Closing Bell - Closing Bell: 7/1/26

Episode Date: July 1, 2026

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, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Thank you very much. Welcome to closing bell. I'm Scott Wobner, live from Postnight, here at the New York Stock Exchange. This maker break hour begins with the second half for stocks, whether the recent momentum unwind is a sign of more things to come in the months ahead. We'll ask our experts in just a little bit, including J.P. Morgan's Dubrovco Lakers. Here's the scorecard with 60 to go in regulation. First day, the second half looks a lot like the way the last quarter ended. Ships are weaker today. other areas of the market are outperforming the momentum space. Many of the mega caps, well, they're hired today led by META, which is building out a cloud business. We'll have more on that big news today in just a moment because the stock is off to the races. Microsoft's higher too.

Pretty good day for Amazon as well. All of that takes us to our talk of the tape. How best to position if stocks, in fact, are poised to continue their winning streak. Let's welcome in our panel. Treasury partners, Richard Safferstein and so-fi's Liz Thomas. Good to have you both with us. Thank you. Are we going to continue this record run for stocks?

We will, and it's interesting because earnings are accelerating, yet multiples are compressing. And all I can attribute that to is the fact that the hyperscalers are now being or have been valued as capital intensive and asset heavy versus asset light. And I think that's a mistake because it would be justified if these companies were not showing growing earnings, growing profits, and growing operating cash flows. But they are clearly way ahead of the game. Last quarter, 30 to 60 percent cloud growth. And that's going to continue. And eventually, it's going to get valued by the market. So I would stick with the hypers, the large cap tech, because I think the market's going to re-rate over time. You saw the meta announcement today,

and that's only going to reinforce that trend. Do you agree? I do agree. I think directionally in the second half, the movement is going to be higher. I do think that semiconductors continue to see volatility. I would expect a little more downside in that space just because of the big run they've had. But I think the Meg 7 comes back and gets back into the forefront and the hyperscalers as well. I mean, every time in this market throughout this cycle that we've had any volatility, and I think we will have volatility into fall, investors continue to flood back into those big names. Now, in the first half they lagged, which I think surprised most investors.

But in the second half, I think they come back in. Wow, so neither one of you are really big buyers into the idea you're going to have this big broadening move away from the hyperscale. I think the juice has been squeezed, so to speak, from those names, at least in the near term. And now we need to see more of the show me on the return on all this investment that they're doing. Okay, there's a couple dynamics here. First of all, the broadening, sure, it can happen, but look at the peg ratios, the price earnings ratio to the growth rates.

You look at the more traditional consumer stocks. It's five, six, seven. look at large cap tech, it's one. So you're paying one times for the growth rate versus, let's say, Kimberly Clark, a Coca-Cola, Procter & Gamble. The current growth rate. Correct. But what happens if the, well, we don't assume that that growth rate is going to continue at this clip in perpetuity. Well, that was reinforced today with the meta-announcement. And if you look at the growth of the operating cash flows of these companies, you take Microsoft over the last three years. The ROCF has doubled. That's doubling to what, $200 billion a year?

Well, how come that stock has done absolutely nothing? That's why it's probably a great value right here. But the second trend that's important is this concept that the beneficiaries of the spend have benefited more than the spenders, right? So the Ciscos, the Dells, the Aristas, the anphenols, which we own, okay, but I think that that trend will continue, yet you still want. want to own the large-cap hypers. I like that business. Are you in the bigger broadening camp or no? In some ways, but I wouldn't call it a broadening trade. A broadening trade that we've been talking about for most of this period is the cyclical broadening. So it's everybody wins sort of thing. I don't think that's what's going to happen. I do think the broadening out into financials,

some of the health care names were nice confirmation of some of this. And I do think health care will continue to benefit. I mean, you're going down the list of a lot of areas of the market that you think are going to... Just two so far. Yeah, but you think tech's going to do well also, don't you, the mega caps at least, maybe not the chips, but... So let me be specific. So as money rotates out of the chips, I think healthcare continues to be a beneficiary of that, not because it's a different choice that is a substitute, but because investors are looking for growth opportunity and they're finding it in pharma and biotech. So I think that still happens. But I do think Meg 7, to Rich's point, I do think Meg 7 comes back in. You do stick with those. Also, healthcare is one of the sectors that tends to perform the best in a midterm election year. And some of the volatility that we're likely to see in fall is going to be about midterm election. So I think healthcare is a place where it may look like there's a broadening trade, but it's not this wholesale, cyclical, everybody wins sort of broadening trade. Even if earnings come in to where they're expected, I mean, 24.3 percent,

earnings growth is the estimate for the current quarter. On April 1st, it was 19. On January 1st, it was 15. Now we're at 24. And all of these other groups of the market are supposed to, if not fully catch up to what tech has been delivering, at least improve to the point where why wouldn't you have a quote-unquote everything move if earnings produce what the consensus suggests they will? I think you could have things benefit, but the magnitude will be different because those earnings are still largely driven by tech and AI and by hopefully the revenues that are going to show up because of the spend. That's what needs to happen. But these other areas, though, in terms of their earnings growth, they're already, they're already doing well into double digits in their own right. Yeah.

Like, whereas the tech is, I know, skewing the whole picture, because as a group it was plus. 50% or they're about. But that's not to say that all these other areas haven't done well in their own right. And they're only, the estimates they're increasing too. You know what I'm saying? So if like the economy's still good and earnings deliver, why wouldn't you get these cyclical, real cyclical areas of the market to maybe even outperform? Perhaps some of them. I think financials have a decent opportunity at that. But you're still getting more bang for your buck on earnings and earnings expectations in tech stocks and in that expectation going forward. If you look at it over a longer term period, so we're talking about the second half of this year, if you look at it over a much

longer term period, then you start thinking about what are the next sectors, what are the next industry groups that are going to benefit as maybe memory costs come down, as companies start to benefit from productivity and cost savings, then you throw in things like more. health care, industrials. You've got obviously energy generation that needs to happen and most of the energy complex. But that's a longer term story, the next couple phases of this theme. But don't you, if you have, let's say, you know, tech here and then everything else here, and from an earning standpoint, it's been like this. But then we're slowly, as the quarters go on, we start to go like this. And we get all these other areas of the market that start to show like really, really

robust earnings growth, not just low double digit percent, but, you know, 20 plus. Well, look, I own half a dozen stocks away from tech. And they're on a relative basis more expensive than the large cap tech right now because, as I said, earnings are growing on accelerated pace. Multiple are coming down. I think the risks are something that we should discuss very quickly, which the circularity of what's going on between. the needed IPOs of Anthropic and OpenAI is going to impact the remaining

performance obligations of the hypers and you just heard OpenAI pull the offering to following year and that's one of the risks that we should be thinking about as well that's not that's not definitive it's not definitive but we always look at what tail risk events could occur obviously a restart of the

conflict in Middle East would impact oil prices. Market won't like that on a short-term basis, but also the circularity and some dynamic that changes that might impact the hyperscale. I noticed you have one of your most recent buys is Apple. Yeah, Monday. What took you so long?

I just added to the position. So I've only owned it for like 14 years. Okay. Okay. So you just add, you, I'm sorry. You did add to it. It's not a newbie. And PWR, too, you added to.

So you still like the same themes. Yeah. So that's, but Apple is interesting because they never got into the arms race, the AI arms race. And now they can simply adopt Gemini into Siri and any small modification or improvement of Siri. Like, can I search an email for when my flight is landing in Minneapolis tomorrow? Okay. You can't even do that now, right? And so any improvement is going to further spin their flywheel and sell more iPhones.

Okay. All right. Good stuff. Guys, thank you. Liz Thomas, good to have you, Rich Sapperstine, you as well. We'll see both you soon. We do have some other news regarding a frequent guest and someone, all of you know pretty well at this point. Dan Ives, he's leaving Wedbush, and he joins us now to tell us more. So welcome to you. It's good to have you. Tell us more. You resigned today? Yeah, so look, I've been a WebBush eight years. It's been a phenomenal time. So proud of everything we've done as a tech team, they're going to continue to be partners. But for me,

It's about what's the evolution of my career, 25 years on Wall Street. And, you know, I'm excited that I've found great partners in long-term capital to create a new investment bank, really essentially a new modern merchant bank that I think is really going to fill the need that we're seeing on Wall Street, given my view from tech to energy to infrastructure financials. So super excited to really start that chapter. When is all this going to happen? When is the page turn if you talk about a chapter become official?

Yeah, officially we'll understand. nouns the new firm in the next few weeks. And I'm so excited, you know, it's obviously to be a partner and help drive this vision because part of it is that, you know, it's seen around corners. But I think more and more companies need not just, it's not just great research. It's not just great advisory, but also align balance sheets as well. And I'm just, I found the right partners, people I've known a long, long time, great capital. Are you prepared to talk about that at this point? the backers who they are and all that, or is now not the time for you to do that?

Yeah, we'll do that in a few weeks, probably right here. Okay. Again, I'm so excited to announce it. And my time at Webbush has been unbelievable, just been another step to where I ultimately believe when I talk about the AI revolution, the fourth industrial revolution,

is to create a firm that I think could go after that and help clients, help investors, what I view over the next decade. Didn't you? You just initiated on SpaceX yesterday, didn't you? You did, right? Yeah. Why did you do that if you knew you were leaving?

That seems weird. Yeah. And that's, look, from a timing perspective, you never could coordinate these things. But to me, it's just yesterday. But it's a good, but for me, SpaceX is one where, you know, I'm such a believer as we've talked about in terms of what Musk is doing there, what ultimately AI is going to mean to the SpaceX story. And it broadly speaks to our view of we're still in this third inning of the, you know,

the AI revolution. That's just starting to play out. just like you see meta and others, you know, continue to kind of add other notches onto their belt. So you have an outperform on SpaceX. It seems strange even talking to you about this since you literally have a foot out the door at this point. But 190 is your price target.

What is the principal part of your bull thesis on that name? It's really some of the parts. It's the fact that when you think about data, you think about space, but it's really AI. It's my view, they potentially could be the, company in the world with the most data. And I think when you look at AI, you don't see it in revenues today, but over the next two, three years, we did some of the parts that got us to 190. And I just, and as I've talked about, I also think there's a, there's over an 80% chance

that SpaceX ultimately acquires Tesla by 2007 and it's part of the broader theme. Okay. Well, congratulations on the new move. Thank you. I look forward to hearing more about it when you're able to share that. Don't go anywhere because I want to come back to you and talk to you about some more tech stuff, but I want to go to Julia Borson today for more information on what is sending meta shares sharply higher. What do we know? Well, Scott, sources confirm that meta is working on building an AI cloud infrastructure business. Now, this should not be a surprise since Mark Zuckerberg first talked about this last October and again at Meda's annual shareholder meeting in May. Then he said, quote, it's definitely on the table almost every week.

There are different companies that come to us from outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we bought it at. Zuckerberg's appointment of Dina Powell McCormick as the company's president and its co-head of its new Meta-compute division laid the groundwork for this new business as MetaWorks to monetize is up to $145 billion in capital expenditures this year. Now, in addition to challenging Amazon, on Microsoft and Google's AI cloud businesses, Meta could sell its raw compute, which would rival AI cloud companies, Corweave and Nebius Group, both of those trading sharply lower today. And as for Meta and its 9.5% gains today, many else are bullish on this for creating

a new potential revenue stream, guys. Okay. Julia, thank you very much for that. That's Julia Borson. Back to Dan Ives because you follow the company. What are you making the news? It's, I mean, we've talked about it. This is just going to be another sort of notch when you talk about all the capbacks and how they're going to monetize. This is another piece. They're not just spending to spend.

This is not baked into the stock when you think about cloud, what that could be in a monetization, what the subscription is going to mean to ultimately the three and a half billion users. And I think this is just the start of a strategy where I do believe Zuckerberg and META are playing a game of poker. Investors haven't seen it yet, but it comes down to number. numbers and results where you're starting now see breadcrumbs, they get you more bullish for a stock that, as I've said, garage sale price in terms of what this thing is trading. Did you see this coming?

Look, we talked about it that when you talk about cloud and you talk about compute and you talk about what they're doing, they're going to continue to focus on ways how they can monetize. They're not just spending like 1980s rock stars for no reason. They will monetize and some of the parts. I just think New York City cab drive right now is Barish on Meta going into July 5. Can they really challenge the other, you know, more well-established cloud, Amazon, Google, Microsoft, obviously? Yeah, I don't think that they could challenge them.

So when it comes to are they going to unseat Microsoft and the Della, Amazon, Google? But if they could be, look, very similar to what Oracle is doing. If you could be a fourth, fifth player, monetized your base, get ultimately spillover, this is something that's not baked into the valuation. It's not baked into the stock. And I think that's the game their point. Well, it's funny. You mentioned Oracle because, I mean, that stock hasn't done well at all.

Has it? I think Oracle and Microsoft, the most oversold large cap names out there because it's the view that Oracle is just spending, taking on debt, not going to ultimately monetize in the open AI piece. RPO continues to go higher. And I think that's one another one. Super value name relative to where it's trading. And I just think as we go into the next six months, why these names are going to recover.

and I think outperform even maybe some of the memory and chip boys. Oh, wait. So you think the mega caps are going to reassert themselves in the second half of the year? So you don't buy into the underperformance there. And, you know, momentum continues to unwind from the chips and that money goes somewhere else. You don't buy that story? Because I believe when it comes to modernization, you're building Vegas strip, 195, who ultimately is going to be the one that benefits there down the road?

It's the hyperscalers. How Microsoft's going to monocon? alphabet, what you see on Amazon, right now that's not being factored in. It's, of course, memories, the chip plays, that's what those are the golden childs. But I think as we go into it, it's the hyperscalers. And I think ultimately mag seven, that will flex their muscles going into earnings season in July. Why should it be factored in now? Why isn't it the right reaction that the market is given to like, you know what, we've given you all the benefit of the doubt on spending hand over fist on all the money when, you know, whether it's, you know, you know, you're

free cash flow or now you're raising debt and all that stuff that's coming coming on to the market. We've given you the benefit of the doubt on all that, and we've priced a lot of that in, but now we're just going to sit back and we want to see results. What's wrong with that? Why should we be pricing in what you suggest we should? We've given a lot already. Now it's time to see what comes our way. Yeah. Does it make sense that the market's pricing that in penalty box? Yes, but my whole view is Look at alphabet a year ago. DOJ is going to break it up.

AI is going to cross-search. The narrative means sense at the time, but that created the opportunity. That's our view is that as they prove it, they will, but they're going to have to prove it. You can't have dogate-a-homework type of quarters. The chips are an interesting call. What gives you the confidence that they're going to, you know,

reassert themselves back into the mix? And that, I mean, if they do, then the momentum factors are going to do quite well. And it spreads second, third, fourth derivative. And look, when you look at Nvidia, streets underestimate and growth, probably 15, 20% in terms of earnings, demand the supply. We've seen our Asia checks still 12, 15 to 1. That's not stopped. Now look, memory, clearly that's the one where, you know, they basically run into the bank.

It's going to spread chips to hypers. Ultimately, I think the software, we talk about names like cybersecurity, crowd, strike and pow out, though. Those have crushed it recently. There's no doubt about that. I mean, the quarter, they're coming off. I don't know, the best quarter and seems like forever, but. It's been remarkable. Year to date, a lot of those names, Fortnite's up 100%.

Palo Alto's up almost 100 as well. And go back, we talked back. It might have been the best quarter of. And go back to March, month of March. Yeah. Uber Drive, no matter who you talk to, everyone was bearish on crowd track, on cybersecurity, look at what George Wilco and the cash is done. All right.

To be continued. Thank you. Thanks for sharing this news with us first. So we appreciate that. Thank you, sir. Let's send it now to Christina Parts of Nevelos. She has a look at the biggest names moving into the close today. I, Scott. Well, let's start with the SpaceX shares, because you can see they're just trending about 7.5% lowers.

The Wall Street Journal reported Elon Musk showed investors a prototype for a headset like AI device just ahead of a SpaceX IPO that was supposed to be using Qualcomm's Snapdragon chipset. But in a reply on X more recently, Elon Musk called the report utterly false. And so that is, you're not seeing as much of a reaction in Qualcomm shares, but that's why that's reacting. Now for Nike shares, they're up ever so slightly 3% making up earlier losses. as Nike beat expectations, but saw another sales decline in its key Chinese market. UBS and Bank of America cut their price targets. Goldman kept a neutral rating, says investors just need to have patience with Nike's turnaround plan. Last but not least, shutter stock shares are tumbling as it called off its plan merger with Getty Images just after hitting a regulatory roadblock.

A top UK regulators said it would require shutter stock to sell its editorial business before any type of merger could actually happen. These companies, we have to point out, do have market caps under $1 billion, so the swings are definitely dramatic. Shut our stock down by 30%. All right. Christina, thanks. We're seeing a little bit. We're just getting started. Up next, can the markets keep up the momentum? Or will the summer heat for stocks to cool down? J.P. Morgan's Dubrofco-Lakos joins us next. Welcome back to the bell. After the best first half for stocks in years, is there enough momentum to keep these markets climbing through the summer? It's welcome in J.P. Morgan's head of global market strategy, Dubrovco-Lakos. It's good to have you back.

Thank you. I love your most recent note. You talk about blue skies ahead. That sounds pretty bullish, are you? We're bullish. We have been bullish entering the year. Obviously, you know, the geopolitical event around Iran deterred the path for a bit, but looks like things are moving in the right direction.

We are bullish. We think momentum for broader equity markets remains intact. Having said that there is certain segments within equities where there is extreme degree of crowding. And so in a way, momentum factor is highly crowded and at risk of flash crashes, but the broader market, we think, remains in a decent spot. Okay, so let's take those in pieces. Your target is 7800, right? You raise that to 78? We use the recent weakness in the market to raise it from 76 to 78. Okay. I mean, you're at 75 now, and when you talk about blue sky, that doesn't sound like a lot of blue. No, but blue sky was sort of the turn that we were using amidst the geopolitical, you know,

than the oil crisis when there was a much bigger risk that we basically had to entertain in terms of where things could go wrong. And so we thought about blue skies and environment where, you know, the earning story continues to come through. And then a lot of these pressures tied to the trade of Hormuz, oil markets, and so forth start to normalize. That's pretty amazing how the market was able to look through a whole lot of noise and even more than noise. You know, the spike in oil prices, there were some volatility. The market got upset here and there, but by and large, it kept its eyes on the earnings price. And that enables you to go to 7,800, others to 8,000 and beyond. This is all an earnings-driven story, right? Largely, absolutely.

We think that the multiple story, actually, if anything, at this point, is relatively contained because the market does have a number of different hurdles that will have to basically digest, including potentially tightening monetary policy. You don't believe that. We don't have hikes officially for this year, but you could basically see some in 2027, and that remains a risk. You have a situation where there is, again, we talked about pretty high degree of crowding in certain segments

that are quite important to the overall market. Like momentum? Momentum, but specifically tied to AI, and it's less of a midstream hyperscalor story. It's really more the beneficiaries. of this sort of hyperscaler spend. So think about the upstream plays, the second, third, fourth order plays,

and not just in the U.S., but also broad. When you look at Asia, markets like Korea, Taiwan, they've been on fire. So you're talking about chips. Like the memory chips? Chips in the broader supply chain, the ecosystem, you know. And then there's something to be said about equity supply. There's a lot of equity supply that's going to be hitting the market.

Already is, and more to come. And so we still think that the demand supply picture remains robust and solid, but it will not be as good as it's been the last six, 12, 18 months. No, but the market has not wavered one bit on any of the issuance that that's come or the IPOs. So far. So far. You think it'll be different when, say, Anthropic and Open AI hit the market, but given their size, that eventually you have a supply demand imbalance? Well, there is potentially new names that are coming to market. So we're thinking $2502,300 billion worth of IPO, supply coming online this year, which will be the highest, I believe, since 2021. And then you have the

question around secondary offerings. We're seeing some movement there. And then there's the whole question around post-lock-up shares that's going to be also additional supply hitting the market. Now, that's at a time when buybacks, which have been a very steady hand in terms of demand, remain quite strong. And then the retail side has been a relatively steady hand in terms of buying the dip. So we think those persist and help this new supply get absorbed. But the spread is just not going to be as favorable. Right. So the market will have to digest these. So the market will have to digest these things along the way. Do you think, I mean, do you expect what, what's happened in the last few weeks, or not even maybe that long, but the momentum unwind that we've been witnessing, is that

a bigger trend, a longer trend? And if it happens and money just circulates somewhere else, right? So, so this market has been a big time momentum driven market. The degree of crowding and momentum that we're seeing today basically is similar to what we saw during peak momentum bubble in COVID and peak momentum bubble TMT, right, crowding-wise. And it's been highly concentrated, as I mentioned, in these AI upstream plays. So risk of a flash crash in momentum is high, has been high, remains high. So what's happening on a day like today, I think is very real and should not be any surprise. And I think there's more such risk to play out. Having said that, I do think that various other important segments of equities, like the hypers, big tech, big 10, their valuation,

peg ratios and so forth, actually, if anything, look quite attractive. So I think that should help keep the market in a relatively, I would say, strong spot. So momentum crashes, but not necessarily full-blown market crashes. Is there an area of the market that you think will have the biggest upside surprise in the second half that not enough people are focused on? Or is that too difficult to interchange. So no, no, I like that. Quality growth, rotation from speculative growth into more quality growth or broadly quality is what we've been sort of advocating for. What do we mean by that? What goes under that umbrella? So tech, hyperscalers, I really like as a relative outperform. Right here, yes. Okay. Many of them have been doing nothing for six, 12, 18 months. Right.

You think about health care. You think about areas like medical devices. And then you even think about areas that have gotten heavily hit from this call it fear of AI disruption earlier this year, software areas like cyber. I think of them as also quality growth. Well, I mean, cyber is coming off. A lot of those names are coming off their best quarter ever. Yeah, but I think if you look at the trend of software the last four or five years. And cyber also went through a relatively tough patch up until recently. So it's only more recently starting to rebound, right? What about the reverse of that question? Is there someplace you would just outright avoid?

So areas that I would... So I would be trimming the indirect, the second, third, fourth order, AI place that we talked about, the momentum. That's where I think you really need to think carefully about

diversification and portfolio construction because risks, I would say, are quite high. We haven't seen in quite many years equity funding costs shooting up as much that they have now. Levered ETFs sizes are moving up.

So there's frothes billing within those specific segments of the market. I appreciate you sharing your views with us. Debraffield, it's good to see again. Thanks, Dubrovco-Lakos. JPMorgan coming up. NASDAQ coming off its best quarter since 2020, but could the tech trade be due for a serious correction?

Intelligent Alpha's Doug Clinton has a view on that. You don't want to miss it. Welcome back. As Tech Prime for a serious correction, our next guest thinks it might be. Even as he continues to love the space, Doug Clinton, the Intelligent Alpha founder and CEO, and Deepwater Managing Partner, joins us now. It's good to see you.

Likewise, Scott. Tell us more about this call, looking for a correction. If you look back at the dot-com era, there were 10 corrections of 10% throughout that six-year period. And obviously, there's a lot of analogs, I think, a lot of comparisons people make between the AI era that we're in now and the dot-com era previously. And one of the things that we've noticed sort of studying that prior period is when we get these periods after a strong run, which we've just had in the NASDAQ, and you start to see some wobbles, you start to see really some more spiky volatility where you have bigger day-to-day moves, a few percent up, a few percent down. That often did correlate with one of those 10 percent correction moves. And so that's kind of what we're seeing right now, Scott.

It does feel like I wouldn't really be surprised if we went all the way down to that 10-to-percent correction would be about 24,000 or so, a little higher than that in the NASDAQ. Does it start with the momentum unwind? I'm not sure if you heard the conversation I just had with Gibrovco Lakers of J.P. Morgan, who mentioned the idea and possibility of quote-unquote flash crashes within the memory space and some of those high-flying and really crowded areas of the market, which are right in the epicenter of the whole momentum factor in the market. I think that's where you have to be most careful.

If you look today, even, I mean, some of our favorite names, like a lamb research, which is one that we continue to believe in, in the semi-cap space, you know, down 10% plus, some of the memory names down 10% plus today. So I think it would make sense if we think about a 10% correction, where would the brunt of that happen? Certainly it'll happen on some of the Mag 7 names to get to that level because there's such a big part of the NASDAQ,

but I also do think that some of that momentum underlying would be a big part of it. The question I think is how do you sort of play it? At Intelligent Alpha, our AI models that run our portfolio, portfolios, we have been trimming a little bit of our exposure to the data center play. We were about 40% exposed in our long, short hedge fund in May. We're now down around 30, so we still have a lot of exposure. But I think that you just want to be a little bit careful here through this period until the trade, in my opinion, starts to work again, probably later this summer.

And it's clear that you don't believe the memory trades over. In the long run, you just think it needs a bit of a reset given the parabolic moves that we seen? That's right. I would stick with memory long-term. The semi-cap space is another piece of the broader AI trade that we continue to like. I mentioned land research. You know, on the memory side, Western Digital is a name that we continue to own. And we're going to try to manage around those positions for what we think could be some volatility here. I think the good news is when we get to the back half of this year, there are some other things that could be incremental tailwinds to the AI trade. We've talked a little bit about this before, Scott,

the idea of doing inference or running AI models on your computer locally. I think that would be a bigger trend next year, and we could start to see some beneficiaries from that. Memory will continue to benefit from that trend, but a company like an Apple, for example, or even Dell computer could be beneficiaries as well. What about outside of tech?

What do you like the best? And tell us now if we use AI to do our stock picking, I myself really only focus on the tech names, but I'll tell you one name that our models really do like. It's been Eli Lilly for most of this year. I think you think about all the momentum in AI, all the excitement around AI. Eli Lilly obviously is using, I think,

a lot of technology to develop new drugs. Retachetide is a very exciting drug. I know in the bodybuilding space, which I follow quite closely, could be the next big GLP1. I think that that name is one that's worth following. We'll talk to you soon. Doug, thanks. Doug Clinton joining us once again. Coming up next, we track the biggest movers into the close.

Christina Parts de Nelves is standing by with that. Tell us what you see. Well, we have a fame short seller taking aim at some of the market's biggest AI winners that you guys just talked about. The best performer in the S&P 500 today rides a crypto rebound. And a cereal giant proves eating at home still pays. Those movers next. Just about 10 from the closing bell.

Let's get back to Christina now for the stocks that she's watching. What's at the top of your list here? Well, Scott, we've got Caterpillar shares dropping after famed investor Michael Burry said he's shorting the stock, which has become one of the Dow's best performers over ties to the AI investment boom. Who knew Kat would be of an AI stock? Burry also revered new bets against Nvidia, applied materials, Tesla, and the SOX semiconductor ETF, which plays nicely into your previous chat. Now switching to Coinbase Rising, it's the best performing stock in the SME 500 today. That says the price of Bitcoin is just

back above 60,000 bucks. Stock still down roughly about 30% year-to-date as the price of Bitcoin. and we know has fallen dramatically, but crypto-link stocks like strategy and Robin Hood are gaining today considered proxies. And last but not least, General Mills shares higher. Roughly 7%. There was a beat on both sales and profit

as more budget-conscious consumers continue eating at home, while the trials maker did post a quarterly loss mainly due to increased promotions. The company said that the investment phase is largely over. One of the investments, I found out protein in their cereal. Secondly, happy Canada day, Scott. Okay.

You as well. Christina, thanks. Christina Ponce and Nevelos. Coming up next, big moves in Salesforce and Service Now. We'll tell you why inside the market zone, which is next. We're now in the closing bell market zone, Mike Santoli, and Bernstein's Roosevelt Bowman are here to break down these crucial moments of the trading day. Plus Oliver Renek standing by, as always live from the CBO global markets in Chicago.

We'll join him in a minute. Simomodi's all over the moves today in software, Salesforce and Service Now. I'll tell you what's going on there. First off, Michael, begin with you. of this market today? I mean, first day of a new quarter and half, it seems like the market is trying to do some deferred maintenance on areas that maybe got a little bit overplayed. You talk about it being a momentum unwined. It absolutely is that. And it's kind of holding the S&P 500 in a neutral

condition because other stuff is coming in to kind of catch up. So laggard stuff with a zero conviction in it, but there are trading flows running through those areas like, for example, the average consumer staple sock. It's a beneficial process as long as it doesn't, I think, create its own sense of erratic flow and disorder. I mean, I think that's the thing. I heard DeBrovco's comments to you, the idea that you had these momentum stampedes, crowding lots of leverage and pockets of this market, the question is, has this cooling off period we've had lately been enough to reset the market? Or is it going to be about, you know, really more of a cross-the-board reversal.

Who knows, right now it's not really hurting anything. And I think the bottom line continues to be, the macro is not in much question. And so it's much more about the market reacting to itself and its own excesses and neglect. I mean, it sounded that Dubrovco is looking for, I mean, he used the words flash crash to talk about, you know,

the idea that what's happened with momentum's not done. And you could see, you know, flare-ups at any moment. among those highest flying most crowded names. And it's inherently impossible to predict with any precision. I know he would agree with that. But it's good to be aware that there are fragilities that get created when you have one-way trades that dominate for so long. And, you know, as I did a few hours ago with you, Scott,

I'll just point to Micron. It's still 15% below where it was before it reported the best quarter in memory. No pun intended. What are you coming up top of the hour? All that. Plus, we actually have Rohit Kalkarni to talk about this meta news, which is fascinating, and Biltre represents a laggard stock catching up and a very interesting fundamental story. Good stuff. We'll see you then, Mike. Thank you. Oliver, how about it? Cbo, what's going on there?

Scott, Options Trading after yesterday's monthly expiry is settling back into a new normal structure that prior to this year was very abnormal. One month implied correlation among the top 50 stocks just set a new year-to-date low. as individual stocks move in extremely different directions. This is simultaneously wedging the biggest divide in years between S&P volatility at 16 and a half and volatility in the queues at 27. One step even higher is the SMH where VAL is 59. This has been working for the market as a whole,

but also means traders need to stay on their toes because when correlations reconnect higher, it's usually during sell-offs. Perhaps that's why we see more than 10 times as many calls getting bought in VIX today, versus puts as traders use the S&P to hedge while staying along the backbone of the market via put selling in semiconductors, which was today's most popular directional trade in SMH. Scott? Oliver, thank you. Oliver Renick from Sibo. Nice day for software, especially Service Now and Salesforce.

Tell us more, SEMA. Okay, Scott. Well, the software rally really pronounced in names like Salesforce and Service Now with analysts at Guggenheim upgrading both stocks asserting that the fear is tied to the AI threat are overblown. Adding that current valuations reflect a very pessimistic view on where software is headed and overlooks the innovation that both companies are working on. You'll see service now up six and a half percent. Other software names rebounding too, though. Take a look at Palantir up 8 percent. Follow CEO Alex Carp's appearance on CNBC this morning, which he criticized the frontier AI models saying open source is the path forward and that deepening partnership it has with NVIDIA. Scott, that interview going viral. Oh yeah. Oh, it certainly is. Seema. Thanks. And you

We're definitely a part of that at Seema Modi. Roosevelt Bowman, I said, here. It's nice to see you for the first time. Thanks for coming on. Thanks. What's your sort of broad view first as we make the turn here into the second half? So I think there are a couple of things just building on what Seema mentioned in terms of software. Ultimately, what we've been telling our clients is that you want to focus on those companies

that are solving complex problems. You know, problems are there's high variance. What a lot of large language models do, they're great at solving problems that have low variance. If there's one or two answers, you're going to be narrowed that. down those companies that are providing those types of solutions, they're going to face competition from those new AI tools. But if you have proprietary data solving more high variance complex problems, then you're going to be able to keep your existing customers and acquire new ones. Sounds like you're on the side of time to maybe move a little bit away from the AI spenders

and zero in on the enablers. For sure. I think this is a concept that we've been talking about with our ultra high net worth clients for months now and saying, hey, don't focus so much on semiconductors where maybe those valuations are extended, but where else can you invest in innovative technology, in manufacturing and healthcare, where there's unbelievable kind of advancements going using AI and machine learning tools? Those are great places to invest as well at better valuation. Do you think tech's going to underperform some of those other areas in the second half as a result of that view? Not necessarily. When we look at from the macro standpoint, Kevin Warsh has talked a lot about not using forward guidance, right?

And a lot of market participants have that's led them to say, hey, we're going to have more volatility. But the range of outcomes for the Fed funds rate is pretty narrow. So if we're talking about interest rates not moving around as much, then all of a sudden, that's a sort of supportive backdrop for technology and similar to higher growth names. So you think we're going to have more volatility if the Fed does away with its forward guidance, which seems, honestly, at this point of formality. And he alludes to it, you know, again today in Portugal. Absolutely, Scott. I do think that higher volatility comes more on the long run, though, when the range of

outcomes is wider. When you look at most of the Federal Reserve officials, they're basically saying the current Fed funds rate is around where the long run rate will be, where they think that's the steady state. So all of a sudden, you're looking at maybe a hike, but you're not looking at that extended hiking cycle that we saw in 2022. That's been a concern amongst our clients. We've said, hey, that was a very different time. That was demand-driven inflation, wage pressures rising. that's not we're seeing now. This is supply-driven inflation because of the oil spike. So a very different environment, not likely to see that kind of extended hiking cycle and therefore a better backdrop for equity. What do you think is the biggest risk right now to the bullish story?

I think in our opinion, the biggest risk is really that wages don't hold up. That you all of a sudden have wages falling below kind of headline inflation and that consumption and growth slows in the quarters ahead. And we would say that's one of the biggest risks here. But is that realistic to think that that could happen anytime soon and that it's going to derail the equity market. Because if I'm thinking that that is the chief risk, then if I'm bullish this market, I'm feeling pretty good about myself because I don't think that's going to happen in the next quarter to at least three, four, five. And I would agree with you.

I think on one or two is where you would say, hey, I feel pretty good. But then when you kind of look at the wage data and some of the leading indicators of the labor market, it shows that juxtaposition between leading indicators. is weakening, current indicators being strong. That's where you have to worry about gross law. Well, as you can hear, they're about to ring the bell because they're clapping. It's good to have you on the program, Roosevelt. Thanks for being here.

Appreciate Dow. We do have a new high today for the Dow. Also did get briefly a new high for the Ruffle 2000. Dow's going to fight for positive territory as we head towards the exit here. See you on the other side. See tomorrow. In overtime.