Countdown to the Fed Decision 10/28/26

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1:15Thank you. And Carl and Sarah, welcome to the Halftime Report. I'm Leslie Picker in for Scott Wapner today, front and center this hour. A critical day for your money with a Fed rate decision and key tech earnings on deck. We're trading it all with the Investment Committee. With me for the hour, Joe Terranova, Bryn Talkington, and Bill Baruch. Let's check on the market. Somewhat muted and mixed right now with these consequential five hours that we're looking forward to today with the FOMC. You can see the Dow up about 0.3 percent, the S &P up 0.2 percent, the NASDAQ, basically around the flat line in the 10-year back, barely above that 5 percent level.

1:53Let's begin with the countdown to the Fed. CNBC senior economics reporter Steve Leisman is standing by ahead of today's decision. Steve. Hey, Leslie, as you say, the Fed expected to hold rates steady, but many Fed watchers expecting as many as two, maybe three descents today in favor of higher rates. Take a look at our results of our CNBC Fed survey of the 30 respondents, 18 expecting at least one descent. Ten think there could be two and five think there could be many as three. The trouble for the Fed rating on hold is that the inflation data has come in hotter from the last meeting when the Fed hiked.

2:24J.P. Morgan's Mike Firoli writing, Chair Worsh will have to explain why the committee hiked after a two-tenths core PCE print in September, but is now holding after an expected three-tenths outturn. That's the number expected tomorrow. If PCE comes in at that number, the year-over-year rate ticks up to 3.1 from 3 percent. Still, several Fed governors and New York Fed President John Williams have argued the Fed could wait before hiking again. Warsh could finesse the dissenters, hinting in the statement that more hikes could be on the way, and that could be enough for them to vote with the majority to hold.

2:55The problem for Warsh, he doesn't want to provide any forward guidance. Leslie? Steve, stick around. We want to turn to the panel on this. Joe, we'll start with you. So obviously the market is expecting a hold. In terms of commentary, though, what do you think the bond market is looking for? Do they want more of a hawkish tone from today's conference? It's interesting because we have had a significant fall in yields over the last two weeks, and that's had a positive effect on the momentum factor and the AI investment theme. I think it's going to offer the Federal Reserve and Kevin Warsh a bit of relief seeing that pullback in yields.

3:36I think the market has clearly accepted that they will be on hold for this meeting. I think the market is also anticipating that there is one more hike somewhere down the road here. If you were to tell me we're going to go into 27 with an extended hiking cycle, then I think the market has to recalibrate and begin to price that in. But I think the evidence in front of us right now suggests that market participants are comfortable that maybe we have one more and from there we're on hold. Steve, how do you think the markets should interpret some sort of dissent here? You know, historically, the markets have liked everybody to somewhat be on the same page.

4:15But if we do see dissents, what do you expect the reaction to be there? I've got a little poem that I wrote, which is that dissents can lead you astray or they can lead the way. Last time they led the way, Leslie, there were a couple of dissents and then the Fed followed up with rate hikes after that. So it's worth noting. It's worth thinking about what the reasons are for the dissents. It's also worth thinking about what Chair Warsh has said, which is that if the if he does not have confidence that inflation is heading back towards target, then the Fed has work to do. Those are those were his comments.

4:49So I guess there are reasons to skip now reasons to give it more time. I think one of the things that happened during the intermeeting period is you had people like Fed Vice Chair Jefferson and John Williams step forward and say the Fed could take its time here. And that was clawing back the flexibility to decide either way. The market went and decided the Fed is not hiking this time around. Joe is right. There is another hike priced in. But it's also worth pointing out the market has more than that priced in for 27, as many as two rate hikes priced in. You take a look at the two-year yield at 474 and change, I guess, the last minute I looked at it.

5:27There it is, 477 now. You know, that's almost 90 basis points, 100 basis points over the Fed funds rate. So the market thinks the Fed has more work to do here. Right. I had no idea you were such a poet, Steve. Keep it coming. Bryn, the Fed hike, you know, it hasn't done much to slow energy induced inflation. How do you think about today's meeting in the context of the broader macro backdrop where you do still have inflation above target? Unemployment is still below five percent. financial conditions don't appear to be tight. And given what we've seen with yields more recently, perhaps even less so than maybe a month ago, you know, how do you square the case to hold at this meeting against that backdrop?

6:13I think that's a great question. So just like first principles, the Fed has one blunt instrument, unless they're going to mess with the balance sheet, which I don't think they will anymore. They have one blunt instrument, and that's moving around Fed funds rates. And when you have inflation that is created from too much credit, that blunt instrument is very effective, although there's long lags of actually slowing the economy and we'll say slowing inflationary pressures. But right now, that blunt instrument of moving interest rates higher will have zero impact on the drivers of inflation. And And so I think that you could say maybe we'll get a one rate hike in December.

6:57But to me, they're going to be on pause outside of that because those drivers are just not going to be affected by what the Fed does. At the same time, the real economy, if you look at real estate, you look at like commercial real estate, look at housing. These higher rates are just killing those sectors just because we haven't had those rates in so long. And so I think that the slower move is going to be the right move. Also, Leslie, I think it's very important. About$8 trillion, Steve can correct me, about$8 trillion of U.S. debt gets refinanced on a one-year basis. And so the interest that we pay on our debt is incredibly sensitive to short-term rates.

7:37And so while that's not a key driver, I think, of a move in December or early next year, it's definitely going to be impactful. And so for those two reasons, I don't think we'll get much more rate hikes just like looking at this year or next year. No, that's a really good point about our refinancing of our debt as well. Bill, then is it fair to say that as long as the credit markets allow it to, the Fed will remain on hold. But the second you start to see more vigilante activity, maybe that that calculus starts to change a little bit. Yeah, financial conditions, you know, you know, tightening over the over the past since the last meeting.

8:17I think the important thing really is anchoring those inflation expectations. And, you know, that's that's what we've seen from Warsh being his goal and talking tough on inflation to bring it down to two percent. Has has he talked tough enough to start to get the committee on his side and the market participants on his side? Absolutely. I think we've seen that from where we were six months ago. And is inflation a bit higher than expected than we've seen or than we want? Absolutely. It has been a little hotter than expected. But at the end of the day, I think we've already cited it, that a lot of this comes down to being energy.

8:56And is monetary policy a tool to combat energy inflation? And it is not. And we've heard Fed Chair Powell early this year talk about it. And it's coming to Harvard moment at a panel there. I think that's really the most important thing right here is, and Bryn mentioned too, is the housing market is very restrictive. So there's a balance here that they can't push this too much without deteriorating the economy and creating tighter and tighter conditions. So, you know, I think it's a balance. Obviously, we're not going to get a hike here today, but we may get a token hike in December. And I see those hikes next year getting priced out.

9:35Yeah, I think something that you have to think about when you're managing money is the Federal Reserve has to understand the bond market of 2026 and 2027. And looking forward is going to be different than the bond market of 25 and decades past. What has happened is the bond market has now become price sensitive. The bond market previously was price insensitive. Previously, it was all about liquidity and size. Global central banks were the marginal buyer. Pension funds were stepping in. Well, because of the generous returns of the last several years, pension funds have stepped back. They have satisfied their obligations.

10:15Global central banks are repatriating capital. Who has stepped in now? It's hedge funds. It is speculators. It is institutional investors. They're more price sensitive. And what the Federal Reserve and us as investors have to understand is that means more volatility. Both ways for yields, moving aggressively higher over a three-week period, and as we witnessed in the last two weeks, moving aggressively lower. That's a changing dynamic that I think the bond market is giving all of us as we move forward. It's also bigger, though, too. Absolutely, which means even more volatility when you know that some of the players that previously were price insensitive are no longer participating, and they're being replaced with price-sensitive participants.

10:56Steve, what is the number one priority you hope to hear from Chair Warsh this afternoon? Well, my objective today is to ask a question that doesn't result in the answer. There's a task force for that, because that is how the chairman has parried a lot of the questions coming his way. Look, all you can hope for is some attempt to get a sense of the framework that the Fed chairman is using to think about policy. Nobody wants him to tell us exactly what he's going to do at the next meeting. All we want is a framework. Let me just throw out, Leslie, this idea of maybe a caution of a little bit too much wishful thinking.

11:37The idea that the rate hikes go away for next year. The idea that the Fed shouldn't hike because it will have no effect. The way the Fed has an effect is to raise rates to the point that it brings economic demand below potential. and it only has the one tool. And Fed Chairman Warsh has been very clear about the idea that inflation is the Fed's responsibility and is going to deal with it. So I would just be a little careful about dismissing the potential for the Fed to be more extreme or more aggressive than people would expect if this inflation problem doesn't go away on its own. Right. Good point.

12:18Well, hopefully, you know, we can look forward to a question in the form of a poem. I don't know if that's on your radar, but it's worth tuning in. It's worth tuning in. Steve, thank you. Appreciate it. Steve Leisman, busy day today. Let's turn to the other big story coming our way. It's earnings. We get results from Alphabet and Microsoft after the bell today. Bryn, let's start with Microsoft because there's a lot out there on the whisper number for Azure, 47%, 48 % for the quarter. How critical is that for the expected aftermarket activity for Microsoft today? Last quarter really turned the stock for Microsoft around Alphabet as well.

13:01But, I mean, both of these numbers are going to be blowout. I think that there is a definite correlation between Azure numbers and compute. And I think that Microsoft is finally getting their co-work, co-pilot to work. We use it all the time. I think usage numbers are going to be great. They've talked about, Amy Hood's talked about free cash flow positive. And so I think enterprise is going to be strong. Co-work's going to be strong. Cloud's going to be great. And what's important about that is unlike Meta, which Muse is so popular and is very, it's very effective, but unlike Meta that doesn't have a cloud, I think the market's going to be very comfortable with the spend that Microsoft has because they have this huge cloud platform.

13:46And the same goes for Google as well. And so I think both are going to do just like fantastic. We'll see how the market reacts. But these cloud numbers, I think, are going to be all-time highs, all-time high growth as well, year over year. Yeah, Bill, that's essentially what Dan Ives was talking about as well, where he said Microsoft's double-digit operating income growth helps it fund its AI build-out, whereas peers have to sell equity or debt to finance it. So, you know, how critical is that in this point in the AI cycle, especially given the jitters we've seen in recent weeks? Yeah, I mean, the CapEx over 50 billion for the quarter and they've committed to positive free cash flow for the year.

14:27The quarter two guide and any changes to the 2026 envelope is what's going to move this. I'm looking at the chart and I'm looking at how this price action has been over the past maybe a couple months. I mean, I think the elevation that we've seen, the market is looking very positive. I expect this stock to really break out, get out above 550 in the coming weeks on the heels of this report. The Azure dollars is going to be reported and$34.5 billion. So it ends the guessing game behind that. The guide, I think we could see something above 45 % with that beating that consensus, some whispers above there.

15:03I think that we're going to see strong numbers. If you look back to Meta's report last week, the stock acted pretty strong initially, and then it's been selling off since. I think we're going to see a story where Meta and their CapEx and their free cash flow really set the bar on how bad it could be. And then I think we see something here that is less bad or even better than expectations from the whisper side of it. And that's going to be a tailwind to this stock as well as Alphabet. So Microsoft at 550, then you already own Microsoft. Are you buying then in anticipation of that? No, it is one of our top five holdings.

15:40And we're going to sit tight here and watch this thing try to extend higher. I think if there's some serious breakout and we like the momentum behind the market, maybe Microsoft is a place to lean into, but there could be some other opportunities as well. You don't own Microsoft. You own Alphabet, though. Expectations, yes. Expectations, sentiment, and positioning. Those are the three words that you always have to think about. On July 22nd, you had the report from Alphabet that reversed everything that Alphabet had done from June 1st of the prior year through June 1st of 2026. The stock was up 116%.

16:17Subsequent to that, since July 22nd, Alphabet is down 5%. Why? Why? Because the street got uncomfortable. The street knows that what you're going to hear tonight is two great examples of companies that are able to tell you how they're monetizing the spend. You have a proof point. You could see it in Azure. You could see it in Google Cloud. But the concern that the market had was the turn in free cash flow to being negative for Alphabet and the significant elevated spend debt,$200 billion. dollars. So what you're looking at tonight is the expectations that are embedded. Microsoft and Alphabet have both underperformed the S &P so far year to date.

16:59So who's in the better position from that standpoint of expectations, positioning and sentiment? I would argue it is Alphabet because it has already priced in that bearish activity since its earnings report on the elevated spend. As it relates to Microsoft this evening, I think you have to see the report exceed all of the expectations to continue to carry forward this 36 plus percent gain that we have seen since the end of July. I think that's the important way to think about these Mag7 companies is where they are coming from, how is the market positioned, and ultimately what is the expectation as you move forward.

17:42In the case of Meta, just look at what Meta has done. It has reversed all of the gains that it enjoyed from the September announcement from Muse. Six and a quarter was the level. It had the significant spike, and it's reversed everything right there. And it did so because it had such high expectations. It had extreme bullishness, and it had extreme bullish positioning. And it's out there raising nearly$100 billion in equity. And that is a awful combination when you have that time of extreme bullishness embedded into a stock. You don't have that tonight going in with Alphabet. And to a certain extent, it's lesser with Microsoft.

18:21Bill, you recently trimmed Meta? We did trim Meta. To add to Joe's point real quick on Alphabet, it's trading at support. I mean, it's right there trading at support. And I do agree that we're going to see a very strong report from Alphabet. it. You know, yeah, we did trim meta. And that kind of that's on the heels of my comments to last in this last Microsoft was it was a two and a half percent position meta was. And we brought it down to one and a half percent. We were looking post muse. We were looking for excitement behind this earnings report. I think CapEx story is just a complete headwind right now.

18:58One hundred and thirty five billion to one hundred forty five billion is what they're looking at for 2026 CapEx. And then some of the estimates for 2027 are up towards$200 billion. And the negative free cash flow, Joe talked about that, too. This is such a headwind in that negative free cash flow. Meta's there. And, I mean, the stock is telling us, too. We've got to listen to what the market is telling us. The$700, it got back above. It's now surrendered that. There's a tremendous amount of resistance there. We are trying to raise cash to have some flexibility as we look ahead through the midterms and to the final end of the year.

19:34I think the market's going to do terrific as we look into January. And we want to make sure that we're able to lean into things that we really, really like. And for now, Meta is a sacrifice here that we don't like the story behind it, did not follow through on the Muse news post earnings. And we have to trim it. Listen, I also think all of these MAG7 companies, they're benefiting from the mood of the market very quickly, reversing from being incredibly pessimistic last Thursday and Friday to now being more optimistic. And a lot of that is rooted in two earnings reports. I think there's two companies that are driving the continued appreciation we've seen this week.

20:16Number one, SK Hynix. Yep. SK Hynix. It is lifting all of the memory stocks. Western Digital reported last Thursday had great earnings. What was the price action? It was negative. We heard from Seagate. Great earnings. The price action this morning was negative. If you pull up Seagate, it's now higher on the day. And I think that's attributable to SK Hynix. In addition to that, look at Vertiv. It's up 13 % today. That is giving confidence to the industrial sector as it relates to the relationship between AI, the spend, and the ability to drive revenue growth. Vertiv, that is a blowout quarter.

20:55It's giving confidence. It's restoring optimism. So given what you've just shown there and what you talked about with regard to sentiment, then this earnings season for the broader AI trade, is it less about what we're seeing from the numbers and more about the market reaction and the turn in sentiment? I think it's always about reaction, and I think it is about sentiment. And I like the fact that over the last several days, in particular today, I think those two reports are incredibly powerful catalysts for extending the optimism through the end of October into the month of November. And I think it lends itself well as we begin to hear more and more from the Mag7 companies and some other semi-equipment names.

21:36Lamb Research, they reported on October 21st. Bad price action after a good earnings report. Guess what? That happened to be an earnings bottom. That's now moving higher. We'll hear from KLA Corp. So I like the fact that we are reversing some of that pessimism that we carried into this weekend. And we've done it very quickly so far this week. Hopefully the Fed doesn't take it away tonight. Bryn, do you agree with that, that memory is kind of this key read for semis and tech and just the overall trade? I mean, absolutely. And especially South Korean memory. You know, I bought DRAM before SK had their IPO in the U.S.

22:15because Samsung and SK Hynix are like 45 % of the DRAM ETF. And I mean, the numbers from SK Hynix were insane. So quarter over quarter, their revenue was up 32%. Quarter over quarter, operating profits up, what, 38%. So that's quarter over quarter. I mean, they are booked out. Half of their bookings are already contracted out through 2028. They're booked also with long term contracts to 2030. And I think when you look at the price action of SK or DRAM or Samsung, there's just peak skepticism. And if you think about when we hear from Microsoft or Google, there's the spenders still. There's still the spenders.

23:03The recipients are all of those companies that Joe just mentioned. And that this to me, this skepticism out is actually quite healthy because it's really dampening animal spirits because you have to, you know, kind of like just like hold your nose and buy some of these names just because the trading action has been so terrible. But at the same time, the numbers totally contradict the price action. So it's nice to see the price action and the numbers finally coming together for at least today. Yeah. Leslie, can we show G.E. Vernova intraday because the bears will say, well, OK, what about G.E. Vernova's price action today?

23:37They did a nine billion acquisition of a German company, Trench. Look at that price action today, though. It is recovering alongside of what we're seeing with Vertiv. Vertiv, 74 % growth in the Americas in terms of their revenue. Staggering numbers. The best report they've put forward in five years, and the last one is Teradyne. That reported, semi-equipment today. Don't look at Teradyne and say, okay, that is a referendum on semi-equipment. It's idiosyncratic to Teradyne. Their outlook clearly was less exciting than the street anticipated. So this is kind of emblematic of a stat that Goldman had this morning, their trading desk, where they said with two months left in 2026, flagship momentum, their flagship momentum basket has already recorded 39 distinct one day moves of 5 % or more other than the 42 occurrences in 2020, which is possible that we get there in 2026.

24:31That's higher than any year they've seen since at least 1999, just showing the price swings that we've seen. And I know you study this stuff closely. Yeah. And then you wonder why the Nasdaq is recording a 52 week high in the last several days. And I own personally SIBO, which has had a spectacular bounce here over the last four days. I think the exchanges come back into play here as we move through the end of 2026, because we're going to see that elevated volatility. And who knows, maybe it benefits the trading revenue for some of the banks. We've seen it. But it softened in the last quarter relative.

25:07Well, the fixed side softened, but the equity side was very strong. Relative to what we saw earlier in the year, though, those were some tough numbers to kind of comp against. Yeah, it's been a remarkable 2026 for the equity trading desks, at least here in the U.S. Up next, our halftime headliner, city head of wealth Andy Sieg, is standing by. We'll talk the state of the markets and the financials ahead of today's Fed decision. Halftime is back in two minutes.

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27:08Welcome back. Joining us now is our halftime headliner, Citi's head of wealth, Andy Sieg. Andy, it's good to have you here at Post 9. No, thank you. Thank you. So Citi reported earnings a couple weeks ago. Wealth revenue increased 15 % in the quarter. Net new investment assets doubling year over year. Reports say you were hired personally by CEO Jane Frazier three years ago to turn around this wealth business. And I'm curious where you are on that journey and how much of the recent growth do you ascribe to market and asset related tailwinds versus the strategic changes you've been making at the firm?

27:47Well, you know, first of all, the business is rocking. We've had 10 quarters of revenue growth. And so this has been sustained performance. We just had not only strong flows. These were all-time record flows for us, over$38 billion of net investment flows in the quarter. We got returns up. We still have work to do on that. But we're definitely at a different phase around the business. There was a lot of change necessary over the last few years. We've made the changes. We've got a very strong team in place across the board. And at this point, there's real organic growth happening. And markets have been helpful.

28:20But what we look for are flows. And that rate of organic flows is very strong. It's over a 10 % rate of organic flows growth. So this is arguably the fastest growing wealth business in the world right now. You recently announced Premium Boost, which aims at essentially giving eligible clients savings rates based on their relationship with the bank, better savings rates and so forth. How should we think of that program in the context of some of the broader concerns and angst around AI agents pulling money out of people's checking accounts and putting them into higher yielding assets and therefore deteriorating the margins at banks?

28:56I mean, is this essentially a product that can combat those types of concerns? Well, I mean, this type of program, a relationship-based pricing program, is the right thing for clients. It's also actually the right thing for this moment because when you think about what agents are doing You know agents are going to help clients be smarter about where is their value in the marketplace? This is a value offering and so we're seeing tremendous response We've only been in the market for two days. We've had over 25 ,000 clients already across the country You know contact us and begin the process of subscribing for premium boost I think you'll see a lot of banks move in this direction and again, you know It's rewarding people for making us their primary bank and doing it in a really transparent way, increasing the rate on their savings account.

29:41And so it's simple. It's powerful. It's an attacker move for us because our retail bank, it's not a national brand. We're in six markets around the country. We've got great clients, but we can do a lot more with them. And so an offer like this, it's designed to deepen those relationships and have people bring more of what they do to Citi. Interesting. Speaking of relationships, about six months ago, you launched an AI client tool called CitySky, which I know has been rolled out over the summer. How has it been going? And what has been kind of the response from your financial advisors who wonder how much of their job could be replaced by an AI financial advisor in the future?

30:22Well, you know, it's interesting. I think our financial advisors see this in many ways the way we framed it, which is a new AI-driven team member for them. So it gives them more bandwidth on their team, the ability to be more productive. Clients get it. They kind of know when they're going to want to talk to a human and when they might want to use a tool like this. We have been proceeding a little slower than expected with the rollout because we want to make sure this has to be a very trusted resource for clients. There's a lot of agents out there in the world. You know, this is a version of AI that clients can understand.

30:59It's secure. It has access to your information at Citi. It knows you from prior interactions. And, you know, they can, we think, feel confident kind of opening up around questions on their mind, around offers like premium boost, but also questions like, you know, like, am I saving sufficiently for retirement? And so, again, we're in the very early days, but I think we can see this type of tool. It's going to be all across the banking landscape, and Citi wanted to be first. Andy, it's great to have you here today so we could talk a little bit about asset allocation and the messaging surrounding it, most importantly, not exactly what the weightings are.

31:38Let's talk about private credit and private equity. What is the messaging to clients as it relates to those two asset classes that have had extreme volatility in 2016? I think we need to take a step back. The broad messaging is the markets today are very different than the markets in the 1980s or the 1990s. There is so much activity that's happening in the private markets. If you just have a public market allocation, you're missing out on a lot of action, a lot of opportunity in the marketplace. So you started with the phrase asset allocation. The second thing I want to say, this is about discipline.

32:11It's about making sure that you've thoughtfully set an asset allocation consistent with long-term goals. Our clients tend to not be timing the market. They're in the market for 10 or 20 or 30 years. And so we still see private credit and private equity as key parts, key building blocks for asset allocation. The question is, do you have a diligence team that can help make sure that it's a strong asset management firm? We understand how they operate. And that clients, again, are not looking at this as a trade. They're looking at it as a long-term allocation. I think from that standpoint, by and large, clients have been happy with the returns that they've had.

32:49And we continue to recommend this as part of portfolios. And how do you get a younger generation that has grown up on generous equity returns to realize the value in fixed income? Hey, it's tough. That's the role for an advisor, though. When you think about what advisors do, it's not reinforcing things that are easy. It's helping clients kind of step up to things that are hard for them to do on their own. And, you know, and take the time to think about risk, time horizon, boil that to an asset allocation, and then think about how do you manage those assets very well. Again, you know, it seems like it would be simple, but we're all human.

33:23We're kind of drawn to the hot dot. You know, we're fearful at the wrong time. We probably read the headlines a little bit too much. No offense. And, you know, but that's when our when our advisors are doing their job well, it's anchored right there in asset allocation. Andy Sieg, thank you very much. Appreciate your time today. Thanks so much for being here. Good to see you. Thank you. Now to Frank Holland with a CNBC News update. Hi, Frank. Hey, good afternoon, Leslie. Authorities in Spain say at least 68 people have now died in a high speed train crash. They say another 58 people needed medical treatment in a hospital.

33:53Spain's transport minister says one train slammed into another that was stopped on the track ahead of it. Authorities say that happened because of a breach of protocol that allowed it to continue on its journey, despite there being an active red signal on that track. Civil rights leader Dolores Huerta, who co-founded the United Farm Workers with Cesar Chavez, has passed away. She was the union's vice president for nearly four decades, where she secured historic labor victories for thousands of migrant laborers. Her family announced today that she has died from cancer. She was 96 years old. And a U.S.

34:23cruise ship won a three-year trip around the world, abruptly suspended operations due to fuel costs. The MV Odyssey's Florida-based operator says monthly fuel expenses that were around$1 ,800 are now between$6 ,000 and$8 ,000 in parts of Asia because of the war in Iran. The ship forced its roughly 200 passengers to disembark in Cambodia. Leslie, back over to you. Wow, remarkable story there, although Cambodia is a good place to visit as well, Frank. Thank you. Up next, committee moves. Bill Baruch is ready to walk you through more trades. Halftime, we'll be right back.

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36:27Welcome back. Bill Baruch has been busy. You've got some more moves. You trimmed NVIDIA, Micron, and Broadcom. Yeah, this is taking a step back. And yeah, I want to sugarcoat this with risk management. Let's start with Micron. It was more than a 5 % position of ours. We shaved 50 bips on it. You know, we still see memory pricing. You know, it's going to continue this trajectory, at least stable, through 2030. We're a long-run believer in this name. You know, if our clients, if you were a client of ours prior to 25, I mean, chances are your cost basis is$70. We've been significantly overweight in semis in general.

37:08So we find this is an opportunity here. With the SMH it pulled back about 20 % from its October peak. It's up 7 % this week. So late yesterday, we trimmed the 50 bips from Micron, trimmed 50 bips from Broadcom, and 50 bips from NVIDIA. I mean, for Broadcom, same as NVIDIA. It's a victim of risk management, but it's back above key support at 333. We like the way it's looking, and yesterday's response to off those lows I think should continue pretty well. But again, we're heading into the Fed. We're heading into the midterms. We're managing some risk, bringing down our overweight and semis to a less overweight.

37:45You trimmed CrowdStrike as well. Same thing with risk management or more idiosyncratic there? You know, I think CrowdStrike and cybersecurity are going to continue to do very well. In CrowdStrike, more so, it's become too large in our portfolio. It was nearly a 4 % position. So what we're looking here is giving ourselves some flexibility, again, from a risk management standpoint, as we head into the Fed today and midterms next week. But yeah, it's really a risk management thing here. We love CrowdStrike. We love the trajectory of the need for cybersecurity. We only think that's going to grow, but it is a bit more volatile name.

38:21And to have it at a 4 % weighting was just a bit too much for us at this time. No, that makes sense. Bryn, you own Bug's Cyber ETF? Yeah, longtime owner. I mean, I think that obviously Bill crushed it owning CrowdStrike, you know, in a singular name. I like the diversification. It's still concentrated, but I like that diversification. So I can just own it over a cycle because all of these cyber stocks just ripped it. Earlier this year, when we all came to the realization, we're going to need more cybersecurity, not less from all of these AI hacks that seem to be upon us. And so I'm a long-term holder.

39:02Don't need to trim it. I have it sized right, but kudos to Bill for having Micron at 70 and CrowdStrike at equal prices, well below where they are today. Credit where credit's due. Bill, you also sold the CQQQ China tech ETF and Bespoke is flagging that China is one of the four countries in a bear market right now. The rest in bull markets. Yeah, this was a we have a tactical ETF model that we run and diversify portfolios along with their stock model. This tactical ETF covers a 10 percent of the entire portfolio. We looked at CQQQ as a little bit of a hedge to our significant overweight and simmies, you know, as as China may have been and brought some competition in the memory space.

39:50That did not turn out to be true. This thing has been a dog all year, all year long. It's it has not worked out. We're going to we're going to admit that. And it's OK to be wrong for us. We're going to cut it and move on. And what we've done is put the money elsewhere in that and buying XTN. We love the transports. We think the transports are in a secular bull market. Transports have pulled back from the highs. They're retesting their prior year highs for the last two years. Now, we chose XTN. That's an equal weight transport index compared to going with IYT, which is extremely heavy on the rails and Uber up top.

40:28But I think this equal weight is the way to play it. And, I mean, the growth in the United States has been tremendous, and I think we're going to continue that trajectory. I like having transport exposure in the portfolio or as an ETF in a tactical manner. Interesting. And in an equal weight manner at that. Mike Santoli's market memo is next.

40:55We are back with senior markets commentator and overtime co-anchor Mike Santoli with his market memo. Mike, I mean, we've got pretty consequential the next four hours to look ahead to. Yeah. The market's in wait and see mode. Next four hours, I would say even next few days. And I do think there's been this sentiment out there coalescing that, OK, we got some potential clearing events for the market with the Fed, with PCE even coming this week. And then obviously the election. I do think things are lined up for where the market should be able to make some hay and break higher, maybe go toward the highs on the S &P 500, because you did have the hardest parts of the AI trade bounce on a short-term basis relatively convincingly in the last couple of days.

41:36Credit spreads, including on the hyperscalers, have come in pretty appreciably. So you had a little bit of that fear about capital squeeze is dissipating a little bit. You have this very strong micro-seasonal period between the very end of October, very beginning of November. And then again, a wait-and-see Fed or a go-slow Fed typically is OK. If you're skipping meetings on rate hikes, that's generally on a long-term basis good for stocks. Now, the difference is I do think a lot of it is mean reversion this week. So the worst 15 stocks October to date were up coming into today an average of 6.5 % in two days.

42:16In other words, whatever was hit hardest last month, you got the bounce. Now is it more than just a bounce? Also, Fed days under wars have not been strong for the S &P. We'll see if that pattern breaks today. Yeah, that's a good reminder of what we've seen so far. Mike Santoli, thanks so much. Up next, we're taking a look at the futures trade on gold in a key level to watch. Halftime is back after this. We're back with the futures trade. Bill, you're looking at gold. Yeah, gold got below 4 ,000, a big psychological level last week. and it's responded here ahead of the Fed. I think gold has some significant upside.

42:54It's been a really tough run on the metals this year after a phenomenal year last year. And we're embarking on what is and typically will be a phenomenal seasonal time from mid-December and through the end of January. So I expect some, maybe it takes a little consolidation here. I'm looking at the 21-day moving average of 41.50, some resistance at 41.80, but a move out above 4 ,200 I think will really get some momentum higher. Nothing's changed in the bigger picture here. The debasement trade, I think, will come back to life. There's de-dollarization, which is attractive for gold, widening fiscal deficits.

43:30But central banks, central banks continue to be buyers. The Shanghai Gold Exchange is some of the most volume it's had since April. But China continues to be buying gold hand over fist. And then finally, ETF flows this week actually have been net sellers every single day this week, and gold has actually climbed higher. So I think 4 ,000 is a tremendous area of support, and I'm looking for gold to trade higher, even if it chops around a bit for the next month or so. I expect a strong finish to the year and a strong start next year. Joe, you're making a skeptical face over here? Is that what that was?

44:04You look at money flow. You always look at money flow, and CTAs have limited capacity. There's a ceiling there in the amount of capital, and all that capital right now is being pushed towards the energy trade. And they're getting rewarded. So they're staying there and they're adding to the position. Gold and silver doesn't look as exciting as it did in January and February now that you have this Middle Eastern conflict and you're getting the performance from heating oil, from gasoline, and from Brent and WTI. Brent, you own it. Oh, go ahead, Bill. To Joe's point, I would say I would have liked to see the commitment of traders manage money, which highlights CTAs.

44:40I would like to see more selling in the last few weeks. They haven't liquidated their position. Maybe that's a good thing, but the producers are actually buying and closing some of their shorts for hedges. I think that's a positive we've seen in the last few weeks. Bryn, broadly speaking, you own INFL, Inflation Beneficiaries ETF. Where do you think this fits? I mean, they've got wheat and precious metals. They've got a lot of metal exposure. They're just using the cap light way to do it instead of the miners. And so I think gold is so interesting. I think there's always 10 different reasons to buy gold.

45:17It moves up right when you think it's not going to move up. But I like INFL because you get energy, you get the exchanges, you get metals and mining. And so to me, I think it's just a really good basket of things that doesn't look like the S &P or the NASDAQ, which is almost impossible to find. And the performance has been really strong at the same time. Yeah. Diversification these days. Final trades coming up on halftime. Watch closing bell at 3 p.m. Eastern. Scott Wapner will be joined by Double Line's Jeffrey Gunlock with instant reaction to today's Fed decision. Now to final trades. Bill. RTX with the cash that we raised, we're putting half of that to RTX.

45:58High quality defense name. It's back above the 200 moving average this week. Bryn, Tesla, and you can sell the February 450 strikes and get$20. Joe? September 1st, I bought Nutrien at$75.67. It's gone nowhere. It's a losing trade. I'm selling out of it. All right, that does it for halftime. A special exchange from D.C. starts right now. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium.

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