Bryn Talkington said that in every midterm year since 1962, the market has fallen about 12% to 13% between the end of August and November 4th as a median, and that investors should expect it again this year.
The usual advice in a drawdown is to wait for clarity. Both panelists said the opposite: Talkington would sell call options and dollar-cost average into the weakness, and Chris Harvey would use any post-CPI rally to take risk off first and buy back lower.
"But since 1962, in every midterm between the end of August and November 4th, we've had about a 12 to 13% drawdown as a median."
Harvey is CIBC's equity strategist and a CNBC contributor; Talkington runs money at Requisite Capital and has been trading options around this setup for several cycles.
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Here are the 5 calls that matter.
👤 Guests: Chris Harvey of CIBC, a CNBC contributor, and Bryn Talkington of Requisite Capital
🎙️ Host: Scott Wapner, a co-anchor of CNBC's Closing Bell
📰 Published: 10 September 2026 on CNBC's Closing Bell
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 6 min
Key Takeaways
Harvey says a hot CPI print gets the hike and anything cooler makes it very hard to justify
If they hold anyway, he expects the bond market to react badly
He thinks Warsh removed his own optionality with how hawkish he was at Jackson Hole
Talkington's median midterm drawdown since 1962 is 12-13%, and over 95% of those were good entry points
Long-dated municipal bonds now yield well over 7% on a tax-equivalent basis, which she says should pull cash out of money markets
Harvey would sell a CPI-driven pop rather than chase it, and is looking at communications and the alternative asset managers
1. Hot CPI Or No Hike
Wapner put Jeremy Siegel's call for a hike to the panel first.
Harvey made the decision conditional on one number. "CPI runs hot, they'll go. CPI runs cooler in line, I have a hard time believing that they can go."
A hold without an explanation is the bad outcome, in his view. If they do not go, they have to signal why, or, in his words, "Otherwise they're going to have a bond tantrum at some point in time."
He reads the market as demanding a move the fundamentals do not support. "Markets telling you, hey, they need to go. Warsh built expectations that they will go, but I just don't see enough on the ground unless you get a really hot CPI."
2. Warsh's Corner
Harvey's criticism of the new chairman is about communication rather than policy.
He credited the previous administration of the Fed with keeping its options open, saying there was a lot about it he did not like, but that it kept everything open
His charge against Warsh is self-inflicted. "What Warsh did, he painted himself into the corner." Harvey's account is that Warsh felt he lacked credibility and that the market did not think him hawkish enough, came out very hot at Jackson Hole, and now has to follow through
Talkington took the chairman at his word on the mechanism, noting he has said he wants the bond market to signal him — and with the 2-year Treasury near 4.53%, short-term rates have already risen
3. Buy The Midterm Drawdown
Both panelists expect an unsettled two months and both would buy it.
Talkington said the market stays on edge until the midterms, and gave the historical base rate. "But since 1962, in every midterm between the end of August and November 4th, we've had about a 12 to 13% drawdown as a median." Her conclusion: "So I think investors should expect that drawdown."
The entry-point record is what makes her a buyer. "And that's what history tells you, that if you buy during this midterm drawdown, like over 95% of the time, with the exception of 2002, that was a wonderful entry point."
Her methods are selling call options against holdings and dollar-cost averaging, on the view that earnings are good and the AI build-out continues
She also expects the energy shock to reverse. Iran is a real problem for oil, but "And I don't think we're going to have a forever war. And when that dissipates, that's going to be very deflationary."
On the size of a single Fed move, both were dismissive. "One rate cut or one rate hike is not going to do anything." — Bryn Talkington. What matters, she said, is the signal about the trajectory over the next 12 to 18 months, which she called very unknown
4. Sell The Pop, Then Buy
Harvey's positioning is deliberately two-sided, and he said so.
He expects a rally if CPI comes in cool, and would use it to reduce risk. "So I'm going to talk out of both sides of my mouth." With everyone getting defensive, a cooler print produces "a pretty big pop" — and "We would sell into that, or we'd reposition the portfolio, take off some risk for the short term."
Two percent off the high is not enough to commit new money, on his read. "We want to tread water. We want to be a little bit more defensive." He would tell clients to start putting new money to work in weakness, not here
Where he would buy: the communications names that include some of the larger hyperscalers, and the alternative asset managers, which he thinks have been oversold after trading down recently
5. Munis And Mega-Caps
The segment closed on two positioning questions: bonds and the return of the largest stocks.
Talkington has avoided long-dated bonds for years and is watching one exception. "If you go out ten years, you can get, on a taxable equivalent basis, well over 7% on muni bonds." She said she is interested to see whether cash buyers finally move for that after-tax yield
On the mega-cap resurgence of the last month, Harvey's explanation was rates. Yields have risen since the end of June, small caps have underperformed, and money has moved back to large caps — with narrowing breadth, industrials underperforming and utilities underperforming, which he said is exactly what you would expect
Their shared bottom line is that the next two months are likely to be ugly and worth buying, with the disagreement only about whether to buy before or after the CPI print.
Bonus Insights
Talkington's objection to a single large move is procedural. She said an outsized one-off is not how the Fed has historically operated — it enters a tightening cycle or an easing cycle — so the question is which kind of cycle the next 12 to 18 months turn out to be. She called the position precarious and the crosscurrents unusually heavy
Harvey allowed one case in which a single hike would matter: if the Fed is embarking on a short credibility cycle in which one move is enough to settle the bond market rather than have it push yields further from where the Fed wants them
Asked how a long-term investor should read the next few weeks, Wapner used the forest-and-trees framing and Harvey agreed with it, which is how he arrived at treading water rather than selling
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