Closing Bell - Closing Bell 11/14/23

Episode Date: November 14, 2023

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.

Welcome to Closing Bell. I'm Scott Wapner, live from Post 9, right here at the New York Stock Exchange. And this make or break hour begins with the bull case for stocks, whether it just got turbocharged today. With that better than expected CPI report, we're going to ask our experts over this final stretch where your money is likely to head from here. In the meantime, your scorecard with 60 minutes to go in regulation, one of the best and broadest days and months, looks like that. The S&P hitting 4,500 today. It's trading above that level. That is a 2% gain. It would be only the second 2% one-day gain of the year,

if you can believe that. Look at the Dow. It's heading towards 35,000. Many different parts of the market taking off after that inflation read. A strong day for cyclical areas, as you might expect. Financials, industrials, materials. How about Home Depot? That's a standout for the Dow areas as you might expect financials industrials materials. How about Home Depot that's a

standout for the Dow today after its own earnings report also giving a big lift to discretionary names. Wow that's all I can say about the Russell two thousand. Take a look up nearly five percent for much of the session today regional bank

staging a big relief rally along with other besieged parts of the markets as well and not to be outdone of course tech also a strong point today. NVIDIA is going for its 10th straight up day. Apple approaching $190 a share. It's the Nasdaq's best day since May. Yields, big part of the story. They plummeted today, the 10-year hitting 4, 4, 5 percent. As the markets contend, the Fed is done raising interest rates for good. It leads us to our talk of the tape, whether the bear case is finally finished. Let's ask Cameron Dawson,

Chief Investment Officer for New Edge Wealth, here with me once again at Post 9. You want to answer that question? Is the bear case dead? At least through the end of the year. I think that the fact that we have neutralized the Fed risk right now, given the CPI print, what it does is it can spark a positioning chase through the end of the year. We pass through that resistance that we've been talking about, that 4,400 level, that 100-day moving average. What that does is that it draws people back into the market and likely causes positioning to really get from what right now is just overweight to being much more overweight there's room for that into the end of the year but if the bear case is built primarily on the foundation of recession that's pretty much what it is right

inflation remains high you're going to cause a recession because the fed's going to have to continue to hike it's getting a little flimsy, isn't it? A little tired? It is. And if we think about the best case scenario for stocks is one where growth remains robust. So you deliver on the earnings growth that's already being forecasted and the Fed becomes easier and kinder, which means that you get good earnings and you can sustain an elevated multiple because the Fed isn't having to raise interest rates as much, which would put downward pressure on multiples. You can't say that's the base case yet? Well, I think that's what this data makes more a higher probability. And that's why markets are rallying so much.

Yeah, I mean, Dow's up nearly 550 points. We're pretty much at the highs of the day. I mean, how unlikely does that sound to you? That, OK, inflation is going to continue to come down. Earnings are going to stay up enough. The economy is just going to stay strong enough. And that all of the naysayers are just going to have to take their arguments and go home and get invested? I think that where we have to have that discipline and what we'll be watching really closely is things like sentiment. Does sentiment

get stretched? Does positioning get stretched? Where do valuations stand? Because all of the fundamentals can remain very attractive, But if we get extended on those things, we have a setup that could be similar to early 2022, where, of course, you had very stretched measures on that side of things. We're not at that point yet. So those things are not a risk in and of itself. But that's where the discipline as we go into 2024 will come. When you sat down, you said, hey, did you see the B of A fund manager survey, which I did, which shows people looking for bonds to yields to come down and bonds to go up a lot. There's a lot of buying of bonds. They're expecting a bond rally now. Yeah, that is very consensus now. And I think that that should be something that we keep in the back of our mind, because

when something becomes so very consensus, the pain trade is usually the opposite direction. That fund manager survey showed that people are the most long or overweight bonds since 09. It's a record number of participants saying that they expect rates to fall. And so because that is so consensus, I do think that we should probably be open minded to things moving in the other direction. All right. So, you know, one of the arguments has been for at least a year

is that there are just alternatives, whether it is bonds or cash. So we have to chip away at both of those. Now, maybe we can't chip away at the bond argument yet. If you think that yields are going to come down and bonds are going to have a potential rip in front of us. But what about cash? If yields are going to come down, are we going to get money out of money

markets and into the stock market? It could be possible if we have that soft landing in the sense that in a recession, in a non-recessionary scenario, yields fall because you get that pressure of the Fed coming off, the Fed possibly doing some of those insurance cuts that can then cause people, as they start seeing the cash yield move down, rotate into equities as long as you don't have the earnings risk. So I think the thing that we'll be watching really closely is, does the market confirm the soft landing as we go into 2024? If the market remains really resilient and robust, it's effectively saying we don't need those insurance cuts, but the Fed is still going to give them to us.

See, because we're thinking, you know, there is the argument that, well, if the Fed cuts, it's because it's desperation. They have to because the economy has gone into the tank, which leads them to have to cut. You're talking about a different kind of cut, that being insurance, as you say, which means the story remains intact. They're just doing it because they can. They're doing it because they can. And the parallel that comes to mind, of course, is 1995. Now, 1995, they did three cuts starting in the summer, and there was recession fears during that time. The market didn't confirm it.

The interesting thing, they cut, and the Dow was already at an all-time high, which effectively is saying that the market didn't believe that the cuts were necessary. So if they dust off the 95 playbook, that's where you could see them do a little tweak lower in rates. That doesn't necessarily mean the 100, 200 basis points that is expected by some participants. So I'm going to take you sector by sector, but some other areas of the market and just get your view. It's astounding to see the Russell today up near 5%. Now, everybody knows it's been obliterated. So you're going to get these outsized moves on days like this. However, 5% is amazing. Is it time to take a look at small cap stocks if you believe in the soft landing scenario? You have to believe in the soft

landing scenario and this scenario where rates can move lower. Remember that small caps are very sensitive to rates. So rates moving lower helps small caps probably more than any other part of the market. Now, even with rates where they are today, there's still a big refinancing risk for small caps. The challenge is, is that if rates move lower for the wrong reason, meaning a recession, small caps are far more cyclical, far more hurt by a recession than large caps would be. So we have seen two really big rallies in small caps over this past year. Before this one, 15, 17 percent rallies, they all failed. The question is, is this the one that sticks? All right. Consumer discretionary.

A lot of concern out there about whether the consumer can hang in or not. Now, you get outsized moves in the sector because Amazon and Tesla are part of it. So on huge days, you're going to have a little skew that way. Nonetheless, Home Depot is one of the best performers in the Dow today, if not the best. And you have more retail earnings coming tomorrow. Is it time to look at retail related consumer discretionary stocks? Equal weight consumer discretionary versus staples, removing that impact of Amazon and Tesla, have remained really resilient this year, which tells you that the market is not sensing a big deterioration in the consumer.

So what that could lead to is that if you believe no recession next year, that there can be a recovery in the parts of consumer discretionary that have been left behind. What about financials, which have not done much? Is now the time? Now, the regional banks are a good reason why the Russell is doing what it's doing today. But what about the bigger players? What about the ones that make up the bulk of the XLF, for example? It's important if this rally continues and is it sustained, do we finally get a reopening of capital markets? Because that's one of the areas that's been completely left for dead over the past couple of years. Then it comes a question about monitoring the health of the consumer, monitoring the health of corporations for loans and credit quality. If you avoid a recession, that would be an area that there's probably upside surprise and they're cheap.

OK, let's bring in John Mowry now of NFJ Investment Group, one of the most bullish strategists who've been on this network. How are you feeling today? Today is a sneak preview. Today is a sneak preview, Scott. You know, we've been well, again, I'll pivot back to last year. We were bullish on tech, semis, homebuilders, and we've been repositioning throughout this year. We've been more bullish on the small cap area, the mid cap area, banks and utilities and REITs, as you well know.

So, you know, a couple of points that I would make. The first is that the two year bond has been signaling to the Fed for over a year they've done enough. If I were to pull the audience and say, how much do folks think the two-year bond, which is controlled by the market, is up in terms of its yield over the last year? The answer is just 30 basis points, Scott. 30 basis points. But the Fed funds rate's up 225 over the last year. Every time the Fed funds rate exceeds the two-year bond for a sustained period, and we're in that currently, the Fed always ends up cutting. And I like to pivot back to 2000 because I think that's an interesting parallel because of the dollar, technology, inflation.

There's a lot of similarities. In 2000, Scott, the Fed raised rates three times by 100 basis points total. Then in January of 2001, they cut twice by 100. So I think the Fed has every intention of keeping rates higher for longer, but they simply don't know what they don't know. The two-year bond's been signaling they've gone too far. I think the CPI putting a little bit of pressure downward is showing massive recoveries in regional banks. You mentioned the RUJ, the Russell 2000 value. Regional banks are up 800 basis points just today. And that's on the Fed doing nothing. That's on the expectation that

there could be a more moderate and easier environment with lending and a steepening of the yield curve. Do you think it's time, John, to just give up on the bear case or is it still going to have some breath left to it? Well, I gave up on the bear case a long time ago. You asked if we were going to retest the lows six or eight, nine months ago. I told you no. I gave up on the bear case a while back. I think that the market bottomed October of last year. Sentiment was very negative. Now, I will say in fairness to that call about a year ago, you know, small caps have struggled and it's been pretty difficult. And the Fed raising rates 225 over the last year has had an impact there. But I do think investors

should be rotating out of large and particularly in large growth and looking at value. My issue with cash, it's great to put 5% on a money market. The problem is reinvestment rate risk. And if inflation runs at 2.5% over time, that's not a great way to compound capital. Definitely not a way to reach retirement goals. So I think you're going to have to move out of cash. I think today is a signal for that. And I think up five percent in one day is a shot over the bow that if you're not invested, you will miss these rallies. And if you miss these rallies, Scott, it's detrimental to compounding your portfolio over time. Yeah, but we've seen what's happened to other big rallies in these other more cyclical or beaten up areas of the market. There hasn't been staying power.

It's gone right back to the mega cap trade at any time of turmoil in the market. So maybe you'd say it's too easy or it's too difficult to give up on the bear case yet unless you see sustainability. That's a key word, sustainability in these other areas of the market. Well, you have to be there. NVIDIA was down 67% last year. Adobe was down over 50%. The large cap names, the Magnificent 7 were the measly 7 just a year ago. So you have to have staying

power. You've got to allocate when the dislocations are there. I mean, the reality is, Scott, there are plenty of small caps that are in trouble, but there's a whole group that are not in trouble. They've got significant dislocations and valuations, but they're growing their dividends. They're holding their margins. They've got strong balance sheets. And there's a lot of negative sentiment and people are dumping them. So we look for dislocations and valuations as opposed to dislocations and fundamentals. And we want to construct a portfolio that way. There are plenty of stocks out there in the small cap arena that have been tossed out. So I'm not worried about daily price movements. Today's great. But again, I think this is a sneak preview of what's to come. I'll share one more statistic. There have only been two periods historically

where the Russell 2000 value was down consecutive years back to back. Those two periods were 98 and 99, and then 07 and 08. A lot of folks forget that 07 was a down year for value stocks, because that was the peak of the market and the banks started rolling over. In both of those consecutive down periods, Scott, the following year was a massive rally in small value in 2000 and in 2009. And we are setting up

a similar scenario. The RUJ was down 15 last year. It was down six year to date before today. So we're setting up a very similar scenario where you can see small value do very well as well as mid-value. You want to comment on that? I mean, you, like John, speak the same historical language. You know it like the back of your hand. What do you make of what he says? The key thing in both of those periods is that you did have the tailwind of liquidity and Fed easing, mostly coming out of the two down periods, meaning that if you look at small caps historically, they have sustained,

and that's such an important word that you said, sustained outperformance at the beginning of a cycle, very early cycle, because they're getting bailed out by the Fed. They had a near-death experience. And so by having the rate cuts, having liquidity, that's why they can outperform so very much. Let's just show the majors, if we could, again. We're at the highs of the day.

We are above 2% gain for the S&P. So there's the Dow pushing towards 35,000. But the S&P is the one really to keep an eye on today. It has only had one other 2 plus percent one day gain in the entire year. So this would be number two of that. And the Russell 2000, of course, has been just an astonishing story all day long. It's now above that 5% threshold. So what's another area, John, that you like that others hate? Well, the interest rate sensitive areas,

I think, are some of the most attractive. know, I heard you on the earlier show talking about utilities, and I heard some comments made that utilities are defensive play. But I would push back gently on that notion. The reason I push back on that is in 2000, utilities were up 50. 2019, they were up 22%. Utilities can have big returns. I completely agree with Cameron that you do need an industry environment for a tailwind for that. But I guess that's where I pivot back to. If you look at the spread between the two-year bond and the Fed funds rate, every time you get elevated, a cut has come. And I think when you get valuation dislocations like we're seeing in utilities, regional banks, and REITs,

with that elevated Fed funds rate over the two-year bond. I think it is wise to allocate capital to those areas. So I like some of the utilities, Scott. I also like the banks. Commerce Bank Shares is one that we own. They've been raising their dividend. They've got 3% NIMS and they've got very few charge-offs on their balance sheet. And they reported well just a couple of months ago. So I think there's lots of pockets investors should be looking at. And I think that unfortunately what always happens, everyone's chasing large tech, the NASDAQ's up 35. I sat on this show with you a year ago. Nobody wanted large tech. The argument was, hey, rates are going to go higher, sell tech. Now the argument is, hey, rates are high, buy tech. So I have a hard time with that. I like to go where the valuations are pointing me as opposed to getting caught up in where rates are going.

I think that the contrast between the setup for tech going into 23 is the exact opposite today as we go into 24. Because to John's point, 23, as we started the year, nobody wanted to own tech. Estimates had been cut significantly over the course of the year. Nobody wanted to own tech. Estimates had been cut significantly over the course of the year. Valuations had fallen over 30 percent for the tech index over the course of 2022. So it was the pain trade. Now it's very different. Valuations are up 40 percent. You see positioning is now very crowded. You also have sentiment that has turned very positive. And so it's not to say these aren't great companies and they still can't perform and navigate a tough environment. However, the setup is very different. You know what's so interesting too?

In other periods, you would say, well, if there was going to be a rotation into these beaten down areas, it might come from tech. But because we've gone from a there is no alternative to stocks where most were fully invested in equities rather than cash and bonds, just relative to where rates were.

Now the rotation may come from outside the equity market altogether, which is why tech necessarily doesn't have to suffer, even if other money comes in into these beaten down areas, comes from cash or elsewhere. Yeah, it could relatively underperform, not by going down, but just by not going up as much. And that would be the scenario that you that you laid out. Yeah. All right. We'll leave it there. John Mowry, thanks so much. Cameron Dawson, we'll see you soon as well. Let's get to our question of the day. We'll ask you what we asked our guest. Is the bear case now officially dead? You can head to at CNBC closing bell on X to vote. The results are coming up a little later on in the hour. In the meantime, semi stocks, they are higher today.

Michael Burry, Scion Asset Management, is making a big bet in that space. Christina Partsenevelos joins us now with the stocks she's watching. Christina. Well, according to the 13th filings, Burry's team did bet that iShares semiconductor ETF, that would be the SOX, ticker SOX, would drop by taking a put position against 100,000 shares. This sounds like it could be a negative, but this short position could be a hedge against a long position in Q4. Recall that these numbers I'm sharing with you right now are from last quarter, ended September 30th, my birthday, and Scion could have easily

bought up a bunch of SOX shares on October 1st. The SOX, though, did drop about 5% in the quarter. So depending on when Scion took that position, they could have made a lot of money on that 5% drop. But year to date, the SOX is up over 45% and up 4% today. Happy belated. Isn't that the moral of that report? It was a little throw in there. Next year, you'll get it.

All right. Christina Partsinellis. We'll see you in just a bit. We're just getting started. Up next, the Nasdaq leading the major averages today. Microsoft hitting a record high ahead of its big AI event tomorrow. So how should we be positioned and navigate that space into year end? We'll ask Plexo Capital's Lo Tony after the break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC.

Shares of Microsoft are higher yet again today. The stock hitting a record high ahead of the annual Ignite conference tomorrow out in Seattle. Tech giant expected to reveal its latest developments on the AI front. Let's bring in CNBC contributor Lo Tony of Plexo Capital to discuss. Welcome back. It's good to see you again. Thanks for having me. It's a great day to be on the show. on the show yeah i'll say biggest thing that's going to happen tomorrow is what i think it's going to be the ability for microsoft to really talk about how these tools for a i are now being incorporated into more products were looking for a

big announcements from co-pilot to span across from developer tools, kind of helping developers create, manage, and deploy software more efficiently. I also think there's going to be some exciting developments around the cybersecurity front and the ability to have a Copilot specific to the IT professionals trying to combat threats from the malicious hackers. We could get a chip. I mean, I think we're expected to do that. But, I mean, Microsoft is still going to be highly reliant on NVIDIA chips, which it currently buys.

But can you make the argument that maybe not as much, or is that overstating it? No, look, I think ultimately if we think about where companies try to create moats, especially in the tech space, I mean, we can look at companies like Apple as the best one to talk about the concept of vertical integration. It's do I have the ability as a company to be able to have an assembly line that has all of the various components necessary for my customers. So if we think about cloud in particular, and especially looking ahead at where the AI revolution is taking place, it's partially dependent on these cloud servers that Microsoft has. And when we think about, you know, who is the chip provider, it'd be nice if there was the ability to, again, in that

concept of vertical integration, own the actual chip inside of the hardware as well. So I don't think it's far off. You know, you look at what Google is doing, you look at what Amazon is doing, definitely is a place that a lot of folks are thinking about. You think we're giving AMD enough props? The whole conversation seems to be about NVIDIA, and then maybe it's about Broadcom after that. But over the last month, AMD's up 14%.

Now, I know NVIDIA's back near 500, but it's, you know, NVIDIA, I mean, AMD's had a nice little move here. Yeah, it has. And look, they've done a good job at trying to compete with NVIDIA in this arms race for chips. AMD's new chip kind of raised the bar. And then I guess, you know, Nvidia stole a little bit of their thunder with the recent announcement of the Nvidia chip. I do think if I were to take a step back and just think about, okay,

who's actually buying these super high performance chips at the high end? You know, it's a smaller set of customers. You know, the smaller companies are definitely using some of the older chips. But yeah, to your point, AMD is without question a player. Performance-wise, if we look at the memory comparison for AMD's new chip versus NVIDIA's, there was a wide gap. NVIDIA closed it a little bit, but AMD is definitely a contender. But it's going to be hard to displace NVIDIA.

Forgive me for interrupting you there. You always give us a good sort of big picture view. I want to take you down, though, micro, if I may, to your world, because we haven't really checked in about, you know, private markets of late, what's happening from venture. Are we nearing the exit, so to speak? As you know? There was a crack in the door. A lot of companies that got out didn't do well post-IPO. How are we feeling now? Yeah, this is a really important concept to think about, which is the timeline that companies typically take to raise capital in the private markets, which is what your question refers to. And fortunately, a lot of the companies that raised very high amounts of cash at higher valuations, you know, those companies

are likely going to be looking to raise again next year in Q1 and Q2. So I think on the high end, when we think about those companies that we're raising at especially, you know, 500 million, billion dollar plus valuations, we're going to see a lot of those companies come back to market. And I'm not sure what the appetite is going to look like even after we get across the first of the year. So I think we still may have some more bad news to come from some of these private companies. Now, that said, at the earlier stages of a company's evolution, I think we are seeing a comeback when we look at companies that are raising smaller amounts of capital, that initial capital, those checks of a million up to about five million or so.

I think a lot of those companies are benefiting from a consolidation of talent, fewer companies out there competing for talent. And those companies are going to be able to have less pressure to be able to focus on producing the results necessary to raise. So I think we'll see a little bit of a separation, a bifurcation, so to say, between the large companies that raised millions of dollars in 2021-22, valuations were high relative to these companies that are newer to raising capital. I think those are the companies that we like to take a look at. Yeah, I mean, sometimes the anecdotal evidence from people like you tells the biggest story. I mean, how many pitch books are you

looking at these days? Is that picking up in and of itself? I got to tell you, you know, it's funny because I was just having this conversation with a colleague about I cannot believe how many inbounds we have from both venture capital funds raising as well as startups. And on the venture capital side for those funds that are raising, we're seeing a lot of interest internationally and a lot of specialization around surprise, surprise AI. And then on the company side, it's somewhat of a similar story. You know, we're seeing a lot of inbounds come in with some pretty novel companies. But again, it almost seems like everyone's doing a search and replace around, you know, Web3, blockchain and replacing it with AI. So without question, everyone's highlighting the fact that they either are an AI company

or want to be an AI company. I was going to ask you if you're getting a look at anything other than that. Yeah, exactly. I mean, that's where the valuations seem to hold fairly steady. You know, some might even argue we're in a little bit of a bubble around the valuations for AI companies. But I think it's to be expected, you know, when we see this paradigm shift and we haven't really seen a shift like this in quite a while. I think the consumer side is also interesting. One of our portfolio companies, Humane, just announced an AI pin. So it's kind of thinking about the next step past mobile devices, no screen to input information per se, but really leveraging open AI and being

able to have a conversation with this pin that's able to see things in the world around the user. Pretty exciting stuff. Yeah, no doubt. Appreciate having you back. What a day to do it as well. NASDAQ's good for 350 points, two and a half percent. Lo, we'll see you soon. Sounds good. Take care. All right, you be well. Lo Tony, Plexo Capital joining us here. Don't miss a CNBC exclusive interview, by the way, with Microsoft CEO Satya Nadella. It's live from the Ignite event. It's tomorrow, 1 p.m. Eastern time. All right. Coming up, stocks ramping as we head into the close. See what the Dow right now is up 574 points. Yields are moving lower across the curve. Up next, Ed Yardeni is back with us,

breaking down his first reaction to today's CPI print. And of course, the big day in the markets. Closing bells right back. Well, we have a big rally on our hands today following that cooler than expected CPI report. Joining me now to discuss Ed Yardeni. He's the president of Yardeni Research. Good to see you. Welcome back. Thank you very much. I'll just ask you first for your thoughts on what's happening here. Well, the CPI was a great report. You know, I'm a big believer that you should always take out what doesn't support your story. And if you take out shelter from the CPI, it was up like 1.5 percent.

If you take out food, energy and shelter, it was up 2 percent. So we've already got inflation pretty close to where the Fed wants it. They actually wanted a 2 percent. So we just have to wait patiently here. But shelter inflation is definitely coming down. I think the market read it the right way. And I think this rally is going to continue. My year-end target is 4,600. And it's turning out to be too conservative the way things are going. And I think if we actually go up to 4,600, that's actually a breakout, which could set us up for a good

rally into early next year. You mentioned stories, the bear story. Can we say it's dead, or is it too early? I've said it's dead for a long time. I mean, I thought October 12th was the low. I even thought that the bear market wasn't going to be long sustainable. But I think the bear story requires a recession, as you said, Scott, and it's hard to see a recession out there with the economy continuing to grow quite well in the face of what has been a very significant increase in interest rates. The economy is resilient. That's really the bottom line of it. The consumer is resilient. And as long as the labor market continues to show lots of job openings,

I don't think we have to worry about a recession. And I think that takes away from the bear story. And now with this rally and with interest rates coming down, that helps on the valuation side. You know, this rally and with interest rates coming down, that helps on the valuation side. You know, the third quarter earnings reporting season is just about over. And the result is going to be that the earnings just rose to a record high. So all very impressive. Right. But I mean, you could you could say, couldn't you that, OK, the economy remains resilient? I'll give you that um but what happens if rates remain remain elevated right but the fed is just not good fed's not going to cut

right because powell doesn't want to be arthur burns so what what happens when you put still resilient economy with still elevated rates one plus one what does that equal for the stock market in my forecast i don't really have to have interest rates come down significantly. I think, you know, it's always everybody wants to be a contrarian and bet against the Fed. I've actually been betting on the Fed that the Fed is going to get it right. And right now they're talking about two rate cuts, 50 basis points next year. I think that's very reasonable. And I think the economy can live with these levels of interest interest rates it's already proven that it can do that. I think if rates stay here would really be it.

An indication that the economy is actually pretty doing pretty well. And rates at these levels are a real windfall for a rough fixed income investors. That's one of the reasons by the way, that high interest rates haven't been all that negative because there's a lot of people who were basically suffering when interest rates were close to zero. And now they're getting quite a windfall in net interest income. You think we get people to move out of cash and into equities? And if so, when? Well, I think, as you mentioned before, it's not essential that that happens. There is a lot of cash out there, and it may not take that much to move the market higher. But, yeah, I think the market could very well convince some people that they've got a misallocation in their asset portfolio, too much cash, not enough in bonds and stocks. Yeah, one day also doesn't make a broadening make. I'm looking at the Russell.

I've just been astounded by the move today. It's up 5.15 percent. You need some level of sustainability behind that before you can declare this still, you know, a broadening market, right? Right. Well, I'm not a technician, but technicians certainly must be marveling at today's action and the action really since October 27th when the correction was over. This has been a classic bull market since October 12th. This is the third year of an election year, and that's usually a very good year. We had an amazingly strong January barometer at the beginning of the year.

We had a weak September and October, and now we're getting a very strong November. I think we're already in the Santa Claus rally, and it may surprise even the optimists like myself. But I mean, it's not like earnings were fabulous, right? I mean, they are somewhat lackluster, and maybe the projections for next year, given lag effects and the like, are still a little too elevated? No, I think they're quite good. I mean, as I said, we're talking about record earnings in the third quarter. And I know that analysts have been shaving down their estimates for the fourth quarter

because they've been getting some cautious guidance from companies. But companies have to do that in the kind of environment we're in. You know, as an economist, as a forecaster, I think next year is going to be a better year. And I think earnings are going to be strong. Look, Scott, I've been at the top end of forecasters on earnings. I thought 225 this year, 250 next year, and 270 for 2025. And I've been saying that for over a year. And for over a year, I've been kind of wondering whether I should lower it and I haven't because the economy continued to perform pretty well as

I thought it was actually again everything has been working out better than optimists like myself have been thinking I mean three-quarter economic growth was fantastic I wobbled a little bit uh the last time I was with you thought well maybe we'll get to 4,400. And now all of a sudden I'm back to saying, no, no, we're probably going to see 4,600. Not today, but the next few days is quite possible. Yeah, given the kind of day we're having, it's obvious why you would think. I mean, look, you've been strong in the face of a lot. And Bulls like you are having a flex.

I get it. I get it. It's the kind of day it is. That's right. Yeah. We'll see you soon, Ed. Thank you, as always. Thank you.

Ed Yardeni. Bye-bye. Joining us on Closing Bell. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is back with that. Christina. Well, let's start with Enphase Energy. Shares are up double digits, but that still can't save the stock this year.

And one EV maker sitting out this market rally. I'll explain why after this short break. We're 15 from the bell. Let's get back to Christina Partinovalis now for a look at the key stocks she's watching. Christina. I'm starting with Enphase Energy and other solar stocks that are up big today after a lighter than expected inflation report this morning. Solar companies and of course tech stocks are sensitive to interest rates, and the light CPI report bodes well for future rates and phase, though. You can see up 16 percent, but year-to-date, still down 65 percent. And shares of EV maker Fisker are sitting out today's rally after the company's earnings fell short of expectations. Fisker had originally planned to report his third quarter results last week, but the abrupt departure of its chief

accounting officer and issues with financial reporting forced the company to postpone. Shares are down 20%, Scott. Wow. Christina, thank you. Christina Parts of Nevelos. Last chance now to weigh in on our question of the day. We asked, is the bear case now officially dead? You can head to at CNBC Closing Bell on X.

The results are neck and neck. We'll tell you what happens after this break. Votes are split. No, right now, is the winner. But we do have like 10 minutes left in the show, so who knows? Maybe we'll tell you at the very, very end. Straight up, homebuilders heating up as the group has its best day of the year, plus snaps surging after a new deal in the e-commerce space.

We'll take you in the Market Zone next. All right, we're in the closing bell Market Zone. CNBC Senior Markets Correspondent Bob Pisani here to break down these crucial moments of the trading day. Diana Olick with us today on the Homebuilders leading the rally. And Julia Borsten on Snap's partnership with Amazon. Bob, I'll turn to you, of course, first. It's only the second two plus percent one day gain in the S&P of the year. We're on track for that. Paul McCulley calling it today, quote, rational exuberance. That is a great line. And this is about as exciting as it gets as a stocks reporter. 10 to 1 advancing to declining stocks.

What do we have here? We have lower inflation, number one. If the Fed's done raising rates and yields are lower, this is going to have a very positive effect on consumers and borrowing. This is why the banks are up. Key Corp up 10%. You never see these regional banks move 10%. Well, that's why the Russell is doing what it's doing today. There you go.

They're financials. 30% financials in the Russell 2000. So the markets are acting like a soft landing is now attainable. So the pain trade has been short the market. And that's exactly what's happening right now. What about earnings? Well, if really this is happening, that the consumer is going to act better, all of a sudden borrowing costs are going to go down. Earnings revisions should happen on the upside. Remember, the fourth quarter earnings numbers have been coming down a little bit recently. That could well turn around. That's another factor in the rally. Finally, as our cast keeps pointing out, a good part of this, we don't know how much,

is obviously short covering. Institutional traders have been caught off sides, the pain trade. Well, the other pain trade is money going into tech, mega cap, and nowhere else. Now, one day doesn't a new trend make, but let's see what happens if you're right and the soft landing trade really takes effect, because then you'll have money going into

these other cyclical areas. Well, that's what's happening today. So we see banks, I see REITs, I see utilities outperforming mega cap tech. I see retail, I see micro cap, I I see utilities outperforming mega cap tech. I see retail, I see micro cap, I see mid cap outperforming mega cap tech. Utilities number one today, up three and three quarters percent. I see transports outperforming big cap tech. I see mid caps in general. Equal weight, way outperforming market cap weight. So the equal weight S&P is up three percent, market cap weighted up 2 percent. So

there is your point there. Well, it's about time. It's about time. And mean reversion, all these people waiting for some of the value trade to come back, et cetera. This may be their particular moment. So here's the question I have. The missing piece of this is the FOMO crowd. How many of all those people who piled into money market funds and one-year treasuries are going to start getting FOMO? Because we're heading for 20 percent up in the S&P 500 right now. Remember, we have strong seasonals on top of this going in. So your 5 percent clooping coupons is not going to compare to that. What percentage of those people might be dragged in?

We've seen the institutional people. You know, Scotty, they don't have a choice. They've got to be dragged in. Otherwise, they're going to underperform. But it's the retail people sitting at home, the fear crowd who've said, I don't get the I don't get why it's worth owning stocks. Let me clip five percent coupons. Are those people now going to see this and start getting different thoughts? Yeah. Remember those one year treasuries? They're going to roll over those people on. They're going to have to make they're going to be forced into making a decision in early 2024.

Well, that's going to decide really how how strong this rally decides it's going to be. Bob, we'll be back to you in a minute. Diana Olick, what's going on in housing today? You know, discretionary is having a huge day and this is a big reason why. Yeah, Scott, the builders are happy because mortgage rates just took another leg lower. It's as simple as that. After a wild ride over the past few months with rates going briefly over 8 percent, the average on the 30-year fix dropped 18 basis points this morning to 7.4 percent. Even according to Mortgage News Daily, mortgage rates, of course, loosely follow the yield on the 10-year Treasury. Home building ETF ITB took off on that news, now up over 6 percent on the day. Big names like Lennar, Pulte, D.R. Horton also up decidedly

on the day as rates could drive more demand. And you'll remember they got crushed last month when rates went over 8%. They have been benefiting from lack of supply on the existing home market, and they've been buying down mortgage rates to help their customers. This could help them save some of that money. The question now, of course, is how much lower can mortgage rates go? Really, I think we need to see a six on the 30-year fix, a six handle to get more potential buyers in the door, not to mention more housing supply, Scott. It gives you an idea where we've been, Diana. If a six is a breath of fresh air. I remember three. I still remember three. Yeah, of course. A lot of people do. Diane Olick, thank you so much. Julia Boorstin, what's happening with Snap? Well, Snap shares are surging after Amazon said

late yesterday it will run shopping ads on Snap and it will allow Snapchat users in the U.S. to buy some products within the app without having to swipe away and leave. Now, this is seen as a boost to Snap's ad business, and that is why shares are now up about 7.5%. Now, Amazon does have a similar partnership with Pinterest, announced in April, and one with Meta to put those shoppable ads on Instagram and Facebook. That was announced just last week. And Evercore saying that these partnerships could, quote, help drive more robust overall ad targeting and measurement on Meta and Snap's ad platforms and potentially greater user engagement, keeping users on his apps during transactions. Now, all of these social players are competing with TikTok, which has really emerged as a social shopping behemoth.

Back to you. Big day for a lot of tech names. Julia Boyson, thank you so much. There's the sound effect for the two minute warning. You have 20 Fed speakers this week, Bob. 20. Thank God I'm not not Steve Leesman. All right. Man is a saint. So Leesman had, you know, these comments from Goolsbee today and they're going to filter through now in a big way over the next few days. Let's see what they collectively have to say about the CPI print. You get PPI. You got some other economic data. We need to pay attention. So let's see if the PPI kind of supports this tomorrow. Heaven knows it

could reverse. I don't think so. My theory now is I'm feeling a lot better, a lot more bullish. I think the onus is on the bears at this point. And I'll say that because we had two bear markets in a year. Now, remember, from January to September of last year, we were down 25 percent. And then we had another bear market from, what, the end of July to the end of October. We were down 11 or 12 percent. Two bear markets in a year. We've gone nowhere for two years. How many more bear markets do we need to convince people that the low was put in in September or October of last year? I think the onus is on the bears to demonstrate we're going. And I think the soft landing is becoming more attainable. I could still see the onus being on the bulls to prove that we're not going to have these lag effects that's going to push the economy off the edge at a time where, you know, consumer spending is slowing a bit.

Got the Bank of America data out today. You know, the jury is still out. As I said yesterday, you got people dug in on both sides of the fence. It could be hard to get, you know, either side off. I love Mike Wilson raising those numbers that for next year. Still looking for thirty nine hundred for this-term bull, short-term bear, is that what the way it is this year? All right, well, we're going to get only the second two-plus percentage game day for the SEC. And the Russells

are going to close higher by more than 5%. Just astounding day for stocks.