Rally On, Trade Relief, Senate Showdown. 6/30/25
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This episode is sponsored by Morgan Stanley's Thoughts on the Market. It can be difficult to stay up to date on the financial market in today's ever-changing environment. With so much commentary at any given moment, it's hard to cut through the noise to gain quality, actionable insights. Morgan Stanley is here to help with their podcast, Thoughts on the Market. Thoughts on the Market is your daily market snapshot covering trends across the global investment landscape and offering perspectives from Morgan Stanley's leading economists and strategists.

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Rally on. Stocks take off. A short week of trading in the green with the S&P 500 and the Nasdaq both at record levels. Next up, the Dow making its push into unchartered territory. Canada and the U.S., they're talking once again after Canada walks back the tax that made President Trump shut down trade discussions.

And a showdown in the Senate as Republican lawmakers look to win over their holdouts and push the president's spending bill over the finish line. It's Monday, June 30th, 2025, and this is Worldwide Exchange on CNBC and streaming on CNBC+.

Good morning. Thanks so much for being here with us. I'm Frank Holland. Hope you had a wonderful weekend. Let's get you ready for the trading week ahead. We begin this morning with the S&P and the Nasdaq, both of them at all-time highs. Taking a look right now, you can see the Dow is just under 3% away from its all-time high. The Russell is still in correction territory, about 12% away from its all-time high. But you see the S&P, the Nasdaq Composite, and the Nasdaq 100 again at record highs. Taking a look at the S&P 500, excuse me, taking a look at futures first.

I want to see futures in the green across the board. A lot of green on this board right now. The Dow and the Nasdaq up right around a half a percent. The S&P up right around a third of a percent right now. And now we want to look at the S&P 500 pre-market lag or some of the stocks moving. The index is higher right now. So take a look. Over the weekend, the DOJ approved a deal for HPE to acquire Juniper Networks. You see Juniper Networks shares rising.

up about 8.5%. HPE up nearly 4%. You see a lot of tech up here. Palantir shares also up about 5%. The defense AI play has seen a lot of recent upside recently as we talk about more defense spending. And down here, Elevins Health up about 2.75% to 1%. Then we have the other side of the coin. The S&P 500 pre-market laggers. Taking a look at some of those names, you see a lot of energy up here. Enphase Energy pulling back about 5%.

Next era energy down about three and a third percent. AES, Hamid Aerospace and Crown Castle running out your worst performers on the S&P. Trade is back in the spotlight as Canada drops its plan for a digital tax to restart U.S. trade talks. Taking a look at some of the ETFs that track ETFs.

The in the equities in countries where we're having active trade negotiations right now, the Canadian ETF may be surprisingly not moving right now. You're seeing the Mexican ETF up three quarters of one percent. The Japan ETF pulling back a quarter of a percent. Very similar story for the Indian ETF down here. The Chinese ETF up very fractionally right now in the pre-market.

Also a check of Chinese tech companies as Baidu is expected to release an open source version of its latest Ernie bot large language model today. It's a potential competitor for open AI spoke with Dan eyes from Wedbush. He says it's not quite a deep seek moment, but it is a notable development. Take a look at body shares actually pulling back about 1% right now.

You see Alibaba down about 1.5%. PDD Holdings down about 0.5%. Down here, Metruon pulling back more than 3% in trading right now. Also looking at currency this morning. The dollar coming off a lower week and on pace for a six-month losing streak. Take a look at the greenback in the pre-market pulling back just about a

quarter of one percent over the last week, down about one and a quarter percent. Also, we have the one big, beautiful bill passing a key procedural vote over the weekend. Republicans, they're aiming to get it passed this week. The Congressional Budget Office forecasting would increase the U.S. interest expense by 700 billion dollars and add nearly one trillion more dollars to the U.S. deficit over the House passed version of the bill. With that, take a look at the bond market. Often we've heard or seen the

The bond vigilantes respond to legislation that impacts the deficit. Right now, the benchmark pretty much at the same level we saw it at last week at 4.25%. Okay, that is your setup. Let's now see how Europe is shaping up as this trading day gets underway. Juliana Tattlebaum is live in London with a look at the early action. Juliana, good morning. Good to see you.

Frank, great to see you. Happy Monday. Well, here in Europe, we are still some way off the records that we saw earlier this year, and it's been a downbeat day so far compared to what you're seeing in futures stateside. So European markets fairly range bound this morning. A lot of focus on Sintra, the beautiful, beautiful city outside of Lisbon in Portugal. The ECB is kicking off its forum tomorrow.

So from a central bank perspective, a lot of investors going to be eyeing and listening out for what the central bank has to say. You can see the Zetra DAX off about two tenths of a percent this morning. CAC 40 off about 13 basis points. FTSE, maybe the FTSE 100 are also trading lower.

has been a positive quarter across most of Europe, with stocks regaining ground after the post-liberation day sell-off in April. Europe's stock 600 is set for its second straight positive quarter, while Germany's DAX has outperformed, boosted by big European defense names, on pace for its longest quarterly win streak since 2021. Now, I will add this caveat, Frank, that yes, we are on pace for another positive quarter here in Europe, but

but we are underperforming the U.S. So investors now engaging in this debate around whether the rotation out of the U.S. into Europe really does have legs or whether we're going to see it prove a short-lived phenomenon and investors resume their preference for U.S. equities here.

All right, Juliana Tattlebaum, live in London. Juliana, great to see you as always. Turn our attention now to D.C. and Capitol Hill. And one of our top stories this morning, the showdown in the Senate over President Trump's self-described one big, beautiful bill. Republican lawmakers looking to push that bill over the finish line ahead of their self-imposed Fourth of July deadline. Leadership's looking to keep the party united through what's expected to be a lengthy debate process. NBC's Alice Barr joins us now from Washington with the very latest on this developing story. Alice, good morning. Good to see you.

Good morning, Frank. Good to see you. Well, all but two Senate Republicans backed the bill in a procedural vote over this weekend. Democrats are doing everything they can to slow it down, forcing the Senate clerk to spend 16 hours reading the full text out loud, looking to make every detail public.

Today, one big debate on President Trump's massive domestic policy package known as the One Big Beautiful Bill. This morning, senators starting a voterama when they can offer unlimited amendments to change the bill before a vote on final passage. Democrats making their objections clear late into the night. This legislation is the most significant attack on the health care needs of the American people.

in our country's history. The bill includes cuts to programs like Medicaid that the nonpartisan Congressional Budget Office estimates would cost more than 11 million Americans their health care. Republicans argue changes like new work requirements will make the program stronger in the long run. We want them to be safety nets, not hammocks that people stay in, but getting people on their feet.

Republican Senator Tom Tillis opposes the Medicaid cuts and on Saturday voted against a key procedural vote, though the bill still advanced 51 to 49. On Sunday, after scathing criticism from President Trump, Tillis announced he won't seek re-election, asked if there's room in the GOP to disagree with the president. If you have the courage to, and if you don't, there isn't.

Democrats also objecting to extended tax cuts, part of why the bill is expected to add more than $3 trillion to the deficit over 10 years. Using fake math and budgetary hocus pocus to make it seem like a gargantuan tax break for billionaires is going to cost virtually nothing. That's insane. Republicans largely lockstep. It's going to make us all more prosperous. Looking to press ahead with the Trump agenda. It is a quirk.

There is very little margin for error here, and we're expecting to see amendments from senators in both parties. Republican Susan Collins saying she is leaning against final passage without substantial revisions as President Trump urged cost cutting Republicans not to go too far. Frank, you know, Alice, that's very interesting. The president saying to Republicans, don't go too far, kind of implying that there's some political risk when it comes to going too far when it comes to spending cuts. What else are we hearing about that?

Yeah, specifically the Medicaid cuts are something that President Trump has said he doesn't want to see happen. But there are also the fiscal conservatives who are saying there's not enough money here to make up the deficit that we've already been talking about being added to the deficit we've already been talking about. And they're pressing for more cuts here. And that's a central tension.

One other senator who's been speaking on this, Josh Hawley of Missouri, he said he's going to vote for the bill, but he does have serious reservations. And he said that if we want to be speaking about Republicans, the party of the people, working class people, then we have to deliver for working class people, urging his party to do some soul searching.

All right, Alice Barr live in D.C. Alice, good to see you. Turning back to the markets, progress in Washington on the president's spending bill, removing a major overhang for stocks. The Dow sitting just below an all-time high, just about 3% away. Joining me now, Drew Pettit, director of U.S. equity strategy at Citi. Drew, good morning. Good to see you.

Hey, good morning, Frank. Happy Monday. All right, so we're just about at the halfway point of the year right now. The start of the second half actually starts tomorrow. And you sent us what's your S&P 500 year-end targets. Now, I thought this was pretty interesting. Your base case, you gave us a bull and a bear case as well, but your base case is 6,300. That's just about a 1% rise from where we're at right now. Why only a 1% rise? I mean, what do you see happening? What sectors do you see moving higher, perhaps moving lower? Does everything just move sideways?

Yeah, look, here's the thing. You can get to 6,300 with everything not moving sideways. We're still really optimistic on growth. And honestly, that's tech and communication services here. We don't really love the cyclicals or even the defensives. But why 6,300? Because that's fair value when we look at the earnings growth opportunity for the S&P 500.

What's happening now with sentiment getting stretched, you're kind of adding some extra points to what is fundamentally justified. That's why we have the bull case of 7,000. If cyclicals kick in, if people feel even better about alleviating some of this uncertainty, that's how you can have an overshoot of fair value for the S&P 500 at a price level.

All right. Let's get to the areas that maybe you're a bit more bearish on, because just as you said, you know, some things can go up, some things go down. What do you see potentially being under pressure for the rest of the year if we go back to your base case again of 6300 for a year on price target on the S&P?

It's heavily consumer and heavily cyclicals. So consumer staples, not a lot of margin wiggle room if anything goes wrong. Even trade down for a lot of those companies is going to hurt your earnings power. Consumer discretionary, you might have to really wait to see rates move to get...

increase spending on that side in industrials and materials if there's any slowdown in global trade or just delays in global trade as we try to get through a lot of these trade deals. All right. I want to go to your bear case as well. Your bear case is 5200, a pretty sharp drop from where you are at all time highs. I want to play the soundbite from Raphael Bostic, the Atlanta Fed president, speaking to our colleagues in Europe about tariffs. And I want to see how tariffs potentially factor in to your bear case.

The textbook story for economics is if you do tariffs, it's a one-time shift. It happens quickly. What we are seeing today, though, is not just a one-time shift. It's actually something that's being stretched out over a much longer period of time. I think that runs the risk that people start to feel like inflation is always with them. This elevated level of inflation is always with them. And that then runs the risk that there might be some structural changes that businesses and consumers, for that matter, make.

So, Drew, how concerned are you about inflation overall and just the impact of tariffs when it comes to that? Yeah, it's funny. It's actually not an inflation concern from us from an equity standpoint. It's a margin concern. So what's interesting, when he's talking about inflation being a structural problem or a headwind, that's kind of what would happen with margins if we have massive input price increases.

So if we're going to reset margins lower, that's going to put more pressure on companies to be more productive and find ways to grow earnings. So, yeah, secular trends and growth totally get that. But again, cyclical is where we're concerned. It's it's that structural dent to margins that gets you to a more bearish scenario for the S&P 500 and a lot of its underlying companies. All right. Drew Petter from Citi. Good to see you. Thank you very much.

We've got a lot more to come here on Worldwide Exchange, including the big buzz in one critical corner of the market that's got names like Steve Cohen and Dan Loeb joining in, plus reports of a big insider sale at NVIDIA. And then later, looking ahead to the second half of the year, J.P. Morgan's Joyce Chang, she's here. She's going to lay out her team's key themes and price targets that you need to watch. We have a very busy hour still ahead when Worldwide Exchange returns. Stay with us.

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And welcome back to Worldwide Exchange. Big hedge funds are reportedly making a bigger push into private credit. The FT reports that Dan Loeb's third point, Steve Cohen's .72 in millennium management, they're all launching new funds and strategies around the space. The FT also reporting that Meta is turning to private credit to raise $29 billion to fund its build out of AI data centers here in the U.S., holding talks with Apollo, KKR, Brookfield, Carlyle, and PIMCO. They've all declined to comment about that to the FT.

An interview with The Wall Street Journal, Sixth Street CEO Alan Waxman, a pioneer of private credit, says his publicly traded rivals such as Apollo and Blackstone have become factories, turning out deals with little consideration of their long-term prospects, potentially ruining what he calls private credit's golden era. For a closer look at private credit, we're joined by Shundron Thomas, founder and managing partner at the Copia Group, which provides debt and equity capital solutions to private companies. Shundron, good morning. Thank you so much for joining us.

Good morning, Frank. All right. So, I mean, is this the golden age of private credit in your mind? Right now, you work with a lot of middle market companies. What are you seeing when it comes to this, the landscape and what's your outlook for the back half of the year?

Yeah, I think that's a great question because what we're really seeing actually is an evolving private credit market. And so in the comments that you made and even the kind of firms that you're referring to, they tend to focus on what we would know as the upper end of the private credit market. And so the private credit market is not a monolith. We're talking about private companies that maybe begin with $5 million in revenue,

all the way up to a billion in revenue. So you can appreciate there is a wide variety in those firms. For example, rather, as you refer to at the Copia Group, we're focused on direct lending to private companies in that lower echelon of companies, so the $5 to $150 million range. And again, what we see there in terms of not only the return characteristics in that part of the market, but also even the type of companies that we invest in and with in their behavior, it's quite different. All right.

All right. You gave us a forecast. I would imagine you probably got this forecast from Prequin or somebody like that. But right now, the private credit market's 1.7 trillion. You see it going up to 2.8 trillion in 2028. What's the catalyst? Where are you getting this visibility from? I mean, it seems like the growth of private credit has been largely due to tightening of lending by big institutional lenders and also an increase in interest rates. So do you feel like interest rates stay elevated over that time? I mean, what's the reason that you think we get to that 2.8 trillion? Yeah.

So there are a variety of things that are driving the growth in the private credit market that I actually think from a secular standpoint will continue. So first of all, really over the last decade plus, what we've seen is the structural shift in lending moving away from what we would call traditional banks like money center banks and regional banks into the private market, some of the firms even that you refer to.

And that shift has largely taken place. But what's happened is the overall amount of commercial credit we're seeing over that period of time hasn't changed much. Now, if you flip to the demand side, while you've seen institutions moving into private credit, on the larger side, you're seeing smaller mid-side institutions. And we're on the earlier phase of the shift that I think you'll continue to see in high net worth investors or private investors. So think about

demand structurally fueled by not only the kind of clients that are coming in, but the quantum of that. The very last thing I would mention in terms of what will fuel that continued growth isn't that evolving I talked about in the type of strategy. So again, much of what we've seen in private credit is what we would call senior-back lending. So think about large companies, even public companies like

meta, tapping the market. Again, you refer to that. But now as we see specialty finance and as we see growth in other asset classes, as we see growth in specialized strategies like we're pursuing, again, you're going to see other types of borrowers accessing the market and tapping into that secular demand that I tell you about.

All right. I want to come to what may be a pressing question for a lot of our audience. What about private credit when it comes to retail investors, accredited investors? What's your point of view? So last week, BlackRock came out with a white paper saying they're going to launch some target funds for 401ks, where private credit would be like 5%, potentially 20% of that fund to kind of get into a 401k. You come from the equity space. You're a former CEO and president of Northern Trust. What's your view on private credit when it comes to accredited investors, retail investors,

and also retirement accounts.

I think this is a very important question because we're always taking risk and you want to make sure as an investor you're getting compensated for the risk you take. The short answer I would say is this. To the extent investors are working with very competent investment advisors and they're tapping into that expertise and the way that they access those strategies, private credit can have a role in the portfolio. But again, we're talking about a more relatively illiquid investment.

We're not talking about investments like in the public market where you have ready access to lots of information. So I do get concerned when I hear more and more about

quote unquote, retail type strategies where they're not even tapping into what we would know as the illiquidity premium that exists in private credit. And so what I would say to you at the end of the day is all credit is not created equal. And certainly we have to be very mindful when we say more retail dollars are coming into private credit if we're not doing that in a prudent way with strong underwriting and good advisors.

What about the success of some of these funds? I mean, do you see them actually being successful? Because one of the issues with them are the high fees. I was actually talking to Vanguard last week about ETFs, but there's some similarities. They gave me this stat that really blew my mind. Only about 2% of ETFs have an expense ratio of three basis points or less, and about 28% of the flows go into those. So it seems like retail investors, especially more educated, accredited ones, they want lower costs.

Well, I think what you're seeing, and again, I know the ETF market well, many strategies are quote-unquote more commoditized. And what we mean by that is they're tapping into parts of the market that don't offer a lot of diversification, a lot of variability, a lot of potential for risk premium. Now,

Now, broadly speaking, private credit can offer more of a range for that. But I think you will see a divergence in the market over time where you will see pricing come down on a relative basis for more commoditized strategy. In an efficient market, like what should happen, you'll see when you can truly capture alpha or excess return, those type of strategies will command, in a sense, the higher expense ratios or the higher costs. All right. Shondron Thomas from the Copia Group. Great to have you here. Thank you very much.

Always a pleasure. Still on deck here at Worldwide Exchange. We've got your big money movers and Delta back on track after a pretty rough weekend for a lot of its passengers. Stay with us. Much more coming up.

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Welcome back to Worldwide Exchange. Time now for your big money movers, NVIDIA executives and insiders. They've sold more than $1 billion in stock over the past year. SEC filings show roughly half of those sales have taken place this month with NVIDIA at an all-time high. CEO Jensen Wang started selling shares as part of a set trading plan this past week. Those are his first sales since September.

Delta Airlines says operations are stable following severe weather over the weekend. Delta canceled almost 600 flights on Saturday, or just about 15% of its schedule after lightning and hailstorms late on Friday brought traffic to a standstill in Atlanta, and that's the airline's busiest hub. Delta says it will reimburse certain expenses for passengers who were impacted.

And UBS is launching a buyback of up to $2 billion in the second half of the year. The moves part of the bank's plans to return cash to shareholders after the Swiss government proposed tougher capital rules for the company earlier this month. All right, coming up, mortgage rates looking to be coming off recent highs, but there's still some major red flags that are plaguing the U.S. housing market. Our Diana Olick is taking a closer look. We'll be right back after this.

We're trying to do hard things that should be done and have to be done. We're $37 trillion in debt. Medicaid has grown 50% in five years. It's about to take over Medicare. What we've done is limited the growth to 6% for two years, 4% after that, so Medicaid is not cut.

That was Republican Senator Lindsey Graham yesterday making the case for the Senate version of the one big, beautiful bill. The race to get that bill over the finish line for the party's self-imposed Fourth of July deadline will continue in just a few hours. Welcome back to Worldwide Exchange. I'm Frank Holland. Coming up, we're live in Washington with the latest on the key Senate Republicans in that vote and what this all means for your money. But first, we get you ready for the train day ahead. We begin this morning with the S&P 500 and the Nasdaq, both of them

at all-time highs along with the NASDAQ 100. Right now you see the Russell just about 12% off of its all-time high, the Dow within 3% of its all-time high. Taking a look at futures this morning, we're in the green across the board, a lot of green on this board. We're looking at the futures right now. It looks like the Dow would open up about 225 points higher. The S&P and the NASDAQ both up around a third to a half a percent, just generally higher in the pre-market. Want to take a look at the NASDAQ 100 pre-market leaders right now. Taking a look at some of those names, you see Palantir right here at the top of the list.

Up over 5%. Intel, Trade Desk, Meta, and Strategy running out your best performers. Then the other side of the coin, the NASDAQ 100 laggards. You see Fostinol pulling back about three-quarters of 1%. Tesla pulling back about three-quarters of 1% nearly. PDD Holdings, Xcel Energy, and CSX running out your worst performers.

on the Nasdaq 100 in the pre-market. Trade is back in the spotlight as Canada drops plans for a digital tax to restart its U.S. trade talks. Taking a look at ETFs that track the equities of some countries that we're in trade negotiations with. Right now, you see the Canadian ETF. It's up three quarters of one percent right now. The EWW that tracks Mexico also up right around three quarters of one percent. The EWJ and the INDA that track Japan and India, respectively, pulling back about a quarter of one percent. The MCHI that tracks China at

Pretty much flat right now in the pre-market. Quick check of Chinese tech companies in the pre-market as Badoo is expected to release an open source version of its latest Ernie Bot large language model today. It is a potential competitor for OpenAI. I spoke with Dan Eyes from Wedbush. He said it's not quite a deep seek moment, but it is notable. Take a look at shares of Badoo right now, pulling back just about 1%. Tencent pulling back nearly 2%. PDD down over a half a percent. Alibaba down about one and a half percent right now.

Gold's coming off a week where it lost nearly 3% on pace for a two-month losing streak after hitting its all-time high of 3,500 back in April. Take a look at where gold's at right now. You can see it's up fractionally. But over recent weeks right now, you can see right here it's down about 2.75% gold under some pressure. But remember, it did hit its all-time high back in April.

Also, again, the bond market this morning with the one big, beautiful bill passing a key procedural vote. Republicans are aiming to get it passed this week. The Congressional Budget Office forecasting it would increase the U.S. interest expense by 700 billion and add nearly one trillion more dollars to the U.S. deficit over the House version of the bill that passed. Take a look at the bond market. No reaction, at least not right now. But we have seen bond vigilantes react to legislation that would increase the deficit. Right now, you see the benchmark at four point two five percent.

We also want to take a quick check of the early trade over in Europe.

Take a look at the stocks. You can see it pulling back just fractionally right now. The best performing, Boris this morning, that's the DAX, but you can see it is fractionally lower. Down here, the FTSE, the worst performer, also fractionally lower. So not a lot of movement over here. Pretty muted start to the trading day over in Europe. Also, look at a number of stocks in the U.K. getting a boost as the trade deal with the U.S. takes hold, slashing tariffs on U.K. car exports to the U.S. and removing tariffs on the aerospace sector, a 25% tariff on British steel. That

That remains in place, but negotiations are ongoing. You see Babcock International Group, one of your best performers right now, up just about three quarters of one percent. Rolls Royce, big aerospace company, up about one and three quarters of one percent. All these stocks kind of moving on that trade deal and also the idea of tariffs being reduced.

Also, a mostly positive session across Asia. The Hang Seng, really the outlier. You see the red right here on the board pulling back about three quarters of one percent. The Nikkei 225 up about three quarters of one percent. The Shanghai Composite up over a half a percent. The South Korean Kospi also up over a half a percent.

All right, that is your setup. Now we want to turn our attention back to Washington and one of our top stories this morning. Senate Republicans are racing to get the president's tax and spending bill over the finish line ahead of their self-imposed 4th of July deadline. GOP leaders looking to lock in support ahead of a key vote that starts later this morning. Emily Wilkins joins us now with the very latest on this story. Emily, good morning.

Good morning, Frank. Well, yeah, that Trump mega bill is on track to potentially pass the Senate. It could be as soon as today, might slip in tomorrow. But as you noted, over the weekend, the Senate had a very dramatic vote, narrowly agreeing to a procedural motion. And you saw two senators, Senator Rand Paul and Senator Tom Tillis, vote against that. Now, Tillis announced shortly after that he would not be seeking reelection. He also slammed the bill for its cuts to Medicaid.

Now, there's an updated version of the bill that was released over the weekend. It's made several changes. One of them includes that SALT cap that keeps that $4,000 limit on state and local deductions, but only until 2030.

Medicaid cuts are also back in the bill, and that includes a cap on the provider taxes that states charge health care providers. That was a major pay-for in the bill. And wind and solar projects now have a shorter runway to qualify for tax credits. Plus, they're going to be subject to an additional tax

if the projects have parts from China. Now, the move shocked the industry and others, including Elon Musk, who called the provisions "truly insane and destructive." He posted on X that it gives handouts to industries of the past while severely damaging industries of the future.

The current version of the Senate bill is expected to add $3.25 trillion to the debt over the next 10 years, although Senate Republicans are using a budgeting trick to calculate the cost of the bill as actually reducing the debt by $500 billion.

That is not flying with fiscal hawks in the House, though. The House Freedom Caucus tweeted that the Senate bill violates the agreement that they struck to pass the bill to keep the debt increase low. That could spell trouble in the House once this bill clears the Senate. The Senate first, though, has to complete votes on dozens of amendments from Republicans and Democrats

It processes that will start today at 9 a.m. and it could well run into Tuesday. We're just going to have to see when they run out of steam and actually go for the final vote on the bill. Frank? Yeah, I think a lot of anticipation to see exactly what happens as that gets read out and some of the political wrangling behind the scenes. So in addition to Rand Paul and Tillis, who are the other senators to watch for when this vote happens?

We definitely keep an eye on Susan Collins of Maine. She did indicate that she would be supporting that motion to proceed vote over the weekend, but hasn't said yet how she's going to vote on the final bill. She's had a couple of concerns when it comes to Medicaid. I would also keep an eye on Lisa Murkowski of Alaska. There were a couple provisions they put in the bill to actually benefit Alaska.

But those seem to have been struck at this point by the parliamentarian. We'll see if Republicans can quickly rewrite them, maybe get them back into the bill in some form. And then again, Josh Hawley, he said he'd support the bill despite some of the cuts to Medicaid. But there is another amendment that could cut Medicaid even further if it was able to pass. And so it will be interesting to keep an eye on him as well.

Emily Wilkins live in D.C. Emily, thank you very much. As the Senate works to advance that tax and spending bill, a number of solar stocks are getting hit ahead of the open. The Senate's bill not only cuts incentives for clean energy projects, but also includes a tax on projects that come online starting in 2027 if they haven't detangled their supply chains from China. The global renewable ecosystem relies very heavily on China, first solar being spared from the selling likely due to its large sourcing here in the U.S. All right.

All right. Coming up, laying out the market landscape in the second half. J.P. Morgan's Joyce Chang is standing by her outlook for stocks over the next six months. Plus, the sector she says investors should be putting their money to work in. That's coming up next. Welcome back to Worldwide Exchange. Regardless of the projected increases to the U.S. deficit, the likely passage of President Trump's spending package in the Senate this week removes at least one critical unknown from Wall Street's wall of worry for the second half of the year.

Among them, President Trump's July 9th tariff deadline, one he says he has no intention of extending. Second quarter earnings, which kick off in just a couple of weeks with the big banks and valuations following the monster stock rally from the April lows to where we stand today at 22 times toward earnings for the S&P from less than three months ago. Back in April, that was only 18 times. Also, we got the Fed with interest rate traders down.

Still counting on no move in July and a quarter point cut in September. Join me now on all this in our second half outlook. We have Joyce Chang, chair of global research at research at J.P. Morgan. Joyce, good morning. Thanks for joining us.

So we kind of hit us some of the worries. What do you see as the potential upside? Like what could actually move the market higher right now at highs? Can we keep going? I mean, we had our someone from Citi kind of give us their S&P price target with like a 1% increase the rest of the year. What's your view? We're still at around 6,000 for the S&P 500. So I think you're in a range here. You have slower growth coming and we think higher inflation. But you also have that there's been very steady retail demand and buybacks.

I mean, we've been looking at $7 billion to $8 billion of demand daily.

into equity markets. So the technicals could still squeeze this higher, but we're on a stagflationary tilt here. So I would just be careful on calling for a much higher market here. You know, I had to just check. You said 6,000. So you see the market pulling back quite significantly in the back half of the year. I think you will get the slowdown. Now, we've had a lot of front-loading, a U.S. import surge, but we're still looking at an effective tariff rate that's 14%. That's a $400 billion tax.

You know, it's funny. I spoke to Gene Sirocco from the port of L.A., Long Beach, yesterday. He did say that import volumes are slowing down. So we are starting to see that. Not clear if that's because of front-loading and people have what they need or just they're kind of concerned about tariffs. Not really clear there. We also heard from Rafael Bassik, Atlanta Fed president, speaking with our European colleagues this morning. I want to play a soundbite from him when it comes to tariffs and get your opinion.

The textbook story for economics is if you do tariffs, it's a one-time shift. It happens quickly. What we are seeing today, though, is not just a one-time shift. It's actually something that's being stretched out over a much longer period of time. I think that runs the risk that people start to feel like inflation is always with them. This elevated level of inflation is always with them. And that then runs the risk that there might be some structural changes that businesses and consumers, for that matter, make.

So it sounds like you two see things similarly, a potential stagflation environment with higher inflation due to tariffs.

With that in mind, if the tariffs create stickier inflation, what parts of the market actually work? Because it doesn't sound like you think everything goes down. It sounds like there's different parts that work and different parts that just don't work. Well, I do think that the term premium here is going to stay elevated because of the fiscal debt, the one big, beautiful bill. But GDP growth, we think it's going to slow down to subtrend. So looking at going from the fourth quarter, we're around 2 percent, going to 1%.

1.3 percent, still a one in three chance of recession here. So I think that, you know, when you're taking a look at the sectors, look at, I mean, certain things like aerospace and defense are going to do well. But we still think that you should be more in consumer staples, utilities, you know, real estate here. And I think the international markets could continue to outperform here. So you're mentioning aerospace and defense. A lot of talk about that in recent weeks, obviously, just because of some of the geopolitical tensions.

I want to show a chart. If you look at the European Aerospace Defense ETF, the EUAD, compared to the ITA, one that we tracked really here, they're trading pretty closely since then. You can see that they're pretty much neck and neck right now. We also heard from the European Commission president. Our European colleagues spoke to him saying that some of that spending that they're doing there is going to go to U.S. companies. So with them kind of neck and neck right here, which sector seems more attractive? Is it U.S. defense stocks? Is it European defense stocks? I'm going to ask you about emerging markets,

developed markets and U.S. stocks going ahead, but just specifically when it comes to defense, which one seems more attractive from here? I think that in Europe you also have to take a look at the currency. I mean, we still see the weaker dollar here as well and that euro is going to do better here because a lot of this...

fiscal spending will be more front-loaded. So I still think that there's a reason to look at Europe right now, just given that what they are doing at NATO is historic, even though it's going to play out over a period of time on the defense spending.

What about the bond market? With the one big beautiful bill passing, are you expecting to see bond yields move to the upside? And does that upside move create competition for equities that also puts pressure on them? I mean, there's always some crowding out when you look at where yields are at in the U.S., but I think that this is one area where the fiscal considerations are in some ways even like...

outweighing some of the monetary policy effect that could come into play. So I look at term premium to remain elevated here. It's not just the fiscal deficit. It's also what the Treasury funding needs will be. And we think that's covered for this year. But we see beginning in 2026,

about a five trillion dollar gap that begins to emerge when you look through the rest the deck we gotta go on just by a special one more thing your gold outlook you see go get a 36 75 IQ for about 11 percent upside from here so why are we just all invested in gold why we waste our time with these equities mean we talk about you recession risk stagflation risk I mean gold is still a very good hedge

And, you know, we've done a hypothetical and granted it's just a hypothetical. But if you did just a half a percentage point increase in the gold holdings over the course of the next four years, I mean, you could be looking at gold prices that could go hypothetically all the way to six thousand. Now we're thinking four thousand next year, but it's still a good hedge to have given the uncertainty in play. Joyce Chang, always a pleasure. Thank you so much for coming in. Good to see you.

All right, coming up here on Worldwide Exchange, potential new red flags for housing. Our Diana Olick lays out the fresh worries facing the sector and a growing list of challenges. We're going to be right back after this. Stay with us. Welcome back to Worldwide Exchange. Mortgage rates are starting to tick lower following a seven-week low this past week, but there are still some concerning red flags in the mortgage and the housing markets. Our Diana Olick is here with more. Diana, good morning. Good morning, Frank. Yeah, I want to talk about mortgage delinquencies. They're still historically low because so many homeowners are sitting on so much cash.

cash. Home values are up over 50 percent in the last five years. Still, delinquencies began to rise recently on FHA loans, which are generally used by lower income borrowers. And now we're seeing a bigger problem in May, a significant jump in the early stage category of mortgage delinquencies. That's your 30 to 59 days past due. And this, according to a new report from Vantage Score.

They rose from 0.92% in April to 1.03% in May. So not huge, but an early indication of financial stress among borrowers. And what's more concerning is that these delinquencies were led by borrowers in the near prime

prime and super prime segments. That is the least risky borrowers with the highest credit scores. And that suggests that this short-term financial stress is possibly beginning to affect even them. Subprime late payments, those are the most risky borrowers.

They actually fell. Now, for a broader picture, a separate report from Ice Mortgage Technology looking at the overall delinquency picture showed them rising 5.2 percent in May year over year with the most serious delinquencies, that is, those more than 90 days past due, up 14 percent. Again, delinquencies and foreclosures are still at very low levels. But as more consumers face financial challenges and as it gets harder to sell a home, which it is right now, these numbers could get worse. Frank?

Oleg with the latest in the housing market. Diana, always a pleasure to see you. Thank you very much. All right. Coming up here, Worldwide Exchange kicking off the week with some fresh record highs. Futures are pointing to new highs on tap for both the S&P and the Nasdaq. We got David Zervos and Jeffrey standing by digging into whether the market's renewed momentum can continue in the second half of 2025. Stay with us.

As we close on the 6 a.m. hour, a check of a few big stories we're following. President Trump telling Fox News he's found a buyer for TikTok's U.S. operations, which he says are a group of wealthy people. The president says he's going to reveal their identities in about two weeks, and the deal would likely need China's approval. Sticking with China, manufacturing activity there contracted for a third straight month in June, despite Beijing's ongoing stimulus efforts. The reading on PMI did show a slight improvement from May's reading, however.

SEC filings show NVIDIA executives and insiders have sold more than $1 billion in stock over the past year. Roughly half of those sales have taken place this month with NVIDIA at an all-time high.

We're watching shares of the big banks this morning, mostly higher after clearing the Fed's annual stress test. The results clear the way for the banks to distribute capital via dividends or buybacks. And F1 racing to the top of the box office, pulling in $55 million North American, $144 million worldwide. The movie, which is produced by Apple, is seen as a test of the tech giant's strategy to release films in theaters before they appear on Apple TV.

Well, the Bulls are out in this final trading day of the month, second quarter and first half of the year, with investors watching developments on the trade front and the tax bill that's moving slowly through the Senate. With that, let's bring in David Zerbos, chief market strategist at Jefferies, as well as a CNBC contributor. David, good morning. Always a pleasure.

Good morning, Frank. All right. One big, beautiful bill making its way. We're going to continue to see it go to the floor today with a reading. What's your perspective? What it means for equities and also for the bond market? Do you expect the bond vigilantes to react to some of the deficit increasing measures here?

I don't, Frank. I think we're well past that. I mean, everybody's been looking for a reason to get nervous. And every time they do, they regret it a week or a day or a month later. So I think we're in a very exciting place. We've had this administration have some pretty big wins in the last

five to ten days, some of their biggest wins over the course of this administration since inauguration in January and really since the election back in November. And the market's adjusting to that. The market likes what it sees on trade deals. The market likes what it sees on the Tax Cut and Jobs Act. The market likes what it sees on deregulation. And the market is telling you a little bit that the next –

The crosshairs are really kind of next getting set on the Federal Reserve. And that I think the next tailwind for markets is probably coming from more expectations about rate cuts into 2020. Can I also go to what we're hearing from J.P. Morgan? They're telling us they see the market pulling back, the S&P going down about 6,000, about a 4 percent decline from here. What is your second half outlook specifically for the equity market?

It'll probably be a lot like the first half, but stronger in equities and maybe a little less strong in the rate side. The rate side did a lot of heavy lifting. We saw more rate cuts get priced in to 2026, 2027, a pretty significant move in the belly of the yield curve.

to the tune of about 70 basis points. I think we'll have a little less on the rate side. Maybe we can get 10 years down toward that 4% level and maybe through it by the end of the year. But I think equities are going to have a double-digit second half. All right. You mentioned the Fed. We heard from Rafael Bostic this morning. He spoke to our European colleagues. I want to get your take on what he said about tariffs and the inflation impact.

The textbook story for economics is if you do tariffs, it's a one-time shift. It happens quickly. What we are seeing today, though, is not just a one-time shift. It's actually something that's being stretched out over a much longer period of time. I think that runs the risk that people start to feel like inflation is always with them. This elevated level of inflation is always with them. And that then runs the risk that there might be some structural changes that businesses and consumers, for that matter, make.

All right. So, David, coming back to you, are you concerned all about a potential stagflation situation, slower growth, higher inflations and also maybe businesses pausing some activity due to tariff uncertainty?

I am not, Frank. I think that's actually the wonderful news that the market is pricing some of that stagflation. I think positioning is absolutely terrible, particularly after April and May, and that a lot of people are going to have to get stopped back in to a much more Goldilocks outcome rather than the stagflation outcome. But I like that people out there in the market have got themselves twisted up because that just means they have to climb the wall or eat back into the trades that we've been recommending at Jefferies. So I

I love Rafael. He's a very talented economist.

I think a lot of the folks at the Fed have gotten themselves and around the FOMC table have gotten themselves very twisted up on this tariff story. And they're reading textbooks. They're not reading markets. And the markets are telling you that people do not have significant changes in inflation expectations based on tariffs, whether you look at the tips market or even start to look at some of the crazy survey data that went a little loopy for a while. It's all telling you that people think this is very temporary. And if it even has

any impact at all. So with that, give us the sectors you think leads us higher in the second half of the year. Well, you know, I'm not a big sector guy. I'm the macro guy. So I'll stick with

my risk parity style trades. But I do think financials have quite a lot of room to run. And I'm very optimistic on deal flow and just a sort of deregulatory story that starts to hit both the energy sectors and the financial sectors. I'm not sure that the energy dereg is going to be that great for the energy sector. I think that's more going to be a benefit for the consumer. But I think the financial side really has room to run, Frank. I think there's a story here with the SLR, what the

Fed's doing. I think the administration is very keen on kind of wrestling some regulatory purview back into back into the administration's basically area. I think they really want I think they really want to see like you open the show. You know, they want to see a tick tock deal. They want to see deals. They want the activity. And I think they're going to get it. David Zeros, we got to leave the conversation there. David Zeros from Jeffries. Thank you for joining us as always. You have a great day.

Always a pleasure. Here's what to watch on this holiday. Short and trading. We've got a few things to watch. A number of economics reports, including the monthly jobs report being released a day early due to the 4th of July holiday. We're also going to hear from Fed Chairman Jay Powell at the ECB's forum in Portugal. That does it for us. You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.

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