Closing Bell - Closing Bell 10/17/25

Episode Date: October 17, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to closing bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This maker breakout begins with unsettled stocks. The major averages are pacing for a positive week, but facing some new questions. We'll discuss those ahead. Take a look at the majors here with 60 to go in regulation, another volatile session, concerns over parts of the loan market, making investors a bit nervous. But we look pretty decent right now. As I said, green across the board. Dow looks to be close to the highs of the day, up more than 300. quarters of 1%. Even the regional banks, they're bouncing following a rough go this week. We're watching the Alts managers, too. It's been a mixed picture there today, although we do have a little bit of a pickup there with Apollo leading the way, one and two-thirds percent. Oracle shares, they're down sharply today following the company's investor day, the market not loving the

outlook, and that's why it's down seven and a half percent. It does take us to our talk of the tape, idiosyncratic, or something to really worry about. That. That's what investors are asking themselves as the markets focus on the credit markets. Let's welcome in Trivariate's Adam Parker, CEO and founder of Trivariate Research, a CNBC contributor at Post 9. It's good to have you back. Thanks for having me. Are you dialed in on credit and loans and all the things that people are talking about outside of the stock market? It's definitely coming up in a lot of my meetings.

It's polarizing. I think most people, the consensus among the institutional investors, is this is going to pass. we're going to get locked in on earnings. I don't even think it's next week. It's the earnings the week after. Like all the big tech stuff, Visa MasterCard, kind of more like 10 days from now. So I think people are thinking maybe a little bit isolated,

some of the- idiosyncratic. That's a little bit more inscratic. So you would answer, before I brought you in, I said idiosyncratic or, you know, more to worry about you go with the former. I think it's going to pass pretty quickly, I do. What makes you believe that?

You know, I just think we're not seeing it from the bigger institution. So our view is own the large cap higher quality banks. I think the regional banks are more of economically sensitive interest rate play that I don't love right now. They're more likely to, you know, be affected by loans that are bad. I think the big guys can absorb 50 million losses here or there and you don't see it. You know, I don't even know if JP Morgan, you know, bends over to pick up 50 million. So, you know what I mean?

I think it's probably not going to affect the bigger banks as much, and I think that's a safer way to play it. You know, on the flip side, I think the earning season from the big banks, which was really before the whole. you know, first brand and Zion stuff was pretty darn solid, right? If you look at it generally, upper revisions, a little bit more provisioning, but they didn't do as much last quarter. I kind of looked at the bolus of

the big bank earnings that thought they were pretty solid. So I can kind of stick with that as the thing I'm most focused on. I mean, you know, what Jamie Diamond saying, the consumer looks like is pretty good. Monaghaned Bank of America. If you look at what they're saying, I mean, you also talked about, you know, cockroaches when it comes to credit. Totally, right? Yeah. You know, and I

you know, I appreciated that sense of humor, But I think if you kind of look broadly across lending and demand for loans and what's being borrowed and what's being returned, it still looks pretty good. So I'm not, I think the answer is the way you pitch it, it's a more idiosyncratic. I think by the middle of next week we'll be talking about Mag 7 earnings on the horizon, Visa MasterCard, the other consumer. And we'll be back to the AI focal point. I mean, Taiwan Semmy this week will out a little bit ignored, but pretty good numbers. So I think there's enough in the fundamental positive camp that we'll get through this.

Credit is always going to be considered the Canary in the Coal Mine after a huge rally in stocks. Sure, it makes sense. You get a couple days of fear. But as you see, people want to own the good quality names into what I think is going to be a pretty good earnings season. Wow. And the Mag 7 are going to remind us why we want to stay with those names? Yeah, I think. So I think the early season is risk of war.

It's due to the positive. I think the biggest risk I see is that the return on the hyperscalor capix is so good, they raise their CAPEX even more. And so the school of people that are out there, I'll profile by saying older value investors have been more skeptical of AI productivity than younger growth investors. Obviously, there's exceptions, but I'd say that's how I'd cluster the group that I talked to. And I think the older value investors would say the return's obviously not that great,

the CAPEX is crazy, ultimately that's going to be bad. They may be right for the wrong reasons if the CAPEX goes up. I think it's more likely the return is awesome for a while, and that the companies want to spend more cap-backs, take the cash flows down to zero or negative. And so you could get a little kind of freak out on that. But I think ultimately you're going to be back to this stuff works and it's good and things can go higher. What about the idea? Even if you dismiss the credit issues as being not even to the level of systemic, but even more of a worry than they are now, does it tell you in any way about where we might be in the cycle? That when you get to a certain

point in the cycle, you start to have issues like this because you talk about excess, the incredible demand for leverage loans, and then the lending standards are lower at the closer to the end than the beginning. I mean, how do you look at that? I'd answer that a little bit differently, and I want to make it seem like I'm talking on both sides of my mouth, but there definitely are late cycle trading signals happening. If you look at like the number of stocks that are up 100% or more in the last six months and just things that maybe everyday investors don't look at, you know, Akalo or Or, you know, just a huge moves in these names that are either pre-revenue or don't have a lot of revenue. Rigetti in the post-quantum, you know, cryptobocracy, quantum space, you know, ionic.

Like, the moves have been massive, bloom energy. Like anything with any AI data center sort of dream is up three, four, five, six hundred percent. So you don't see tops full of things like that as part of a normal way. And so actually the note we're working on for the weekend, you know, we write one every Sunday is, you know, let's compare this to the October 99 through March 2000, just on some of the trade. I don't think that's the exact thing is where we are in the lending cycle. I think we're still earlier there. I still think private credit demand is going to grow.

I think people are putting products together for that. So I think we're earlier in the credit cycle than we are just some of the kind of crazy valuation trading cycle. But the NASDAQ, since we brought up 99 and we're talking about parts of the AI trade, I mean the NASDAQ's valuation now relative to where it got to in the crazy times, it's It's not even the same conversation. No, not even the same stratosphere, right? Now, there are parts of it, as you point out, that look especially frothy.

Yes. And I think others would agree with you. But until the Mag 7 names get a little frothy looking, now, many would say, well, their valuations already look a little bit stretched, but they do deserve to trade it premium to the overall market, and you're at 23 times. So if you're at 30 times, it doesn't look that ridiculous, given what's on the come, theoretically. I think what the institutional investors are doing that I think makes the most sense is start putting together your Christmas shortlist. Things that just look wildly expensive, probably won't see fundamental support next year.

It's all momentum. You're a little too nervous to short them now because, you know, at the very end of that last six months of the tech cycle is where you got most damage by being short, right? And so people are worried about doing that, but there are just a bunch of profitless things out there that are up too much. let's kind of identify some of those where the business models might be impaired and let's start putting our shopping list together. I think most people came into two weeks ago before the credit stuff surfaced saying,

you know what, we'll probably get an end of year higher, then we'll get a rotation and we'll figure out where they are. I think now people are sort of saying you know what, maybe if I get to highs by Thanksgiving or hire, I'll position a little bit before the end of the year and that's why we're focused on what stocks are up 10% or more and have a low correlation to the AISM's basket.

We got a zillion requests for that. Is it which healthcare names? Is it metals? Is there anything that is second derivative? Can I buy Echolabs? Can I like anything that might have a tinge of AI, but isn't the mainline drug? Because I just, they know that stuff's most vulnerable and it's all correlated. Well, I mean, we're keeping our eye on the credit ball, so to speak, and we're going to continue to do that. Leslie Picker certainly will from the regional banks to the ALTS managers, the so-called BDCs. You're all over this story. and people are trying to really get a hold of what's actually happening. Yeah, well, I think the conversation you were just having was really poignant here because, you know, in talking to investors about what's really happening

and why there's so much concern out there, they say, you know, we've seen this movie before. First come the frauds, then come the leveraged loan blowups, then come the contagion and fear. And I'm not saying that's what happening, that's what is happening right now, but it is a pattern that the market has seen in the past, and that is why it pressed sell so hard. Yesterday. So there are now allegations of fraud in three separate instances, the Tricolor and First Brands bankruptcies, and then the private real estate vehicle that borrowed from Zion's and Western Alliance and other banks, which are now suing to recover funds. So a lot of the selling yesterday was in the KRE, was in the ETF versus each individual name, leading many analysts who cover the space to say that the moves were kind of this broad-based overreaction. And you can see today the regionals are rebounding thanks to a slew of third quarter reports. dissuaged concerns about credit quality issues. A lot of investors out there are kind of just pressing pause to see what else comes out with regard to these issues. But Truist Comerica, Fifth Third, Huntington, showed pretty decent metrics in areas like net charge-offs and non-performing

loans, which indicate the health of their balance sheets, Scott. So it's kind of this question of, you know, we've seen these frauds now. Are they idiosyncratic? Can you still say idiosyncratic when there are three separate instances? And, you know, everything else looks fine? Or is there kind of more cockroaches, so to speak, that we just have yet to really see in broad daylight? And we'll just have to wait and see. That's going to be the issue. We'll have to wait and see. And hope we're looking in the right places. And ultimately, we'll find out. Leslie, thank you. Leslie Picker following that money. What's interesting, too, here, is how the Fed's thinking about all this. We do have a meeting coming up in the not too distant future. That means

the blackout period is about to begin. In fact, it starts after today. today. Senior economics correspondent Steve Leesman joins us now. So we have the blackout period about to begin. So you're not going to really hear anything. And I also use that word blackout because when we're talking about some of the issues that Leslie was discussing with us, we're wondering whether the Fed is blacked out from seeing what is really happening because we're talking about the shadow banking system. Those are two good points. Yes, we are entering the so-called blackout period where the Fed no longer talks about monetary policy. They may, in fact, appear at events and talk about things other than monetary policy or the economic outlook. But look, Scott,

here's the equation. The equation is systemic risk equals the size of money at risk, multiplied by the opacity of where the damage may be. And this is a situation where I don't know that there's a whole lot of money at risk here. I think there are large numbers, but it's the opacity that's really the problem. We don't know where the potential losses may In that situation, Scott, that's where you get a situation where everybody sells first and asks question later. That's what happened with Silicon Valley Bank and, of course, more broadly and widely and dangerously in the great financial crisis. So this is the world that we've decided to live in. Scott, we've decided that it's okay for you to get outside the banking system and do lending there in an unregulated way.

I would make a point. It's not necessarily the Fed's responsibility to manage the shadow banking system. the extent that is anybody's responsibility, it would probably kick up to FSOC, the Financial Stability Oversight Council, which is a joint council run with different regulators run by the Treasury. That would be their responsibility. The Fed, to the extent that it is responsible on a regulatory standpoint, along with the other bank regulators, they should be monitoring the concentration of these loans from the banks to the shadow banking system. And I'll tell you, I do not have confidence that the Federal Reserve supervisory process is one that innovates very quickly.

I think there's a lot of inertia to supervision. So when something new is happening in the market, I think it takes the Fed and other bank regulators, by definition, time to catch up. So they end up usually behind the curve. You have to believe that it's at least on Chair Powell's mind. I asked you this earlier, the connection between the chair himself suggesting that they're going to stop the runoff of the balance sheet and I think he said in the coming months might be related to credit and their outlook and a little bit of tightness in that regard. It can't be a coincidence in my mind. I mean, it seems like it's related. We had a little bit of a blow up at the end of

the quarter in September. And there was a flare yesterday in Sofer as Rick's been talking about and I've been reading from different people who follow that market, and it has been elevated. I think it calmed back down. So we could be reaching a point here, Scott. Folks, don't put up silver. We're talking about SOFER, just as though that SOFER is the new LIBOR there. We had that same problem this morning. I understand SOFER.

I need to maybe pronounce a little bit better. Just spell it out. Yeah, SOFR. Sorry, SOFER. S-O-F-R, yes. And the deal is this, Scott. It's the new LIBOR, by the way, not a huge track record in terms of its trading. And the banking system, Scott, the regular bank system, has access to kind of unlimited funds.

Because remember, the Fed has a standing repo facility. That is not true for the shadow banking system. That's something that makes it very different and perhaps a little bit more risky in the sense that not everybody can go to the Fed and the Fed window and the various facilities the Fed has for overnight funds. So you might be getting to a situation. Remember, the Fed's been bringing down the balance sheet. It could be at that place where it wants to be, maybe a little bit below, so the Fed's going to stop and figure out. If they need to, they can add reserves if they want.

And if banks need overnight funding, they can go to the standing repo facility to get them, which is something the Fed has been kind of trying to promote the banks doing. But I do not think, Scott, even if Powell is talking about these issues, the idea that it's socialized as a risk down at the supervisor. level. That's what worries me. And I think the most recent event is pretty instructive. What was the Fed stress testing about when it came to Silicon Valley Bank? They were not stress testing, and they did not stress test what happens when you have an increase of interest rates. That's what got SVB, right? That was not part of the stress test, so it took them time to catch up with

the reality of what was happening. I do not know specifically the Fed has talked about it, but I don't know where they stand on checking the concentration of the banking system to the shadow bank system, specifically to private credit. Yeah, it's helpful that we're talking about it. Steve, thank you. Steve Leasman, our senior economics correspondent. Let's add in Invesco's Brian Levitt, Adam Parker, of course, is still here. Brian, it's good to add you the conversation. Apropos to what Steve was talking about, Goldman's John Waldron was at a conference and said the following, quote, I don't really understand why we're talking about private credit as one thing and lending in the banking system as another thing. There's one system. If there's pain to come,

everybody in that system will feel that. You know, what do you make of that comment and how you see all of this playing out? Whether you think it's as idiosyncratic as Adam obviously does, because that's what he said, or maybe something more. Yeah, I'm going to use the word idiosyncratic as well. I mean, certainly it's all interconnected, but it's ironic to the extent that we're focused on it in a week where the mega center, the big banks produce good earnings, the read, even a lot of them. All of them. And even the regional banks set aside less for loss provisions than many analysts had expected. Credit spreads remain tight. Economy's okay. Federal Reserve is easing. So I'm with Adam. This feels idiosyncratic. There's, you know,

a couple of names, one in the subprime auto market, one that didn't have a lot of transparency. around it that are creating some concerns, but this is not an over-levered economy to the extent that it was even close to 2008. I've got to be honest with you. I'm surprised that people are as willing, apparently, as you guys are, to go on the record and say that it's idiosyncratic when the whole point of the shadow banking system is how opaque it is, and we don't truly know what's what? And as Leslie was pointing out, at what point do you say it's not idiosyncratic because it's not one, it's not two, and now it's three. Is it four, five, and six? Does it get to more than that? How do you respond to that? Yeah, I mean, so you're using the word idiosyncratic

a little bit differently than I use it. So at the end of the day, I think the broader question, The way I interpreted what you read from Goldman, I don't agree with that. There's a distribution of loans that are made at different risk profiles, at different returns at different rates. And with things slow, riskier things can blow up. It's not illegal to lose money. It's not illegal to – there may have been some illegal stuff. A couple of the things you're talking about.

But I think holistically, I think what you're asking is when you say everyone feels it, when you read that, I think, well, what do you mean by that? I mean, I think most of the loans are going to be money good. I think most of them are good, and the demand for loans is going to be decent. I don't necessarily think there's going to be some, you know, 2008 housing crisis kind of moment where everyone feels it at this point. Oh, and I don't think that. I don't know the context of that. I'm not going to speak for Waldron, but I don't think he's in any way suggesting where, like, this is an 08 problem.

So if you lend money to illegal immigrants in a subprime auto market and it goes badly, is that a shocker to you? I'm not trying to be dismissed. I'm just saying part of me thinks is a little more of that that's going on than a holistic problem with demand and support. apply for loans and how they're going to be true-ed up. So I'm idiosyncratic. We could have four or five dumb things that are happening. I'm not saying this is it. I hear Leslie's point in yours that we've had three things, not one, and it's starting to feel like there's cockroaches. I get that phrase, and I don't like cockroaches either when they're in my apartment or whatever. But I don't think it's going to be broad-based.

Like if the economy's in a good place right now. Yes. Okay. We're having this conversation more seriously, I think, if the economy takes some turn. Absolutely. For the worst. Now, the reason why people are looking past this is because, in fact, the economy is good. The economy is good. And earnings are going to be good. Earnings are going to be good. And the Fed is cutting interest rate.

So you can tune out the noise, I hear, and focus on the prize. I agree. And yes, so when we use the word idiosyncratic, what we're talking about is events specific to those businesses, like to Adams point, subprime loans to immigrants. We're not talking about a meaningful deterioration and economic activity. We're not talking about inflation expectations rising in the Federal Reserve having to raise interest rates. If you look at what the bond market is telling us, spreads are historically tight. That tends to scare people.

I view that as a positive that the fundamentals and corporate America are quite sure. What scares people. Yeah, spreads blowing out. Tight is the point where we say, hey, the credit market looks good. We're not worried. That's what I'm saying. We saw a very modest move yesterday, not much of it. So it's a, typically when you're thinking end of cycle, you've got spreads blowing out.

You've got the economy deteriorating you. You have the Fed raising rates. Financial business is tightening. Yeah, we just don't have that right now. We might look back this in the year and this might age really poorly. Okay, like I'm not, you know, in the distribution of things you've asked me. I was trying to look out for you both. I know.

I appreciate that. And I think, you know, we talk all the time and not everything we say is going to age well. And this has that greater than normal risk. But I just think what we're saying holistically is enough of the big things we look at look like they're stable to positive that I'm going to say this is more isolated and downstream than systemic. Dude, if nothing else, what was thought to be the potential for a good broadening trade between now and the end of the year, now if you're talking about regional banks and wondering what the exposure is in different places, it's no accident that the Russell is down again today. Now, it's still positive week to date, but are we putting that trade on the back burner once again because of this issue? I think it's for a variety of things. One, you just don't see the leading indicators picking up significantly, some of the soft indicators rolling over a little.

Rates coming down, though. But rates coming down, but we've priced a lot of that, right? I mean, you see the small cap market move pretty quickly over a very short period of time. The question about all of it is, are rates coming down taking us? to a new, sustained higher level of growth, or rates coming down, taking us back to, you know, globally, a trend level of growth and continue to look for those businesses

that can grow earnings in a relatively slow growth world. And that's the camp I would be in. I think the bank deal you saw with Fifth Third and Comerica is kind of interesting, right? I mean, at the end of the day, you know, you need to believe there's a lot more of those happening to get bullish on the space, and maybe that's the answer to your question

that's bullish, is like, look, if you're a 10 billion market cap bank, you're kind of irrelevant, you know, from the big cap investor standpoint. So maybe you've got to do something. If we start bringing up for, yeah. And so maybe that's the second wave that ties in with the MNA cycle that you need to believe for next year. All right, we'll leave it there, guys.

Thanks. Good weekend. You both, yeah. Brian and Adam, we appreciate you. All right, let's send it to Sima Modi for a look at the biggest names moving into this close. Hi, Seema. Hey, Scott. Let's talk American Express.

The stock is popping 7% after posting third quarter profits and revenue that beat Wall Street estimates. Amex's CEO saying the launch of its new platinum credit. saw high demand from wealthy clients who really aren't signaling any pushback to that higher annual fee. Let's pivot to Starbucks. Shares climbing after the coffee chain shareholders wrote a letter to Starbucks to resume talks with its workers' union. The letter is expressing concerns that deteriorated labor relations threatens the company's ability to create long-term shareholder value. Stocks still down about 6% this year. Finally, Oracle shares giving back some of its gains, executives laying out that strong growth picture at its analyst day, but earnings guidance does imply

a slight dip in margins in 2028 tied to the build out of data centers before trending higher in 2030. RBC Capital calling it a sell-the-news moment, but it also, the RBC also saying that competition is a key risk. Scott? Seema, thank you very much. Sima Modi. We're just getting started. Up next, Fun Stretch, Tom Lee is standing by. He'll tell us what he thinks of these markets, where the risks are and where he says the biggest rewards can be had.

Live at the New York Stock Exchange. You're watching closing bell. B.C. Welcome back. Despite the return of volatility this week and fresh concerns over the credit market, stocks are still pacing for a positive week. Joining us now is Tom Lee. He's Fundstrat's head of research and his CNBC contributors. Good to see you, joining us from the nation's capital today. So what's What's your take on everything that we are talking about now daily? Well, I heard the earlier segment, Scott, and I do think I'm kind of more in the Jamie Diamond camp, you know, that and Steve Leesman's point, that there's opacity in private credit, and that's the problem that investors are going to grapple with for some time. And I think that along with the trade tensions and, you know, the Vick spike, is the reason investors are a little cautious.

But I don't think that's going to change that markets still have a lot of tailwinds into your end. And part of it is AI is like I think demand is accelerating there. And we know that investors are sitting on a lot of cash. And institutional investors are really having a terrible year. Only 22% are beating the benchmark. So I think there's a bit of a chase. And then sentiment has flipped negative, which is always a contrary and buy signal. So, you know, I think despite this mounting wall of worries, including the shutdown,

I think it sets us up for a pretty good rally into the end of the year. It sounds, though, like this is enough on your radar that do you think it's at least changed the game in the near term for the market? On the private credit? Just overall. I mean, if there are continued issues in private credit and the leverage loan market, then the stock market is not going to take that well. I mean, you wouldn't think. Yeah, I mean, Scott, that might, the only thing that I don't know is how many chapters it's going to take to play out because, you know, I mean, there's, you know, there's opacity, which is what is scaring people, but then there's real credit deterioration, which I don't think that that's what's happening. And I think that's why Adam and all those had called it idiosyncratic. I'm kind of in that camp because high yield spreads have behaved. So I think it's more of a, is the flow of capital because I think one of the biggest sort of allocations for alternatives has been private credit. It's going to make

investors pause that, you know, maybe this market is, it's not as easy a return as it looks. You told me, I think, a couple of weeks ago that 7,000 on the S&P by the end of the year was realistic. You still think that we could get another 5%? That's what it looks like. It's 5% between now and then. Do we have that in us? Scott, I mean, 5% is just an average fourth quarter from 1950 to 2024, but we have the Fed easing after an extended pause. So that's 1998 and 2024. So I think that 5% might be the base case. I bet you it's going to end up being more like 7 or 8% or even possibly 10%.

So I think 7,000 is the low end of what we can end the year at. Wow. And how much do earnings have to do with that? I mean, earnings are going to matter. But, you know, it's been a good start. We're barely into earning season. The banks have been good. 82% of companies are beating.

There's a lot more visibility of demand and then less concerns about tariffs because we're kind of working our way through it. So companies have a better sort of visibility over the next 12 months. I think the outlooks are going to be good and I think that's going to help stocks. And, you know, I think there's a lot of room for multiples to still expand. So I don't think this market's that demanding. I think it's interesting that you suggest that you'd be a buyer of regional banks and small caps. Why are you willing to do that?

That's not putting your toe in the water. That's like putting the bathing suit on and jumping in. Why? Well, I mean, Scott, you know, I know there's a lot of muscle memory for people from 2023. And that was because of a big change in rates that really caught a lot of banks. banks off-site just in their business model. But that doesn't mean that this crisis, which is really underwriting being done properly, should have the same issue.

So I think that there has been a throw the baby with the bathwater out on the regional banks and the small caps. So yes, I think despite the fact that the Russell had a rough week, I think they're really going to be one of the beneficiaries. I mean, even on earnings basis, small cap earnings are going to row 48% in the third quarter. That's like four times, five times bigger than the S&P. So I think there's still a lot of growth left there. What's the message in crypto right now, Tom? Bitcoin is down today. It's 107,000 right now. What's going on there?

I think there's a couple of things. One is there was a big de-leveraging last week because that VIX spike and the tariff headlines triggered the biggest liquidation and de-leveraging in crypto ever in history. So I think that people are still licking their wounds. And I think that there's also a bit of gold envy because, as you know, gold has been a huge performer this year. In fact, you know, there's people waiting in line to buy gold. So I think that there is a bit of like I'd rather own gold than crypto. So I think this is not the top of the crypto cycle, but I think leveraging, I mean, levered longs in crypto are near record low. So I think it's kind of like more the, we're at the basement and working our way back up. Okay. We'll see if we

get there. And if we're walking or taking an elevator, Tom, thanks. Enjoy the weekend, Tom Lee. Thank you. Still ahead. Terraf relief could be on the way for the autos. The details on that new report coming up. We're back on the bell after this. All right, welcome back a quick programming note. Don't miss my exclusive interview with Black Rock's Rick Reeder. That's this Monday right here at 3 p.m. Eastern on closing bell. Can't wait for that for obvious reasons. Coming up next, Intelligent Alpha's Doug Clinton maps out his playbook as we hear for

tech earnings. The bell will be right back. Welcome back. Tim Cook in China this week as the new iPhone goes on sale there and quickly sells out. Steve Kovack following that joins us now with more. Good to see you. Hey, good to see you too. Yeah, it's the iPhone air. I got one right here that's being that hot seller out there in China. A little delayed, Scott, by a few weeks because of some regulatory issues going on. They got that cleared out, and it seems to be a hot seller already. And look, this is the kind of capstone of this tour that Tim Cook has been going on around China for most of this week.

He met with a bunch of different customers and visited some Apple stores. He even got a custom-made Laboo-Boo made out of him and sent Pop Mart's shares kind of soaring that day on that news. But he's also promising some investment in China. No details on that, but he did meet with some officials there and said Apple will continue to invest in the country. Obviously, it's the most important market for Apple besides the United States in terms of revenue, in terms of production. And then at the same time, Scott, we talk about this all the time due to tariffs, due to those lessons learned during those pandemic lockdowns in China, putting all your eggs in the China basket has not turned out so well for Apple. That's why we're seeing so much production expand into India, into Vietnam to get those products to the United States at a lower tariff rate. But it's not going to be a perfect solution quite yet.

Because think of this, Scott, we know for the September quarter, they're expecting about a billion dollars in charges related to tariffs. That number is likely going to go up. We'll get a new number in less than two weeks on that earnings report about what they expect to pay in tariffs related to all this coming in the December. quarter when they, of course, sell the most iPhones. By the way, China seems to be having a little bit of a resurgence right now, especially because of their subsidies going on in China effectively gives customers there a discount. So we'll be watching that. You see shares having a really good day today, though, up 2 percent, Scott. Yeah, good stuff. Steve, thank you. Steve Kovac. Our next guest is looking ahead to tech earnings, his firm own, several mag-sevins, including Apple.

Intelligent Alpha and Deepwater Asset Management's Doug Clinton joins us now. It's good to see again. Scott. This move today is interesting from Apple, but I still feel like expectations are so muted going into this earning season. What do you see? I mean, as it pertains to Apple specifically, I think they've done a great job of keeping the bar super low for this earnings and really earnings until mid-next year, because the question still remains what will Apple ultimately do with AI. I think the iPhone 17 has proven to be probably a better seller than investors had a expected when they launched the device last month. But expectations are low. And I think that as we get closer to kind of June next year, WWDC, that's when we'll start to talk more about what will Apple do for its next kind of error in AI and will it fix Siri. That's where I think the most optionality stands in the stock. But as for the quarter, I think they're in good shape. And our AI models like it too at Intelligent Alpha. Speaking of low expectations, you say CapEx expectations are too

low from both Google and Amazon, which is an amazing thing to say, considering the size of the numbers we're already talking about. I mean, you look at the street numbers for CAPEX for those too, Scott. Google, it's about 12% expected growth for next year's CAPEX. Amazon's even lower. It's high single digits. It's almost unbelievable. You know, how could analysts sort of expect this? But I think the reality is if you look kind of more at meta, that's probably a better benchmark, and they're going to be growing kind of strong double digits, probably something like 30 to 40 percent. And I think you'll see Google and Amazon both. It might not happen this call. They might sort of just indicate, right,

that they're going to continue to spend in this capex boom. But certainly as we get into Q4 earnings and projections for next year, I think those numbers need to go up significantly. And that's good for companies like Nvidia and TSM, both of which we also own. Yeah. And I know you, they're among your favorite AI plays as well. As is Microsoft, what's interesting is First Solar is as well, correct? Which you call your under-the-radar play. Why? You know, it's funny, we got this sort of AI bid, this story for Caterpillar over the last month as it pertains to them providing heavy equipment and some power sources for AI. I think First Solar, and maybe Solar in general, has sort of been just thrown out entirely.

I think a lot of the excitement around energy production, maybe as an era for AI, has been around nuclear, not solar. And I think solar is inevitable as part of the solution to addressing how do we fix this problem where we don't have enough power to power all these data centers that we're building. So First Solar, it's an American company. They build some of their panels in America. And I think that's very important in this environment and with this administration. And our models have loved for solar almost all year, trades very low, double-digit EPS. And so it feels like kind of a cheap play on AI, as hard as it is to believe. Would you stay with, I know you don't, it does look to me from your, at least your top holdings,

that you're very exposed to some of these other power names for AI, whether it's Vistra or Eaton, you know, GEVernova. I don't know if you own them or not, just not in enough scale to get to the top holdings. Do you think that trade continues to work, or is it ahead of itself? We have owned some of those names, particularly Vistra and G. Vernova in the past. We don't right now. And the concern I have is, you know, everybody's talking about AI bubble, kind of where are we? Are we near the top?

For what it's worth, I think we're probably in 1997 in the AI trade right now. But I think there are components of the trade and things that are kind of on the periphery, particularly around nuclear and some of the energy plays, and then also quantum. that feels more like we're in 1999. And so the energy stuff, as important as it is, and as topical as it is, is kind of a bottleneck to some of these data center buildouts that we have right now, I do think a lot of that seems to be priced in the stocks. And I would rather own the hardware and the software players than energy right now. All right, good stuff. Doug, good weekend to you. We'll see you soon. Doug Clinton. Up next, we track the biggest movers into this Friday closed.

Seema Modi is standing by with that for us. Hi, Seema. Hey, Scott, Micron, exiting China's data centers. tell you why and what the street is saying about this move. When we come back. We've got about 10 minutes to go before the closing bell. Let's get back now to Sima Modi for a look at the stock that she's watching. Tell us. Okay, Scott, let's start with Micron Reuters.

Is reporting that the chipmaker plans to stop supplying server chips to Chinese data centers after its business failed to recover from a 2023 ban on its products and critical infrastructure. You'll see stock, the stock is basically flat on the hour. Moving on to Kenview, bouncing back around 7% after yesterday's 13% loss after the U.K. High Court filed a lawsuit against J&J and Kenview, alleging it knowingly sold baby powder contaminated with the best dose between 1965 and 2023. Now, J&J spun off Kenvue in 2023, and you'll see shares are down about 27% so far this year. Finally, AST Space Mobile sinking 7% after Barclays double downgraded its rating to underweight from overweight. The analyst there said valuation, of the satellite manufacturer has become excessive and that a lot of the growth factors are already priced into the stock.

We're looking at it down about 7% at this hour. Scott? All right, Seema, thanks so much for that. Seema Modi. Up next, we'll tell you what's weighing on Eli Lilly and Novo Nordish today, that and more in the zone next. We are now in the closing bell market zone.

CNBC senior markets commentator, Mike Santoli, is here to break down these crucial moments of the trading day. Plus, Phil Lebo, he's tracking autos today. Brandon Gomez tells us what's weighing on Lily and Novo Nordis today. But Michael would begin with you. Leave us with what you're going to be thinking about into next week. Threatened to get messy yesterday and really has been cleaned up today.

So we kind of stayed on the beam. This level we're out right now in the 60s 60s for the S&P. We've crossed it every day for the last six sessions. So clearly we're trying to sort something out, essentially figuring out if kind of the overshooting the speculative stuff and crypto being on its back is changing the whole character of this market or is it honestly just a stutter step? We've got earnings next week, the forward estimates continue to go up, the Fed's going to do what it's going to do, and GDP tracking for the third quarter is like 3.9%. So I think altogether, unless we see some cracks forming

in the capital markets, as it threatened to this week, we're kind of okay, although I don't know that the business has been finished with this mere 2% pullback. Yeah, we'll have to see. Phil Leboe, auto tariff relief. Is it coming? Well, according to a report from Bloomberg, it is possible that we could see some kind of decision soon from the Trump administration. And we've heard about this for some time with the automakers publicly lobbying the Trump

administration to make some changes. We're not going to go into all the minutia here, but it impacts imported auto parts used in domestic vehicles, vehicles built in the United States. United States. It's a tax offset. It may be extended from where it was initially put in place. This will help domestic production costs, actually ease them a little bit. That's why you saw shares of the domestic automakers moving a little bit higher today because this is certainly welcome news for them. One other thing when it comes to auto, Scott, we're now in that one week zone where everybody says, when does Tesla report? Happens next Wednesday after the bell.

Scott, back to you. Yes, it does. The big kickoff of the so-called Mag 7. Phil, thank you very much. Tell us more on Lilly and Novo. Hey, Scott. Yeah, shares of Eli Lilly and Novo Nordisk are falling after President Trump vowed to cut prices on weight loss drugs. Novo Nordisk is the maker of obesity drugs Ozempik and Wagovi, while Eli Lilly manufactures, competitors, Manjaro, and Zeppbaum. Now, the president did say the costs for those drugs will be much lower. Now, it's worth noting both companies have already been racing to create a pill rather than

injections for weight loss, which the companies have said could be a more affordable and accessible option. Now, the news, though, also rippled to telehealth, hymns and hers, following double digits. The company has expanded its business in weight loss over the last 18 months around lower-priced copies of those big pharma drugs. Now, potentially losing some of that competitive edge, the industry faces renewed scrutiny and pricing pressure. Scott. All right, Brandon, thank you. Brandon Gomez. We're approaching two minutes left as we bring Mike Santoli back in. So you get starting the Mag 7, right? Test is going to kick it off. That doesn't really give you much in terms of the AI trade.

Not a lot. But it does remind us of what's coming pretty soon, which maybe can offset some of the jitters around the credit issues. Yeah, because this quarter, it's still supposed to be very heavy Mag 7-driven earnings growth. Not exclusively. Non-Mag-7 are supposed to be up 6% or 7% year-over-year, but more like 15-16% for Mag-7. And, of course, we know they usually blow out the numbers.

So, yeah, it is important. Netflix is another interesting tell. That was one of those kind of quality. Everybody Loves the Story-type names that did come in off the highs. We're going to hear from them next week as well. In general, again, I think the market field position is such that we got a little bit fully valued and complacent. We had this calm trajectory that was interrupted. I think a positive going into the weekend is the VIX is down over four points.

Because it was really up way more than you would think it would be, given we only came down 2% or 3% in the S&P. Therefore, the credit concerns may be dissipating going into the weekend. You still have more 52-week lows than highs in the New York Stock News and NASDAQ on a one-day basis. So it's a little bit of a staticy environment and a little bit of maybe profit-taking that was deferred going on under the surface. So you're not out of the kind of seasonal window. Everyone cares about who cares about buybacks, notes that they're not doing them during earnings season. But in general, I think you'd say we got through this week in decent shape given how we might have thought.

thought you were going to get a lot of this erratic action. And in fact, you did see glimpses of it from time to time. Do you think that the financials are the near-term key, both regional and the big eases? They have to hold these gains. In fact, the XLF is kind of out on a shelf going back to like late last year's high. So yeah, you want to see them participate. Consumer Silicon's got to bounce this week. That was another worry point that looks like it might be okay for now. Okay, good stuff, Mike. Mike, thanks. Good weekend to you. That's Mike Santoli. The Dow, the S&P, and the NASDAQ, of course, the Russell's got a lot of regional banks in it, some other issues that will pay attention to, and I'll see you next week. Look forward to that great weekend at 8th.