Anchor: Well, we are counting down to the market open here on Wall Street, and we're looking at the Dow futures set to rally while Nasdaq 100 is lower, and we are still looking at some of the stock averages near all-time highs, and this is as the bull market marks its 4th anniversary. Wall Street is entering a critical earnings season as big banks report the results, and with corporate profits projected to jump 25%, investors looking for proof the economy can handle current energy prices as well as bond yields ahead of tomorrow's CPI report. Meanwhile, the IMF warning the world economy is nearing the limits of its resilience, cautioning that downside risks are rapidly mounting, pointing to depleting energy buffers as well as surging bond yields and heavy public debt burdens. Joining us live this morning at the New York Stock Exchange is Michael Ryan King, senior market strategist at the New York Stock Exchange. Michael, good morning. Thank you so much for joining me.
Michael Reinking: Morning. Thanks for having me.
Anchor: Well, it is a big week. Of course, we're digesting the latest earnings out from the big banks as well as healthcare and even Domino's Pizza. So what do you make of this divergence we're seeing in Dow futures and the sell-off in tech?
Michael : Yes, so I think what we're seeing is a little bit of a reach for quality, right? And we're seeing kind of lower-quality names were kind of really under pressure yesterday, and you're kind of seeing this move into kind of the Dow and kind of more quality, and we're seeing this weakness in kind of the tech trade, right? So overnight you had South Korea was sharply lower. I think it was down like kind of almost 7%, breaking below its 200-day moving average, and it's actually back near a couple of percent away from the lows that we hit in July. So you think about this pretty big rebound we've had, you know, it's almost kind of retraced much of that. There was some commentary out of Broadcom CEO, kind of likening some of the investment in AI to casinos, right? And there's clearly, I think, some building concerns from a credit perspective where we're seeing kind of spreads are starting to widen. And as you think about the lifeblood of this AI trade, it comes from the ability to raise capital, companies that are looking to IPO, and we're seeing kind of some of those names get some of that get pushed back, right? And so you're starting to see this kind of circular concern building on kind of within kind of that AI complex right now.
Anchor: And Michael, you bring up a lot of key points, and these are details that we will be focusing on as we head into the rest of earnings season as well as the 4th quarter of 2026. But when it comes to the big bank earnings, of course we're paying attention to more reports coming out this week. But so far JPMorgan as well as, well, Citi, what did you make of the results?
Michael : Yes, I think the numbers look pretty solid, right? They are continuing to show kind of strength in investment banking. The equity trading businesses, I think, were better than most people had expected. You know, trading was a little bit kind of a little bit weaker, but when you look at, you know, speaking of credit, right, you're not seeing kind of big provisioning or reserve builds, right? There's no real kind of red flags coming from that side of the businesses, right? So I think in general the numbers look pretty solid, and you keep in mind these stocks have kind of pulled back pretty significantly over the last or so. So like to your point, you know, kind of around the Dow, right, you are seeing, you know, kind of over the last week or so as we've kind of gotten into Q4, right, you are starting to see some of that rotation away, you know, kind of from, you know, tech and into kind of other areas in the market. And I, you know, I think that part of that is just, you know, kind of the bifurcation that we've seen, uh, you know, kind of over, you know, kind of throughout much of kind of Q3 in this year.
Anchor: Yes, and you bring up an important point because even when we're talking about the record highs we saw last week for the S&P 500 as well as the Nasdaq, we have to keep in mind that there is significant concentration here. But I do have to get your perspective on geopolitics, oil inflation, because we are counting down to the CPI data coming out tomorrow morning, and we have been hearing from Fed officials this week. We will be hearing from later on this week from the IMF World Bank gathering, but of course less than 24 hours away until CPI. What are your expectations?
Michael : As if the start of earnings season wasn't going to be enough, we're now going to contend with an inflation data point, right? I think that's going to be very, it's going to be very telling for kind of how the rest of this week kind of plays out in that if we get a hot number. They started to see yields start to pull back over the last, I wouldn't say pull back but kind of level out over the last week or so. We're down a couple of bases, 3, 4 or 5 basis points this morning after credit markets were closed yesterday, seeing a little bit of a reprieve over in Europe, which has been kind of one of the sources of pain within kind of within the fixed income markets this morning as well. Everybody's going to kind of be paying attention to those numbers. If we get a hot print, right, that's going to kind of once again kind of strain the overall kind of rotation trade, right? Because that rotation trade, you know, very much benefits from the idea that you're going to see kind of, you know, if rates to pull back, right, that definitely benefits that kind of rotational trade. The other thing to keep in mind is that you're actually starting to see that the hyperscalers are outperforming, right? And if you think about that, right, they once again, right, there are these all-weather stocks even though they've been, you know, kind of some of the big issuers here, right? Their balance sheets are in a much different place than when you kind of look downstream kind of within that AI complex. So you're once again seeing kind of the hyperscalers, the mega-cap tech stocks, show that kind of quality and kind of outperformance that they have in the past kind of cycles in the market.
Anchor: Yes, and some key names, those hyperscalers we continue to monitor because we know that this year, 2026, we had some new terms as well as acronyms, including LAG 7 and CES apocalypse, but these are sectors within the AI trade that we need to keep our eyes on as we head into the rest of earnings season, and I'm sure we'll be hearing guidance from the management of those hyperscalers, something we'll continue to monitor. But of course when it comes to what we're seeing, geopolitics and the countdown to the midterm election season, this is something that all of us are watching, but you and I have been talking about geopolitics and energy, and when we're talking about economies around the world, we're seeing this affect bonds as well. So what are you paying attention to when it comes to the bond market and yields?
Michael : Yes, so I mean as we just talked about, clearly kind of tomorrow's inflation data is going to be a very big focal point. The pullback that we're seeing in Europe is definitely helping this morning, and I think we have to kind of pay attention to just kind of the level of issuance that we're seeing outside of Treasury markets and outside of government issuance, right? So we've clearly seen a pretty big step down from the peak in June, which is also going to kind of just help from a supply and demand side of things. There's also been a story, you know, kind of Bloomberg ran a story yesterday suggesting that the Treasury could continue with their kind of Operation Twist where they're kind of reducing auction sizing in, if not longer-dated Treasuries as we head into next month. So I think people are on the case, they're paying attention. Um, you know, in many ways if you do start to see kind of that, uh, that AI or tech trade begin to wobble, right, that you would also kind of start to see kind of some rotation, kind of more rotation into Treasury markets. Interestingly this morning, and we had BlackRock actually just, um, you know, kind of take their equity, um, you know, ratings down to neutral and kind of increase their allocation to Treasury markets. So that's the first time they've done that in many, many years. So it's something Rick Rieder is pretty well followed on the Street, something to kind of pay attention to.
Anchor: A lot to keep our eyes on as we head into the rest of today's session as well as the rest of the week. So I appreciate your time, Michael. Thank you so much for all of your insights.
Michael : Thanks for having me.
