Scott Bessent Is The House Now (Or So He Thinks) | MRKT Call

Dan Nathan (0:00)

In today's hyperfast markets, it's never been more important to consider every option to raise capital, drive growth and create value. Stay one step ahead with Strategic Alternatives, a podcast from RBC Capital Markets. This season, RBC's experts examine how corporates and investors are adapting their strategies, reassessing their portfolios and reallocating capital to navigate uncertainty and volatility in the current macro environment. Tune in to Strategic Alternatives, the RBC Capital Markets podcast today. iConnections is the largest membership-only platform for the alternative investment industry, bringing together thousands of fund managers and allocators in one powerful hub. iConnections reimagines how the industry connects through its digital offerings and premier in-person events, empowering allocators and managers to meet, build relationships, and do business anytime, anywhere. To explore more about iConnections, its events, and gain access to the members-only platform, visit iconnections.io.

Let's level set here. Okay, so we have an S&P that's down 50 basis points. We have a NASDAQ that's down 50 basis points. We have the VIX trading at the highs of the last week or so. It's 1657, by the way. We have, you know, oil, you know, 96 and a half. That is WTI. Brent is 101.30. Ten year. This is the 10 year at 4.84.

Haven't seen that in a while. 30 year, you know, guys, the 30 year is kind of stuck here at this 5.3 sort of level. The Dixie is below 99 So a lot of it seems like it's a macro market, especially now that we're through a lot of earnings. I mean, how do you look at this? We got CPI on Friday. We got Fed meeting a week from today. And like we said, this one feels live. I mean, it is live for whatever reason, the back and forth, the CME, Fed funds, futures. Now we're at like a 60 hike, 40, nothing done.

Guy Adami (1:51)

It's live. We've been saying that for a while again. I want to say, I'd be very surprised if something were to take place in terms of a move. In this case, obviously, market is somewhat anticipating a hike. I don't think they do anything. I think the rhetoric will continue. But these bond moves without again, just sort of droning over on over and over again. I mean, this is a global thing. And I think there are people come into realization that there are global debt problems that are gonna have a hard time being solved. And yes, we will buy your debt, and yes, we're gonna charge you more. You're gonna have to pay us more to do so. And I think that's what we're seeing. And in a world where everybody seems to be taking their ball and going to their respective corners, that suggests that the appetite to buy our debt is not gonna be as robust as it was in prior years.

Dan Nathan (2:44)

Yeah, so Guy, why is it that we have, if we could overlay maybe the 10 year yield versus the S&P 500? I mean, the S&P is getting back towards that 7,600. That was the breakout level. And we kind of highlighted a little bit that move that we saw, I think it was late July. It was a three, four day move where we went from, I think, 73, 50, basically to almost 7,800 in a straight line. And here we are. We're kind of getting back towards that 7,600 level.

Is that yields moving higher, this narrative about the possibility of a 25 basis point hike next week? Is that why we're seeing a little bit of equity weakness here?

Guy Adami (3:27)

I think the market is coming to the realization. And it's been happening, by the way, it's been happening for a while now, but it hasn't been happening on an index level. It's been happening more sector level. Now it's seemingly happening on an index level where, wait a second, higher rates for the wrong reasons are not a good thing. And in a market that is so dependent on, this is a capital intensive economy right now, vis-a-vis what's going on in AI. And higher rates, these companies do not win to that. And you're seeing it in credit default swaps, you're seeing it in delinquency rates for the consumer. You're seeing it across a swath of different things that until the last couple of weeks, S&P has not cared about at all. I do think, again, there's a volatility event coming. I think it's probably predicated on some yen bond type move.

And I wouldn't be surprised to see a repeat to a certain extent of what we saw two years ago, August.

Dan Nathan (4:25)

Yeah, I want to highlight something. I know that you read this earlier. We read Peter Bookfar every morning. We also report in the book report. We also read Doug Cass at thestreetpro.com. Doug just kind of highlighted this and I missed it. I think while you and I were doing this fine program, but it was from Peter.