Closing Bell - Closing Bell 11/15/23

Episode Date: November 15, 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 Wobner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with stocks on the run. The rally extended after another read on inflation comes in better than expected. Coming up momentarily, I will ask the Wharton School's Jeremy Siegel just how long this can last and if the bear case is now truly dead. In the meantime, your scorecard with 60 minutes to go and regulation looks like that, but mostly a positive day for the majors. It had felt like we were taking a little bit of a breather, but wouldn't you know it, we begin the final stretch. Got a little bit of a pickup here.

And that following the best day in months for your money. Yields, they've crept back up today. Might be putting a little bit of a lid on stocks at the moment. There is the 10-year no yield, 453. NVIDIA, wow, that's been up 10 straight days coming into today. It's giving a little bit back. Microsoft making a big announcement about a new chip today. How about Disney?

A new activist investor there. The stock up nicely. And Target beating on earnings and surging as a result. It is the best name out of the S&P today. It takes us to our talk of the tape. The staying power of this move. As the market bets the Fed's next action is a cut in interest rates. No more hikes. Let's ask Professor Jeremy Siegel. He joins us once again.

Professor, good to see you. I guess you have reason to be smiling. What do you make of this move in the market? Where can we go from here? Well, Scott, I like it. You know, I had said that November is one of the very best months of the year. It's certainly proving to be great news on inflation. What I would say is that, you know, Jay Powell has to be on the lookout. We are slowing. I'm not saying we're going into a recession at all. But he has to be as sensitive to the real data going down, you know, as he claims he's so hypersensitive to that inflation data. I really think the next move is going to be a cut, even if there isn't a recession, just because of the slowdown. It could come as early, actually, as March of next year.

I want him to un-invert this curve. That has, as we all have been saying for months, has never been a good sign through history. We want to get that short rate below the long rate, and Powell can do that. Are you saying that it's all clear on the inflation front that the bear case is in fact now dead? I would say it's all clear on the inflation front. And by the way, my biggest worry is Powell is going to bring up that argument about the 1970s again. Oh, stop, go policy. You know, Burns lowered the rate and all of a sudden inflation zoomed up again. We are in a totally different situation now. Back in the 1970s, we were just pumping money in every single month out of the year. We have had no money growth, Scott, for two years. We've had no deposit growth. And this is as long as we've

kept records on commercial banks for three years. So liquidity is being squeezed. We are not going to have any more inflation. Sure, certain core rates will go down slowly, but that's not the battle that he has to worry about in the future. I mean, there are others who say that's not so true and not so fast, right? Even, I mean, Jamie Dimon, professor, says, quote, people are overreacting to these short-term numbers and they should stop doing that, that the Fed is right to pause for

now, but that they might have to do a little bit more. He's not so convinced that inflation is going to go away as quickly as you believe. Well, as I said, there'll still be elements of core inflation, but if he waits till all that elements of core inflation go to 2%, I think we could have a recession. I'd rather take a percent here a little slower and keep the economy out of a recession. I think that's what the American public will like to do. And, Scott, as we've talked about, we are in election year. You know, what does the American... how people like to do and it's got as we've talked about we are we are in election year uh... uh...

but you know what what does the american the worst thing that can happen is that unemployment suddenly comes up you know four-and-a-half five percent uh... and uh... buys as maybe uh... uh... six months earlier we're gonna get down to two and a half percent inflation i don't think that's a trade off american public public wants. Certainly not the trade-off that the administration wants or the politician wants. So my feeling is that he'll move really easier on that,

and he has to be really sensitive to any real slowdown that could still plummet into a recession. I'm not saying that, but I would say there's more risk on the downside now than on the upside. Yeah. What about the lag effects? It's the obvious follow-up to what you just said. We really have no way of knowing what the Fed's already done and the impact it still might have. We already know the consumer's slowing, you know, because of the backbreaking price increases that they've seen over the past year. You can only deal with that for so long, right? Absolutely. And look at when we, you look at the mortgage rate went to 8% in the last month.

I hear from home builders, wow, that really slowed things down. Unfortunately, our housing price statistics are two months old. So, you know, they're not yet showing that slow down. We do see it in rents. We do have up-to-date rent indexes that are going down. And remember, shelter is the biggest component of the CPI. It's over 40 percent of the core CPI. So, you know, that that does not seem to me to be in any inflationary mode at all. I think JP Diamond and others are worried about the deficit. That's a long term concern. But I don't see that as a concern over the next six or twelve months six or twelve months we're at 4 500 on the s p professor given what you just said what what's a reasonable expectation you have for where stocks can go if we judge it by the price action on the s p 500.

well if we we just take november and december and we don't see a big slowdown. I mean, we see a slowdown, but nothing that looks like it's turning into a recession. You know, we could do another five, six, seven percent, maybe even 10 percent. Of course, that's six weeks away, Scott. It's really hard to predict what's going to happen six months in the stock market. But I'm, I, I, listen, even today with this rally, we're at 18 times next year levels earnings. That's with the Magnificent Seven. Take out the Magnificent Seven, we're at

15 times earnings. Or lower. Take small stocks, which, you know, rallied so, you know, wonderfully yesterday, even today, continuing the rally, 12 times earnings, 13 times earnings. I mean, they're almost priced for a recession. So anything that hints that, hey, maybe we're going to have a soft landing, you know, think of how far they could go up.

Yeah. Would you would you advocate to, you know, came alive in a big way yesterday, but have been, you know, sleeping forever, it feels like. Would you advocate now putting fresh and new money into all of the other areas beyond big tech? Yeah, I would. I really would. I'm not saying, listen, the big seven aren't great and, you know, that they're due for a fall. But when you're a long-term investor, valuation actually means more than just earnings growth. You're short-term, chase earnings growth. Long-term, you look at valuation. And if you're structuring a longer-term portfolio, you're going to be rewarded with those down the road.

If not, you know, this month, it will come and probably sooner rather than later. Well, I wish I had people on my panel who wholeheartedly agreed with you, professor. But life isn't that simple, as we know. I'm going to bring in Lauren Goodwin now of New York Life Investments and Jordan Jackson of J.P. Morgan Asset Management. They both have been more cautious than you. We're going to find out right now if they still are. Lauren, I think you might be. I sure am. I want to acknowledge, I think this is it. This is the Fed relief rally that we've been looking for all year. And the data that we're seeing come in on the inflation front, on the spending front is slowing.

So I think the Fed really can stay on pause. But there's a couple of buts. First, the bar for cuts is really high. Inflation is still high. The Fed has to be very vigilant. That's the second. But price levels are still high. And I'm hearing from clients, even financial professionals, much more about how prices are 30 percent higher than they were pre-pandemic than about the 0.1 or 0.2 or 0 percent month-on-month growth that we talk about here. And that third but is that because we are seeing this slowdown and because there still is pain to the consumer, this relief rally is probably just a step on the train on the way to recession. So I think investors should be using it as an opportunity to make some tactical gains and rebalance.

So, I mean, you know, the professor obviously doesn't think we're going to have a recession. But worst case, if we do and it starts to look like we might, the Fed's going to come to the rescue immediately. Do you not buy that? I don't buy that as long as inflation is still in that higher than 2 percent core level where we still are. Our Fed checklist has been super consistent all year. You need to see inflation expectations and core inflation in line. Inflation expectations are core inflation isn't. And you need to see wage growth and unemployment consistent with that price stability over the medium term.

Those things aren't intact either. And as long as that is the case, I don't think the Fed can cut. Jordan, I'll get to you in two seconds. Professor, I want you to respond, though. Well, first of all, I think Lauren is right on one thing. I mean, if Powell waits as long to fight inflation as he does a slowdown that turns into recession, it is not good. So I'm saying, you know, you said that I said Powell come to the rescue.

He absolutely should. And I'm going to lend my voice to saying, hey, do it. But listen, you know, the way he fought inflation so late doesn't say that it's a sure thing by any stretch of the imagination. But I do think that, you know, given that inflation has come down, that's why it's such good news. He has much better cover than he did, let's say, a couple of months ago. Don't forget, still has a dual mandate, employment and inflation, not just inflation. So given a political year, you know, if he bends towards the other, he'll say, hey, that's part of what Congress told me to do, you know, if he bends towards the other, he'll say, hey, that's part of what Congress

told me to do, you know, Federal Reserve Act 1913. So, you know, my feeling is that that will happen. But I do agree that if you ask me what is my biggest worry, is Powell's going to delay as much on the downside as on the upside. And I'm going to do everything I can to convince him that he shouldn't. You keep grabbing that megaphone right here with us. All right, Jordan, five, six, seven. Hey, maybe another 10% we can put on top of this rally already, says the professor.

What do you say? I'd say over the next couple of weeks, I'm a little bit more cautious. I'm a little bit more concerned just about the Fed going to have to reaffirm the hire for longer mantra. I mean, look, the markets are now pricing in almost a full percentage points of rate cuts next year. And I think that's just premature, just given what we're seeing with the data. We are seeing signs that the economy is slowing, and that's been highlighted here on this call.

But inflation is still maybe being a little bit sticky, a little bit stubborn here. Financial conditions have loosened as of late. And so I do think that they had talked about that financial conditions, the tightening that we saw, had done the heavy lifting from a rate hike perspective just a couple of weeks ago, and now it's going in the opposite way. So I'm firmly in the camp that the Fed is probably finished here, but they're going to still have to tout that higher for longer mantra and push back on these aggressive rate cuts being priced into the market.

And that threatens valuations over the very short term. I know the broader market is roughly at average valuations when you strip out the top 10 names. But I think those top 10 names valuations have to catch down to the rest of the market, not the rest of the market catching up from a valuation standpoint. So do you not believe what the professor suggested, that now is the time to go to those other areas of the market that have been so-called left behind? I think you've got to be selective. I mean, the rest of the market is roughly flat from a total return perspective on the year. So I think we catch down maybe a little bit.

But even if you look at just tech, I think maybe it's not no longer a GARP, it's TARP. Tech at a reasonable price. That's where kind of investors should, I think, should be looking. I do think there are pockets of opportunity in the broader market, but I'm not buying beta. I'm not buying a passive index. I'm actively approaching high quality companies that can deliver on earnings growth in a higher

interest rate environment. Companies that probably are still expressing a bit of pricing power in a downward inflationary environment. And so that's how I'm thinking about the market over a short term. I'm just hearing, Professor, from both of our other guests that it's just kind of too soon. It's too soon to look at these other areas of the market until we get more signs of things being a little more clear. And right now they're opaque enough that it's too much of a risk to do that. I can understand that, but in all my years with the market, and I'm sure they'll agree, you know, when the coast looks clear, it's too late. The market has seen it.

The market's not always right, to be sure, but it senses out something coming. And, you know, that movement was really impressive, I thought, yesterday and continuing today that could bring that rally. I also agree with Jordan, by the way, that Powell and the Fed have to talk tougher than it is. Remember, September with their dot pot, a majority said we were going to raise by December. Now that's virtually off the table. And that's, you that's just going to be another six weeks away. So they talk tougher. We'll see what really does happen once all the data comes in at the end of this year

and beginning of next year. Well, Professor, that must be music to your ears, that they are apparently data-dependent, as they suggest they are. Which they should be. Maybe they did learn their lesson from the mistakes that were made at the beginning when they started too late and thought it was transitory when it wasn't, unless you have a much wider and longer definition of transitory than most. But maybe they learned the lessons the hard way.

Let's hope they learned the lessons. That's what I'm saying. Because they were way too late going up. I don't want them to be too late going down and cause an unnecessary recession. Yeah. Lauren, what about other, you know, other asset classes? You know, when do we get people move out of cash? You know, if rates continue to go down, the pressure, if rates continue to go down and the people who've been sitting in cash continue to see the stock market go up, the internal pressure is going to start getting a little heavy. What has to happen for that to happen?

The best time to move out of cash is about two months before the Fed pauses. So we might already be a little late on that front. And so we are seeing movement from both retail and institutional investors back into the market, wholesale equities and bonds. Early days, but it's happening. And I think that's the right move. The question, though, is if we're seeing a tactical upswing in risk asset, risk appetite, what does it look like for the next three, six months? Because a lot of investors are working their way into the market slowly. There, I think we have to look at quality from an earnings perspective. I really like what Jordan was saying on that front. We also have to look at the structural themes that are going to sit tight for the next six, 12, even

24 months to make that rotation worthwhile heading into what I expect to be a more volatile environment ahead. All right, Jordan, what about you on that same idea of, you know, other asset classes, which may still present great opportunity, like if you're playing, which some obviously are for a rally in bonds at the short end? Well, I truly believe that investors need to have a two-year outlook on rates, not a one-year outlook. It is very uncertain how the economy is going to play out here, where interest rates are going to be over the shorter term. But I think it's fair to say over the next 24 months, you could argue that interest rates are going to be lower. The Fed will have cut rates to some degree. We don't know when they are going to be lower. The Fed will have cut rates to

some degree. We don't know when they're going to start or how aggressively they're going to cut, but to some degree that they'll have started to cut. Inflation will have come back down. Growth will have come back down. And you can paint that narrative pretty succinctly over the next 24 months. Over the tactical horizon, though, I think the sweet spot is sort of the one to three year part of the curve. You know, the reality is the Fed is professing higher for longer. So lock in, right, those juicy rates at the front of the curve, north of 5 percent. Maybe layer on some short credit. Get yourself a little bit of spread at the front end, one to three year paper.

Juice that yield up to about six, six plus percent. And you lock that in for the next 12 to 24 months. I think that looks pretty attractive. I'm still a little bit worried about the technicals in terms of increased duration supply hitting the market at a time where demand for treasury debt is moving from price insensitive buyers to price sensitive one. So I wouldn't rule out a potential another leg higher in the back end of the curve. And so that's why I think one to three years, the sweet spot, once the Fed is kind of puts the stake in the ground and says that they're done, that's when I want to start to leg back into

intermediate and longer duration fixed income. All right. For the record, Lauren was shaking her head yes in agreement as you were talking before we showed the boxes of everybody. Professor, I give you the last word. Leave us with a thought here as we have the Dow up better than 200 points. We will go make a little run here, it looks like, as we hit this final stretch. Yeah. Well, look, I see very few excesses in the market. It isn't like two years ago with the meme stocks. It isn't like the NFTs. It isn't like two years ago with the meme stocks. It isn't like the NFTs. It isn't like

the craziness of the of the pandemic stocks and, you know, you know, the SPACs and all that. I see very little. And that's why I think that this is a very sound rally that has legs. We will make that, in fact, the last word. Professor, thank you so much. Everybody have a good Thanksgiving. If I don't see you guys before Jordan, thank you. And Lauren, of course, thanks last word. Professor, thank you so much. Everybody, have a good Thanksgiving. If I don't see you guys before, Jordan, thank you. And Lauren, of course, thanks for being here with us again as well. We are watching Disney shares today, too, moving higher on reports of another activist investor in that name. Julia Boorstin has the details for us. Julia.

Scott, Disney shares gaining almost 3.5% today on news that Value Act has taken a significant stake in Disney and the media giant is now one of its largest positions. According to reporting by 13D monitors Ken Squire, Value Act started buying up shares of Disney this summer during the WGA and SAG strikes. And key to Value Act's interest in Disney is a thesis that the company's theme parks and consumer products businesses alone are worth a stock in the low 80s a share. Now, notably, Value Act is reportedly friendly in contrast to Nelson Peltz's move at the beginning of this year, with another move by Peltz, now joined by former Marvel chairman, Marvel Entertainment chairman Ike Perlmutter, potentially in the works. Now, looking back at the nearly 12 months since CEO Bob Iger retook the helm,

shares are up just about 3%. We're pretty much flat before today's news. And worth noting that Value Act is no stranger to media stocks. It's currently an active investor in the New York Times Co., Spotify, as well as Fox. Scott? All right. Good to know. Julia, thanks so much. That's Julia Boorstin. That brings us to our question of the day. Does another activist investor in Disney make you more optimistic about that stock now? You can head to at CNBC closing bell on X to vote. We'll share the results a little later on in the hour. In fact, we're just getting started here, though. Up next, Microsoft is getting into the AI hardware arena after announcing two new AI chips. We have a shareholder standing by with his first reaction, plus his top tech plays with that sector at record highs. We're live from the New York Stock Exchange and you're watching Closing Bell on CNBC. Welcome back, Nasdaq moving higher today. Microsoft hits another new record high and that's ahead of its annual Ignite conference today. Let's bring in now King Lip of Baker

Avenue to discuss. It's good to see you. Welcome back. So, you know, Nadella's bullish, obviously, on their chip that they announced today. He thinks they've got the right stuff, that they don't have to be solely reliant on NVIDIA anymore. What do you make of that? Yeah. Hi, Scott. I think the Ignite conference really solidified a couple of things. One is the company is fully committed to AI for the enterprise.

I think the announcement of the AI chip, that was rumored, and they actually officially announced it today. I think it's a good move for the company, to be frank. I think a lot of people sort of think back during the PC arms race where Intel was the only chip in town. And pretty much all companies had to sort of subscribe to what Intel was commanding. And I think having alternatives like Microsoft's chip to potentially be a competition against NVIDIA makes a lot of sense. Now, would it be formidable competition against Nvidia? Only time would tell. But certainly it makes sense from a competitive perspective. I mean, it's not like Nvidia shareholders are shaking in their collective boots today.

The stock was up 10 days in a row. So you'll forgive it if it has a little bit of a down day. And a little bit is probably the most important part of what I just said, because down one something percent. It's like, yeah, OK, so you got a new chip. We're still the leader and we're going to be. That's right. The stock's down about one and a half percent. That's nothing considering that this is a pretty big announcement by Microsoft.

I think what the market may be suggesting is that NVIDIA is so far ahead of its competitors that any new competitors into the industry would probably be relatively smaller, perhaps more niche-y type players. What about tech right here? We've had this incredible run. It's, you know, it's bounced back from, you know, the sell-off that it had within the last couple of two, three months. You know, NVIDIA, since we're speaking of it, was down near 400. Now it's back near 500. Apple was kind of written off for a moment, saying the charts were terrible, stocks going back down.

Lo and behold, they have earnings. Now it's back towards 190. So what is your positioning right now as it relates to mega cap? Well, when we last chatted we we were still optimistic on tech we did think that there was going to be some seasonal headwinds which which did occur as you just noted but we thought the the november time frame was going to be much more positive for the tech sector and that's exactly what's happened we remain bullish for the tech sector for for the remainder of this year and even going into next

year. And the reason why is despite the sector selling at premium valuations, we think it's deserving. We're forecasting mid-teens to high-teens earnings growth for the sector in Q1 2024. We expect those big, large-cap megatech names to be large contributors to earnings growth. NVIDIA, Amazon, Meta, Google. We think those are going to be the largest contributors to earnings growth in Q1. Yeah. What about other areas beyond the mega caps? They suck all the oxygen out of the room. But, you know, there are other areas to talk about, whether it's software or chips. And on the note of the chips, you know, these filings that we're getting now from some of the biggest investors around are revealing interesting positioning. Dr. Michael Burry, obviously, of Scion with this, you know,

play against the chip space right now. What do you make of that? Well, I think there are other areas of interest, certainly, which was just discussed earlier. I think small caps, to be honest, have been sort of the forgotten asset class this year. And we think that small cap tech could find a place for investors going into 2024. The reason why we believe that is small cap tech valuations are generally more reasonable than the large cap tech. And we're seeing extreme wide spreads in terms of performance deviations. So that's not getting a lot of attention. But if interest rates have paused and likely the Fed cycle has stopped, we think that the small cap asset class is going to see a lot of attention. I've got a couple of names on my list to go over real quick. Super Micro SMCI and Rambis RMBS.

I can't remember the last time we've talked about either of these names. And I don't mean you and me. I mean just collectively. It's been everything about mega cap and everything else. That's exactly right. So these are both companies that are small caps, but both companies are a very important part of the AI ecosystem. They've done well, and we think they're going to get more investor intention once people start looking at outside large cap tech.

King, we'll see you soon. I appreciate it very much. That's King Litbaker Avenue joining us here on Closing Bell. Straight ahead, Target. Well, it's surging after its big earnings beat. So is this the green light for more gains in the retail space overall? We'll ask Hightower Stephanie Link. She's in Target. She's in TJX.

So we'll get her view, her playbook just ahead on what other key retailers to keep an eye out for. Because a lot of reporting this week. Closing bells right back. Big story of the day in retail. No doubt Target. Look at that. Up better than 18%. That after earnings beat expectations this morning.

We will get more earnings from Walmart, Macy's, and Gap tomorrow. Here to discuss the retail space is CNBC contributor Stephanie Link of Hightower Advisor. I mean, first and foremost, when you look up relief rally in the dictionary, it says see Target. Because that's what this appears to be today after the stock's gotten you know obviously had gone through a tough stretch i talked to you about that earlier i didn't talk to you about tjx let's hit that one first yeah what do you make of that because that stock is not acting like target no and it's exact opposite, Scott. Whereas Target is such low expectations, a low bar to kind of jump over, TJ, really high bar. It was up 15% into the print.

It trades at 24 times. Out of all the off-pricers, it's the most expensive. And by the way, I think it should be the most expensive because the market share that it has and that it's taking. I thought the quarter was just fine. It's just a relative to expectations thing. I mean, you had a 6% comp versus 4.9, which is what it was expected. But in August, when they first issued guidance for comps, it was 3 to 4%. So they saw an acceleration.

And then, of course, the same thing with what we saw with Target on the margin side and the profitability side. Gross margins were much better than expected, up 200 basis points for TJ. Operating margins beat by 50 basis points nicely. Again, merchandise margins, lower freight costs. That's going to be a theme across the board. We talked about that earlier today. It's the guide.

They needed to just crush the guide, and they didn't. They did raise it for fiscal 24, but the fourth quarter is a little messy with expense timing. So I get why it's down. This company is a wonderful company. They are always conservative. It always trades crappy around the quarter, and that's the time when you want to buy it. Yeah. Are you buying more?

Yeah, I will. I'm going to let the dust settle for a couple of days. Let's get through earnings. But this one in Target, I'll be buying more Target at 13 times. OK, you set me up for that. I had to ask you that. You walked right into it. Cisco, Cisco in overtime. You own that, too. Yeah, so I think the quarter is going to be in line. I think expectations are fairly low. There are two things that we're keeping an eye on. Product orders, and that's going to be down 18 percent following down 14 percent last quarter. If it's anything worse than down 18 percent, stock's not going to like it. Investors aren't going to like it. Stock's

going to go down. Backlog drawdown. That's the second thing that we're looking for. They drew down 3.7 billion last quarter, 2.7 billion this quarter is expected. Again, anything kind of that deviates from that number probably will affect the stock price. But really, at the end of the day, Scott, this is why I own it is because of Splunk. I think that that story is really exciting. It adds to the growth rate. It's accretive. It also increases their software and security revenue and their recurring revenue. That's why I like Cisco at 13 times forward. I thought you could say you owned it because of Chuck. Chuck Robbins, of course.

I do like Chuck. I do like Chuck. I'm looking forward to hearing him later on CNBC on Jim's show. Wow. I was going to tease it. Now I don't even have to. You just did. But, you know, that's how you roll. You don't have to.

That's how you roll. All right. You added to Bank of America, too. That's an interesting one, given just what's going on in the market. And you know what? What hasn't gone on in the market? And I'm referring to the fact that bank stocks just really haven't done much. I know they haven't. And this thing is still down 10 percent. It's been a laggard. And it has been a laggard because of interest rates and their bond book and the concerns there. I think if rates have peaked, which I think they have, the stock should settle in. It's not going to act as crazy as some of the regional banks because there's a lot of leverage there. I think if rates have peaked, which I think they have, the stock should settle in. It's not

going to act as crazy as some of the regional banks because there's a lot of leverage there. But I do think that it's cheap at 0.9 times book value, doing a great job on cost cuts. I like the diversified brand. So it really is all about rates and the valuation. Is it time to get more heavy in these other areas? That's a natural segue from you, you know, buying more BAC and some of the other moves you've made. You know, you haven't been afraid to approach the consumer a little bit more with McDonald's recently, for example. What about that question? Yeah, I do think so. But I don't think it's all or nothing, Scott. I do. As you know, I've been adding to some of the mega cap techs because meta is still cheap

and Alphabet is certainly very cheap and they both have really good earnings. Amazon's not cheap, but relative to its historical average, it is. And I like what they're doing on the margin front in retail. That said, I think there's way better value in industrials. You know, I just bought Qantas Services and I like that one a lot. Parker Hannafin blew it away. I think that's getting a re-rating as well. I'm looking at some of the material names because I actually don't own any,

but I'm looking at a Freeport again. But it's up about 10% in the last couple of days. So we'll wait for that to settle. But I do think there's going to be a catch up. There's a ton of cash on the sidelines. And I think it's all going to go into the market as a whole, not just one small group, one small sector. Wow. So you're that bullish?

Yeah. Yeah, I am. I mean, you know, I've been buying. I've been buying since middle of September when, you know, things were really getting hit. And I think there's a year-end rally to be had. Seasonality we know is in our favor. A lot of negative sentiment as well. You know what I feel about in terms of inflation,

making progress there. I feel good about the consumer. It's not perfect by any means, but I don't think the consumer is dying. I just look at, like you mentioned, McDonald's. Look at Starbucks. Look at Lulu. Look at American Express. There are a lot of good numbers coming out.

So I think you've just got to pick your spots. And I think it's kind of a stock pickers environment. All right. We'll leave it there. Steph, I appreciate it very much. Good to see you again. Good to see you. Twice in one day. Stephanie Link. All right. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by with that. Christina. Prices getting even cheaper on one online Chinese retailer and the weight loss drug craze helping one medical device company. I'll reveal those stock names next.

We're about 15 minutes from the closing bell. Let's get back now to Christina for a look at the stock she's watching. Hey, Christina. Hi, Scott. Well, Catalan is jumping today after posting a narrower than expected loss alongside a revenue beat. The company makes devices used for medicine delivery, including syringes used in some of the popular weight loss drugs known as GLP ones executives say their exposure to that weight loss market is growing and they plan to expand their capacity to meet demand shares are up 11% JD comm is having its best day since March after the Chinese e-commerce giant top earnings estimates the company cited its efforts to make prices even more competitive along with supply chain

advantages and that's helping the stock up seven and a half percent got all The company cited its efforts to make prices even more competitive along with supply chain advantages, and that's helping the stock up 7.5%. Scott. All right. Appreciate it. We'll see you in just a minute. In the zone, last chance now to weigh in on our question of the day. We asked, does another activist in Disney make you more optimistic about that stock? Right now, no is winning, nearly two-thirds. Well, head to at CBC Closing Bell on X.

The results are just after this break. You've got three more minutes to vote. Here we go. The results are just after this break. You've got three more minutes to vote. Here we go. The results of our question of the day. Does another activist investor in Disney make you more optimistic about that stock? The majority of you said nope. Doesn't. Doesn't do anything.

61.2% said nope. Don't care. Coming up, Cisco and Palo Alto Networks are set to report earnings in just a few moments in OT. We break down the numbers, the key things you need to watch for before they hit the tape. That and much more when we take you inside. Bob Pisani sitting right here waiting for the Market Zone. All right, we're in the closing bell Market Zone. CNBC Senior Markets Correspondent, I told you he was here.

There he is, Bob Pisani, here to break down the crucial moments of the trading day. Plus, we are watching two tech earnings in OT today. Pippa Stevens on Palo Alto Networks. Christina Partsinevlos on Cisco. Bob, I'll begin with you. I mean, it's a pretty good follow-up to what you got yesterday. I don't think people thought we were going to just be off to the races again today. Look, it's sideways most of the day.

Now, I know people say, oh, gee, we're up six points in the S&P. That's not very exciting. But I think bulls should be very excited. I see small caps, again, strong. I see mid-caps, again, strong. Banks, again, strong. Transports, all these had terrible performances up until recently. I see tech lagging.

That's why the S&P isn't up so much. So look, Nvidia, Amazon, Meta, Salesforce, all down. This is called rotation, and it's great for the markets. So look, Russell 2000 up 6% this week, Scott. When was the last time you saw that? Mid-cap's up 4.5%. NASDAQ's only up 2%. S&P's up 2%.

Equal weight S&P up 3%. That's rotation. I like what I see, and I know it's not as exciting today as it was yesterday, but we're getting a broadening out of the rally. The equal weight sectors of the S&P, they're all up 3% to 5% this week. The market cap weight is up 1% to 8%. They're more lopsided. So inflation's driving this whole story right now.

It's hard to have higher interest rates in a declining inflation environment. And that's what we're continuing to see. So what's it mean? Look, if the Fed is done, we might have a soft landing. They might actually pull this thing off, which nobody ever believed that we could have happening. So what's this is going to have a positive effect on the consumer. It's going to have a positive effect on borrowing. It's going to have a positive effect on earnings in 2024. Those numbers are going to start going up. We have 240 right now. Those numbers are going to start. If it happens right now, look, the trend, what the market is telling you right now, the way it is rallying, the sector's most beaten up by higher interest rates are rallying the most. That's telling you right now

that a soft land, the market now believes that a soft landing is not only possible it may even be likely you know it's hard to it's hard to know i would say this you're you're at the end of the year seasonality is in your favor you got it let's can it last for the rest of the year certainly let's see what happens in the new year right let's see if it can how much it can really continue if there really is a belief that the lag effects are not going to have some sort of negative impact more than they already have. You know what's the missing element here? It's the FOMO investor out there. All those people, the $6 trillion that are in money market funds that are out there. And I know a lot of them are savers in general.

But will those people get back in or not? Well, that's the real rotation to look out for, not the one from mega cap to these other areas. Don't you think a lot of those people are really, really sticky that at 5 percent they're going to sit there, even if they have to roll it over next year at 4.8 or whatever, it's slightly lower. They're going to sit there and say, hey, I don't care. I just like the certainty of knowing I get a real yield and it's a real positive yield. Well, if you believe inflation adjustment. Yes, they would. If they also believe that David Koston, for example, is going to be right and you're only going to get a 5 percent gain in the S&P for next year, 6 percent with total return

and the reinvestment of dividends and the like, that will keep some people sitting in the 4% to 5% money markets. Who thought they would flip around? Costin is a little more conservative. And our friend at Morgan Stanley sounds kind of bullish, actually. Is it a weird world? Speaking of bullish, how about Jeremy Siegel, top of the program as we bring it full circle, says, look, you can get 5%, 6%, 7%, I don't know, maybe 10% more out of this run before

the end of the year. Jeremy has been right. Jeremy's observations. I listened to Jeremy. He had a huge influence on me 25 years ago when I became the stocks correspondent because his book looked at the whole history of this business. So this man is a market historian. You're also partial to Philly people. I mean, I totally get it. He lives down the street from me. But the point is that the man knows history better than all of us do. So when he speaks, I listen very, very carefully because he's not going to go too far out past what he knows is history. So I think that that's very

plausible. I'll get back to you in just a moment. Pippa Stevens watching Palo Alto Networks. That stock is not quite a double this year, but it's not that far away either. That's right, Scott. A big outperformer this year, but slightly lower ahead of earnings. And Wall Street analysts are expecting Palo Alto Networks' Q1 results to be at the midpoint of management guidance. Now, one key area to watch is firewall demand after weak quarters from Fortinet and Checkpoint. That said, Palo Alto Networks is more insulated in that it's transitioned over recent quarters to a software and subscription model.

And roughly 30 percent of its product revenue is now related to software, according to B of A, which carries a higher growth rate. But analysts at BTIG adding that its channel checks showed signs of softness in Europe and Asia, but that feedback on Palo Alto's Prisma Secure Access, Service Edge and Cortex product lines was strong. Last quarter, the company warned about an increasingly challenging environment. So investors will also closely watch the company's guidance. But as you said, Scott, with the stock up 83 percent this year, we could see some selling in the wake of this report. Yeah, we will see. It's getting a little bit into the print, but who knows what after. Pippa, thank you very much for that. To Christina Partsenevelas as I said, she'd be back with us. She is because she's following Cisco today.

Yes, I am. And the networking equipment maker is expected to post in-line results for the first quarter. But getting through the backlog, Stephanie Link spoke about it as well, still remains an issue, with the company previously indicating it would not reach normalized levels until at least halfway through fiscal 2024, which has already started because it's in Q2 now. That limits enterprise sales as customers work through their inventory levels. They're not going to buy new stuff when they already have it, and companies are already cutting back on IT spend or shifting it towards AI. That's part of the reason why analysts expect weaker Q2 sales

you're seeing on the right-hand side of your screen. AI momentum will be a theme, but it's less of a tailwind for Cisco since they make the silicon chips that go into the infrastructure for large language models, not the chips used for training and inferences within those large language models. Lastly, the company is still close to closing its $28 billion acquisition of cybersecurity firm Splunk.

Management's very bullish that it'll end soon, but it still isn't closed. Competitor Arista Networks posted a beat and a raise with a positive outlook for 2024, especially on enterprise. Let's see if Cisco can do the same. Scott. We'll see. We will see. In OT with you.

Thank you. Christina Partsenevelos. As always, as we've just had the two-minute warning, Bob, I'll come back to you. I mean, the bulls, it feels like the bulls are getting more bullish. People like Jim Labenthal, halftime today, I started calling him all-in Jim because he's like, this is it. This is the moment. Stephanie Link, we just heard from her a few moments ago, says she's buying more Bank of America. So the bulls are looking for these underappreciated and underperforming areas of the market. And we need those bulls to come in because the short covering is kind of done. It looked

yesterday, and Cash and I had a discussion about this, back and forth. He felt a very large part of the rally yesterday was short covering. That makes complete sense to me. So once those people cover, now we need other people coming in. That's why I'm very interested in that FOMO trade. And I think a lot of those people out there, the retail investors are going to be very sticky. I think it's going to take a big move higher in the S&P for them to move in. The institutional people, they had to be forced in. They can't sit on the sidelines with 40% cash.

They can't do that with the market up nearly 20%. Remember, we're up almost 20% in the S&P 500 this year. Those institutional people got largely forced in yesterday. And so we need the Jim Laventhal's of the world and people like that to come in and start saying, here's why we like it. We know about the seasonals now. I think the next leg up will come when the earnings numbers start moving up for the first and the second. That's a good, trying to get some round numbers here, Bob, on the close. Dow looking to close above 35,000 today. And the S&P sitting a couple points above 4,500.

Key level to watch as well. As we approach the finish, bells are going to start ringing just about any second. There you go. Bob Fasani, thank you, as always. That does it for us. Got those key earnings to look forward to.