Closing Bell - Closing Bell 4/14/23

Episode Date: April 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. This make or break hour begins with a big bang from the banks. Better than expected earnings sending several names higher today. And now one of the most influential analysts on the street has upped his estimates on one name in particular. In the wake of those results, Mike Mayo is here first with those details. Here's your scorecard. 60 minutes to go in regulation. The Dow lowered a day thanks to a big drag from Boeing and UnitedHealthcare. Stocks weaker across the board, as you see.

Interest rates are higher today. There are more worries about the economy. Retail sales coming in a weaker than expected as well. It leads us to our talk of the tape. Better than feared, that seems to be the takeaway from those bank earnings today. J.P. Morgan seeing JP Morgan seeing its biggest post earnings pop in some 20 years. Let's bring in the star analyst now, Mike Mayo, Wells Fargo Securities. More details on the move he made. You have said, nice to see you. Goliath is winning. And oh boy, did we get evidence of that today, did we not?

Goliath is really, really, really winning. And you see that with the largest U.S. bank, J.P. Morgan, beat expectations by almost one-fourth. The big news here is that they guided higher, $7 billion of revenues with zero extra expenses. They guided higher. Last year, they had $50 billion of pre-tax earnings, another $7 billion. You're talking like 12% or 13% higher earnings, just like that. And so we increased our estimate this year by 12%. Wow. You raised your price target on the stock as well. Absolutely. So what number? Where are we now?

So we have like over 25%, 30% upside from here, even with the stock moving higher. So we'd still be buying the here, even with the stock moving higher. So we'd still be buying the stock, even with the higher news. Now, look, the big news here is that national banking is paying off. This is why you had national banking passed in 1994, because J.P. Morgan has diversification of funding by channels, by geography, by customer. And that diversification is really paying off. And so they don't have the issues of some small regional bank. Also, and Scott, I've been on your show before. By the way, I was on the show before the earnings saying J.P. Morgan, but people are Don't pat yourself on the back too hard. No, I've made my share of mistakes. Don't worry. But

the cherry picking of, oh, funding costs are going higher. They went higher for JPMorgan, but guess what? Their yields on their assets went even higher than that. And the other point, as you know, I downgraded JPMorgan at the start of last year because I thought their expenses were out of control. Now, Jamie Dimon and JPMorgan, they're getting this $7 billion of extra earnings without spending more expenses. So now they have the financial discipline that we've always loved about Jamie Dimon for the last 25 years. It's coming back and it's coming back in spades. They're not spending this extra earnings. You've called it a port in the storm. That's from the note that you put out just before

you came on the show today. Net interest income up 49%. You charge more to lend than you do on the deposits. That's the result you get, right? Can it hold up is the big question. All of this is not going to hold up. Their guidance was that they might give half of this back after this year. They're assuming deposits flow off. They're assuming lower interest rates. So they're not exactly assuming a super rosy scenario. But yes, I do think the resiliency holds up. Resiliency of funding, resiliency of the business model and the scalability, and certainly the resiliency of the balance sheet. Scott, everyone here is talking about a recession. Their credit losses are half the long-term average.

Their guidance for credit card losses, despite everything you've seen, is unchanged. So you look at JP Morgan's results and you say, what recession, what crisis, what are you really talking about? Now, JP Morgan is best-in-class global bank, and we will get regional banks next week. So let's not get too carried away. But I'll tell you, as far as the largest banks which have had the most regulation are the most resilient. And J.P. Morgan is best in class out of those. Well, I mean, Diamond, you know, maybe quelled some of the concerns, too, about what's happening on the credit side. On the call, I wouldn't use the word credit crunch if I were you. He said, quote, we're not running around aggressively tightening

standards right now. I just raised the issue of whether they're going to. They just haven't yet. And whether that's going to have an impact and whether you're a little too giddy about these results today, as obviously is reflective in the stock of up more than 7 percent, the biggest earnings pop in some 20 years. It's definitely a concern. I think it's choice of words. Instead of credit crunch, contraction of credit. Stay however you want to. Banking, the banking industry, it's likely to become more restricted with who they lend to. And you've already seen that. You'll see that in the Fed surveys when it comes out in May. That shouldn't be much of a surprise. But banks are open for business and J.P. Morgan, you know, stands atop of them.

JPM's getting all the love today, at least as the commentary goes. But you like Citi also, right? Is Citi still up? Let's take a look at Citi shares because they were up 3% in their own right after what was a pretty good quarter two, right? Well, that was Citi Group was another name we liked going into the quarter. And, you know, I say it's not 5%. It's not your it's not your parent Citigroup This is a different Citigroup. When's the last time you had a big crisis that Citigroup wasn't part of it So they don't have the regional bank issues their deposits were higher and they don't have the global bank issues like Credit Suisse And they had this jewel this gem

called Treasury and Trade Solutions. It's one-fifth of the company. It's the largest global wholesale payment network. Didn't you used to hate this bank? Yeah, I went to annual meetings. I tried to get CEOs fired. Some CEOs did get fired.

I testified to Congress about them. You wrote a book about it. Two of my 10 chapters in my book about how much I hate Citigroup. And now you love Citi? I didn't say love. I'm saying going from worst-in-class efficiency returns and stock market valuations back toward average. So how much then, where do we put Jane Frazier? Like everybody, you know, obviously says, you know, amazing things always about Jamie and the quarter that he just delivered is evidence that it's deserved

in the eyes of most. What about Jane Frazier? You know, Jane Frazier, you know, so far, so well, pretty good. I mean, but they need more proof points. She needs to prove it. And Citigroup needs to prove it quarter after quarter after quarter. But they have strung together about, you know, several decent quarters here. And I think they're deliberate. It's one year since their big investor day. And so far, they're on path, if not a little bit ahead. And they trade at half a book value. So in terms of people say, oh, buy some European banks or cheap. Citigroup benefits from the reopening of China.

Citi benefits from the rate hikes by the ECB. And they certainly benefit from this incredible diversification of funding in over 80 countries around the world. So that resiliency, Citi is more resilient today than any time in the last 50 years. And that's underappreciated. Wow. You refuse to say that you love the stock now. It certainly sounds like you do. No, we recommend the stock. I like the stock a lot.

But Love and Citi Group haven't gone together for a while. And Like and Citi Group will get you a stock that goes up by like one-third. I think you're still taking it personally, but that's neither here nor there. What about next week? What does all of this mean for what we're going to hear next week? Goldman, Bank of America, and the others that still have to report? Well, look, Goliath is winning. So the largest banks are in the sweet spot.

And partly that's due to the regulators. The regulators forced the largest banks, and screaming to increase capital, to increase liquidity, to improve oversight. And they did it and they're benefiting now. The smaller regional banks, it waits to be seen. And I asked Jamie Dimon today, I said, your CEO letter said there's a banking crisis. So what are you talking about, Jamie? And he said, you know what, it's really just a handful of banks that were caught offside and you can count them on your fingers. So it's not the industry. No, I know. But last week he that are caught off sides, that there will be issues. And it sounds like they're resolvable, but that's what waits to be seen. So we don't know which, if Jamie Dimon is saying there's a handful of banks that were caught off sides, we don't

really know which banks those are. All right. Let's bring in Dan Greenhouse of Solus Alternative Asset Management, along with CNBC contributor Bryn Talkington of Requisite Capital Management. All right, Bryn, we've got Mayo sitting here. Banks are obviously having a good day, most of them led by JPM. And as I just showed you, Citi. So are you feeling better about this space given what they delivered today? Well, I mean, if Goliath is winning this battle, we all know David, you needed David to win the war, and the regional banks are David here. And so that, to me, is so interesting. Clearly, J.P. Morgan is best in class. To have this type of return today, you're seeing a tremendous amount of hedge funds that clearly got caught off sides to see this type of return.

But that return in J.P. Morgan is coming at the expense of the regional banks. I mean, PNC had earnings. They were solid earnings. They went in their deck in excruciating amount of detail talking about they only have 2.7% office, their deposits, and it's down 1%. And so to me, it's like the JP Morgan's a city, the Bank of America, are really important to the stock market. But the regional banks are important to the economy because that's really the grease in the economy. And I looked at IAT, which is the iShares Regional Bank Index. Scott, it's trading back at 2014 levels.

Technically, they look terrible. And so for me, while it's great that Bank of America, JP Morgan, they all are going to have good numbers. To me, you really want to see some stability in the stocks of the regional bank because that tells you what's going to happen in the broad economy because that is the lending machine in the U.S. What do you think, Dan Greenhouse? What about the banks now? I mean, I think better than feared is an appropriate way to assess what was delivered today and the way that it's being received on Wall Street. Listen, sentiment wasn't great going into the quarter. Positioning was not great going into the quarter. But I think to echo a point Mike

made earlier and Bryn touched on, J.P. Morgan is very much a item unto itself. And really, the big three three the big four banks are items into themselves the real financials the real bank story is going to come next week as you guys have all touched on when Comerica and Key Bank and everybody else reports that's gonna give us the data from a broad market and a broad economy but if you look at this though and you say okay well if you're worried about recession you know imminent you look at this and you say, oh, no, that's not. Yeah, no, there was nothing in the reports, whether it was PNC or Citi or

JP Morgan, from a high-level standpoint, that gave you any indication you were any closer to the elusive recession than you were the day before. So is that, then the market's down today. Now, I know the Dow, it's hard to look at that because it's a two-stock story for the most part in Boeing and UnitedHealth. But is part of what we're seeing in the market the, okay, it's hard to look at that because it's a two-stock story for the most part in Boeing and UnitedHealth. But as part of what we're seeing in the market, the, OK, Fed's going to stay on the pedal. Pedal's going to be the floor like, you know, Waller was talking about earlier today. Yeah, I mean, there was a bunch of economic data out this morning, and it's a Friday. So we can chalk this up to a number of different things.

But I think the Waller comments obviously play into this conversation as well. In terms of Brin not being ready to take your foot off the gas, right? Is that what you think is still the overhang? If you get a couple of down, you know, negative reports, retail sales negative, so you're like, okay, now we've got to worry about the consumer cracking. But then you've got some bank results and you're like, wow, I guess the economy's holding up pretty well still. That means the Fed's still going to be in play. So here's the way I think about it,

is that first of all, the Fed has never stopped a tightening cycle before Fed funds were above CPI. So right now, if I just go to June and we say CPI continues to grow at 0.4 month over month, just because we're dropping off March, April or March, May and June of 2022. Scott, CPI by the end of June will be at 3.16. Fed funds are at 4.8. I mean, the Fed is close to done. I can't imagine them to continue to tighten if you have a three, a three CPI and a five Fed funds, that wouldn't make sense. So I'm less concerned that the Fed's going to continue to tighten over the next few months, maybe one basis point or 25 or 50 over the next couple of months. But listen, going back to 1985, it gets murkier after that.

We don't just mosey into a recession. There's always an event where there is Iraq, Kuwait, 9-11, Lehman failing, COVID. There are these events that occur. And so I do think the economy today is still strong. And that's what's really hard for the bears to say, we're going to go into a recession. You're going to have to pick this event, this ephemeral event that none of us can occur, can predict. So that's why I think we're going to muddle along. But I do think the S&P is tired here. I don't think we're going to get much more traction until after earnings season and there's more clarity. If we have been able to grow into the multiples of these tech stocks that have really expanded, I think too much. All right. What do you want to say?

I just want to, if the CPI is going up 0.4% per month, I don't care what the headline year-over-year inflation rate is doing. The Fed's not going to be done raising rates. Full stop. 0.4% per month. I don't care what the headline year-over-year inflation rate is doing. The Fed's not going to be done raising rates. Full stop. 0.4% is a completely unacceptable amount of inflation for the Federal Reserve in any month, let alone repetitively. So in terms of where we are now and in a week in which the CPI and the PPI both were pretty good reads, Chris Harvey has been really leaning on that we're going to have a sell-off. We're going to have a correction.

We thought the market was going to get to 4,200, and it was kind of on the doorstep, right? And this week's benign CPI-PPI-led rally does not change our advice to sell before May and go away. Remember, he had made that call. He was on with us this week to explain it even further, thinks the post-SVB impact on bank lending and demand margin slowdown is all going to make for a difficult road ahead, excuse me, road ahead mid this year. What do you think? And then, May, I want your opinion on that, too, in terms of this bank lending. First of all, let me say I don't like the disproportionate representation for Wells

Fargo on this panel, but we'll move past that for a minute. These Wells Fargo securities. I don't know the difference, but whatever. Yeah, I mean, listen, there's a lot still to be nervous about. I don't think that that broader fundamental landscape is any different today than it was a day ago, a week ago, a month ago. The bank reports are obviously a positive. And the fact that the economy is not rolling over is a positive. But again, those of us in this camp that have been in this camp, that are new to the camp,

that are in the camp, the view is very simple that the Fed continues to raise rates and there are repercussions for that beyond tech valuations. And while it might take a day longer than we thought, a quarter longer than we thought, a half a year longer than we thought, the odds remain that eventually those effects are going to be felt. I think the strategist Chris Harvey is exactly right for three reasons. Number one, you have less deposits in the industry by 3% in the first quarter. You're likely to see that at the regional banks, less deposits, less lending. Second, a lot of those regional banks need to build capital. One way to do that is to lend less. And number three, you have more concerns about commercial real estate lending,

office lending, concerns, but get concerns and rating agencies and analysts and people like you, Scott, are going to be asking about it. And then banks will reduce that exposure and you could have some contraction, at least in certain spaces. So Chairman Powell said it might be equivalent to a 25 to 50 basis point rate hike. It's probably more than that. And it's something we collectively need to watch. Bryn, so on that note, if the Fed's going to be a little more aggressive, is the next 5% on the S&P up or is it down? I ask the question because you got Harvey talking about a correction. Jonathan Krinsky out today, more volatile next week as we really get into earnings season. He

says Deutsche though says another 5% upside in the coming weeks. If you were writing the note, what would it say, Up or down 5%? I would say down by 5%, but I think we're going to actually trade in this range for a while. I think that we are tired for the S&P from a tech. So I would say down 5%. I'd only pick one. But my real suspicion is we're going to be more flattish and be range bound. Something's off. OK, either the bank stocks are saying the market has to come down or the bank stocks have to come up to the market. So maybe the scenario here, I'll just accept the premise that the market doesn't go anywhere and the bank stocks move up to the market. Too much of a disconnect. Well, admittedly, the banks are still on their lows as a whole. And so

there is room for if next week comes in better than expected, there's going to be deposits shuffling, as we know. There's going to be worries about commercial real estate, particularly office. But from a pricing standpoint, they are about as low as they've been. And so there's room for them to move higher if they are, like JP Morgan, better than expected. What sector do you like the best right now? Oh, man. Well, listen, we're finding to the idea that there isn't a recession imminent or anything like that. There's stuff to do in consumer focused businesses.

We've talked about the banks being on the lows. Take a look at the hotels. Take a look at what's going on fundamentally with the cruise lines and in the content distributions world. There's a lot going on there in terms of how consumers are consuming content. Are you more bullish now than you were on the consumer? No, it's not that we or I are more bullish. It's that I think there are stories underneath the headline that are playing out in the form of consumer behavior shifting.

And you talked about the retail sales before. All day long, I don't think anybody's made this point, but you have to remember the retail sales report is all goods, almost all goods. It's none of the services. What are services? Trips, hotels, movie theaters, et cetera, et cetera. Packed, packed, and packed. Packed, packed, and packed. You know, airlines, awful performance, but in terms of the number of people flying, basically still at highs. So, Bryn, if I told you, you know, okay, channel Larry Fink, who says, no, I don't. He was sitting on this set earlier today. No, I don't see a big recession.

I'm not sure we're going to even have a recession in 2023. May have it in early 24. But he said, look, and he sees the flow of money unlike anybody else and suggests the economy is still chugging along pretty well. So if you believe him, what sector do you like the best? Well, if I believe Larry, no recession, which I'm not sure I believe that or not, because no one can look over that horizon line. And that's all we see out to. I think you still want to go with the sectors with the highest free cash flow yield. That would be energy, which would bode into what Larry's saying. If there's no recession, China's coming out of their contraction. And I would say health care, because this is the number one and number two sectors with the highest free cash flow yield. And so that gives me

optionality if he's wrong. But I also, if he's right, you get companies that can do M&A, dividends and buybacks with all of that cash they're generating. Mike Mayo, last word to you, then we got to hold the Mayo. Goldman? Well, can somebody do the free cash flow yield on the banks? I was gonna ask you a question. The free cash flow yield on the banks, I guarantee you, are among the best of any sector.

No, doesn't exist. People don't, well, people don't do that math, but you can back into a free cash flow yield, and it looks incredibly attractive at the banks. And for those out there, call me out on this, because I know I'm right on this, I've done this long enough. Free cash flow and yields is very good. And that's one of the most compelling metrics you have out there. Goldman, Bank of America, Morgan Stanley,

who blows the doors off next week and who do we watch out for? Well, I think Goldman, I mean, trading, this should be Goldman's environment when people need Goldman services now more than ever. So hopefully they're able to capitalize and monetize that. All right. This was great stuff. Thanks for coming by. That's Mike Mayer with us first as he makes those moves on J.P. Morgan. Dan, thank you. Bryn, thanks as well. It brings us to our Twitter question of the day. We're asking which bank that reported today is the best stock right now? J.P. Morgan, Citi or Wells? You can head to at CNBC closing bell to vote on Twitter. We've got the

results coming up a little later on in the hour. Coming up, United Health under the weather today, the biggest drag on the Dow. It's been a top holding for one fund manager for the past 10 years. So is he buying the dip? Is he hitting the sell button? He tells us next. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Thirty five to go in the trading day on this Friday. Let's get a check of some of the top stocks to watch as we head into the close.

Seema Modi here with us today for that. Hi, Seema. Hey, Scott. We're watching two notable decliners in the electric vehicle space. We'll start with Lucid, which is under pressure after reporting weaker than expected deliveries in the first quarter. The company delivering just over 1,400 of its air sedans, while analysts had expected closer to 2,000, shares down about 6.5%. Take a look at its rival Rivian, falling after Piper Sandler downgraded the stock to neutral. Analysts say they still like Rivian's overall strategy, but they think it needs more capital to execute on that strategy.

Shares, you can see, down over 7 percent here. Scott? All right, Seema. We'll see you in a little bit. Thank you, Seema Modi. UnitedHealth shares under pressure today. That stock giving back some of its big gains over the past month despite a beat on the top and the bottom lines and also raising guidance. Joining me now, Kevin Simpson, CIO and founder of Capital Wealth Planning, UNH, a top holding of his, as it has been for the last decade.

Right, Kev? Yeah. Can you believe that, Scott? I woke up this morning. Why have you held it in such high esteem? Well, it's performed really, really well. But it wasn't until this morning that I realized that we haven't sold this position in over a decade. And I was thinking of the Warren Buffett quote that if you can't intend to own something for 10 years, you shouldn't try owning it for 10 minutes. But literally, we've had this in the portfolio for that long. And this is the

21st out of the 23 quarters where they beat top line, bottom line, and they've raised guidance. You see a little bit of a sell off here today, which is, I think, to be expected, because to your point, it's been on fire so far this month. It was up 11 percent just in the month of April so far. So I think we're seeing a little bit of sell the news. And that's understandable. What jump started what excuse me, what jumps jump starts it again? I tried to say. Well, the problem with this whole repricing about Medicare Part C and this idea that they're going to have to change some of their reimbursements was problematic for a 12-month possibility. And now that they're able to kind of wash this into their earnings over a three-year period, I think that in and of itself did jumpstart it, because if we go back to January

of this year, the stock was down 10 percent to start the year. So we saw that jumpstart. This earnings report is kind of ho-hum because they do it so often. But I think it's a stock that absolutely deserves to be a core holding as it is today for us, as it was 10 years ago. And I'm anxious for us to be sitting here 10 years into the future and seeing if it still is. You added to your Apple position. I want to take that one. Take that one next. Why did you do it here? Well, it had a little bit of a pullback earlier in the week. You know, unlike UnitedHealthcare, we've sold Apple eight times out of the entire position over the past decade. Most recently, it was about six weeks ago where we had removed it and we've been working our way back in, working our way back in. And like anything

else, when we talk about position sizing, I think that's an important conversation to have. We want to build that position back up into Apple, which we're doing. And it's not like we've never sold a share of UnitedHealthcare over the past 10 years. When we look at position sizing is about 5% per position because we're looking at everything through a risk management lens. So we're building up the Apple position, building that back to 5%. And over the past 10 years, anytime UnitedHealthcare became a 7% or 8% weighting, we would trim it. We would sell into strength, rebalance back down to the 5% target. So constantly we're taking profits in the position. But I think it's a good lesson on active management. It doesn't mean we have to be trading all the time like we are with Apple, but we can hold the position for a really

long time and take profits along the way. I understand, but I do find it interesting that, you know, for a stock that's up better than 20 percent and decidedly so to start the year, that it just takes a mild pullback for you to want to buy more, essentially suggesting that you don't think that technology as a group, certainly as it relates to mega caps, are going to have a sizable correction because you would have just waited and bought it lower. Well, I still have some dry powder. We've got 11 percent cash. If it goes down,

we'll always buy more. But yeah, the thesis for the tech names looking at what happened in 2022, you have a Nasdaq that sold off so dramatically that as good as some of these numbers look and now some of them are completely outstanding to start 2023. But over a longer term lens, that's how I try to look at everything is over a longer term lens, and that's how I try to look at everything, is over a longer term lens that these things are absolutely opportunities to add to them. They're long term buys and we expect a lot out of them. So I don't know that the markets in general have a whole lot of upside left in them. But I think there are opportunities within any market where we can look to build out positions. And Apple is still not a full position.

We've got plenty of cash to continue to add to it. But I don't want to be the guy waiting and missing the boat. That's for sure. Speaking of speaking of building out positions, Lockheed, quickly before I go, you added to that one to defensive name, strong dividend, strong dividend growth. And with any geopolitical risk, owning a defense company, not just for defensive measures, but owning a company in this space, I think makes sense. We've owned it for a while. We just build out a little bit more. Again, looking to build cash on cash positions. They earn money. They pay dividends. They increase their dividends. That's what we want to see in a stock, especially if we're in an economic slowdown.

All right. Good stuff, Kev. As always, thank you, Kevin Simpson. Have a good weekend. We'll see you soon. Up next, tech taking a breather today. It's up nearly 20 percent, though, for the year. Does the sector have more room to run? We'll ask that question. It's also the one name that could be, quote, nearing an inflection point. We'll tell you what stock we're talking about, why it is moving higher. We'll do it in two right back here on Closing Bell. Welcome back to Closing Bell. Tech on a tear. As you know, this year, our next guest says it's red hot rally may in fact have more room to run. Let's dig into the charts now with Jessica Inskip, director of product at Options Play. It's good to see you again. Why do you think it does have more room to run, as some are suggesting it's time to sell? Yeah, it's really because Q1 is marking the highest level of negative guidance that we've had since Q3 of 2019. And all of those companies that gave us forward-looking guidance that was negative, the majority of that was actually technology, which means it supports that narrative of really setting the bar really low and then exceeding the negative implications from poor earnings has a precedent that's already been set due to because of the rally that we've had in the NASDAQ 100, it is stuck between the January 30th high of 12,880 and the bottom of the gap that it

formed in August of 13,175 to 13,210. So it's in this area that needs to gather momentum. And I think that momentum can absolutely come from better than anticipated earnings. Wow. So it's not too stretched based on what the charts are saying. And you think that earnings will actually confirm the fact that tech can go higher rather than throw cold water on the move? Certainly. And that's really because we've already received a lot of negative forward-looking guidance. So if we have received that, that sets the precedence that we certainly can overcome those levels. And then if you look at the broader S&P 500, Scott, every bear market rally has been fueled by an earning season. So that narrative that we keep receiving consistently over and over is things are not as bad as they thought we were. I think we'll still follow through at least for this quarter.

Yeah, that's early. We have to see. Google is on your mind today specifically. Why? Yeah, so when I look at the indicators that I do at this time and note that these have not been of note until very recently, which is the 26, 40 and 200 weekly moving averages, because that gives me a quarter over quarter view and an indication of the trading cycle. So I pulled that across a lot of sectors. And the biggest cushion, naturally, is the NASDAQ 100 or technology with about a 10% move, 9% based on today's movements. And Google really screamed from someone that's at the bottom of that. So it has a breakout from the bottom of the trend. So I want to see consistent closes above the 26, 40, and 200 weekly moving averages. Google has done that four weeks in a row.

So now we've got support at the 40 weekly moving average, which is 101. The next item that we need to overcome or milestone is 110. And in addition to that, from a technical perspective, Google or Alphabet has not really participated in the AI hype. And I really feel that that's largely due to a PR issue, not necessarily product. They have been investing in AI for five years. We've talked about it so much. Increased productivity is something that can help with the labor market imbalance in a way that can find equilibrium. And additionally, their CEO announced the movement from the Lambda model to the Palm model as far as the backend of their AI capability, which really narrows the gap from Google's AI model to OpenAI's ChatGPT. Of the back-end requirements and data that it's trained

on, it exceeds it. And so that is something that can spur once that's announced in addition to their earnings coming up. All right, we'll leave it there. Jessica, thank you. Jessica Inskip joining us on this Friday. Up next, we're tracking the biggest movers as we head into the close. Seema Modi is back standing by with that for us. Seema. And Scott, a big call on one of the hardest hit apparel names this year. We're going to bring you the details on the other side of this break. Stay tuned. We got less than 20 to go before the close. Let's get back to Seema Modi now for a look at the key stocks we're watching. Seema. Scott, we'll start with VF Corp outperforming today as Goldman Sachs

double upgraded the stock from sell to buy. Analysts citing a number of positive factors, including a strong product pipeline advance, better inventory management and the China reopening, which we know has helped LVMH. The stock has had a rough start to 2023, down more than 15 percent so far this year, slightly higher, up about 3% in today's trade. ServiceNow, draw your attention to that chart, lower as UBS trimmed some of its estimates for the company. But the analysts there are maintaining their buy rating on the stock, saying that demand softness is industry-wide and not specific to ServiceNow. You'll see the stock is still down about 4%. Scott? All right, we'll keep our eye on that one for the next 15 minutes or so.

Seema, thank you. Seema Modi. Last chance to weigh in now on our Twitter question. We asked which bank that reported today is the best stock in that group to buy right now. J.P. Morgan, Citi or Wells Fargo. You can head to at CNBC closing bell on Twitter. We'll bring you the results just after this break. All right. The results of our Twitter question, we asked which bank that reported today is the best stock to own right now or to buy right now. The majority of you said, and I suppose I'm not surprised given the better than seven percent gain today. J.P. Morgan, 68 percent. It was a runaway. Up next, production problems. Boeing issuing a warning over its 737 MAX jets. That story and much more. We're going to take you inside the Market Zone.

We're now in the closing bell Market Zone. The Wall Street Journal's Gunjan Banerjee joins me now to break down this end of week weakness. Plus, Phil LeBeau on Boeing's latest 737 MAX issues. Bob Pazani on what he is watching in the final minutes of this trading week. Gunjan, I turn to you first. Not much volatility. I mean, we're down today. The VIX, oh my gosh, it's at 17 and sinking as we speak. That's the fascinating thing Scott is that we are ending this week on a pretty downbeat note. When you look

across a range of markets there isn't a lot of fear out there. The VIX has been edging lower. The bond markets move volatility index has been down from its March highs. Credit spreads have tightened this week in the high yield market across the markets. That tells you people really aren't on edge right now. And what I've been hearing from from traders is that, you know, people who had bet against the market, people who had looked to bet on volatility, they were caught flat footed this year and especially over the past week. I still have plenty of people, though, including this week, come on and say we got a correction coming and it's coming sooner than people think, and it could be 10%, if not more. The thing is, Scott, it's costly to bet on that. We saw S&P 500 futures positioning. Bearish bets against the S&P 500 hit the highest level since August 2020 last week,

ahead of CPI, ahead of bank earnings. That didn't pan out the way a lot of people expected. So that's why you're not seeing this rush to protection, even though there's this kind of seemingly endless list of concerns that analysts have cited. At least for a day, we're saying, OK, earnings aren't as bad as some had feared, but it gets real next week, right? I mean, you have so many important S&P and Dow companies reporting. It's going to get real next week. And, you know, this week, the indexes saw pretty muted moves.

But I think one thing to watch is how much dispersion do we see out there? JP Morgan stock was popping a lot. We saw some other big single stock moves that might play out next week as well. What do you think about technology here? It's an interesting question. It's had a great run. It teetered a little bit. It's down again today as rates had crept higher a bit. It's down again today as rates had crept higher a bit. I think a lot of investors cannot

let go of those trades that worked the past few years. And one thing that really surprised me is bitcoins move higher. Techs move higher this year. ARK popped, what, four or five percent yesterday. And I think that shows you there's still a lot of speculation out there. There's still a lot of excitement for those trades that, you know, roared the past few years. Gunjan, it's great having you here. You may have seen a headline bottom of our screen in the last few moments about a temporary Supreme Court ruling related to the abortion pill. Our Meg Terrell joining us now with the very latest there. Meg, what do we know here? Hi, Scott. Well, the Supreme Court has issued a temporary stay of this ruling from the district court judge in Texas that

would have taken Mifepristone, the abortion medication, off the market. So this is a temporary stay that's in effect until the end of the day on Wednesday, April 19th. Justice Alito has granted that Justice Department request for this stay to sort of preserve the status quo for right now. But he's also called for a response from the plaintiffs that originally filed the Texas lawsuit. And the court is ordering that any response to the application be filed on or before noon on Tuesday. So, Scott, this is not the end of this legal battle. This will proceed. But right now, this drug is ordered to stay on the market at least through Wednesday of next week as this continues. All right. Appreciate that update. Meg Terrell joining us there now to Phil LeBeau. Phil, Boeing, one of the biggest drags today. We have more 737 issues, as I read from one commentator earlier who suggested Boeing

just can't get out of its own way. Well, this comes at a bad time, Scott. We've talked about this all day. What you have here is a situation. They're still trying to assess exactly how many 737 MAXs might be impacted by the fact that there are two parts that their supplier Spirit AeroSystems told them, look, they're incorrectly installed. So they're checking all the ones that are in production as well as those in inventory. This is important to note here. This is not a flight safety issue. There's no planes that have been grounded. The MAXs in service remain in service. Nonetheless, for Boeing, it is potentially a big deal, depending on how much they have to lower their deliveries, not only near term, but let's say this stretches out over a couple of months, which is not impossible to believe. So you don't know

how many deliveries that people were planning on for this year, Scott, are not going to happen. And as we know, deliveries drive cash flow, ultimately drive earnings at the end of the day. And that's why you see shares of Boeing under pressure right now. By the way, shareholder meeting next week. Wouldn't be surprised if we finally hear a comment from Boeing CEO Dave Calhoun at that meeting about this. Also, you have Spirit. They're down, what, 20 percent? At one point today, they were down 20 percent. They are the primary supplier here. And this is just a brutal day for them. They are in the process of putting together a plan for inspecting and fixing the fuselages that may be impacted here. You're channeling exactly what Stephanie Link said today,

Boeing shareholder, of course, on halftime about the hit to free cash flow. But even she says this is still overdone in the stock today because it isn't a safety issue, as you just laid out at the very top, Phil, correct? She is correct about that. However, if you were an investor and you were counting on Boeing, let's throw out a number here. The estimate is 445 maxes to be delivered this year. Let's say this is an issue where it takes a couple of months for them to figure this out, and they can't get these deliveries up to 400 this year. Well, then near term, you're going to see an impact here.

So Stephanie is correct. It is not a safety issue in terms of they will never be able to fly or the planes in service aren't able to fly. However, it is an issue that is going to hit the bottom line potentially in the second quarter as well as the rest of this year. It depends on how extensive this is and how long they have to lower their deliveries. Yeah, no doubt. Not to mention the narrative around it, just hearing Boeing and 737 issues. It's like a sell first, ask questions later story of sorts, Phil, as we've learned. Absolutely. And it was at, what, a 52-week high within the last week, two weeks. So I think a lot of people have sat there and said, OK, we had a nice little run here.

Maybe we'll take some cash off. At some point, we might get back into it. All right, Phil, good stuff. Thank you for that. Bob Pisani joining us now. Boeing, just one of the Dow stories today and the drag. I mean, Dow's off the lows, Bob, down 139 still. It's Boeing, UnitedHealth as well. A bit of a drag, even though its numbers were good. But you're talking about another stock that has done quite well of late. Yeah, and remember, it helps to be a $500 stock. And when a $500 stock does well in the Dow, it pulls the Dow right up with it. The Dow is a price weighted index. I think the real story today on the first day of earnings, the soft

landing piece is still intact. Earnings were brought down for the first quarter more aggressively than any other quarter this year, understandably. The numbers came in a little better than expected. I think not as bad as feared is certainly a good way to characterize the bank earnings. But we're modestly down today, but the volume's very, very light. And here's the important thing, Scott. We talked about this all week, the advanced decline line. Now, it's true there's more declining stocks than advancing stocks today. But generally, for the last two weeks, many more advancing than declining stocks.

We've talked about the strength in the cyclicals. Industrials keep advancing. Materials keep advancing. Energy keeps advancing. Then there's the defensive sectors that are advancing. Health care has had a great couple of weeks put together. Consumer staples are generally advancing. You mentioned, Scott, tech has been flattish this week.

And that's true. So what you see here is more of a rotation, a rotation into cyclical and even defensive names and a little bit of rotation out of technology. But that's a rotation. That's not a correction, Scott. And that's why the market trend is still to the upside right now. Yeah, we've got two minute warning. You just heard it. Gungeon Benergy still with us to soft landing still intact until it isn't. I guess that's what the narrative is going to be in part. I mean, that's what it seems like so far, where investors are saying, we think the peak in inflation has passed and we think the trough in earnings is

soon going to pass. And that makes next week so, so important where, yeah, maybe JP Morgan's earnings weren't as bad as people thought they'd be. But what about those smaller regional banks? What are they saying about a potential credit crunch ahead? What are they saying about lending that could change that soft landing thesis that a lot of people have warmed to lately? In other words, Bob, be careful to judge too much on a day where you've gotten earnings off to a decent start. And remember, the quarters prior, several of them, the bank stocks did not do well on the back of the earnings numbers. So it is a welcome change at a much needed time. Yeah, I would agree with the idea that there is a widening spread between the money center banks and the regional banks.

And you see that with the KBE, which is the bank index, versus the KRE, which is the regional bank index. That was down generally for the good part of the week here I I thought that the provisions for loan losses everybody so worried about the recession that's coming to provisions for loan losses I thought were very modest

throughout a PNC actually had lower provisions to me that indicates better credit quality not worse maybe they're wrong down the road but I was very encouraged by what I saw today at least on on that particular. And even the net interest income numbers were not as bad as people feared here. So remember, these were very, very low expectations, and at least

today, it looks like they met those expectations. We'll go out with a loss, albeit a bit modest. Interest rates, watch them too. Ten-year highest in a couple of weeks. Have a great weekend, everybody.