Closing Bell - Closing Bell 11/8/23

Episode Date: November 8, 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 here at the New York Stock Exchange. In just a little bit, we'll be joined by Goldman's Jan Hatsias, who's going to reveal his outlook for 2024 right here on our set today. He'll tell us where he thinks stocks, rates, and the economy are going to head in the year ahead. In the meantime, this make or break hour begins with a reluctant bear no more. A top CIO changing his tune on stocks. He'll tell us why in just a moment. Here's your scorecard with 60 minutes to go in regulation. The major averages are trying to extend their longest winning streak in two years. You can see we got a little work to do as we begin this final stretch.

Energy stocks, they're a drag again. Crude falling further today. Take a look. There's the XLE and there's WTI below 76. Pretty much a mixed picture for the mega caps, though, as you see there, most green. We do have Amazon, though, modestly in the red. The Apple run continuing today. As for yields, mostly lower today as well.

We'll show you the Treasury curve there. You've got the 10-year at 452. Does take us to our talk of the tape, the road ahead for stocks, whether it is finally time to get more offensive in the market. Let's ask Sebastian Page. He's the chief investment officer for T. Rowe Price. Back with us at Post 9, and you are the reluctant bear no more. I knew this was going to happen. I just didn't know when. Why did it happen now? Scott, we bought stocks. We closed our underweight. It wasn't a large underweight. It was a little less than a percent.

On October 27th, when the S&P went to 4,100, down 10%, with sentiment indicators down by one standard deviation. I told you I'm waiting for a pullback for a better price. And these are large portfolios. We bought about $3 billion worth of stock. And we were done by Monday, average execution price $41.35. And we're now neutral, fully neutral between stocks and bonds. We have some interesting positioning under the hood still, however. OK, so you bought $3 billion worth of stocks. Can you give us an idea of the types of stocks you did buy? So for us, we went diversified.

We are neutral between value and growth. We are overweight, small and mid-caps. And that's interesting because, you know, it is interesting. The S&P equal weighted is flat to down a percent year to date. Your magnificent seven is up 92 percent. So we think there's an opportunity to get more diversified in stocks over the next six to 12 months. So that was part of the positioning we went into. But I mean, if you're overweight, small and mid, you must be in the soft landing camp then. You know, I think soft

landing is the base case. You have to balance two things right now. And it's actually, you know, we're going back and forth with all the narratives. The narrative changed last week, right? And the week before it was different. It's like narrative ping pong. But it comes down to the fact that growth has been surprising on the upside significantly, which you and I have talked about, versus the fact that there are long and variable lags to a higher cost of borrowing. And that is something to worry about.

I mean, the narrative may have changed a little bit, but the risks have not really. You still have the risk of higher for longer. Some would say, you know, inflation's sticky. It's going to take a while for it to take that next major leg down to firmly put the Fed on the sidelines. Some would suggest valuation's still too rich. How do you address the risks that you still see? I worry about three main risks. Rates. Definitely there's still upside risk for rates. I agree with you, Scott. Inflation. Maybe the base case is that we continue to normalize, but the risk is to the upside. Oil price is down. The market is sort of calming, but the risk is to the upside on

inflation. And the third, you mentioned it, is valuations. You know, overall, the market is reasonably valued, but compared to bonds, stocks are more expensive than they were before this whole, you know, the sell-off of 2022 and where we are now. So, you know, the equity risk premium is most compressed it's been in 20 years. You don't use the equity risk premium to allocate tactically. But it's still one of the top three risks. Cash yields are higher than earnings yield on stocks. OK, so I think this is important. So of the risks that you see, the three main ones that you listed, you don't have geopolitical risk on the list. I bring it up because we got David Einhorn's investor letter a short time ago.

There it is. Most recent one. And there are a number of highlights in it in which he says, by the way, they're up almost 28% net of fees for the first nine months. So they're having a great year. And they've had a diversified group of winners outside of the mega caps,

which is interesting, proving prowess of being a stock picker in this kind of market if you don't want to own the mega cap. Seven. Here's what he goes on to say, though. We are and I'm quoting. We are effectively on a buyer's strike again and did not establish any material long positions during the quarter. It's a tricky time and we remain worried about the direction of the market, which brings us to geopolitics. Investors have been conditioned to ignore geopolitical risk.

Apparently, these days, geopolitical risk presents itself as a small overnight sell-off, creating an immediate buying opportunity. Are you ignoring some of the geopolitical risks that have Mr. Einhorn worried? Well, the first part of the statement, you know, about the uncertainty in the macro data, I agree completely. And that's why we're comfortable at neutral between stocks and bonds. Geopolitical risk doesn't always matter to markets until it really does. And to me, the channel here is an expansion of the conflict in the Middle East, which would eventually impact oil prices, even if demand is coming down, a real supply shock. And that spurs inflation. That keeps the Fed in play and on and on and on. You've heard

sort of the bearish scenario quite a bit, but that is part of it. I feel like Einhorn speaking directly to you. He says, quote, the complacent investor view is that geopolitics should be ignored might be true, except for the times when it isn't. We suspect we are in one of those times. In other words, yes, what you say is true. However, we could be in one of those moments where we need to pay more attention to it for a greater market impact than we otherwise might, because historically we just don't. Yeah, I think now is not the time to be overweight stocks by 10, 20 percent. But now is not the time to panic and go all the way to cash either.

And I think that's important because, yes, Einhorn's making a great point. There are always reasons to be worried, Scott. And you often push back on the bears and those that tend to worry. There are always reasons to be worried. In the long run, stocks pay off. And if you're investing for retirement, you want to have some money in the market. Are we finally breaking the cash is king, cash is a better alternative narrative or even environment or stronger than a narrative? Because we have been

in an environment where you're getting so much for your cash. People thought it was a better risk reward to be there than in equities. Is that dynamic changing as rates start to come down? Not yet. If you look at how we're positioned in fixed income, we do have an overweight cash and an overweight credit. I call it the magic barbell. And we're short duration.

I'm worried about rates volatility and rates coming back up from here. But there are $6 trillion in money market funds right now. That is two trillion more than before the pandemic. And that is the big question, Scott. Will it move into markets like us when markets really pulled back all the way down 10 percent we bought? I don't think that's fully happened yet. Well, because there are still concerns about the economy. Right. Which leads me back to wanting to be overweight, small and mid-cap stocks when you're still in what is an undoubtedly uncertain economic environment. I'm trying to mesh those two thoughts together.

Yeah. And two things on that. The spread is extreme. The valuation for small and mid is basically pricing in a very hard lending. And we started the conversation by saying soft lending is probably the base case. So it's all about where they're priced, what the expectations are versus what we could get. Growth continues to surprise on the upside. We started Q3 with 0.5% expected GDP growth.

And as you know, we printed 4.9% GDP growth. And as you know, we printed 4.9 percent GDP growth. But how can somebody who's been as cautious on the markets for as long as you've been now have base case of soft landing? Have you recently changed your view on that? Because if you're going to be so negative for so long on stocks, now I know you'll say that we were modestly negative. Nonetheless, you had to be preparing for the idea we're going to have a recession. Now it seems you've changed. Yes. And look, the soft lending scenario is not all rosy. And there are risks for markets, including the risk of valuations. But incrementally, we have gotten more comfortable owning stocks. We bought more stocks when they pulled back. We're not day traders. You know, we look six, 18 months ahead. We're not day traders. We look six,

18 months ahead. We're asset allocators. But we can get pretty aggressive with execution. And when we saw October 27, the opportunity to buy stocks, we did. And now we're at neutral. It's not an exciting position, but it goes back to stay invested, stay diversified. Well, let's bring in Victoria Fernandez now to join the conversation of Crossmark Global Investments. Victoria, welcome back. So what do you make of what you've heard here from Sebastian, who is, you know, you probably have known for a while, has been a reluctant bear, self-described, who now says, you know what, I bought $3 billion worth of stocks. Yeah, well, look, I'm in that camp of being a reluctant bear as well.

So I can sympathize with that. But I think there's still a lot of elements out there that tell us we need to be a little bit concerned about what's going on. It doesn't mean we're not going to be in the market. It doesn't mean that we're not in there trying to find stocks that have good value, strong balance sheets, all those things that we always look for. But we're not so sure that when you look at the broader picture, we're not so sure the Fed is actually done raising rates. We think we could see another hike in the beginning of next year. We're not so sure that the consumer is going to continue to be strong enough to hold up the economy like it's been doing for the last year and a half. And we've seen this volatility in bond yields. We've seen how that flows through

to the volatility in the equity market. So for us, we're actually buying bonds when we see yields go higher. We're trimming our equities on this last week and a half or so when equities have gone higher. We think you have to be pretty nimble right now. I agree with Sebastian. We take a longer term look as well, but we want to have. Tactical moves in our portfolio. And for us that means taking advantage of some of the short term moves. To the equity market and higher at the end of the year it could you've got good seasonality you've got the Santa Claus rally that usually comes. But I think the slowing of the economy the slowing of the consumer. What we think is going to be margin pressure and lower earnings

for the fourth quarter sets us up for a pullback in the beginning of the year. See, the hard part of this is that, you know, the bears, Victoria, self-describe yourself as a reluctant bear in that camp, have been paralyzed because they've missed the move in the market. They still see what are the perceived risks on the horizon and are still afraid to get more invested into equities. When are you going to be sure that the Fed is done? When are you going to be sure that the consumer is OK? I mean, by those moments, the market's already going to move

so significantly beyond you. Then you're going to get more bullish on stocks. I don't think you have to wait till you're 100 percent sure. But I think we need to see trends being a little bit better than where they are. The rally we've seen over the last week. I mean, is it a bull market rally? Is the start of a new trend? I don't know, but I want a little more data before I make a decision on that. I want to see, does inflation continue to come down? Are we going to have a little bit of a spike like we saw in Europe this week? You know, we get CPI next week, we get PCE at the end of the month. And we're not saying be out of the market. If you've been in cash, Yeah then you really got hit that's a horrible play. To have made but we haven't been we've

been fully invested just trying to position ourselves in certain segments of the market. That we think will do better and coupling that with investments in the bond market doing some alternative investments. With covered

calls are absolute return strategies you have to be a little more creative in this type of market. In order to have that return so you don't want to miss out completely but you do want to have a little buffer built in. And

that's how we've been doing that but yeah there's no certain time where we go great. That's it we're a hundred percent equities growth stocks. Ready to go I think you have to be smart and be nimble about that and

do it in phases. I just hear sort of the same argument Sebastian from people from people who are negative of the market. You know, a rally notwithstanding, they're still negative of the market. You pick up a recent note from, you know, Mike Wilson at Morgan Stanley. It's still, you know, this is a bear market. This looks like a bear market rally to me. We've been hearing that same sort of thing. And the bears keep telling the same story.

At what point is the story played out? I'm not suggesting that the bears are wrong, but the market keeps going up for the most part. When are they wrong? You know, you're seeing manufacturing PMI go up for three months in a row. The last print was down, but you could be seeing a bottom here. You're seeing construction for manufacturing at twice the levels of 2019. Scott, if you want me to talk about when we would add to stocks, go overweight, right? From being fully invested and diversified to going overweight. I'd love to see a capitulation in the market. I'd like to see the VIX at 30. I'd like to see a capitulation in the market. I'd like to see the VIX at 30. I'd like to see a panic. And that would be a great opportunity to actually overweight stock if the fundamentals are still good.

What's going to cause that capitulation moment for you? to our prior discussion, the geopolitical or just a turn in sentiment linked to the Fed, because whether we want it or not, the market really pays attention to the Fed. So take a little spike in inflation, a little hawkish stock from the Fed, maybe a couple more hikes. And, you know, then you start to bite with the rate hikes at some point, the long and variable lags, and the market could panic. And then I'll be sitting here with you, you know, most likely saying we're buying because we like to lean against the wind. You'd be a reluctant, bigger buyer. Or maybe, yeah, maybe I'll be, you know, a convinced bull at that point.

A convinced bull. But I just think right now. I'll tell you something right now. When you turn convinced bull, you better come here first and tell me that. I promise. After being a reluctant bear as long as you were. Deal? Deal.

You got it. Victoria, last question to you. Disney, overtime. The earnings coming out. You own the stock. What are your thoughts? Yeah, you know, we own it in our index strategies. We're not owning it in our more concentrated portfolios.

We think there's a lot that you need to be watching here for the earnings. Obviously, subscriber growth, everyone's watching watching ad revenues is going to be really important we saw that with warner brothers but the key i think is the uncertainty around the structural and the management um restructuring that's going on selling abc partnering with espn espn bet the hulu purchase all of these, if they don't go exactly as planned, then I think you're going to see a lot more volatility in this stock. So we would probably wait a little bit longer, let some of those uncertainties pass, even if we miss a little bit of the upside, and then start adding to your position at that point.

All right. We shall see. It's going to be an interesting one. That's for sure. Victoria, thank you so much. Sebastian, it's great to see you in person. Always enjoy our conversation. Thank you, Scott. That's Sebastian Page joining us right here at Post 9. By the way, speaking of Disney, do not miss Julia Boorstin's exclusive interview with Disney CEO Bob Iger. That is in overtime just after the results come out. We can't wait for that.

Speaking of, our question of the day. Are Disney shares a buy ahead of the earnings tonight? You can head to at CNBC closing bell on X to vote. We have the results coming up a little later on in the hour. In the meantime, let's check on some top stocks to watch as we head into the close. Christina. Thanks, Scott. Well, let's talk about shares of technology company Toast because they're pretty much toast so far today.

The company reported unexpected earnings loss for the quarter, and this is sending shares down. Look at that, over 12 percent, almost 13 percent%. Gross payment volume also came in fractionally below estimates. Switching gears, shares of Robinhood also down big today after the trading platform missed revenue estimates in the third quarter. You can see shares down 14%. The company also reported fewer monthly active users and a drop in trading volume from the same period last year. The company, though, is also expanding in its earnings release. They said they will be soon launching a brokerage in the UK and will open crypto trading to its EU customers. Shares down 14 percent. All right, Christina Parts-Nevelis, thanks so much. We'll see you in just a bit. We're just getting started right here. Closing bell. Up next, generating returns by

investing in America's service members. That is the mission behind a first of its kind ETF from Academy Securities. We'll speak today with the veteran-owned firm CEO Chance Mims and President NFL great Phil McConkie about the new fund's launch. It's next. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. It's a very special ringing of the Closing Bell here at the New York Stock Exchange today. Academy Securities doing the honors ahead of Veterans Day. The observance, of course, later this week.

Academy, the only disabled veteran-owned and operated investment bank founded in 2009. Chance Mims is the founder and CEO, a former naval officer. He's with us today along with the firm's president, Phil McConkie, who served in the United States Navy and played for the New York Giants Super Bowl winning team in 1987. It's great to see you guys. Great to have us. Thanks so much for being here. Congrats on the closing bell today.

And it goes without saying, thank you both for your service to this country. How, Chance, did Academy start? Yeah, Academy started with a simple mission, you know, to hire, train military veterans right out of the financial crisis of 2008. You know, taking a military veteran, put him alongside a Wall Street veteran is something we saw to be a great mission to be on. And by the way, a smart mission to be on because military veterans translate over very well to financial services, but had to add value. And so we've become the best in the world. We have a geopolitical intelligence group made of 18 admirals and generals, and we tie together what happens from a geostrategic risk standpoint and how that affects the markets.

You offer a full range of financial services as well, correct? Yeah, that's right. A full-service broker-dealer. Now we've launched Academy Asset Management, and that's where we've launched our ETF, VETS, something that's near and dear to all of our hearts. It's something that's going and dear to all of our hearts. It's something that's going to really have a big impact on military veterans. Yeah. Tell us about the ETF. You guys are going to be bringing the clothes, as I said. Here's the hat that maybe you guys will throw them out to the crowd.

Here, tell me about the ETF. I think, first of all, getting into asset management was an issue for us. We did the broker-dealer side, but clients want to see minimum AUM in a track record. So we have some of our corporate clients that want to do more for us as we help veterans because we're helping them navigate, as Jan said, the geostrategic risk landscape. So we're adding value. So we started an SMA and then we had some of our clients say, look, SMA is great. You know, maybe an ETF, you know, which we started that helps, you know, veteran invests in military veterans and also active duty for home mortgages. Sometimes in some areas like the New York metropolitan area, San Diego, there's expensive for veterans to get loans.

This kind of helps lowering lower the borrowing costs for those military veterans. And it's a Ginnie Mae backed security that we have just launched and real excited about. So it's going to primarily invest in loans to service members, veterans, their survivors, and veteran-owned businesses as well. Eighty percent chance of underlying assets are going to consist of these loans. Yeah. I mean, we talk about where mortgage rates are and everything else and just how hard it is for everybody. Yeah.

No, I mean, this is personal to us. Not too long ago, I was stationed in San Diego on a guided missile destroyer, buying my first home. It was tough. The VA loan was very important to me. That enabled me to buy a home. By the way, that equity in my home got rolled into a company. I was able to take that and start a company.

And so we're also investing in loans to SBA loans to military veteran owned businesses. Access to capital is such an important thing. We need to have that access to capital in order to build our businesses. So this ETF is historic. It's never been done before. It's personal to our group. And we've been fortunate to have some corporate investors like Virtu Financial, State Farm and other corporations that have also invested in this ETF. You've had an incredible career, Phil. It's football, serving a country, back to football, now to finance. How did this all happen? You know what? Growing up as a skinny kid from the west side of Buffalo, I just had big dreams. And I remember hearing something a long time ago that stuck with me. I didn't come this far just to come this far. So, you know, I think it's in life, you know, you set goals for yourself

and you have dreams and, you know, you achieve them and, you know, you look beyond that to do more. But this is as fulfilling as anything I've ever done in my life. We've got teammates, transitioned military veterans. Look, the only war I was in was a Cold War. I mean, some of our teammates, they fought in real wars and they suffered a lot and they gave a lot. And for us to help them get a leg up in financial services, to make that transition, to have an opportunity with us on Wall Street that they wouldn't normally have. And that's a testament to our customers, our corporate customers that trusted in us. You know, I know people on the floor and viewers in this area, you know, the photo of you catching the touchdown in the Super Bowl is certainly one of the most iconic in the history of the

Super Bowl. Did you always have aspirations for finance, even when you were playing? No, I didn't. At that point, I was just trying to hang on as a 165-pound old guy in the NFL, trying to do everything I could to last. And then I think when I got done living in the New York metropolitan area, in fact, at one point, I think I was the only New York Jet or New York Giant that lived in Manhattan, if you could believe it. But, you know, financial services is all around. I had access, knew a lot of people. So it was kind of a natural for me.

Got involved in the trading aspect of it. And when I moved out to San Diego, I had the great fortune to meet Chance, who was just starting Academy Security. So, you know, it's been so much fun to build a business, to serve our customers, give them something they're not getting anywhere else, and watch these young heroes develop and have careers

that they might not otherwise have. I think we, you know, we think about our veterans all the time. We take one day out of the year to formally celebrate them. But Chance, what does Veterans Day mean to you? I don't think it ever gets old or tired or anything hearing from actual veterans about what this day means to you. Yeah, it's honoring veterans that have served, people that have answered the call. We have an all-volunteer force, you know, and to have men and women that have, you

know, voluntarily gone in to serve their country, to potentially give their life for their country, you know, it's something we always have to do. We always have to take care of our veterans. We always have to honor our veterans. And it's, you know, it's an absolute honor to be a veteran because we have this amazing country. Yeah, you got to see some of these young kids that have volunteered to serve. In fact, my daughter is a second class or a junior at the Naval Academy. So I get to see these young people and you spend any amount of time around them. it gives you great hope for us as a country because of the enthusiasm and the patriotism of our young people, and there's a lot of them. So very hopeful on that front. Your insights and your expertise on these issues matter, and they mean so much to people.

I just want to ask you a quick question before I let you go. We have one of the most well-known hedge fund managers here in New York, write a letter to his investors. He's having a great year and he talks about the risks and he talks about geopolitics being front and center. Do you think we're taking geopolitical risks today, given some of the things that are going on around the world, be it Russia, Ukraine or in the Middle East? Do you think we're taking them seriously enough as it relates to markets? I think we are. I think we have to, right? And I think that's what our customers demand from us. That's why they come to us. That's why they engage us with our generals and admirals who understand what's going on. They can help them interpret

what's going on as they're making decisions. If you're sitting in a boardroom, you're getting ready to issue 10, $12 billion of debt. Something sparks up in the Middle East, like it's going on right now or the Straits of Hormuz. They're coming to us to understand that because they want to know whether they should go through with that transaction. And we've been doing this for 10 years. For 10 years, we've been advising clients on geo-strategic risk. And it's such an important thing and just something to keep an eye on because it affects all capital market participants. All right. Well, they told me you guys had to be out of here by 3.30. It's 3.29 and 15 seconds. So I did what I had to do

because you guys are going to be on the balcony and everybody's going to see you up there come the closing time in about a half an hour. Guys, thanks so much. We appreciate you. Thank you, Scott. It's a pleasure to have you guys on our program today. We appreciate it.

Chance Mims, Phil McConkie joining us right here at Post 9. Coming up, Goldman Sachs' chief economist, Jan Hatsias. He's back with us. He just dropped his 2024 outlook as well. Has the street talking today. We'll tell you exactly what he sees happening for the economy, for the markets, for rates. The Fed pretty much might come up with a few other things, too, when Closing Bell returns. Welcome back.

Just a few weeks away now from 2024. Hard to believe that. My next guest here to share his macro outlook on what we can expect. He says the hard part is over. Joining me now, Post 9, Goldman Sachs' chief economist, Jan Hatsias. Welcome back. It's nice to see you on Closing Bell. Great to be with you, Scott. I read your outlook here and you sound pretty, dare I say, optimistic? I'm pretty optimistic, and in part because we have seen such strong signs that we can bring down inflation to an acceptable level without really hurting the economy. I mean, 2023 has been sort of a proof of concept of that. We've seen very substantial disinflation across

not just the U.S. and the developed economies, but a much broader group of countries that saw an unwanted and large acceleration in inflation to an average of about 6% in 2022. It's back to 3%. There's still some work to do, but we're on a very good path. You use interesting words in your outlook. You see tailwinds to global growth. So whereas others would be a little more worried about where the economy is going to be in 24, you use words like tailwinds. What are the tailwinds that you see? The most important tailwind is strength in real disposable household income growth. And that is really driven by inflation coming down very substantially, wage growth also coming down, but coming down more slowly.

So real wages are now growing. Employment is still growing. And that is helping consumers. I would say that's number one. The other one that I think is important, the other question, whether monetary policy is going to have a large lag negative impact on growth. We think the biggest negative impact is already behind us. Interesting. So the labor market never falls apart. It slows, which, you know, last month, obviously, it was a positive read. It was one of

the things that the bulls needed to see. So we continue on this steady but not stumbling path. That's right. The labor market held up well in 2023. You take the average unemployment rate globally. It's been going sideways at a very low level. and I would expect more of the same in 2024. Okay what I see here too in terms of returns I'm quoting now from your outlook we expect returns in rates credit equities and commodities to exceed cash in 2024 and that's your baseline forecast explain. That's right in in some cases only by by a little bit. For rates at the long end and the short end, we don't expect big differences, but we do expect a pickup in returns and credit. We expect a somewhat bigger pickup in equities. And then we're looking for commodity prices

to recover and to actually produce pretty strong returns in 2020. It also sounds, I suppose, if you have this belief that the Fed returns to being our friend, so to speak, rather than our foe. Not only are they done hiking, but, you know, if necessary, they'll cut. And if necessary, they'll cut more than we might otherwise think. Yeah, our baseline expectation is the Fed does nothing for the next year. Oh, nothing? So you don't have any cuts? We don't have any cuts in our baseline forecast because we have a pretty constructive forecast on growth.

But you also are constructive on inflation coming down back towards 2%. So wouldn't they cut even if inflation comes down? We have inflation still a little above 2%. So that's consistent, I think, with a cut towards the end of next year. However, if things were to be weaker in 2024, if we saw an unanticipated speed bump or maybe pothole in growth, they could cut in response to weaker numbers because inflation is now in a place that would allow them to cut. You know, we spent a good portion of this program today talking geopolitics, whether it's the David Einhorn letter that I was citing at the very top. We just, of course, had our two veterans on. You don't really list geopolitics here as a principal risk. Why?

We do list it as one of the risks. Of course, if we had a significant escalation in the Middle East and a really large energy price shock, for example, that would be a downside risk to the global economy. There's no question. But our baseline would have it more in a more benign kind of development. And I would say so far, we haven't seen that broad escalation. Sure. If you look at energy prices right now, they're in a place that I think is consistent with continued growth. Before I let you go, China, you know, a sputtering recovery, I think is fair to say. How much does that pick up hinge on your baseline forecast? So we do have slightly better numbers over the next few months. And the reason is that the policymakers are stimulating, financial conditions are easing. I think that is going to give us continued growth

in a reasonable place. We're at 4.8% for next year. That's a little bit above the consensus. The longer-term downward trend in growth in China, though, I don't think is going to change. We are seeing some structural issues that I think have legs. All right. I appreciate you being here very much. Good to see you again. Jan Hatsias, Goldman Sachs. Thank you. Up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is standing by with that. Christina? I'll have another example of the resilience in video game demand. And we also debate whether fintech can survive in a higher rate environment and slowing consumer spending. All those details

next. We've got a little more than 15 minutes to go before the closing bell. Let's get back now to Christina Partsinovalos for a look at the stock she's watching. Christina? Well, let's start with shares of video gaming platform Roblox, popping today after the company reported earnings that beat estimates. The company also reported daily active users and engagement hours were up 20% from a year earlier as the platform continues to grow among teenagers, especially in Western Europe and Eastern Asia.

Shares are up almost 13%. And Buy Now, Pay Later company Affirm is set to report earnings after the bell today. The theme among many fintech companies this season is just how will they succeed in a weaker economy where spending slows down. Affirm will be able to hopefully shed some light on discretionary spending trends.

More details on its Buy Now, Pay Later partnership with Amazon and its debt plus service if it's gaining any traction as well. And you can see shares are falling into the close, almost down 2 percent. All right. Christina, thank you. We'll see you in the market zone coming up as well. Christina Parts and Avalos. Last chance, by the way, to weigh in on our question of the day. We asked her Disney shares a buy ahead of tonight's earnings. Head to at CNBC closing bell on X. The results after the break. Okay, the results of our question of the day. We asked her Disney shares a buy ahead of earnings tonight in OT.

And the majority of you said nope. Two-thirds. We shall see what that company delivers in just a little bit. Up next, we break down the key numbers to watch when Disney results hit in overtime, whether the report could spark another proxy fight from Tryon's Nelson Peltz. That and much more when we take you inside the Market Zone. We're now in the closing bell Market Zone.

CBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day. Plus, we have our sights set on two earnings reports out in OT. Christina Partsenevelos on what to watch out for with Arm Holdings. Julia Borsten with what to look for with Disney. Mike Santoli, I come to you first because the S&P is trying to make a move back towards 4,400. The futures are above it as we speak. Third straight day where, again,

it's sort of you just get enough offense out of a few names to get the index continuing this positive streak. If it closes here this afternoon, it's Eli Lilly getting a little bit of positive news, 4%. By the way, Lilly's like a top 15 weight in the S&P by now. It's amazing how big it is relative to what it used to be. And then the rest of the market, again, is trying to just kind of regroup and digest another day of negative breath,

which is OK. I mean, I guess if you were bullish, you wouldn't necessarily want to see regional banks down 4 percent week to date as they are. But it's coming off of that huge squeeze higher last week. So you take the good with the bad. I think in general, it is much more about just sort of holding serve until there's another catalyst out there. And that's been, you know, that has absolutely been the case that the market is just doing enough and migrating towards the strength. The struggling parts of the market all year continue to be a little bit suspect in terms of a source of upside, but making it work otherwise. Yeah, I mean, it's like the half-empty view is, look, the Russell, as you said, is down another one and a third percent today.

Half-full is, you know, here come the mega caps again, right? Apple pushing towards 183. That's a significant move. And, you know, Tesla, NVIDIA's back. A lot of these names have had a pretty strong move. Yeah, I mean, Microsoft time high. Aside from Nvidia it really is the only one of the big seven that is truly.

Covering new ground. In terms of new highs versus a couple of years ago. And it's it's actually you know. Continued to carry more than its weight even in terms of the- the relative upside. You know we also have the rest of the asset markets

cooperating with this idea of disinflationary, slower but still positive growth. Oil prices, we talked about it earlier, going down this way are probably initially a positive, disinflationary and refreshing buying power among consumers before they start to send a more, I guess, disorderly message about what's going on macro-wise. Yeah, I mean, let Yeah, I mean, let's save some money at the gas pump and maybe it'll be spent on holiday shopping. Who knows? But your point's well taken.

Christina Partsenevelos, Arm Holdings, what do we expect? Well, Arm is expected to post a strong first ever earnings report driven by improved smartphone demand and higher price points for royalties. Recall that Arm's business model is a little bit different from other chip makers since it provides the blueprint to make chips and charges royalties for that blueprint. Since its IPO in September, it's down about, look at that, 15, or we can say Arm, actually, you can see it's up 6%, but it's lower than other electronic design automation companies like Synopsys and Cadence Design Systems. Those are the best comparisons. But what we do see from ARM is somewhat missing the AI

euphoria boat. Over 40 percent of its revenues come from mobile. Twenty four percent come directly from China, which operates as a black box under ARM China. Some are also worried about ARM's architectural or blueprint, as I call it, is under threat from an open source model called Risk 5. Lastly, SoftBank still owns 90 percent of ARM, so what they do with their shares will affect the stock. But despite all of those investment risks, analysts believe ARM's full-year revenue guidance should come in just a little bit below $3 billion, and it's going to focus on edge computing or, as they say, AI on smartphones, PCs and local servers, something Qualcomm and Intel really pushed on their earnings calls. ARM is also over the first to update its architecture.

It's actually updating its architecture, I should say, in about a decade. It's the first time it's doing it. So that should provide better computing performance for AI systems. And Rosenblatt and Bia Bay are just two of many analysts that think there's going to be a major upgrade cycle for ARM just in the near term with that new architecture. All right. All right. Good stuff. Covering a lot for us today.

And we do appreciate that, Christina. Thank you. We'll see you in overtime. Christina Parts of Novelist. All right, Julia, what should we expect when Disney reports in a matter of minutes? Well, Scott, with Disney shares off over 15 percent in the past 12 months, most analysts are bullish on the stock. More than three quarters rate Disney shares to buy. This quarter, the company is expected to grow its revenue by 6% and earnings by 134%. And this is the first time that Disney will report under its new structure, which breaks out sports, giving new insight into ESPN. We are looking for an update on streaming and whether the division is still on track for profitability a year from now and for insight into the ad market. The future of the

linear TV business is a question after Disney's battle with Charter and at the theme parks, we'll see if consumer spending is holding up. Plus there's the actor strike that is now threatening, starting to threaten the summer box office. I will be sitting down with Disney CEO Bob Iger to talk results that's coming up right after they report, which is right after the bell. Yep. And we're excited about that. Julia, thank you so much. Julia Borsten, just ahead of the earnings. And of course, that exclusive interview. I mean, you look at Warner Brothers Discovery today and Paramount not looking good. It's not looking good. And it really is interesting because, you know, Disney has this sort of makeup where you can decide how much of the company is essentially a Netflix and how much of it is a WBD and a Paramount. They obviously have the exposure to the linear networks and the advertising like WBD and Paramount do.

But it has a little more of control over its own destiny, it's seeming, in terms of getting scale, especially once it buys Hulu in streaming. And then, of course, you have the brand franchises that you can value as much as you want in the theme park business. And, you know, it's still going to have, I don't know, $6 billion gain in revenue over the course of this fiscal year versus the last one. So it's not the same story where it feels as if the traditional pure media companies are really at the mercy of the macro and their own balance sheets and don't have as many options. We'll see what they convey, what Iger conveys in terms of the degree of urgency to do something strategic, how they might be rethinking spending on content, the volume of it for the streaming platforms and all the rest of it. You want to discuss what you think is the significance of 4,400 as we sort of work

our way towards that pretty important level? Yes. For the cash index to get above 4,400 is kind of cracking through what would seem like the obvious ceiling if this were just a bear market rally, because it would mean it broke this downtrend that's been in place for a little while here since the highs in July. It would get up into that zone we haven't spent a lot of time in since the ultimate peak of the market. I do think what's interesting is, and maybe it's holding back some people from really jumping on the bandwagon from last week's rally is, even if you feel as if there should be an upside bias into year-end, we got the seasonal factors, we got oversold, we should be able to make something out of that. It's hard to see how we get up, up and away to really break above toward the old highs at forty eight hundred. Just because presumably if we got up to forty five, forty six hundred where we were in the summer, you're going to say, well, full valuations again.

Exactly how fast are we going to grow? Our earnings estimates really going to be able to hold narrow. Right. Narrow market. It's a narrow market. It hasn't proven that it's broken out of that mode. And so I think if you don't really feel like the trade is going to leave and you're not going to be able to catch up with it, it does hold people in reserve. That said, refusal to come in. I mentioned in the midday that we haven't even gone back to the prior day's low in the S&P. So it seems like there's just been an exhaustion of selling over the course of that three months where people tried to make hay out of the geopolitical concerns, what was happening with yields, as well as oil. See the Russell settle down a little bit,

right? You can't have this massive week like we did last week and then have, you know, a one and a third percent give back. And then, you know, yesterday was pretty quiet. And then now we're giving back another more than one percent. You don't want it to seem as if it's a real stress point and that it's sending this message that there's some kind of, you know, something to be concerned about macro wise. Now, credit is really hung in there very well. And usually, you know, when credit's doing OK, small caps can struggle without you saying that it's it's really telling you things are turning for the worst. But, yeah, I mean, you don't want it to be a constant drag.

And you really don't even necessarily want that talking point. I always say the concentration of the market, it worries so many people that it almost adds to the reservoir of skepticism that the market can feed off of, as opposed to it being a real indictment of the strength of the rally. Yeah, so thank you. I'll see you tomorrow. We're not going to get 4,400 today, but we are a bit closer.