Closing Bell - Closing Bell 7/17/25

Episode Date: July 17, 2025

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.

Happy birthday, Kelly. Welcome to closing bell. I'm Carl Kintanenia in for Scott Wapner. Final hour kicks off with records and striking distance S and P Nasdaq on pace to close at some all time highs. Earning season is about to heat up Netflix after the bell stocks been on a tear and tonight might be a big swing moment just ahead. What to watch, what's priced in and what's at stake for both tech and the broader market. That brings us to our talk of the tape as earning season rolls on. What should investors be watching most closely? Joining us here at Post9 this afternoon,

Adam Parker, founder and CEO of Trivariate Research, also a CNBC contributor AP, it's great to have you. Thanks for having me, good to see you. Nice afternoon with plenty to talk about as we're approaching session highs here. I wanna start with a great note you wrote over the weekend. We're basically unrolling the possibility of S&P 10K by the end of the decade,

based on a lot of the things you're hearing now from say tech companies. You know, it sounds like one of those crazy things where it's 63.01 and you think, God, 10,000, this is one of these, you know, uber bullish idiots that comes on CNBC type of thing, but when you do the math, long-term S&P has grown earnings about 8.6% per year for the last 50 years.

I think it's reasonable to assume that with all the AI investment that's happened that we could get 9 to 11% growth for a few stretch here and get us a little bit above the long term average. And if you kind of take the price to earnings that we're paying around now, that gets you 20, you know, 20-30 on 20-31 numbers gets you around 10,000. So it was just to kind of get people, I think the reason the market's been very resilient is because all the investment that happened in AI, we were always told it was going to be kind of a 3 to 4 year before we saw, started seeing it. So one of the things I'm watching, do we start seeing any

companies talking about productivity? Microsoft flashed a little last week saying, hey, we saved 500 million here, and I think in the next 12 to 18 months, we're gonna see more and more of that, and people are gonna start thinking, all right, well earnings can grow 10% in the next couple of years. So we'd be moving beyond the build out per se,

and starting to get some of that return on investment? I think that's right, and I think if we don't get it, then we're gonna have a correction in the market. I think we've seen enough catbacks from the big companies. So what we do at Trivari is we search every year and it's called transcript for any mention of anything related to, hey, we think we can grow our revenue without a lot of net hiring or we're getting better predicting our employee behavior or our customer behavior. And the kind of stocks that have worked have been ones where they have low margins, lots

of employees. Look at Walmart's multiple and Costco's multiple and even like in drug distribution, McKesson or whatever, like these stocks have started to go up because, not because they're not high margin, they're low but I can dream of margin expansion and that's how I get the multiple expansion. Right. Yeah. At the same time, we do have sort of the construction elements still in place.

Caterpillar today, Eaton, you name it, GE, a good story once again, right? Totally, I mean, one of the things that maybe isn't obvious to people, because the market, as you said, is basically at highs, five of the 11 gig sectors have down earnings year over year in the second quarter. So it's not like every single part of the market's,

you know, materials, not everything's clicking on full cylinders. So if we slowly get some economic improvement in the industrial side side even if the consumer a tiny bit slows we'll just get other things working I think the other thing that is a little bit weird about the S&P maybe not everyone gets is by the way as we are now get record highs at 6303 yeah right there right so 58% of the S&P is three sectors tech comm services and financial. So if you're bullish on

the market, you kind of have to own a chunk of those three. That's the biggest three sectors have been in over 25 years. Right, someone wants to talk about breadth, but what do you mean? Like the markets concentrated in those three sectors and they're big. Four sectors, utilities, energy, REITs, materials are less than 9% of the S&P, all combined. So you can go crazy if you're trying to beat the S&P and own a lot of one of those sectors, but you still own way less than you do in tech. You're going to own way more tech no matter what.

Right. Yeah. Still though, people were looking today at the triple Qs versus the SPY, right? That spreads widening a bit, is it not? Yeah. I think tech has just so much potential here in the next two or three years to grow. I mean, if earnings grow 10% a year in the next two years, do you want to be negative on tech?

I mean, that's kind of how I look at it. I just got back from being in London and talking to a lot of European investors, and I think they look at the US and just think, well, the market's expensive versus its history. Markets are high, and I want to own something else. And I kind of want to say, yeah, if you go to any perspective on it, like I was going to say, if you go to like a Motel 6, it's cheaper than the Four Seasons. Well, it's because it's worse. Right?

Like there's some, you have to adjust for the fact that there's something somewhat inferior about the set of companies that they have there. Here in the U.S., there's just a lot of high margin businesses growing faster. So I don't think it's the end of U.S. exceptionalism. I like the U.S. tech sector.'t think it's the end of US exceptionalism. I like the US tech sector. I think the financials are in great shape. And probably the most contrarian call we have at TriBerry is our overweight healthcare call

where I do get a lot of pushback on will the AI productivity stuff hit in the next six months or is it more, hey, five years from now and it's too early to get in front of that? Are you talking hospitals, pharma, insurers, which part? I think there'll be a sequence. I think drug distribution, diagnostics, hospitals will benefit earlier, tools, and then in the medium term it'll probably be more like the drug development side. But I kind of look at it and say, and not everyone maybe

knows this, healthcare revenue per share for the S&P 500 has grown at least 25 years in a row every year. During COVID, during the financial crisis, there's a lot of old people, they demand services, tools, diagnostics, testing, hospitalization, managed care. So you have somewhat steadier revenue. There are big fears, obviously, when we're running at a wartime deficit in the US, maybe they cut back on healthcare spending,

do get rid of drug rebates, etc. But I just look at it and think, if you and I were sitting on top of the S&P and we said, where would we focus our efforts for AI? We'd say, where there are lots of employees, where there are low margins and lots of revenue, and let's go there. And so many of those are healthcare companies. So that's why I think there's just, it's not like they're all awesome, it's they're bad and there's opportunity for improvement

that gets me more excited. So where does all of this leave us on tariffs and prospect of further cost pressures and the Fed? I think the biggest risk that people point out to me is that you'll get a bit of a stagflationary growth fear maybe August to October. A lot of people say September's always a tougher month and you get down on revisions.

It's possible. I just think, again, you have to look at that S&P constitution and I think that's the issue. The kind of sectors that get hit more are not tech, comms, services, and financials. Right, I mean, if you look at the financials that people like that I think can outperform, look, Morgan Stanley, Goldman Sachs, JP Morgan,

KKR, Apollo, Aries, Blackstone, AJ Gallagher, Progressive, they're not, those are not tariff kind of business models, right? If you kind of, you know, maybe Capital One buys Discovered, they're gonna get Synergies, that's not a tariff thing. If I go to the big tech companies we're talking about, there are some supply and demand stuff, but Nvidia, I think, got good news this week on some demand, so I don't think that has hurt that much.

Same with, so what you're talking about is a smaller portion of the S&P. I'm not saying it doesn't hurt the economy and maybe smaller companies. That's why large caps outperform. So I think it's gonna hurt less than people think, less than I thought a few months ago, to be honest with you. And at the same time, if we do get that,

a little bit of a fear, because there was a lag, everyone I know in the institutional world wants to buy high quality names down 10, 15% per year, 15% from here, because they know 2026 and 2027, they're gonna start seeing some of the AI productivity stuff, and yeah, let's buy it at a discount ahead of those two good years. And then finally, we're gonna talk Fed later in the hour

with Alan Zetner, but is the pal jaw-boining just no noise to you? Well, Zetner and I used to sit next to each other for years. I love Zetner, and she'll say something more clever and smarter about it than I will. My view is that if the Fed cuts, it might not be great for equities, like everyone thinks, it probably will just cause a big rotation underneath.

It'll probably cause me to take a shot at upgrading home builders or something that's perceived as sensitive to it. I'm not as sure as just, oh great, it's frosting on the cake, equities just explode higher, because I think they'll only do it if the data start to get worse. So I think it's a little bit, remember two and a half years ago, market starts running end of very beginning of 2023 because the Fed was closer to being done.

I kind of feel like we're on the other side of that now. So I think it's a rotation thing, not necessarily bullish, but the Powell thing, look, I think we all want it to be independent. And so it's the extent that there's a perception that it isn't, I don't know if that's awesome right but Zendner will have some Texas charm I'll leave that I'll leave that to her yeah AP welcome home thanks for the time yeah great great to be with you Adam Parker

we of course are counting down to Netflix earnings after the bell joining us now with what to watch is big technology founder Alex Cantor wits and Netflix shareholder Jason snipe both our CNBC contributors. Afternoon, gentlemen, good to see you both. Good to see you. Alex, let me begin with you. Is margin the big story here, or are you looking at things like churn,

or just overall engagement going into the quarter? Yeah, margin is definitely gonna be important. We're expecting big profit increases from Netflix after they raise prices. We saw that in Q1. We expect to see that in Q2. I think the big risk here is that Netflix has run up into this earnings report. They're up 43.5% on the year.

They're one of the best performers on the S&P 500. So that could place some undue pressure on the stock if they miss or they don't beat enough. We could see a drawdown ultimately. But I think they're in really good position, that price hike, the fact that tariffs, the talk has gone away for the most part, so they should be very in great shape

with their subscribers. And of course, this is gonna be the squid game quarter. And I think that matters a lot. So I'm expecting big things from Netflix this quarter. Yeah, Jason, that's gonna help in a, usually Q2 seasonally is maybe one of the more challenged quarters, isn't it? No, for sure, absolutely.

And I think to Alex's point, the concern for me is a run up into the print. Obviously, the stock's up close to 43% year to date. But hey, we're expecting 16% growth on revenue close to $11 billion. We're expecting about $7 worth of earnings, which would be 45% year over year growth. So there's a lot here. And then the margins expansion of above 30%. Ad supporter tier has continued to work. The live content slate has been really strong.

And I think the content for the backend of this year will be strong. So I think there's a lot going well for the stock. And I expect a lot of the same going forward. Alex, you know, we have had, it's not apples to apples, but we've had some downgrades lately of some consumer names. Today it was Shake Shack and Starbucks. We've had some maybe less than stellar credit card data on the lower cohort.

Would it surprise you to see a little bit more churn, especially for those who rely on the ad tier? I would be surprised to see churn and if there's any sign of slowness for Netflix over this past quarter, it might be that they dropped Squid Game on June 27th. You know, if you're really scrambling to make your quarter numbers, do you hold an asset like that and say, all right, we're going to do great. So let's push it into Q3 or do you say we we're gonna get this out in the last few days of the quarter and make sure we hit those numbers?

I mean, the bump that they're gonna get from Squid Game, and I know I keep talking about this, but I expect it to be large. The stats are that they got 60 million viewers in the first three days. It was number one in over 90 countries for Netflix, so this is a global phenomenon. If you have to reach into your pocket to pull out an ace,

this is the ace. So if we're seeing any softness, I don't expect it to come this quarter, maybe it trickles out next quarter, but I think Netflix knows what it's doing here, and it's going to perform very well this quarter. Yeah, we had a good discussion with Kramer this morning, just what a remarkable example Squid Game is

in sourcing something from a low-cost environment and then advertising it all around the world. As you said, it is a phenomenon. Jason, there were some questions today about their buyback activity. They bought back a ton in Q1, almost half of 2024 levels. And some wonder whether that really is the best use of capital at this point. No, there's no doubt about it. I think that that's definitely a concern going forward.

I mean, we're talking about $18 billion of spend in catbacks for content. And what else are they doing with the rest of the cash? Will they look to do some buybacks with the rest of the year? I think that is a concern. But as I look forward and look at the content set and even looking at live sports, this play at UFC is going gonna be really interesting. Clearly, they're likely gonna lose this race in Formula One to Apple. But I'm really interested in kind of the live sport content.

WWE has worked well. So I think that's gonna be the interest for me going forward as I kind of look at the quarters coming. Yeah, it's a great point. Just in general, Alex, the live element, for years it was sort of limited by at least the perception that the technology could or could it not handle a live event at scale without failing. I think that question's kind of been answered over time, hasn't it?

Absolutely. They did a great job with the NFL. Now the Paul Tyson fight might have had some hic it? Absolutely, they did a great job with the NFL. Now the Paul Tyson fight might have had some hiccups, but they did a great job with the NFL over Christmas, and it doesn't get bigger than that. And I think they need this live element, because if you think about what's happening right now, streaming last year or over the past year is up 6%,

but Netflix's share is flat. What's the, where are the gains going? It's places like YouTube, It's the free streaming sites. So they're going to need to pull out something big to continue winning share from TV. And what is it? It's going to be live events. So it's good that they've gotten this going over the past year or so. And I expect their investment will only get bigger on live because of the potential payoff. Jason, if they are looking over their shoulder to see if anyone's closing the space behind them. Who do you think it is?

Well, obviously a long video it's Amazon right Amazon's a big story And I think YouTube is a story as well that we don't talk as much as about but clearly they had been the streaming Winner and I think it's just about for me execution going for going forward to continue to be the the poll runner winner here so I think that's what it's all about and they have executed very well going you know over the past few years as they moved away from reporting on new subs which I think has been a big deal and and they're real focus on profitability so I continue to like the story here.

Yeah, they have a habit, Alex, it's interesting, of sort of being able to tune out things that either aren't going to pay off in the long term. I remember a couple of years ago where we all wondered whether the film exhibitor business was going to distract them from the core mission and they kind of curtailed it. That's right. The eye is on the prize at Netflix. And I think Jason brought up YouTube. And I think that's really the thing to watch. We're seeing an obsession with YouTube in this country and all over the world to the

point where people are now saying, hey, that user generated video site is now threatening a big streamer like Netflix. I think that's something to take with extreme seriousness. And I'm curious, you know, you talk about distractions. I'm curious, is there a move on the product side of Netflix to try to head that off? Maybe they try to bring in big podcasts or something more YouTube-y. We've seen Amazon try their hand with Mr. Beast,

and maybe Netflix is gonna do something on that front. And I don't think that would be a distraction. I think that would be an important move. So I'm looking there. Yeah, I mean, their willingness to use YouTube as a bit of a farm team is what it is, is getting really interesting as they look for ways to leverage new content.

We'll see what we get in a little bit here. Alex and Jason, thank you guys. Appreciate it. Thank you. Let's send it over to Courtney Reagan, get a look at some of the biggest names moving into this close. Hey, court. Hi, Carl.

So United Airlines shares are higher after it reported better than expected earnings for the Q2. The carrier had a rocky start to the year amid weak travel demand, but CEO Scott Kirby told CNBC they've seen an acceleration recently, especially in business travel.

Shares are up more than 4%. Meantime, Elevance shares are plunging after the health care provider posted weaker than expected earnings and slashed its fuller outlook. It comes as the company sees higher medical costs and expects pressures on its Medicaid business to continue shares down more than 12.5%. Carl?

All right, Court, we'll talk in a little bit. We're just getting started here. Up next, the battle over the Fed is heating up. One former Federal Reserve Governor says it's not just time for a new chair, it's time for a sweeping overhaul. We will discuss. We are live at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Small cap seen some signs of life this month, but can that show of strength continue? Let's bring in Greg Torto.

He's head of US small and mid cap team at Goldman Sachs. Asset management joins us here at Post 9. Greg, it's good to see you. Thanks for having me, Carl. Thanks for having me, Carl. We're back to that discussion about how the index is problematic, but you guys still think there are opportunities within it, right? We do, we do.

And I think that we're starting to see some signs of life in the small cap market, as you mentioned. It's been a good month to date for small versus large. We think that's a reflection of a number of things. There's some catalysts in the stocks, but they are extraordinarily cheap, and the underlying economic environment is quite good. And I think as we set our sights on the Fed cutting rates

in the back half of the year, you have a couple tailwinds. I was gonna say, big themed thematics, economic activity, right? You mentioned the Fed, and then M&A universe broadening out, does that help? It helps out a lot, and I think it's been very quiet this year, a lot more quiet than we would have expected.

You've heard from all the bank CEOs, including ours who was on TV with you guys, thank you, that M&A's big backlogs are building. We expect that to kind of be materialized in the second half of the year. Private equity will start to move, and then we'll start to see more strategic. So we've had a couple of strategic deals this week,

but not as many as we expect. Right, so within, you talk about catalysts, within the area, is it consumer first, financials first, something else? You know, I think consumer has been the kind of what has carried us to this point. The consumer came into the year as being a big question mark. Would they continue to spend, where would they spend?

And you even heard this week that they're starting to spend on air travel again. So I think you have to start to see a handoff to some other sectors. We're pretty encouraged about tech, software, semiconductors would be an area that I think could take a nice handoff. But also, airspace and defense has done quite well.

And we expect to see some more IPO activity in that space because space is quite active. The private side of the space sector is quite active right now. Yeah, even the big guys, GE today talked about getting that defense business going. We had Leisure Hospitality, ETF, hit an all-time high today. Individual names, I'm looking. There's some consumer restaurant stuff you like. Yes.

Yeah, cake? Cheesecake Factory, we like a lot. It's become a Gen Z hotspot You know one my youngest daughter to get a second job there But I but I do think that there's some some really good trends for traffic that will go on for cheesecake throughout the summer Piper is a good one. What explains that Piper will be an M&A story along with just the general capital markets recovery Along with a pretty solid underlying municipal bond business.

Voyager, I don't know too much about that one. It's a recent IPO, very heavily on the space side, so you think about as the space market starts to broaden out post, after SpaceX, they do a lot on launch vehicles and other things in space. Do you worry about funding costs, at least for the time being, if the Fed does stay more patient than we think it's going to? They've been high for so long that most of our companies have had to adjust. So I think that maybe there could be some companies at the index level that could have

some problems. But for the companies that we own, we think that they're in really good shape. Rates have been high for almost three years, so you think you get used to it after a while. Right. There's also the added notion that as trade gets limited by tariffs and just overall tensions, that you want more pure plays domestically. That makes some sense, doesn't it? That's a great tagline for small caps and we love it because we do think that domesticity

of the asset class and having been through this tariff challenge before many of these companies are really focused on the US market. It costs a lot to go overseas. It costs even more to source overseas. If you think about the challenges of 2017, 2018, the first tariff challenge, and then COVID, a lot of these guys really tightened up their supply chains. So we think that they are very focused on the domestic market.

Goldman had a great chart today looking at prime net exposure to semis versus software. We've talked a lot about how hardware has sort of stolen that mantle from some elements of software, but how does that play into a smaller mid cap story? You know, I think we don't get the buzz from the biggest semiconductors that we all know drive the market, but there are a lot of those picks and shovels that are out there that really can help the connectivity,

connecting these data centers together. We like a company called Sightime that does that. There's a number of other companies that are really broadening out some of the connectivity between the different sort of AI hubs inside a data center. You have to connect these things together to get the best use out of the different compute loads that you're putting on them. So there's a lot of picks and shovel semis that are out there in the small cap market

that are benefiting from what's happening in the biggest companies. Right, do tariffs play in that? I mean, in terms of the raw material, importing PPI intermediate goods this week was a little warm. Yeah, I don't think so because I think so many of these companies have had to shift.

If you think about how we went through, you know, kind of even with the prior administration, a real big change in how we thought about sourcing semiconductors. So many of these guys have had to make alternative plans. That's been more than a year. So I think you had things right. You know, you could worry about the future.

Maybe you could cap a couple of points of growth down the line if things get worse. But for now, I think things are in pretty good shape. Yeah, my only thing I would end on is we haven't really mentioned policy regarding the one big, beautiful bill, but R&D expensing and pulling forward deductions will create a cash flow tailwind for large cap,

but I imagine small as well. It definitely will, and I think it will help the companies that have that really nice stream of growth differentiate themselves. Growth is scarce, and if you're a higher growth company, if your top line is growing 15, 20, 25%, the multiples in small cap do not reflect that. So I think that that will become more of an attraction point

for people to come into the space. Right. As we said, it's been, nothing's linear, but with the Russell, it's been especially so. It has not been a straight line. Greg, thank you so much. Good to see you. Thank you, Paul.

When we come back, the fight over the future of the Fed, the president, as you know, turning up the heat on the Fed chair, Morgan Stanley's Ellen Zender standing by with her take on that turmoil when Closing Bell continues. This isn't the first time you've heard me in the last decade say we need regime change at the Fed. It's not just about a person.

It's about an approach to economics. It's about approach to what they're doing. And I'm troubled when I see them moving the goal posts. It is very puzzling to me, Becky, how you could think that we should do emergency rate cuts last September. And now all of a sudden you stand there like a hawk. Uh, that's not good for the institution. I don't think it's good for the economy to be changing the goal posts like that. Former Fed Governor Kevin Warsh on Squawk today. Warsh is widely seen to be among the frontrunners for the next Fed chair as the president continues

his attacks on Jerome Powell. Joining us to discuss today, Alan Zentner, Morgan Stanley Wealth Management's chief economic strategist. Alan, thanks for coming in. Hi, Carl. Good to see you. You've got a pretty clear view on how you think this is going to go for Powell. Yeah.

I think that Powell, in his DNA, he is a civil servant. And so he is not going to leave the Fed unless there is a clear, clear directive and clear legal way to remove him from the Fed. And if you believe in US exceptionalism, if you think a stable dollar is important, and if you believe that fully functioning financial markets is ideal, then join me in

supporting central bank independence, because that is what you lose if you take away independence from the central bank. Do you think the very brief trip for the 30-year to 506 or whatever it was yesterday was a shot across the bow? That was a we like market saying we like Fed independence. And we saw pressures on the term premium, upward pressure on the term premium during that hair raising period between April 2nd and April 9th as well. Because it wasn't just Liberation day and the global uncertainty around tariffs.

It was also the heightened talk around firing Pal again at that time. And we should not set a precedent of if you think a chair is doing a bad job, that's it. He or she is out of there. This is this is this a decision to remove the chair would have ramifications longer term for the central bank. Ellen, stay with us. We've got some breaking news from the House floor. For that, we'll turn to Emily Wilkins.

Hey, Emily. Hey, Carl. Yes, the House has now passed with really strong bipartisan support, a measure that would basically say when a digital asset is a commodity, when is it a security. And this is the one that for the crypto industry, this is the number one priority for them. It's a wide ranging bill. It now goes on to the Senate. And look, there are concerns about the Senate's ability to get this done.

There are debates between the House and the Senate and what the bill should look like. Also concerns about potentially getting Democratic support in the Senate. But what we just saw happen on the House floor, 78 Democrats crossed the aisle and voted with Republicans on that bill. That's relevant because the last time the House voted on a similar measure, they got 71

Democrats. So an actually very strong bipartisan support does not seem that Democrats were deterred by the fact that Donald Trump and his family are profiting off of crypto. That's something that came up a lot in debates today on the Democratic side, but it doesn't seem to have depressed the number of Dems who are willing to back this legislation.

So now we are seeing the House go ahead and take a vote on the stablecoin bill. That one again is expected to have a strong bipartisan showing, and that is expected to be sent to Trump's desk where he could sign it into law tomorrow, we're hearing, tomorrow afternoon. Carl? Emily, thank you very much for that busy day on the Hill on the Number Fronts, Emily Wilkins in D.C. Back to the broader economy, we got retail sales, nice print today.

People had varying thoughts on PPI, but for the most part, I wonder if you think, like Williams, for example, that any kind of cost pressures are still to come regarding tariffs. Yeah, I do think it's pretty easy to make the argument that we know that we brought in more than $500 billion in tariffs. Where has that gone? Now, companies have a good deal of cushion to absorb that, more than $2.5 trillion in cash to absorb that, and that's outside of the tech sector.

Free cash flow is there to absorb it. We also have more indications that some producers, external producers, have been absorbing some of the costs as well like they did in 2019. So I think maybe we're thinking the worst fears around tariffs may be averted, but this is just the beginning of the price pressures coming through. More important for the Fed is can you get consensus to look through the coming price pressures. It's a one-off level shift in prices.

We know that growth is slowing quite a bit and it's going to slow even more, and so we can go ahead and cut. But you mentioned retail sales. It's fine. I mean, the economy is not falling off a cliff. We've slowed this year. It's normal. I mean, the economy is not falling off a cliff. We've slowed this year. It's normal that we'd slow. Jobs are not falling off a cliff.

People are still spending. People are going out to eat. That's the number one thing that tells you whether households feel good. And so, it's hard if you're the chair to sit there and say, oh my God, we need to cut. We need to cut, we need to cut now. He believes they should cut this year.

The consensus on the Fed is they should cut this year. It's just a matter of timing. So why do you think the urgency from the White House and from some of these who were auditioning for Fed chair? Well, no. I mean, certainly if you believe that you want to juice the economy, then you don't just want the Fed to cut rates. You want them to cut enough to get into easing and stimulative territory.

So even if the Fed cuts 25 basis points a year, 50 basis points this year, it's not going to be enough to stimulate the economy. That I would call right sizing the level of rates for the slower economy that we're in. And we should do that. Where do we think neutral is? Is it to be two and a half, three? Where do you think that number is? I think on a nominal neutral rate, I think it's higher.

I think it's easy to argue that it's higher. And I think 3 to 3.5% on a real neutral rate, that probably means somewhere around 1%. And so it is higher. So they don't need to cut as much to stimulate the economy. But 50 basis points isn't going to stimulate the economy, but 50 basis points isn't gonna stimulate the economy. Do you think that's gonna bring mortgage rates down so much that we kick off this massive wave of buying and housing?

No, but that doesn't mean you don't move on rates either because you do need to calibrate rates constantly to the underlying dynamics of the economy. I think that does explain, certainly, the aggressive nature of Bill Pulte's social media posts when you look at today at AHB, prospective buyers index is new cycle low almost, right? Yeah, but let me tell you what's even more important than mortgage rates for affordability.

It's regulation. Can we please tackle regulation at the state and local level, which is where regulation is done and housing. Now that's a longer term. Cyclically, all we can do really is try to bring more supply online and reduce mortgage rates. But that's still not gonna take away one of the main reasons why home prices are elevated

and that's the regulatory environment. Finally, I know you're watching CAPEX. We had this big AI summit in Pennsylvania and you have your eye too on some of the resources that you do need to make these things happen and keep happening, right? Like water. Right, water. So we've got this great CAPEX story going

that the One Big Beautiful bill will also support with all of the incentives, but we can't lose sight of the fact that we keep talking about data centers and the need to build data centers. We can't run data centers without water, and we need more desalinization. Desalinization takes high pressure and it takes energy.

Everything comes back to energy. And so we're seeing some innovation in that space to be able to desalinate using less energy, less pressure. But that's something that we need to keep an eye on. Interesting, especially on a week where electricity costs got some attention within those pricing indexes. Ellen, thank you. Good to see you as always, Ellen Zentner.

When we come back, we're tracking some of the biggest movers as we go into the close. Courtney Reagan standing by with that. Hey, Court. Hi, Carl. Shares of a key battering material producer are soaring today, and analysts are projecting a recent IPO to drop more than 70 percent the names to watch after the break. Nearly 15 minutes till the closing bell. Let's get back to Courtney Reagan for a look at some of the key stocks to watch.

Hi again, Court. Hi there, Carl. So shares of lithium producer Albemarle are soaring amid a run-up in the battery material today, and that comes as Chinese producer was ordered by local authorities to halt its production due to alleged illegal mining. Albemarle shares are up about 8.5%. In the meantime, CoreWeave shares are up about 8.5%. Meantime, core weave shares are sliding after analysts at HSBC initiated coverage of the stock

with a reduced rating and a $32 price target. Now that's an implied 77% downside from yesterday's close. Analysts are concerned about revenues concentrated amongst just a few customers and say the stock is overvalued after a 240% climb since its IPO. Shares are down just about 7%. Carl? Court was talking a moment. Meantime, a couple of healthcare names on the move.

For that, we'll turn to Angelica Peebles. Hi, Angelica. Hey, Carl. Sarepta is soaring today after giving an update on a key drug and announcing a restructuring. So the company laying out a path for a levitis that's a gene therapy for Duchenne muscular dystrophy so that they can stay on the market at least for some patients. Remember that was a question when two patients died after receiving the treatment, Sarepta said that it will add a safety warning about the risk for liver failure while it comes up with a safer way to give the drug to older patients whose disease is more advanced. Now more limited use of that drug could hurt sales,

so Surrupt is taking some steps to rein in their costs. They're laying off about one third of its workforce and trimming its pipeline, and that'll save about $400 million a year. And on the other hand, you have GSK. That company's falling after advisors to the FDA recommend against approving GSK's drug for multiple myeloma.

That drug is trying to come back to the market after GSK pulled it about three years ago. But the FDA's advisors are not convinced that the benefits outweigh the safety risks of that drug. Carl? Yeah, healthcare, the rare red spot in basically what is a sector-wide sea of green today. Angelica, thanks, Angelica Peebles.

When we come back, Uber is betting big on Rover taxis But maybe not what the player you expect we'll get some details on that plus We'll count down to Netflix results in the overtime what to watch for those numbers when they hit closing bells back after this break Welcome back got some awfully big moves and some of the food stocks today for that will turn to Kate Rogers. Hey Kate Hey Carl So another downgrade for Starbucks today that stock had been lower on to the the cause its comps to accelerate. And then finally, Pepsi shares absolutely flying today, reporting upbeat earnings and raising its full year outlook. The company says it's seen improving demand for energy drinks and healthier soda brands in the US,

along with FX tailwinds helping to lift its results. You can see up by 7.5%, Carl. Back over to you. Yeah, if that holds, the next few moments, best earnings reaction in 20 years, according to bespoke today. Pepsi, thanks Kate. We're just a few moments away from Netflix results out

in the overtime, we'll talk about what to watch for when we take you inside the market zone. We are now in the closing belt market zone. Uber investing in Lucid as part of the plan to deploy a robo taxi fleet. Deirdre Boza has details on that. Julia Borstin is going to look ahead to Netflix reporting in just a few moments and truest Keith Lerner breaks down these crucial final minutes of the trading day. Let's begin though with Dee on Uber at Lucid. What a story, Dee.

I know what a story, right? And you see shares of Lucid, they're surging after the EV maker it inked that 300 million dollar deal with uber now the two they're teaming up to bring Lucid's electric vehicles to uber's premium ride services first la than nationwide, but the bigger play here Carl said it it's autonomy It's robotaxes the company's plan to deploy 20,000 robotaxes over six years uber shares today They were more muted perhaps suggesting some at least initial skepticism. Remember that Uber did have its own AV unit that it sold off years ago.

And this one here, you have a multi-year timeline, autonomy uncertainty and capital outlay. Uber, though, is certainly spreading its bets across the robotaxi space, partnering with Waymo, among others, to be the platform for autonomy here. Carl? Yeah, we definitely got the street's attention. I think pre-market lucid was up some 60% at one point. We're going to continue to watch that. Meantime, Julia is watching one final look at Netflix before those numbers hit the tape.

Julia? Hey, Carl. Since Netflix no longer reports quarterly subscriber additions, the main metric to watch is revenue growth, expected to grow 15% to $11 billion. Analysts say three main factors are driving Netflix's growth. First, price hikes, which went into effect earlier this year. Second is the growth of Netflix's ad-supported tier. We're looking for how many subscribers it's added since the 94 million it announced at

its upfront in May. And finally foreign exchange. Many analysts saying the weaker dollar could be a big tailwind for Netflix. Now Netflix shares are about 42% year to date, but analysts remain bullish. 65% have a buy rating on the stock. Many of them noting the strong slate of content

that's set for release in the second half of this year. Carl? A lot of squid game references were awaiting. Julia, thanks. Julia Borsten, let's turn to True. It's Keith Lerner. Talk about this market, Keith, as we are right at those all-time high levels

in today that we got in July. Your take is to keep playing with what's working, right? That's right, Carl. I think this market deserves the benefit of the doubt. And what got you here is still the growth sectors, it's the technology, it's communication services. You also have industrials at all time highs today. And the banks continue to act well as well.

So you put that together with also today, the economic data, right? The economic data showing the economy may be cooling, but it's showing it not collapsing when you look at initial jobless claims moving down, you have retail sales that are solid as well. And the earning estimates for this market continue to move higher.

So again, we would stick with the underlying trend, which still seems positive in our world. You're right about claims, down five straight weeks. We haven't had a streak like that in a couple of years. Retail sales, a second best print of the year. Your point on rates. flames down five straight weeks. We haven't had a streak like that in a couple of years. Retail sales a second best print of the year. Your point on rates. I mean, is the market warming up to a 30 year that can sort of float around five. Maybe around five. I think the main thing is the velocity of the move up. But the interesting thing is, you know, historically

the market has tended to focus a lot more on the 10 year. And what was interesting to me today is despite that kind of really solid economic data, the 10-year treasury is somewhat flat. I think more problematic for the market is if you start to see the 10-year accelerate 470, 480, but today, overall good data. You have good economic data, 10 years flat, and the cyclical areas of this market are acting well. Right.

Where do you think? What's the thinking right now, Keith, on how hedges are supposed to work? Right. All the all the hedge plays that we said we had earlier in the year, whether that was gold or buying a more defensives and equities. I mean, is that playbook getting smaller? I don't know if it's going to small. I mean, we have to think that, you know, we certainly had some broken glass, you know, in the first half.

Our theme was a bull in a china shop. We'll likely have some more broken glass in the second half. We still have gold as a diversifier in our portfolios. What we've noticed is when we see stocks and bonds down, gold has been up the majority of the time this year. So I wanna get rid of your hedges because things are feeling good,

but I would say I would still be more focused on the equity side and we still see more upside overall in this market. One big story of the first half, of course, was the outperformance of International and ex-US over the S&P. Do you now have International at a neutral? We have moved International up to a neutral, but we're still Team USA. We still have a US bias. In some ways, Carl, what we saw with international was it had underperformed

by the most since the 1990s last year. So we saw some mean reversion this year. Over that last 18 months, US is still outperforming. But on the margin, I think things are a little bit better. You have a dollar hedge, you have more stimulus there. And the main index there has broken out of a multi-decade range. So I think on the margin, we're somewhat more constructive,

but we would still have a greater allocation to US large caps and the growth sectors. Right. Tomorrow's gonna get interesting. We get one final piece of the puzzle from AXP on financials and consumer, and then 3M on industrials. As you point out, XLI has been on fire.

Caterpillar led the Dow at the open today. Would you expect those pieces to be informative tomorrow? Of course, I mean, you know, it's interesting that the industrials is the best sector at a time when terrorists have been front and center, but there's a couple of things happening. You know, the defense area of industrials is doing well, but also these industrial old line names are, you know,

indirect AI plays or maybe direct plays when you think about AI, I'm sorry, with cooling, you think about power generation infrastructure. But it will be a tell as far as the global economy as a whole and also on the AI side as well. You made a point earlier about the US dollar. That US dollar is also underappreciated as far as that coming down, helping some of these global multinationals. Yeah. Finally, I mean, I know it's a limited sample on earnings so far, but I think the

beat rate is somewhere in the 80 to 90% range, right? Even though we're only dealing with 50 or so companies so far. Yeah, you know, the one thing with this bull market rather the last five years, really, you know, there's been corporate resiliency, adaptability, and I think once again, we're seeing that play out. I don't think the rates are gonna be that high by the end of this. The bar has been somewhat higher relative

to the first quarter when expectations were really low, but we expect a pretty good earnings season and that resiliency, you're seeing it from the financials, you're seeing it from the airlines. I expect that to continue as we move further through this earnings season. Yeah, it's definitely a far cry from You know that q1 reporting season where we had guidance pulled a lot of corp said

What's the upside of issuing full year guidance? That's a much different story this time. Keith. Thanks Keith linner over at truest as we put this session to bed just shy obsession highs here at the close at As we put this session to bed, just shy of session highs here at the close at 62.97. As we pointed out, yields are higher across the board that 30-year right at five. As for our sectors, healthcare is going to be the only fly in the ointment down a percent, but led by financials and utilities and industrial. Let's get to Morgan Brennan and the overtime.