 4% among the biggest of the big-cap stocks. at the same time, what defense today? lower interest rates. what might that mean? how about lower mortgages. so what's the leadership today in the s&p? it's all housing related and consumer related names. mohawk, which is flooring, tile, is a leader on the s&p, up 6%, and there's your home builders. horton, pulte, lennar, up 4%, this is the opposite of the

big-cap tech names. at the same time, what we call deep cyclicals, commodity stocks like mosaic, a fertilizer company, energy like an apache. and deep industrials like deere and dover. this is generically called cyclicals. all call ralying about 3%. mosaic was at a three-year low just the other day. these are significant moves up. lower interest rates, sensitive sectors might do well, like utilities and reits. so edison and american electric, two classic utilities, up 2%. macerich up 2%, and there's vornado, one of the office reits, up 5%. all the office reits are up strong today. sl green for example, as well. so kelly, the big question is, does this have any legs at all? we have seen some modest moves up in small caps and cyclicals

before this year, and it's not lasted. i isn't, though, that the fact that we had a negative print today on the month over month cpi raised a lot of eyebrows and convinced people that interest rates were trending down, the fed was going to move, and inflation was slowly being -- inflation gain was being won by the federal reserve. i think there was a different change in attitude today. >> bob, repeat that set one time, this is the first time -- >> the russell is up 3% and the s&p is down, the first time since october of 2008. that's the financial crisis that happened. >> yeah, that was the worst thing at the moment. we'll discuss it. bob, appreciate it. okay, that monthly decline in prices, look at the chart here, brings us to the smallest increase on the core since april of 2021. so 95% chance of a cut in

september now, at just 63% prior to the cpi. so is september all but certain? our first three panelists are headed in that direction. welcome to all of you. michael, just kick things off, what are your thoughts? >> it was a relief that it's continuing in the right direction. consumers have been constrained by high prices, reducing expenditures. so consumers could be perkier down the road, especially with energy and goods prices weaker. and it's a huge relief for the fed that the q1 data was so high, so we're back on the disinflationary path. >> you got this report and jobless claims were over 250,000, you would read that as a very different kind of message. but this is a message of

emaculate disinflation, so to speak. >> that goldilocks world, where it's perfectly okay, and forthe fed to cut rates when things are pretty good on the real side of the economy is nothing but good for risky assets. >> barry, are we out of the woods? >> no, we're not. i don't -- i view the softer inflation prints as a necessary but not sufficient condition to getting the fed on the path to cutting the policy rate to 4% -- >> which you wanted them to do. >> correct, to relieve the pressure on the bank credit channel, small businesses. they were never going to cut that much because they could, because inflation fell. they'll cut that much because growth is softening, because they have to. and i do think growth is softening. we hit a key metric in the labor market, the so-called somm rule.

if you round it -- >> wait a minute, we go into the weeds. it's three-month average. >> but the unemployment rate has moved up substantially. i isn't when we get the first estimate of the benchmark revision two days before jackson hall, we're going to find a million fewer jobs were created in the year ending march. so the fed will then at that point be convinced that the labor market is soft enough. they need to start cutting. the key for the russell 2,000 to have a sustainable move higher is that we do disinvert the yield curve, that the fed is on a path to 4 say by mid year next year. you know, if growth is soft enough for that, then sure, the russell, the market can broaden out. i isn't that's -- i suspect tha little too easy. i think we'll get softer numbers from an earnings and macro perspective over the next quarter or two.

and those stocks will likely have another leg lower before they're ready to bottom and move higher. >> brian, we just want rick to interject. we had the 30-year bond auction. it did not go that well. mr. santelli, is that because we had such a rally today? what's going on? >> i'll tell you, the three-year and ten-year were above average, almost perfect auctions. today, let's say two out of three ain't bad. 30-year, the yield on those 22 billion, 4.405. but the one issued market was trading 4.383, so it tailed basically two basis points, not good. a price very weak. if you look at some of the metrics, there was one good one, the direct bidders. big insurance companies that need these long-term bonds, they showed up big time at 23.4 on direct bidders. that is the best, the most aggressive since 2014.

but outside of that, everything was weak. if you look at the bid to cover, weakest since november of '23. indirect bidders, weakest since november '23. the dealers take an average of 15.9% is the ten auction average. as i said, i gave it a d plus. i could have gone c minus, but to me pricing is the most important issue here. as you can see, not only are yields moving up on that as you see on your intraday 30-year bond chart. but it's also the last auction. we've now moved 119 billion in coupon supply. i would not be surprised to see yields firm up the rest of the session. the key you want to watch for is twofold and tens. 4.19 and 4 to.25 are both big levels. that would be a four-month low yield close. but there's lots of selling that has started to come in. we want to monitor the markets in the last several hours of the session. kelly, back to you. >> rick, thank you. michael, quickly, anything you

would add? >> the problem is the inversion of the yield curve. will the fed move quick enough to allow rates to come down? the beginning of the year, the end of last year, the ten-year treasury was around 3.9%, but there were six rate cuts priced in for 2024. so to get back to four, you need lots of rate cuts in the next six to nine months. we very possibly won't get that many. a few, but not that many. so other countries have cash rates of four and ten-year bonds at four. so you can see rate cuts hovering around the 3.90 and 4. >> brian, we turn to you. still in the camp that we have a soft landing and the fed starts cutting in september, do you see any risks to that? do you think -- i guess put it differently, do you think we can avoid the labor market continuing to cool from here? >> yeah, this is the million dollar question that you can see from the fed's rhetoric that they've become more concerned

about the labor market. they've got what they wanted, which is a rebalancing in the labor market, a big drop in job openings without a lot of layoffs or a sudden rise in the unemployment rate. but they recognize now that the labor market is back in balance. it's no longer overheated, and if demand for labor keeps weakening, there is a danger that layoff also take you have and unemployment will go up more than they want. so this gives them a big incentive to start cutting rates sooner rather than later. >> exactly. barry, how should people be positioned right now? we talked about this off the top. bob said maybe, finally this rotation in the mag seven is under pressure today, the banks, the housing areas doing a little better. >> right. i've been underweight financials and small caps all year. i have been overweight energy, materials, and industrials.

i reduced the industrials overweight. i've been overmiweight tech and communications sector, but orders are 40%. >> but the earnings growth -- >> listen, 40% is still a healthy position. >> it is, but maybe they deserve that. >> 100% they did. that's why i've had that market weight on them. i think what's happening today is that position with, you know, macro hedge funds, leveraged accounts, oriented managers were all in on the tech and, you know, underweight cyclicals, short cyclicals, small caps. you're seeing an unline for that today. the fundamental justification for that trade is strong. and i think what we'll hear during earnings season is crucial. last quarter we had 8% earnings growth, but tech and comm services it was 0.0.

so this quarter, we're expected to get something more like 10.5 overall. but 7.5 x, tech, and comm service. they're going there be 7.5% growth. so everything else, the other nine sectors, are supposed to grow 7.5%. we heard from delta today, from pepsi today. it's not so clear. when you look at cpi missing on things like big drops in airfare and lodging away from home, price tells you something about demand, as well. so i suspect that those numbers are likely to be disappointing. by the time the fed starts cutting, we could very well be saying they're too late. and it will take a while for those fundamentals to start to turn, in which case, you know, will it be time to pile into small caps right away? probably not. >> brian, what could be the signs to you that the fed needs to get going in a hurry here? anything in financial markets

that would say that to you, and why start cutting rates when stocks are at record highs? >> this is clearly one risk. if there's a big market correction, if financial conditions tighten without the fed moving, so equity prices fall or the spreads aren't covered on the bonds that widen out, that could give the fed another reason to get going. you know, i do see some chances of a more rapid -- one cut per quarter. but with the rates at this level, clearly the rates are too high. they need to be cut, and any sort of bad news from the markets or especially from the labor market and, you know, the fed could be cutting every meeting or maybe cutting more than 25 basis points. you know, they have to have the leeway to cut aggressively if they need to. >> michael, last word.

>> that's right. there's a fed put. if the rates are so high, that could easily cut 150, maybe even 200 very quickly. which could rebolster financial asset prices. but it is unusual when credit spreads are at near all-time lows, equities are at all-time highs. why would the fed be aggressive in cutting rates besides just moderating how tight they are? >> will this be more like 1996 is a moment where we saw policy adjustment -- there are been a few of these mid-cycle moves. >> that's what we're facing. the fed overtightened in 1994, went from 3 to 6, realized they didn't need to cut this high, then cut it 150, and it was clear sailing. >> gentlemen, thank you all. appreciate your time. mortgage rates are on the move following cpi.

you can guess how they're following the ten-year lower. diana has more for us. six handle? >> the average rate dropped to 6.85%. that is the lowest level since early march. bond yields fell sharply after the cpi and rates loosely followed the yield on the ten-year treasury. what is 6.85% mean in the current housing market, giving sky high home prices and still low supply? at the start of this year, the 30-year fix was in the 6% range. pending home sales, based on signed contracts. the most seem timely end kay rose -- indicator rose in march and sales dropped nearly 8% in april and have yet to recover as rates stayed over 7% until today. now, people buying homes generally based on the monthly payment. so for the median priced today,

which is a record high $419,000, the difference between 7.5% on a 30-year fixed where we were in april, and 6.85% is $148 a month. not a huge savings, but not nothing. still, some borrowers may not qualify at a rate over 7%, so the drop into the 6s is a help. is it a game changer? probably not, but it's all about momentum. if markets see a bigger chance of a rate cut coming soon, rates could drop back even more. that savings on that monthly payment will get even bigger. kelly? >> and one factor which barry knapp was just telling me on his way out is that if we can uninvert the curve, that will drop mortgage rates, because some of that spread has been coming from the plumbing of the financial system. so that could be another boone if we see that decline. >> the other part of this is if we do see that drop in rates and we see more buyers come flooding into the market, that could push home prices up even further,

because we still have that supply issue. >> sure, absolutely. diana, thank you very much. appreciate it. coming up, costco giving back earlier gains following those price target hikes and membership price hikes today. the stock is up 30% this year. there's the forward pe. it's more expensive than nvidia and got more expensive to be a member. the next guest says there's plenty of room to run. she's back to make her case, next. universa is known as the black swan fund, but they see the s&p jumping to 6,000 by the end of the year. and a report that anson fund announced a stake and pushing the company to consider a sale. shares are up 4% on that news. back in a moment. >> this is "the exchange" on cnbc. you founded your kayak company because you love the ocean-

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run, despite the 30% rally this year. joining me is my next guest. laura, were there cheers in your house this morning or last night when you saw the membership price hike? >> well, to your point, it is something we've been waiting for, for a long time, which is probably why the stock is trading a little bit lower today, because they're about two years behind schedule. normally they raise membership fees every five years. this has been more than seven. it is an incremental $400 million likely, assuming little churn in revenues and it all flows to the bottom line. so we think this is a reason to buy the stock, not sell it today. >> i suppose a slight touch of the cheekiness in my question, costco is very kind to consumers by saying look, we normally raise membership fees every five years. we know inflation is taking a toll. we've done things to defend the price of chicken and hot dogs, and now they're choosing their moment to do so.

are they choosing the right moment? is there a risk they alienate consumers who are fragile at this point? >> one of the reasons it is the right moment is they finally are in a point where, for their customers, there is deflation. and there's deflation on food and deflation on non-food. and that's because of the efforts costco has made to become more sustainable to reduce packaging, a lot of negative press about turning the rotisserie chicken hard shell plastic into bags. well, that keeps a thousand trucks off the road every day. so they're finding ways to give members more and more savings, particularly relative to competitors. and we think that is why the timing is actually good. they finally have fought off inflation, at least within the costco club. >> it's really significant what you're talking about. so talk about this maybe in competitive context. when we see stocks like costco and walmart breaking out, some say that's a recession

indicator. does it feel like that turning point right now? >> it does make sense. i mean, i liked your lead that costco is more expensive than nvidia, and it doesn't have that kind of growth. but i think the other factor we look for in value and cash flow is risk. and it is true that most of the income at costco comes from those membership fees, which are very steady, very low-risk cash flows. it does make sense to view these companies as defensive, and to own them if we do think the economy is slowing. i would argue that costco, though, in a good economy, performs equally well, because they can do things like step up their investing and international markets where they have three times as many members per club. >> so you're sticking with it. costco is the next biggest member of the qqqs. it's so ironic, because some say its multiple is up because they're in this basket, but you

argue they've earned their place in that basket. who else do you expect to follow suit? there's a few others with these membership fee models. some may be viewed as in a poor competitive position, though. >> we cover bj wholesales club, which will follow costco. costco's timing is clever because it's tough to announce because you're going back to school, then holiday, coming out of holiday with the new credit card bills. i would expect at some point for bj's wholesale club to raise membership fees, as well. >> further upside for the giant. appreciate your time today. >> thanks for having me, kelly. coming up, members of joe biden's senior team briefing democrats right now as pressure on him grows to drop out. we'll have the headlines from that meeting.

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welcome back to "the exchange." futures markets have us poking above 40,000 today. we first traded above that level in may, never closed there, but the dow is still up 52 points. the s&p has turned negative by almost 1%, and the nasdaq down 1.7% as the magnificent seven is lagging 2% to 4% today. ten-year treasury, 4.18. could be significant for further down move. two months ago, this yield move was around 4.75. here are some of the movers. tesla is delaying the unveiling of that robo taxi from august to act to build additional vehicle prototypes. tesla shares down 6% on this news. we'll have more on that coming up in "tech check." let's let a getle show and tell and shares of delta are lower

today on a topline miss and disappointing guidance. they're forecasting revenue for the third quarter shy of expectations. the second quarter, unit revenues contracted nearly 3%, but the ceo said this morning that was more on capacity oversupply, and airlines navigating the surge in travel demand rather than a weakening consumer. with the shares down 5%, here's what he had to say. >> the industry's already correcting for the oversupply. so by the end of august, that 8% is already back down to 4%. more in line in and in balance with the consumer demand. as a result of that, we expect in september, our domestic revenues will be back inflecting positive once again. >> perhaps that's why the shares have capped their losses. now over to tyler mathisen for the cnbc news update. >> thank you very much, kelly. the senate judiciary committee will look into the supreme court's trump immunity ruling.

it comes after chuck schumer said earlier this week he was considering a legislative response to that ruling. the u.s. will soon wind down its operations of the gaza aid pier. the national security adviser jake sullivan said there were now additional land routes for supplies to enter the enclave. the pier was reinstalled after it was removed in june to clear the backlog of aid. "rust" armorrer hannah gutierrez-reed is expected to take the stand in alec baldwin's trial. she said in a pretrial interview she did not want to testify and was unwilling to cooperate in baldwin's trial. she's serving an 18-month sentence for her role in the shooting death of the film's cinematographer, helena hutchens. >> thank you very much, tyler mathisen. coming up, 39 days from the democratic national convention. 39 days with more democrats

casting doubt about joe biden's fitness for office. we'll look at what's at stake ahead of his first solo news conference coming up at 6: 30 tonight. stay with us on "the exchange." (man 1) can you hear me now? can you hear me now? can you hear me now? (dj) can you hear me now? (runner) stay with me now! (teens) oooo! (woman 1) mírame ahora!

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welcome back. joe biden's senior team holding a briefing with democratic senators during a special caucus lunch today. emily wilkins has been tracking all the action on capitol hill. emily? >> reporter: senators have been meeting with top advisers to joe biden for about an hour now, and we're just seeing them beginning to come out. senator maggie hasan of new hampshire said the best way that we are going to be able to beat president trump in november is to stick behind president biden and to support him. so she seemed very enthusiastic coming out of this briefing. she said the presentation that biden's folks gave was a strong one. at this point, we just saw another democrat come out today calling on biden to withdraw. that brings the number of total democrats publicly calling on him to do so up to 11. we heard a little earlier today from senator richard blumenthal of connecticut. he said there are folks who have

concerns about biden and what they need to hear now is a strategy and a plan forward. take a listen to what he said. >> i've expressed my concerns, and i've heard questions and concerns of others. and i think this meeting is another step, but more than one meeting, more than one press conference, more than one speech is necessary for joe biden to win this election. and we must win this election. >> reporter: so of course, we'll all be watching closely today, the president's interview as well as his press conference at nato. senator joe mansion said there will be more conversations on friday and saturday but he expects some sort of decision or clarity on the path forward to come on sunday. that is before republicans gather in milwaukee for their convention. of in the house, house minority leader hakim jefferies said down

ballot democrat also be okay, that they're doing well and set to retake the house coming in november. but of course, there are a lot of concerns right now from members who i have spoken with. everyone is watching the polling very closely. but there is a sense of needing to know from the biden team what the strategy and what the plan is to really win back the support and the confidence of americans. emily? >> what strikes me, and i appreciate how you've been able to sort of chase people down. no one's coming to the microphone and saying, you know, the joe biden i'm with is not the joe biden i saw the other night. that's a statement i haven't heard yet. >> reporter: there are folks who said he had a bad night. but look, honestly a lot of folks, even if you weren't paying attention to the debate, it is clear that this isn't the exact same candidate who we were seeing that ran in 2020. lawmakers are acknowledging that. what they're focused on is what

is the plan, what is the strategy, how do we go forward from this moment. that is what they're looking for here and trying to discern. another couple of lawmakers who i was speaking with today said look, even though there are these concerns about biden, there's a lot of concerns about what the path forward would be should he step down. who would it be, who would be the nominee, how did they come together? so right now, democrats are trying to figure out what is the best situation, is it to stick behind biden or take a risk and potentially go with someone else? >> a lot depends on how the press conference goes tonight. it will be about five hours from now. emily, thank you. now over to sarah, a chief strategist at evercore isi. great to have you here. you say there's -- how focused are investor's attention here, is it obvious what you think the catalysts are? what are you studying in particular now? >> investors are watching this closely, but the election has so

much impact on so many different sectors, whether that comes from energy, trade, a whole range of issues. so they're very focused on this. i think we'll be very attune to the press conference today, later tonight that you mentioned with the president. look, i think the senate caucus lunch was important. the president's advisers went up to make their very best case as to the path forward as they see it for the president. but i agree with what your reporters are saying in terms of there's a lot of conversations to be had tomorrow, over the weekend before this settles down. >> nancy pelosi reportedly sort of indicated to people wait till nato ends and if you feel the need to make a statement about where you stand, then go ahead and do that. we've seen a number of people come out evidently since hearing

that. you're saying look, watch what happens after the lunch today, do we see any other senators saying it's time to step aside? we spoke to senator fetterman this morning. he strongly backed biden. senator casey is the one who is up for re-election. ohio, wisconsin, people like klobuchar. we're hearing from those senators who will tell us a little bit more right now, wouldn't you say? >> i think that's absolutely right. it's those who are in races. senator baldwin in wisconsin, senator casey in pennsylvania. right now, they are polling ahead of joe biden in the polls, and they are -- they look like they're holding pretty strong. but these are a lot of tough races. those are the things that certainly joe biden himself will be on his mind, as well. he's got the relationships with many of them. but i also do think that pelosi's points are important. she is a great ally of joe biden. she has been for a long time.

so the fact that she is speaking publicly about what's next also means that there's a lot of conversations going on behind the scenes about the best path forward. and those i do expect will also pick up friday and over the weekend. >> you do expect those to pick up, but we might hear more talk of carville or these super blitz primaries, things like that? >> i think what pelosi was clear about is this is president biden's decision. the first thing they need is to get a final answer there on that path forward. and to make their case to him directly, if they don't believe that is the path. once they settle out that big question, some of the different ideas out there, if it is not biden, are very viable. that's something they have time to come up with before the convention. but the really big question now is for the president to make his intentions known and how he

plans to go forward. >> absolutely still up to him. sarah, for now, thank you very much. appreciate it. and as i mentioned, watch biden's news conference right here on cnbc at 6:30 eastern tonight, and nbc news anchor lester holt will sit down with joe biden on monday. catch the interview on "nightly news" at 6:30 and primetime at 9:30 eastern. shares of uber are higher after tesla will delay its robo taxi reveal.

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[♪♪] your skin is ever-changing, take care of it with gold bond's healing formulations of 7 moisturizers and 3 vitamins. for all your skins, gold bond. tesla is reportedly delaying the unveiling of its robo taxi to october from august. that's sending shares down 6% today. shares of uber in the opposite direction by nearly as much. deidre bosa has more. >> that chart says it all, right? the reports not just impacting tesla, but uber, lyft also

popping on that headline. they've been very volatile. investors concerned that their existing ride share networks could be threatened by musk's ambition. a potential delay puts delay -- it just throws cold water on musk's claims. and an underappreciated threat may be wamo. it opened up to the public here in san francisco just a few weeks ago, and it's running on its own ride share network, delivering tens of thousands of weekly trips. i spoke to an investor who thinks that wamo could eat into market share in san francisco and l.a., spooking investors. there's other issues. yesterday, uber and lyft were lower as massachusetts pushes ahead with a ballot question that would give gig economy drivers the right to form a union which, again, j underline that regulatory risk around

human drivers that are categorized as independent contractors. that is the bull case for robo taxis. they would eliminate that risk factor. it may take longer to get there for tesla, at least. >> we'll see if the delay is worth the wait as we turn our attention to october. deidre, thanks. coming up, you might recognize universa as the bearish hedge fund associated with the black swan. but their outlook is rather bullish, for now at least. how they're positioning in the second half, after this. your record label is taking off. but so is your sound engineer.

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♪ welcome back to "the exchange." stocks are pulling back somewhat today after the s&p and nasdaq both clocked record high yet again after june's cooler than expected cpi grid. and one of wall street's biggest bears finds himself in the bullish camp, calling for s&p's 6,000 by year-end. but could uncertainty surrounding president biden or the election derail this rally?

let's ask brandon -- also been on this program. brandon, it's good to have you here. welcome. >> thank you vfor having me. >> instead of doing 60/40 diversity, you stay long but you have this hedged exposure against clataclysmic market events. >> that's very good as a summary. and, again, most people, when they think about the 40 and their portfolio, what purpose is it serving? the 40 -- let's say it's bonds. let's say it's people out here that espouse other strategies like hedge funds and ctas. but at the end of the day, it is risk litigation, right? it is meant to protect you against these cataclysmic events. but what you find is that the things that you're using to

protect yourself against the event is more costly than the event itself. >> right. >> the cure should not be worse than the disease. >> a lot of people experience this right now with auto insurance and home insurance. at some point, i'd rather be uninsured. back up a second. what is tail hedging? >> tail hedging is essentially making sure that in these large losses, these big, large market declines, that your portfolio does not lose significant amounts of money. >> how do you do that? >> we do it through option strategy. we have convex positions that when things are going good -- like i said, we've been bullish since 2022. we've been reiterating this bullish tactical call. but our forecast of markets doesn't matter at the end of the day because we have such a highly explosive position, should the eventual black swan happen. >> and that position's not too expensive to carry over a long period of time? >> again, it's a good question. and it's a matter of framing.

if we have a position where our cost is more than the disease we're trying to protect against, you shouldn't have it on. we argue that, again, most financial products are in that camp. but our cost at a portfolio level, if we never see a crash again, the market goes up like it has been this year and in 2023 and it has for 15 years, forever, and the fed does its job and prevents market crashes, it doesn't mean that our strategy was the wrong investment strategy. you have to think about what portfolio do i have that is tail hedging in it versus a 60/40, and how do those portfolios do as the market rises. >> what are you questioning -- i want to broaden it out. is it worth paying a fund like yours to provide this strategy, when a lot of retail advisers could probably do something like this themselves? >> that's a great question. i would highly encourage retail investors to not try to replicate strategies like this. and the devil really is in the detail when it comes to options,

and particularly options are very high transactional cost instruments. so, you know, if you're looking at options, they could be, you know, several hundred percent wide. imagine if google, you know, traded -- google trades in dollars, right? fractions of basis points. this is hundreds of times equivalent. so, you definitely do not want to do this on your own. i think that our real focus in trying to educate people on things like what the 40 is doing to your portfolio is how expensive it is and be aware of all of these forecasts, the biden election, the -- all of these other different macro positions that you're in and the decisions that you're making cumulatively over time and how that affects your return. >> it's interesting you said you guys have a view on the markets. i think of tal bus as someone who wants to be viewed less. if the long-term strategy is to

be long but protect yourself against that, why have a view at all when you say okay, we think the s&p is going to 6,000? why does it matter? >> sure. i mean, we are not in the forecasting business. no one -- not in the forecasting business. most people that have forecasts are wrong in aggregate over time. we're not immune to that. this particular market cycle is very unique because sentiment got negative back in 2022, so we've been reiterating this bullish. you're going to see sediment flip. you're going to see pundits come on air telling you to sell at 4,000, buy at 6,000. >> right. you literally track things people are saying. what are the metrics? are there the vicks and optics measures telling you things are getting out of whack one way or another? for sure. the probability of a crash keeps rising. we're short-term bullish, but the probability of a crash keeps rising because we have the confluence of equity

evaluations -- being as high as they've before been. valuations have been the driver of crashes. rca wrote in the book in 2012 there had been no financial black swans. they've all been driven by monetary policy. boom and bust cycles have been driven by evaluations. we have the fed has raised interest rates probably in the largest portion in history, and we're not in the '70s, as we have a giant global debt amount that's bigger than it's ever been. we describe it as a tinderbox time bomb. >> it's terrifying. >> the time bomb being it will happen at some point. but in the interim, while the fed tends to back off, we have a goldilocks period where things look good and the economy is doing okay, there's no recession, soft landing type of things. but all of our forecasts can be entirely wrong. and all that matters, how people are positioned for it. our clients are positioned for both. >> in other words, you think the probabilities of a crash are quite high. but the price of protecting yourself is quite low.

when you talk about a 6,000 price target, the final question is, what are you looking around the corner to anticipate after that? >> no, i mean -- so, again, this is very run of the mill in terms of historical market behavior. you would expect a bit of a goldilocks blow off top period, again, like we've been calling for. but blow off implies after the blow off comes a crash. and because of all of these factors of debt being so high and valuations being so high, expect the crash to follow to be much bigger than other crashes. >> that's so interesting. and you guys hopefully positioned for it. bring it on, i guess you would say. brandon, thanks so much for joining us to explain more about it. we really appreciate dwryour ti today. that does itor f "the exchange." "power lunch" starts after this quick break. don't go anywhere.

♪ good afternoon, everyone. and welcome to "power lunch," alongside morgan brennan. welcome, morgan. i'm tyler mathisen. what looks like it could be a cpi rally has inflated. inflation fell by .1 month over month. but stocks are lower with the exception of the dow, which is up ever so slightly. >> the rest of 2000 having a big day too. bond yields following on the news the 10-year trading at 4.197%. we've seen a lot of buying in the bond market today. we'rgo