>> i appreciate you, steve. thank you for the medical keeping the ball on the air. last quick thought? >> last quick thought on defense, defense stocks getting crushed today, down 3% to 7% across the board. something is brewing trademarks >> bitcoin. >> --. >> downtown josh brown. i will see you on closing bell. fed chair pal is speaking live. we will take it, the exchanges now. i can't wait to hear what paul has to say. welcome to the exchange, i'm kelly eddins and here's what's coming up this hour. disney delivered, the stock is up 9% today, with a weak spot but it is not going anywhere, so cfo, ben affleck also weighing in on the economics around the media business as they keep changing. we will keep you that and what it means for shares, gains are up 7% right now. plus tech under trump, we will look at why the setup is bullish for amazon could potentially and weather musk is

a risk or hindrance on china and navigating his influence in the white house, what impact will this have as well. three trump trades to make, this group name belongs to those who did well under trump 1.0 and -- says it is set up to do even better this time around. you are looking at his top pick in that group, it is our mystery chart. as always, tweet me if you know it. let's start with the markets, and the fervor is breaking. >> we are losing some momentum, yes. the fervor, the fever, whatever you want to call it in this marketplace, the fever pitch we saw the selection is taking a breather and that is the story so far today. we're still not that far away from record highs, so nothing panicky, to put it into context, we are moving toward the lower part of the day, the dow industrial down about 130 points, good for one third of 1% decline. the s&p 500 is at 59, 65 down 20 points or one third of 1% as

well. we were actually slightly positive, up about eight points at the high of the session, down 33 points on the s&p at the low, that is your trading range. tilting more toward the negative side. and the nasdaq and positive at 19,000 159, down about 70 points, roughly one third of a percent. so it is pretty even. factional to the downside, nothing major, still near record highs. a couple of stocks, few that are making some waves so far because of headlines. super microcomputer, the worst performing stock in the s&p 500 today and it's been a laggard for some time. earlier, the last 12 months it was $122 stock roughly at the high over the past year. we are at $18 and change. it is a five-day losing streak as things stand right now. earlier in the week they divided the quarterly report and are in search of an auditor after ey left their ranks. supermicro pewter -- microcomputer, and the biggest gain or today, is on a failed deal, we're talking about tapestry and company, the luxury houses, kate spade,

coach versus michael kors and versace, both stocks are up. they have scrapped their merger plans. we know that a judge blocked about tapestry is up 12.5%. keep an eye on the luxury chains and i will somethings over to you guys? >> i am looking forward to it. disney is one of the big movers, having its best day since february. up 7% after solid fourth quarter results. the stock, get this, not just about the move today, it is on pace for the eighth straight positive day and that is the longest streak since the summer of 2018. up about 15% in the recent period of time. begins across entertainment and streaming and expect double- digit adjusted eps growth in fiscal 2026 and 27. it is unusual to get guidance that far out. one weak spot continue to be traditional tv. revenue down 6%, profit down 38%. but cfo hugh johnson told cnbc this morning, despite the weakness, linear remains an important part of the

portfolio. >> i like where the portfolio sits because i like the integration of the two. and linear by the way, does have a separate graphic as you well know, tends to be a little bit older and we want to make sure we don't lose that demographic. i would rather keep it as part of the portfolio. >> adjusting, not seeing him at pepsi. he reiterated his commitment to linear and keeping the complementary service for advertisers, a deeper offering. spring mark douglas, ceo of mountain and julia boorstin on set with me. perfect day for you to be here. welcome, why is there something bigger going on than a quarter that beat expectations. is the start date stock starting to have a bigger story to tell people. >> more important than the fact that this company had a strong quarter which by the way was led by better than expected profitability to direct consumer. disney being guidance for the next three years including accelerating profitability in year two and year three.

disney never gives guidance that far out so it is a new thing for disney to be looking this far in the future and the key factors that are driving that outlook for the next three years is the same progress of the parks, where the company has made the $60 billion tenure commitment to investing in the parks and they see it continuing to payoff and consistent, and additional profitability in the streaming business. they have 175 million subscribers as more and more of them go over to the ad supported heart of the business, they see real ability to grow as well as to actually grow the user base. >> as we have seen at netflix, to create -- to pay off quite well. to back up on the sad meant with disney, this was said to be a broken story, we had laura martin talking about who could be a buyer. that has been a big part of the discussion for quite some time. now, people can look at it in a little bit of a different way and i don't know with the profitability of its networks

down as sharply as it is, what that path is. the projections remind me almost of the fed when they put out the projections and is it more hope or is there a reality that investors can get behind it. >> there is a reality. bob migrant has been back in the role of ceo and what he has said is that the changes implemented, we are seeing those changes have a massive benefit for the company. not just for now, but to enable the company to have these bullish outlooks for the next three years. i also think if you look at the new profitability or the incredibly surprising strong profit ability of the streaming division, and the fact you are seeing a decline in linear, if you look over the next couple of years, direct to consumer is going to come idly by 2027 and we should have a wall of that, we're going to see direct to consumer be as meaningful for the company as linear tv business as a past linear tv business. one thing i think worth pointing out about the 30% decline in operating income from the linear business, a lot of that was because this year

they had to spend a lot to market their tv shows. last year was a strike and they were not marketing new tv shows. so the comps are particularly tough. >> in some ways you need to see if some kind of investment so it is taking the hit now in order to hopefully reap that, in the out years. >> they are not expecting the linear business to grow. what they are saying and what is interesting, they are not going to get rid of the linear business because it is useful as part of the bigger picture for disney. remember they have espn and you have football on espn and abc and this ability to really use their sports programming team from abc to help create sort of this big picture programming around the nfl. so there's a lot of overlap. and i think that way they see these pieces intertwining is why

they are not interested in spinning off linear business. from an advertising perspective they see the audience is shifting from linear to digital and in the meantime they can reach everyone. >> this would have been a moment to put that into play well questions always circulate, what we have heard from comcast about potentially exploring for its networks, disney said the same thing, imagine, especially -- they would be going, oh my gosh, think about the possibilities and instead disney seems to be saying not so fast, we're not interested.'s but it was a year and a half ago, nearly in sun valley that bob eicher said everything is on the table including spinning off the linear networks. hugh johnson came in and said you know what, it does make sense to spin off linear networks and he was definitive, that they are not interested in doing that. they see pportunity in having the portfolio approach for advertisers, that is paying off. >> i don't know what they are saying for ceo, but hugh, sounds like he has come in and and has had ideas about the business and they are undergoing, or are they not a ceo search. >> they are in the midst of a search and james gorman is becoming chairman of the board in january. he was running the succession planning committee but elevating him to chairman in january gives him a full year to run that ceo succession process before they've committed to announcing a name

by early 2026. so the clock is ticking and they have four internal candidates, and then these are the candidates, that are helping them guide this accelerated earnings growth over the next three years so it feels like they feel good about their optimism but they are considering external options according to my sources. >> very interesting. this caught my attention yesterday. we had cnbc's big event in the city with featured guests. there was something that ben affleck said that caught my attention. yes, he was talking about the same thing of what is the ultimate profitability of media. take a look at what he said. >> we need, and there is a lot of money to be made in the linear studio space. i would love to be jerry and david allison. i would love to go into that ecosystem and say, yeah, there's going to be hard choices. but there's tremendous opportunity. >> that was ben affleck at cnbc, talking about the opportunities in city. mark douglas is with us.

what you make of the comments, and a bit of the turnaround play at disney. >> yeah, i think he's right, that this is the thing in media. any business, there are two ways to grow, grow the number of customers or revenue per customer and on linear, the networks are doing neither of those. and now they are, with the advent of streaming, they are attracting are digital customers and at the same time, they are existing customers ready to spend more. the effect of that in particular, disney's focus on that, is why you are seeing increased profits from disney and you are going to see the same at netflix because they're building a huge backlog of revenue with all of this and supported customers they are bringing on. >> you are a partner with a lot of platforms, with epics and disney as well i believe. you have become a stock picker as a result, i remember how bullish you were on netflix and boy, what a run it is on. how do you feel about disney?

>> i think if disney were pure play streaming network, with all the properties, espn, look at it this way, they have some of the best, most iconic content. children entertainment, store words, the marvel universe so they have this entire slate of content and i think they are getting really, really good at monetizing and streaming. so i think they're going to do really well. now the parks and other things, you have to look at bentley, but if you look at the streaming business i think you are going to see a lot of profits. >> just to be provocative and why not, it also to the point about it struggle to find its footing, one of the options laura martin suggested yesterday was why shouldn't netflix buy disney when it has an opportunity. if it is still trading at a low valuation and maybe the moment has passed but imagine the power of those two libraries together. >> i think the thing on netflix is, they are in such a strong position. they have organic growth occurring, or ready and you are

going to see this, what i'm referring to is this backlog of revenue. it is half the new customers are and supported but they are not yet good at monetizing the ads. that is going to be a big backlog of revenue. you combine that and other things, i think netflix has an opportunity on their own to become the trillion-dollar via company and they don't need it disney. that is very provocative, the idea of both of those companies teaming up. >> it is time to bring back --. what am i talking about but you are right, it is such a place of strength and why even bother. julia, let me give you the last word. what is next in terms of the cadillac -- catalyst for disney and other media platforms. >> it comes down to habitability and streaming. we have seen disney and many other players implement cost cuts and one reason we saw that profitability is the cost cuts are working. interestingly, we look at the theme parks, tendons was pretty much flat in the u.s. parks but

we saw consumer spending more. the wind disney and these other companies have to figure out is how to continue growing profitability by keeping their costs down and to figure out how to keep adding people. whether it is adding visitors to the parks are adding more subscribers, disney, like netflix, is in a prime position when it comes to streaming because there are that many players that are at the scale of disney or netflix. it's disney, netflix and amazon prime at that level in terms of the sheer number of subscribers. so they have an advantage and what they really need is the engine of their content to keep delivering. they have big movies like mohammed 2 and they need films to drive people back to the streaming and that gets people to the parks and these things can be virtuous cycle when it is content that is good which is what disney is known for. >> when you have the pole position as one of these platforms you can charge advertisers. you got almost monopoly power over them and they are willing to pay up and you don't have to pull from subscriber so much. thank you both. i really appreciate it on what seems like a big moment for disney. mark douglas and julia

boorstin. still to come, no secret that president trump and -- have had public feuds but the tech giant could be prime for friendly administration this time around thanks in part to the growing threat of china's e- commerce. a look at what the next four years could bring for amazon and the rest of big tech under trump 2.0. speaking of which, roth capital says trump's proposed tariffs would have a major impact on the fed path forward. you tell us why, with a little history lesson coming up. stay with us, on the exchange. this is the exanchge on cnbc.

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welcome back. shares of amazon are up 9% since trump's win last week at the e-commerce giant formerly had a tense relationship with the president-elect. will it fare better during his second time in the white house, for more, kate rooney is here with today's tech shack. welcome. >> there so much to consider when you look at what trump might mean for amazon. this time around, the business touches so much of the economy but it keep piece of friction between amazon and trump has been eased, that his relationship with jeff bezos, amazon's founder, no longer ceo. he seemingly buried the hatchet and congratulating trump on what he called an extraordinary political come back and decisive victory. also, pushing the controversial move in his newspaper, the washington post to not endorse a presidential candidate weeks before the election last week. bezos was an outspoken creek of

trump who often accused amazon of things like not paying its fair share of taxes, among other barbs trump repeatedly slammed the washington post, which imagine jeff bezos does -- on wall street, that amazon's current ceo is more diplomatic, less controversial and less of a target for trump. tech in general has been a target for trump and some of his appointees, dan ives thinks that amazon could be immune from the criticism because it is not a social media company. meta and google have been getting the brunt of that. amazon has outperformed some of the names, at least in the past few weeks. antitrust is a tossup, it is unclear exactly what the ftc and potentially doj look like with matt gaetz, gene munster among those who expect deals to pick up and says a ideals are going to be especially crucial for amazon, amazon has been hamstrung by the biden administration when it comes to mn day, -- is a big example.

and china, that could cut both ways, trump is expected to ramp up tariffs, which could increase presses on amazon. ever core says net negative outweighing even lower corporate taxes. finally, one area that will affect amazon more than the rest of big tech, labor issues and immigration. >> stay with us. amazon, one of the big tech companies adjusting to new business environment with president-elect trump returning. is bringing tesla ceo elon musk with them, steve hoback is on that to talk more about that. before we get into that, there were headlines about chris off, specifically relating to this whole question about antitrust. what are they? >> this came out, this initial time saying the ftc is going to start poking around at microsoft's cloud business, basically the deals and packages they do when a company like ours, we use microsoft 365 products, but if you want to keep your data in another cloud outside of azure, they either

make it hard or more expensive or if you want to cancel, they might charge extra fees. so it is those activities that is sounds like the ftc is poking around on. i will note, did not see in the financial times report, microsoft is not commenting anything about artificial intelligence and the copilot product being packaged with that as well. >> but sort of the -- there was an election last tuesday and the current administration, which includes this department, is lame duck, essentially. so there -- maybe there is precedent, believe under president trump there were entered -- antitrust cases that carried over. >> including the apple and amazon as well. this is the ftc chair lina khan who of course has turned into a villain among a lot of corporate america. i will note however, matt gaetz, who's now in line to be attorney general, he has had nice things to say about lina khan. is one of, they call him one of the khan republicans, j.d. vance is another one of them. that is throwing a wrench into this calculus, people are making how friendly toward mergers and acquisitions is

this new administration going to be. this doj pick is one hint, at least toward what they are thinking of that. at the same time gaetz says he wants to blow everything up so who knows what that looks like as well. >> let me turn to jessica lesson, editor-in-chief of the information and she joins us on the new son. jessica, give us context around the discussion and also what else you think the president be prioritizing in terms of antitrust, a.i., chips and so forth. >> absolutely, these are the big questions out here in silicon valley. and i think the mood among executives is really one of being a little bit conflicted. there's a lot for big tech to potentially be excited about, as steve mentioned, particularly a different approach to antitrust. the ability to do deals again. but at the same time they know that trump has been very inconsistent and how he has thought about which companies should do what and so on and so forth.

and so, there is a real sense of not knowing, maybe of being a little bit optimistic in some respects but also quite cautious. >> jessica, do you think it is true, the line of thinking that he and others reported on, whatever the relationship between big tech and its leaders and trump has been, they will be part has is national jazz to go up against those from china and elsewhere. >> i think to some extent, but how do we drive content moderation. one of the things trump has been saying for years now, is that he's going to investigate companies that he thinks take too heavy a hand approach to what he calls censorship. and i think one big question is, what is that going to mean for meta. what is that going to mean for alphabet and youtube. yes, continuing i think on a.i. and making big statements about investment in a.i., is something you will hear out of the trump administration but these businesses are too complex and you know, many of the areas, i read along the

lines of things he says he's really going to pick apart at. so i think that remains to be seen. >> steve, we had headlines this afternoon on the electric car front, about what had happened with the incentives that have existed under biden's inflation reduction aunt. and if the next president wants to for nstance say no, no, the supply chain has to be a u.s. complaint to qualify for those, or even as is own mandate, shares of those companies are selling off. >> and this is where the elon musk factor comes in as well and that has been one of the big mysteries, i guess, around elon musk and cozying up to trump because it is ironic of course, that he is the electric vehicle market leader and all these other companies have tried to figure it out. you hear very often on the political right, that it is -- ev mandate, that you know these incentives are designed to force companies to spend too much money for our product, people don't want. that tesla sits outside of that.

is going to be interesting. are more interested in how the tesla front of it plays and what exceptions he gets as well. and we got to talk tariffs. >> indeed. >> this is also sue were important. content moderation, supply chains, terrorists will hit no company less than apple which makes most of its profit from products, especially the iphone in china, up to 60% tariffs that the blankets tariffs out of china. >> that they got total exemption left him. >> and i think this is demonstrative in how we can expect ceo tim cook to work with the trump administration this time. in 2019 when they got the exemptions, just before that, the whole gain was that trump wanted more production in the united states, so tim cook took trump down to texas where they have a factory, where they built -- it was existing already but it gave trump the opportunity to show, here's the most valuable committee in the world building stuff in the united states and that is the thing i'm looking out for, what

does apple put out front facing and publicly that says hey, we are investigating in manufacturing in the united states. they have made a number of announcements on the chip front and things like that but as far as building an iphone factory, that is probably not going to happen. >> to bring it back around to what you are reporting on amazon, that company is pretty exposed to the cost of goods rising from china. i don't know where they think it leads -- at this point. >> that is a great point and you mentioned tariffs, amazon, we talk about is a big tent company but it is also a major e-commerce player. higher tariffs would mean more expensive items on amazon. they import a lot of guys especially from china. the one nuances you mentioned teemu and --. if there's a stance that we are changing the tax exemptions that make it harder for them to import, that could potentially benefit amazon but you are seeing this tipping the scale effect and the calculus among analysts that you have to look at the ballot sheet and say, eight of you, that is the big

profit engine and what does it mean for north american retail. one of the headwinds has been competition from china in these discount players. we should also mention in the last week, yesterday amazon announced it is getting into the discounted market. thanks of america saying prices are going to go up 30% of the tariffs we expect go into effect. so that is one big area to watch and steve mentioned, for apple and other side of the equation is amazon. there's a lot of conflicting ideas and as these companies have gotten bigger, they touch so much of the economy so you've got to do the math and a lot of it is still undecided. we will see who the appointees and that being. >> as a final word, it will be interesting to see is you have talked about, with the impact of having elon musk so close to the administration is. i took trump's point, he evidently said to the congressional meeting the other day about how i'm keeping him close for now, so we will see how exactly this evolves. but there are people in the valley who are kind of close to elon musk and others who might,

how we say, we call them enemies are they are on the other side. >> i think enemies is the rightward. when you sue someone has -- as musk has done in open a.i., you probably achieve that status. there's nervousness among ceos out here about how elon will influence trump as it relates, you take a.i. and regulation, open a.i. is a huge player in the space. there is a lot that could happen. that could make their life harder. you know, open a.i. is not open source, which is something elon has pushed. there's absolutely nervousness of whose ears he will be in on what and in recent years after having a great friendship with larry page, elon has come out against google that created open a.i., to combat them. so google is probably company number one in the crosshairs of the administration with all of the cases coming together. and if elon is next to trump, that is going to concern is that google. >> great point.

jessica, thank you or joining us. jessica lessin along with our own kate rooney and steve kovach. our next guest has a note out in which he tries to quantify the spending cuts and possible targets of the newly formed department of government efficiency headed by elon musk and ramaswamy. i am joined by sarah bianchi, strategist of international political affairs that ever court. by the way, i notice as our colleague brian sullivan points out that the defense -- i don't know if it is contractors, really trading down sharply in anticipation of what could happen. >> there is a lot at risk when you announce a commission like that. but it is important for people to keep in mind, that a lot of the federal government spending is social security and medicare. that is really the most of it, honestly. and there's defense spending which can be politically difficult. it is a big part of the budget, but lots of republicans in particular like to increase it.

and then the other part, we call nondiscretionary. nondefense discretionary, education and the like. i think people, while elon musk is a great innovator and has certainly made a lot of contributions, he might find on some of these programs, hard to get rid of. first of all, most of this is within the purview of congress. this is not something you can just wake up one morning and executive branch and get rid of. and so, there are going to be imitations there and again, it is very difficult. most of these programs are there because they have a champion. so we think, getting the scope of what musk is talking about, 2 trillion is very ambitious. >> let's start from the premise that it is unlikely we had that number, but what is likely to you? where it like that we see meaningful, maybe not meaningful but where could we see the cuts, period? >> one of the things

republicans are going to go quickly is decayed program. that is a little bit easier. legislatively, politically in their minds. we think the affordable care act will be letting some of those subsidies expire at the end of next year. again, the nondefense discretionary, that tends to be education, some kind of potpourri of low income programs. those are places where you could look. and again, i can see potentially knocking off -- i don't know, 2 trillion over 10 years but certainly not 2 trillion per year. >> there are actually a number of public companies that have medicaid exposure and that will be something for investors to think about. where else, sarah? >> you are mentioning the ev tax credit and i do think that is on the list. i guess it is not spending per se but there are folks who believe that is not a necessary

credit. and i also thought it was interesting that the commission, talking about regulation yesterday. so it doesn't seem that they are really just going for budget cuts, they are also going to look at places where washington is over regulatory. that, you have a lot more authority to deal with, within the executive branch. the dollar numbers you're looking for, but certainly i can provide relief. >> that would be the environmental, energy, education and those areas? >> exactly, financials but certainly, a lot of times when they talk about the ev mandate, they are not necessarily just talking about the tax credits, they are talking a lot about the environmental regulations that the biden administration has emplaced to help deride this transition. those, we expect him to propose, day one, to move against. again, it takes time to regulate that space but very, very much on target. >> we appreciate the

granularity and we would love to have you back to talk more about it. >> thanks a lot. >> sarah bianchi with ever core -- evercore. stocks are at an all-time high but the s&p is more expensive than it was under the first trump administration. more than 22 times versus 16w■ years ago and the bears will tell you that the first time around we got corporate tax cuts. what does it mean for your money? our guest brings tee tmphrru trades every investor needs to know about and we will reveal them, ahead. your clients look to you. you look to t. rowe price. ♪♪ because we stay agile... actively managing investments to uncover opportunities... and build etfs designed to outperform the index. that's the power of curiosity. ♪♪ better questions can lead to better solutions.

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controlled house of representatives, in an effort to alleviate the effects of the -- anyone? anyone? great depression, passed the, anyone, anyone? the tariff bill, the hawley smoot tariff act. >> this time around maybe the class would be more engaged. our next guest say it might be time for all of us to brush up on history as weeain hd to trump 2.0. why and what he thinks it means for the fed, after this. it all started with a small business idea. it's a pillow with a speaker in it! that's right craig. pulling in the perfect team to get the job done. i'm just here for the internets. at&t, it's super-fast! you locked us out?!

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welcome back. we've got new data today showing inflation at the wholesale level also remains sticky. one day after similar cpi numbers, ppi, which measures producer prices rose to tense in october and -- but year on year that puts it up 2.4% which is now the biggest gains since july. what about the core, food and energy, of 3/10 and 3.1% in the past year and that is the biggest annual increase since june. the latest data telling us the fed may have a long road ahead and ringing inflation down to its 2% target. my next guest said tariffs and the uncertainty could force

prostrate cuts. joining us is the market strategist at roth capital partners along with the nbc senior economics reporter steve liesman as well. mike, let's dive in. i want to talk ppi but i really want to talk smoot-hawley. maybe tell me which one you think is more pertinent. >> given the way that you started the segment with the clip from ferris bueller's day off, might as well just dive right into smoot-hawley, since it does look like congress or potentially the executive branch is gearing up for the most significant rise in u.s. terrace in about 100 years. and so if you go back to that period, the smoot-hawley tariff bill passed congress in the spring of 1929, with a similar equity market valuation backdrop. so we have been writing recently about the so-called buffett rule, the ratio of u.s. stock prices or market

capitalization to nominal gdp are at levels that haven't been seen since 1929. so certainly it is worth talking about. you know, the tariff shock in the context of high valuations and potentially difficulties ahead. >> that if i could summarize what you are saying, it is what ben wernicke's said about milton friedman, if i'm not mistaken which is we learned our lesson, we costed and another with the great depression was federal reserve problem and not so much a tariff problem. >> exactly. the smoot-hawley tariff, most scholars agree and steve probably agrees as well, was highly disruptive, came at exactly the wrong time, but was not responsible for the great depression. the federal reserve presided over a collapse in the broad money stock by about a third, and nearly 50% collapse in nominal gdp. that does not happen without serious, systematic, and repeated monetary failures.

and policy mistakes. and the tariff, he gets a lot of the blame for the depression. but it was really just more of a timing thing. it doesn't mean it was a good policy. >> no, no, of course. what is interesting, if i may, both of these things are the opposite this time around. so instead of being contractionary the fed might be too expansionary at this moment and the smoot-hawley tariffs according to pettis, have much more diminutive effect on the economy when you are writing a trade surplus not so much when you are running a trade deficit as we are now. another with a good balance toward more investment kind of increasing savings in a good way which would not be good or bad for the consumer but the context is different now than it was 100 years ago. >> i kind of disagree a little bit with the gist of the conversation. first, i hope mike is dead wrong that we have to learn this history lesson again. i don't to be involved in replaying almost any part of

1929. and i think the other thing is the point that you just made, the idea that the terrorists did not cause the great depression, it is not a reason to do them. i think it might have well be said that it limited the flexibility of the u.s. economy to respond to the depression. and other issues that may have been made by the federal reserve. i think that is important. the second or third thing that is important, which michael brought up in his piece, he sent around which is this. the supporters of the terrace have tried to have it both ways. they tried to say it is a punitive issue that we would use in negotiations. on the other hand, it is a major source of revenue for the u.s. economy and further reconciliation process that would pay for the trump tax cuts. i don't know, but the republicans have for a long time said anything that would be a huge tax increase on the american public would indeed be negative for the u.s. economy.

so, i get that tariffs may not have been the worst part of the great depression, and i get that they may not be so bad right now as they might otherwise have been if we have a surplus. that i'm not going to engage in a conversation that says they are otherwise good. >> mike, as you pull that into a final thought, the real question is also what this is going to mean for the fed. do you think they have to stop cutting rates, or no? >> i think what we are talking about is potential shocks to the supply side of the economy. and so, we've been in a situation where productivity has picked up pace and really is a very positive story. it has helped the fed in terms of bringing inflation down. so a combination of previous monetary tightening, slower nominal demand growth and stronger productivity, is really a very positive story. and risk markets have celebrated that. so if we move into an environment, where we have potential supply-side headwinds, whether they are

tariffs or much slower growth in the working population, that is going to make the job more difficult. and it is easy to say what they should do and maybe from a theoretical model, but we really don't know exactly what the course of policy is going to be. there is a lot of verbal proposals out there, but eventually congress is going to have to get going in terms of legislation. we don't really know how to handicap this. we just know it is probably going to be a hodgepodge of negative and maybe some positive supply-side forces and the fed is going to have to grapple with that. so on the question of whether they should stop using policy, i actually think they are probably pretty close to a pause, hear and the reason i say that is, what fed chair powell was saying when the fed went into the first read and they delivered 50 basis point rate cut out of the gate was simply that they didn't know were neutral was that they were pretty confident that they were above neutral based on all the

mainstream models. but now that they have lowered rates by 75 basis points, they are addicted to do another 25 in december. they are kind of in the middle of the range in terms of mainstream estimates for so- called stars and their goal is not to grow a comedy, it is to not preside over restrictive monetary stance given the progress made on inflation. so a combination of macro data, surprising to the upside over the last month and a half, you mentioned the hot core inflation readings and the fact that the fed has done 75 basis points. i think it adds up to much less certainty in terms of future rate cuts. >> gentlemen, we will leave it on that point to note, and hear from goolsby as well. steve and mike, thank you. we appreciate your time. cnbcinterview with austin goolsby tomorrow at 8:30 a.m. eastern after the october

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the trump rally is taking a breather, the down a percent after the major averages soar to new heights. my next guest notes the s&p is much more expensive compared with the first trump administration. you can see right there. one area that is cheap and one of the traits he likes, but financials and bank of america, one of his top picks, his mystery chart without the numbers. congratulations. let's bring in the cofounder of data track research, the financials make me nervous, nick. especially after the run-up we have had and we never feel like there is great earnings tray so i would love to hear you unpack this. >> the financials as the group includes very high quality growth companies as well like visa and mastercard, it is not just the banks. right now, much higher group visa and mastercard were added. you have some growth and some value. to start is the bank side of the equation goes, the primary story is the continued u.s.

economy and that is superstrong in some areas to worry about that strong enough that you don't have to worry about loan loss reserves in the next four quarters and that is what hurts bank earnings, ultimately and makes investors question how sustainable they are. on that count we are in good shape and as you showed, multiples are extremely low, relative to other markets. so investors -- by far. >> what are your other trades? >> the important trump trade and this is important, you look at trump 1.0 to the end of 2019, pre-pandemic, u.s. stocks outperformed everything else around the world. there was not one major global index, by country, that outperformed the u.s. the s&p was up 15% and the rest was 25% and not one country outperformed. the most important thing to understand is the overweighted

u.s. stocks. >> that is even with the dollar that is up. every time i checked is merging higher. >> the dollar rallied 1% over the period we are talking about from 2016 to 2019. it fell in the first year of the trump administration by 7%, and gave non-us stocks a little bit of a list but overall it was stronger and stronger dollar and part is of the trump trade. but it shows capitalism flowing into the u.s. and part of that goes to u.s. stocks. >> do you think they can achieve similar outcomes this time around when multiple six terms higher than it was and more or less all-time highs and without the prospect of corporate tax relief? >> yes, both great points. i think we can expect multiples to hang around or go a little higher. multiples actually, as much as i think they are precise numbers, they are very fungible and mentored -- is on his confidence is high and rising, they are at very high levels right now. it shows very high levels of confidence and barring every session, barring a downtrend or shock, they should hold. it is uncomfortable at 22 multiples, and a comfortable number but you have to stay investing. it can go higher before it goes lower and if you lag, you are

going to regret it. >> a final question because the sound so reasonable. given all the energy and hype over the last week, what about small caps >> small cap are great trade for year-end. they have really lacked. the russell is not back to the 21-, which is amazing considering how high the s&p is. they have lacked a long way and now on a three-year old basis, they are reasonable holds because of the last three years, they are flat which is amazing. they are usually up 20% so we are looking at a longer-term picture for the small-cap caps that is good and given the enthusiasm about the regulation and everything else, small cap work three-year and quite nicely pick >> i will get excited. we will take a breather a little bit because that was the culprit the last few years as well. nick, a pleasure to have you on. you so much for the time. nicholas with data track. that is it for the exchange. i will join you on theth oer side of the break.

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