J.D. DURKIN: Good Friday morning, subscribers. The one and only Bob Lang joins me once again for his reaction now that we finally at long last have that all-important Fed decision as well as this morning jobs report. Bob, good morning. Thank you for being here.

I do want to follow up first on our conversation from last week and I had all about the S&P. At least we're talking now the S&P currently held firm above that 4,100 level and now quite a bit more as we're having this conversation. You've been watching these numbers closely. How are you feeling, Bob, about this market right now? And what are you watching next?

BOB LANG: Well, it's really been a really nice oversold rally here. Last Friday, just go back a week from a week ago, we were pretty oversold. And now we're just to the opposite end. We're really overbought here right now. A huge rally off of those lows, J.D. , from 4,100. Close to 260 handles on the S&P 500. That's unprecedented in a five-day period.

So, again, we've gone from oversold to overbought. Now, does this mean that the coast is clear and we're into a new bull market? Probably not yet. You got to see a trend develop. And a trend of higher highs and higher lows is something that we look for. These V bottoms that we actually haven't had recently, but we do have here over the past couple of weeks, are a little bit concerning because it requires a lot of short covering people who have been short the market for quite a while, they come in there and step in and start buying.

And then other buyers come in and start piling in and you get some sort of a drift up like we've had in the past three, four days. So I think it's important to hold that 4,100 level that we talked about last week, J.D. . But as of right now, 4,400 was a level that S&P 500 couldn't penetrate more recently back to the beginning of October. So that's going to be the test to the upside.

J.D. DURKIN: So Bob, a quick follow up here. Even if we are overbought, as you indicate, do you take solace knowing that the S&P is no longer below at least the 200-day moving average? At least as of right now, we're above it, and above it by quite some margin.

BOB LANG: Yeah. And so that 200-day moving average is a market that we talked about last week, J.D. , is the fact that big institutions look at that moving average as an important place where they decide to make important investing decisions. And so the big investors come in and start supporting the market at the 200-day moving average. It gives us much more comfort in knowing that level is going to hold on another test back down to that area.

But as it is, what I'd like to see is a series of higher highs and higher lows. So as we reach an overbought reading, as we are in right now, I'd like to see market pull back to somewhere between that low of 4,100 and wherever the crest is going to be before we start pulling back. I don't if it's right now if it's 4355 or 4360. If we make a higher low somewhere in between there in the next four to seven days and we start heading right back up again, then I'm going to be convinced that we can go much higher.

J.D. DURKIN: All right. I think a lot of people like to hear that. OK, let's turn to the Fed because at this point, it feels like many news cycles ago. It was just a couple of days ago. Chair Powell said financial conditions have tightened, of course, but the Central Bank remains committed to achieving its inflation target, 2%, of course, as we know. And the Central Bank, he also said, would take a, quote, "meeting by meeting approach" to its decisions, largely in line with what he said for some time. Bob, you have said that you are going to be focused less on the decision, more on the language that Chair Powell used this week. What did you hear in that language?

BOB LANG: Well, J.D. , I thought they were going to say and Chair Powell repeat that financial conditions are too tight a few times. This is what he said about two weeks ago, which caused the markets to really stumble and come back down. We lost about a good 8.5% in the S&P 500 in a very short period of time based on those words of saying that Powell was adamant about the market conditions not being tight enough.

Well, he flipped on that. And he said that-- he actually asked the question out there, are financial conditions tight enough now? And he didn't say yes or no. But he sort of implied that maybe I was wrong and maybe financial conditions are actually pretty tight at the current pace. And what is the importance of that? So basically, the importance of being tight with money and credit and liquidity is the fact that money is not flowing into the stock market. We see interest rates on the rise as well too.

And it just doesn't create good conditions to invest your money in regardless of what earnings are coming in at. And, actually, earnings are coming in fairly strong for the markets this past couple of weeks, this week being the largest week of reporting companies so far from the S&P 500. So I would say, basically, the few words you know that the Fed came out and said this week put in doubt minds of those who thought another hike was coming along. And of course, the market is going to have to deal with higher for longer.

Powell stated that, J.D. , in no uncertain terms that that was the Fed's playbook. And futures market right now trying to price in rate cuts in 2024. And of course, we talked about that last week as well. They were starting to price in rate cuts as early as June. It may be even the market's probably pricing in a little bit sooner than that even more cuts. I think the market was pricing in at about 55 to 75 basis points, which would be anywhere from two and three rate cuts in 2024.

I still don't think that the jury is out on inflation. I still think that there's a possibility that the Fed could raise interest rates again, although we do have an inflation report coming out in about two weeks, which is the CPI. Cleveland Fed nowcasting is only looking for about a 1.7% increase on an annualized basis for the month over month reading for October. So that's going to be an important reading that we get out in a couple of weeks. But basically, the inflation numbers that we saw yesterday, for instance, unit labor costs pretty strong because they were negative. Productivity, very strong. It was really positive. So I think the Fed is going to like those.

J.D. DURKIN: Yeah. You like to see labor productivity move one direction, those unit costs kind of move the other. That's exactly what we had yesterday, down that last metric, down 8/10 of a percent. That's a great point there, Bob, something a lot of technicians here at the stock exchange were very quick to point out yesterday.

Another phrase I've heard a lot already this morning here at the New York Stock Exchange, Bob, bad news is good news. Let's talk about the jobs report we got this morning. It saw October non-farm payrolls come in lighter than expected. Only-- I'm using this, air quotes-- only 150,000 jobs added for the previous month, playing to the current economic dynamic that the Fed is working with. What do you take away from these numbers today?

BOB LANG: Well, I think the fact that the numbers are not extremely volatile coming off of last month's very strong jobs report is a plus or a positive. The Fed is not looking for huge quick moves down in the labor force, meaning they're still seeing a nice tightness in the labor force, which is pretty much buoying the economy. We had a 4.9% print GDP first look last week for Q3.

And I think the Fed is really-- I think right now that this is a sort of jobs report that gives them some relief. And frankly, average hourly earnings are up a little bit. Still, the labor market shows some tremendous tightness. The unemployment rate ticked up a little bit. But it's just very, very small movement in the jobs market that seems to be happening right now.

And I think the Fed would prefer the slower movement towards a looser jobs market, meaning they don't really want to crash the economy. And if the economy was going to crash, J.D. , you'd be seeing negative job growth right now. And we'd see unemployment probably soaring every single month. But we're not seeing that right now. So I think the Fed is probably relieved that that's not happening.

J.D. DURKIN: All right. Let's talk Treasuries, Bob, while I have you. Buried in a very busy week for the Fed was the decision from the Treasury to slow the pace of its long-term debt sales. We talked about the difference between the short term and the long term. Bob, we've talked a lot about how important Treasury yields are in this particular market. What is the significance of this move? And what do you think it could mean moving forward?

BOB LANG: J.D. , at some point, the debt issuance is going to be large. I don't when that's going to be. It could be next month. It could be next year. Who knows? And I mean very large. Basically, they have to roll over maturities. And they have funding to pay for short term obligations for this week, next week, next month. They pay military salaries. They pay Social Security. Congress, they pay their own salaries and so forth and a lot of other bills that come due in a short term basis. So they have to roll over the maturities that come in.

And whatever their short-term funding needs are, just like as we are when we're families and we manage a budget, if our short-term needs are large, we have to borrow more money. So that was the concern this week, that the Fed was going to be issuing a lot of debt and creating a lot of supply for the buyers and the dealers out there who buy Treasuries. But that didn't seem to happen this week.

But, again, it's going to happen at some point in time. It's gonna surprise everybody. But I think the anticipation, J.D. , coming in this week that the expectation was going to be a very, very large refunding. The government said, well, you know what, we won't do it this week. We'll just keep pushing off our short-term obligations for a little bit. When nobody's looking, we'll go ahead and sell a lot of paper out onto the street.

But we can continue to run trillion dollar deficits. But how long can they go on? The government may be threatened with a shutdown in just a couple of weeks. And that's going to create a lot of chaos. And if that happens, well, what are we going to deal with? I think for right now, though, J.D. , we're just going to take things day by day.

J.D. DURKIN: Yeah. We're watching that date of November 17 in terms of a potential shutdown. Of course, a new-look Republican Congress. Very quick follow up on this, Bob, if I can-- obviously, the emphasis for the last year and a half, understandably so, has been on Jay Powell at the Fed. Do you expect much more of the conversation to shift over to Secretary Yellen over at the Treasury given the fact that the Treasury's biggest buyer of the last few years, the Fed, has now gone missing?

You don't necessarily have the interest in Treasuries from countries abroad on top of the Federal deficit, $1.7 trillion for the last fiscal year. I mean, my goodness, Bob, it really seems as if the emphasis should be a lot more-- correct me if you think I'm wrong-- on the work of the Treasury and the really uphill battle it seems as if Secretary Yellen and her colleagues there have.

J.D. DURKIN: Yeah. I think there's something out there, J.D. , that really will help the government. And it would be lower interest rates. We've seen rates fall from the last couple of days. The 10-year yield has dropped to about 5.5% now. It was up near 5% last week. So we've had a pretty sharp drop in interest rates, which means that there's some interest and some demand for buying bonds. And as long as that continues to hold up, J.D. , you can have some enormous amount of supply out there. And as long as there are dealers out there at the auction to buy bonds, then it shouldn't be a problem, even in the absence of the Fed, even in the absence that we talked about last week.

The Chinese are selling bonds. They're a net seller of bonds and have been for a couple of years. US Treasuries. Even with the absence of those buyers, I still think there's some interest and some not so much speculation, but there's some interest in demand to buy bonds. So even as interest rates start to slide, if the market is starting to see less inflation down the road, we're going to see the long end of the curve starting to pull down. And eventually, the Fed will be pulling down short-term rates.

J.D. DURKIN: All right. Well, speaking of China, if we can quickly hit this, let's talk Apple. We've talked a lot about how the Magnificent Seven, Bob, disproportionately weighted in the market, the S&P 500. Apple alone is 7%. In your decades of experiences, Bob, is it a problem that one stock can be so market moving?

BOB LANG: Not really. Listen, I think about this a lot, J.D. . And you have to ask yourself this question. Who is the biggest, most important investor in Apple today? I'll let you answer that question. You tell me.

J.D. DURKIN: The biggest investor in Apple today? I don't know, Bob. Who's the biggest investor in Apple today?

BOB LANG: None other than Warren Buffett. Warren Buffett. And so I think down the road I think Apple is not going to disappoint this guy. I mean, he's in his 90s, right. But he's one of the most successful, if not the most successful, investor in the history of the world. And this guy is not going to have 40% of Berkshire Hathaway in Apple stock knowing that they're going to disappoint.

So I think the way that Apple works, J.D. -- my point here is this, is that they know how to manage investor expectations. They know how to manage their market. They know how to manage how they're going-- they have an enormous market share with the iPhone. They have some good market share with iPads and some other watches and so forth.

So they know how to manage their product. They know how to manage around the consumer. And, again, the most important thing is being able to manage investor expectations. So they're not going to take a major hit to the stock from one quarter to the next. I mean, if things happen where the economy blows up, I guess everything's on the table there and all bets are off. But for the most part, I think that they have to respond to the biggest investor out there. And that's Warren.

J.D. DURKIN: There we go. All right. A jam-packed session, Bob. Thanks for taking all that time and answering all of those questions with professional context as always, my friend. Have a great weekend. Thanks for joining us.

BOB LANG: Have a wonderful weekend. Great to be with you, J.D. .

J.D. DURKIN: All right, brother. You too. Members, as a final programming note to all of you watching at home, our next live call kicks off Wednesday at 12:00 PM Eastern Time. We are so looking forward to seeing all of you then. Until then, happy trading. Have a great weekend. We'll see you again soon.