Navigating the Risk of a Market Correction: The Investment Committee Weighs in 9/9/26

SPEAKER_1 (0:00)

At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are, with personalized financial strategies that help protect what matters, so you can preserve your progress while creating a path forward.

The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC.

SPEAKER_2 (0:30)

Are you as confident as you should be when it comes to growing your business? Is your strategy ready to execute today?

If cash flows aren't where they need to be, growth could be at risk, especially in the eyes of your investors, board members and the business press. But when your business is operating in top shape, you've earned the right to grow. EY Parthenon can help you re-imagine your business and execute a game plan for long-term growth. EY Parthenon, solutions that work in practice, not just on paper.

Scott Wapner (1:01)

Guys, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner, front and center. This hour, correction risk, is it rising? Some new calls today suggest stocks are in fact prime for a pullback. Do we agree? We'll discuss and debate with the committee. Joining me for the hour, Joe Terranova, Kerry Firestone, Bryn Talkington, Steve Weiss along in just a few minutes. We'll check the markets here. I think by now, you know we're red across the board, and a lot of that has to do with what both oil and yields are doing. Let's show both, because oil is higher. Brent, 101 That's significant in and of itself. There is WTI above 96 The 10-year note yield, though, is one to keep an eye on today. Basically at 485 So we get more details on the Treasury buyback today, and what happens when we do?

Yields moved higher.

So that's having an impact, as we know. I want to start there, because I have highlighted Citadel's Scott Wapner in his notes over the last month. Excellent. He says his highest conviction right now, why I ask the question at the very top of the program, are we at risk of a correction? He says the highs are in for the month.

Mid-month rally starts the seasonal weakness.

Blackout window starts on the 12th. Optioned expiry on the 18th. Quarters over on the 30th. These are all historically very large risk transfer events. RBC today pretty much agrees with that. They say the risks of a garden variety pullback of 5-10% have grown. For many of the same reasons, they throw in geopolitics. I think we all know what is at stake globally, and what the risks are as we think about the rising price of crude and the hostilities that are taking place within the Middle East. That's kind of the backdrop of the commentary today. What do you think?

Joe Terranova (2:50)

So when you have the good fortune to sit on this platform, you listen to what many different people say, and you understand who has the hot hand. And Scott has the hot hand. He's been very accurate in his notes. I sat with you yesterday, Scott, and I said, the next 50 handles up or down for the S&P, I'm not really sure where we go.

I understand, forget the seasonality of September, I don't want to formulate a bias on that, but I understand the headwinds that are in front of us right now. The blackout window for buybacks, rising oil prices, rising yields, CPI coming out. I understand collectively all of that. Then I turn to myself and I say, okay, is that going to allow you to remove your overall bias, which is to be bullish, and turn bearish? And what's interesting is what I fall back on is not earnings, but I have this belief, and I think a lot of people in the investment industry share it. Do we really think heading into the midterm election yields and oil are going to stay uncomfortably high where they are right now? I would say most of us don't, but guess what?

That's asymmetric risk. That, in reality, is really going to catch everyone off sides if, in fact, they do stay elevated, because I think there's so much skepticism regarding where the pricing is right now. So I think you have to be very careful understanding that. And to Scott's point, understanding what you're navigating in the month of September. And if you are going to go out and step out and buy something, I think you do it very, very lightly.

Scott Wapner (4:20)

There may be asymmetric risk right now around the Fed, too. You know, ahead of the meeting next week, Kerry, you made the argument that, you know, for the last many weeks, don't underestimate the Fed raising rates. I get that the market is at 60 percent or whatever it is. I still think a lot of people don't think that will happen, that they're not going to raise rates and be at risk of making an error.