Closing Bell - Closing Bell 7/22/24

Episode Date: July 22, 2024

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner today. This make or break hour begins with a rollback in the rotation. Tech retakes to lead as the biggest Nasdaq pullback in three months draws buyers to start a new week. And this time the gains are not coming directly at the expense of banks, small caps and other cyclicals, which are all higher on the day. So here's a look at the scorecard with 60 minutes to go in regulation to the S&P 500. They're up a full percent, basically just above Friday's highs. The NASDAQ, big outperformer, up 1.5%. Russell 2000 actually has been gathering some steam throughout most of the day. It's up 1.25%, actually outperforming the S&P at this point after starting well behind.

Semiconductors rebounding forcefully after an 11 percent correction from its all-time high. You see it up there at 3.4 percent. That has a lot to do with NVIDIA powering higher. As multiple analysts come to the stock's defense and raise price targets, it's up 4.5 percent, down about 15 percent off its high before this. That takes us to our talk of the tape. Can this bounce be believed? And how do the shifting political probabilities play into this equation, if at all? Let's bring in Chris Verone of Strategas,

Cameron Dawson of New Edge Wealth, and Jordan Jackson of J.P. Morgan Asset Management. Welcome to you all. Chris, this market kind of wants to keep people off balance. I mean, you had this complete whipsaw, quick silver rotations last week, everyone declaring maybe this is an enduring shift. Now we're backsliding on it a little bit.

What are you reading in, let's say, the market behavior the last eight sessions? And can we extrapolate from there? I think the market behavior of the last five, six, seven days is what we should be focusing on, not necessarily today. Now, I'm somewhat happy to see that the strength in tech and semi-state is not at the expense of regional banks or industrials or other kind of the value or small cap names. It's been broad. It's been inclusive. And we're talking about a week where last week you had 50 percent of the S&P make a one month high. You had

75 percent of the Russell 2000 do the same. That is really, really impressive when you look at the history of that data. And what's the message? It means the trend is still very much fully intact here. I recognize there's some seasonal issues that approach us here in an election year, into August and September. But I think if you've got a correction here, it would be modest. It would be rotational. And I think the leadership message from the last two weeks should be heated.

So the leadership message of the last two weeks is what, though? Because what we did get is a routine-looking pullback in the S&P 500 of 3%, 5% in the NASDAQ 100, this huge burst off a completely washed-out level from small caps and other things. So what are we to take from that in terms of what might outperform from here and participate? We have this saying in our work, and when you're in an uptrend, be patient, not clever, right? And when you look at the last four or five months, whether it's financials or small caps or some industrials, their only sin was chopping for four or five months. It got resolved in the direction of the underlying trend. I think the breakout in financials in particular, and not just banks, capital markets, even the insurance names have gotten back in the fold. I think that is your

leadership. This move back to the financials has been really, really impressive here. So Cameron, it seems as if this burst in market breadth and some of the more cyclical tone of the leadership last week, at least the perception is, and we're from Chris is saying, it sort of buys the market a little bit of a technical cushion, perhaps. I guess, what would you read out of it in terms of what it says about what earnings are going to be and whether the macro message is one that you would buy into? I think Chris's point about financials is interesting because that's where we've seen the most earnings revisions higher in this earnings season. They contributed the most to the upside in earnings for the overall S&P. So we think this

market will still be driven by earnings revisions, and that likely colors things like the growth versus value trade. Growth earnings continue to move higher, really boosted by tech. Value in earnings continue to drift lower. If that starts to change, maybe you see a durable leadership change. But if it doesn't, it means more of the same kind of narrow leadership that we've been having. The other part of it is all this started up as we got to the finish of the second quarter and a little past. Let's say the first two weeks of July were at a high. Sentiment and positioning is looking like it's getting a little bit out on a limb. So, Cameron, do you think that this sort of rotation,

this little bumpy rotation, has taken care of some of that? I don't think quite yet. It's been so slight. And you just, you didn't even test the 50-day moving average for the S&P 500. If you look at those sentiment and positioning measures, they are stretched. They're not quite as extreme as they were in times like early 2018 or late 2021. So that would suggest that maybe there is more juice to pull people off the sidelines and get them into the market. And so what we put those risks into the camp of being not Tom Clancy risk, where they're not a clear and present danger, but we can't ignore them. Because eventually, if you see earnings revisions start to move lower, they'll run into the fact that the market is expensive, positioning is stretched, and eventually that could cause some volatility.

Jordan, weigh in here in terms of whether the action recently and even today has revealed anything to you about what you expect the market, can we escape a further pullback and proper correction? And how do you think earnings are going to interact with all this? Well, as you highlighted, right, this rotation really began after the June CPI print a couple of weeks into the month of July. And really what it continues to suggest is that growth is cooling but not freezing over, and the disinflationary trend is back on track. And I think that's what's really allowed sort of the small cap rotation to play out. I'm sort of fading

kind of that small cap play, I think, in the environment in which, you know, the bulk of the index is still, you know, unprofitable. Looking at the Russell 2000 on a trailing 12-month basis, the Fed's going to be cutting interest rates very gradually. And again, growth is cooling, not re-accelerating here. I'd probably be a bigger believer in sort of this rotation to the rest of the large-cap sectors and taking some of the chips off the table from your big winners in tech and dispersing that to some of the more unloved sectors that have underperformed as of late.

And this really feeds through into the narrative of earnings recovery coming out of the other sectors of the market outside of tech. You know, you're talking about potentially by the fourth quarter of this year, financials posting 40% year-over-year earnings growth. Now, some of that is base effects from a weak fourth quarter of last year, but some of that is genuine, you know, net interest margin, net income beginning to inflect positive and consumers hanging in there. So that's sort of how I'm thinking about this rotation as of late.

Sure. And, you know, Chris, all this has gone on as bond yields have come off the boil. Maybe they look to break be breaking down. Yeah. And it's kind of opened the way for, you know, a lot of this movement. So can we can we count on that? Yeah. I mean, we've been very forcefully of the view that bond yields are done for this cycle, that we've seen the cyclical highs, particularly on the short end. And two-year yields got very oversold last week.

They traded as low as about 440. They're bouncing here a touch, but there's a ton of resistance on top of this market in terms of yields in the, call it 450 to 460 neighborhood. I think ultimately you're talking about a terminal two-year yield of maybe 375, even 350. And what does that mean for things like Bitcoin? Great response the last week and a half. What does it mean for home builders, which have come off their oversold condition? So

I think the market very much is trading rates and we expect that's a tailwind. We have PCE coming, Cameron, right at the end of the week. I mean, have we kind of disarmed the inflation data for, you know, like taking away its ability to scare us or are we going to be reminded? Typically, by the time we get to PCE, we've had CPI and PPI. So there is a lot more certainty about what the numbers will come in. And the market is expecting a very benign number. You look at the month over month for headline, they're expecting zero, which just means that this is a market that continues to think that the disinflation narrative will be intact and the data supports it. The question is, as we move into the back half of the year and into 25, will we continue to see that disinflation?

And that could be something as a far right tail or left tail risk that we would consider as moving yields and potentially affecting market leadership if we see stickier inflation. But right now, the data doesn't suggest that. Yeah. And Jordan, you mentioned that obviously the market reacting to this retreat in inflation and confidence that it's going to continue at a time when the overall economy is decelerating, but really perhaps not stalling. Are you concerned at all by some of the further slowdown fears, whether it's from unemployment claims or, frankly, this really, I would say, ambiguous data flow that we've got? Because last week you also got some upside surprises on retail sales and all the rest. But before that, people were very sensitive to any sign that the economy was faltering.

Sure. So, you know, I'm not too concerned just yet about the growth backdrop. You know, obviously, as you mentioned, retail sales came in stronger alongside some upward So I'm not too concerned just yet about the growth backdrop. Obviously, as you mentioned, retail sales came in stronger alongside some upward revisions to previous month's data. Industrial production also came in a bit firmer. The labor market, when I look at some of the initial unemployment claims, some of that is some seasonality. You tend to get this period being sort of weak seasonals on the initial claims. Also, given some of the bad weather in Texas, they did report a pretty significant uptick in the initial claims number. Now, the continuing claims number perhaps is maybe a little bit more concerning, but I think this is a reflection of not necessarily layoffs truly picking up,

but more so companies just slowing their hiring, which potentially can have have some upward pressure on some of these numbers so you know I'm still in the camp that this is an economy that is normalizing to two percent roughly trend growth I also think this is a labor market that continues to remain pretty healthy just given a labor demand now obviously some of the policies depending on the outcome in November could shift that narrative but we're not we're certainly we're not there yet. Well, Jordan, you have the Capitol dome behind you. So you're going to have to tell us exactly what what all the politics and policy flux might mean for all this.

It's been fascinating because the rotations we're discussing have their macroeconomic and earnings based reasons for occurring and just positioning, frankly. And then you put the overlay of, you know, rising probability of a second, you know, President Trump administration, and it would seem like it feeds in the same direction. So how do you tease that out, and do you expect the market to keep trading on those probabilities? I do, to some extent, continue to expect the market to trade on potential political outcomes, but I'm worried that the market is trade on potential political outcomes. But I'm worried that the market is erroneously doing that, right? You've seen in the past just certain policy agendas don't necessarily play out to sector performance. A perfect example would be under Trump's first administration in which he sort of supported traditional oil and energy sector.

The S&P 500 energy sector was down by about 40 percent under his first administration, but actually rallied almost 200 percent under President Biden. And so you have to be very careful sort of trading the noise from a broader macro growth perspective. I am a little bit concerned about assuming a fully Republican sweep, the stagflationary policies that could come out of that. You know wars tend to be stack inflationary and uh... that the tariffs uh... that he's talked about potentially input implementing i think that i could be pretty significant

uh... and market moving but uh... like it i think in the near term all this contributes to elevated volatility in the near term uh... zooming back out then maybe taking off our red blue or purple hat and and putting our investor hat on. I think it doesn't really change the narrative a whole lot over the next three to five years. Chris, you mentioned, you know, OK, we're coming into the seasonal period where sometimes you have a little bit of chop or headwinds. I guess one interpretation of how the market behaved in the first part of July and into last week is maybe we are going to be freed of a lot of uncertainty

if it feels like a highly probable outcome one way or the other. Are you expecting election year dynamics to matter much, even if it's just the seasonal factors? Well, I think at the end of the day, in our work, it's always the trend that matters more. And we've entered this period in a very robust and strong trend. I do think if you've got a consolidation or a correction, it would be modest, and I would underscore that. What's more important, though, I think when you look at the leadership fabric of what emerged after the 2016 Trump win, it was financials, financials, and financials. For about 60 days there, they were dominant. So the extent to which that's been pulled forward here, I think,

is notable. If there's a difference between maybe then versus today, we also have, as you know, Mike, the macro dynamic of what was the soft landing winner in 94, 95? It was financials. Yeah. Ironically, what was the loser? It was tech. So let's watch these semi rallies here.

I think if there's a risk, these semi rallies try to make new highs and don't fail. Cameron, I am interested in what the degree to which it's applicable now to kind of use as a template what happened in 16, 17, mostly because we were coming out of this prolonged period of stubbornly low inflation, stubbornly weak growth. And the idea of reflationary policies, if that's what we were going to get after the 2016 election, was exactly the medicine we were looking for. So what now? Yeah. And we were starting at the point of a higher unemployment rate and wage growth that was running at about half the rate it is today. So if you were to do something possibly through immigration that would restrict labor supply, that could have the potential of exacerbating some of the labor shortages that we still

see in pockets of the economy. You also look at things like durable goods inflation. That really picked up when tariffs were enacted. Overall, inflation moderated partially because of oil prices. So there's different pockets to point out and look at to say, could these policies potentially exacerbate inflation? It remains to be seen. It is a very hot, hotly debated topic. Chris, you mentioned Bitcoin. What is that keying off of? I mean, aside from maybe some policies that allow it to, you know. Well, we've been very keen on the idea that Bitcoin's entire existence is predicated on the explosion of liquidity conditions coming out of the GFC in 08 and 09.

So I think, therefore, looking at it through the lens of a liquidity barometer, certainly one that kind of tries to grasp risk appetite is appropriate here. And the velocity with which over the last week, week and a half, it's come back to the highs or roughly the highs, I think is impressive. And I would just also add on Cameron's point with respect to maybe the comparison or not comparison to 16, watch rates here from that perspective. Rates right now are the big glaring difference. We had rates up immediately after the Trump win in 16. We think they've topped here. The yields look heavy.

Is that a message that the bond market is kind of keen on the idea that maybe the feet come off the accelerator when it comes to the economy in 25? Yeah. Obviously, that, you know, we don't know what all the swing factors are, I guess, in terms of what's moving these markets. But it is interesting to try and decipher them. Great to talk to you. Thanks so much, Chris, Cameron, and Jordan. Appreciate it. Let's send it over to Seema Modi now for a look at the biggest names moving into the close.

Hi, Seema. Mike, 44 minutes left in trade. We have our eyes on shares of Verizon slipping more than 6% after the company posted weaker than expected revenue in the second quarter. The company's CEO told CNBC this morning that its products are delivering more value to customers, but those comments failing to lift the stock, which is now the second worst performer on the S&P 500 today, behind only CrowdStrike. And IQVIA Holdings continues to climb. It is the best performer in the S&P 500 today. The healthcare services company releasing better than expected earnings this morning and leering partners upping its price target on the stock from 270 to 270 from 267.

It's also on pace for its best day since February, up about seven and a half percent, Mike. All right, Seema, thank you. Talk to you again soon. We are just getting started here. Up next, Vice President Kamala Harris speaking for the first time since President Biden dropped out of the race for the White House, endorsing her for the Democratic ticket. We'll bring you a live report from D.C. with all the latest. Plus, how should investors potentially reposition their portfolio amid all this political uncertainty? We'll discuss with Pangea Policy's Terry Haynes after this break. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. The upcoming presidential election front and center in the minds of investors. Vice President Kamala Harris securing a critical endorsement earlier this afternoon and donations are pouring in.

CNBC's Emily Wilkins joins us now with the latest from Washington. Emily. Hi, Mike. Well, yes, Kamala Harris continued to rack up those endorsements this afternoon. Former House Speaker Nancy Pelosi, who still holds an immense amount of sway on Capitol Hill, came out in support of Harris, saying that she personally has known Kamala Harris for decades, rooted in strong values, faith and commitment to public service. And politically, Pelosi says, make no mistakes, Kamala Harris as a woman in politics is brilliantly astute, and I have full confidence that she will lead us to victory in November. Now, House Democratic Leader Hakeem Jeffries and Senate Majority Leader Chuck Schumer have yet to endorse Harris,

but Jeffries spoke with reporters today, and he said that they both plan to meet with Harris soon. He and Schumer then released a statement just moments ago saying that Harris is, quote, off to a great start and noting that she is consistent with the grassroots and transparent process appealing to voters and those in the Democratic Party. Fundraising has also been pouring in. The Democrats' main fundraising apparatus raised almost 67 million yesterday, and we've continued to see the ticker on the website. We've been

watching it, and that number just keeps going up and up and up, Mike. It seems like there is a lot of enthusiasm right now that Harris seems to be having a lot of momentum. And right now, really, is the only frontrunner for the Democratic nomination. Yeah, it's exactly what I was wondering about. I mean, obviously, very broad response. It's a lot of the folks who maybe on paper could have been challengers to her in this

process seem to be endorsing her. Is there a faction out there in the party that's saying, hey, we should still have a more open convention? It should still be a little more of a test of voter preference? Absolutely, because one thing that Democrats don't want to have this seen, they don't want to have it seen as a coronation. They want to make sure that Harris is seen as listening to voters, that they're seen as listening to voters, and they're seen as picking a candidate that will be responsive to the needs and the wants of voters. Of course, the difficulty is, is that there's not really anyone coming out to challenge Harris at this point. Yesterday, we thought for a second that Joe Manchin might come out. But no, he has said this morning that he will not be running. So again, it's not exactly clear how Harris is going to earn this nomination. And the Democratic

National Committee themselves, they're still figuring out exactly what this policy and process is going to look like in coming days. So I think a number of unknowns at this point, but Harris is certainly gaining on the momentum. She's going up to Delaware, going to meet with Biden's staff at headquarters and really begin to talk with them. She said today is the first official day of her campaign and says there are 105 days left on the clock before November and the November elections. Yeah, which is which is a lot or a little, I guess, depending on how you look at it. Absolutely. Yeah. All right, Emily, thank you. Joining me now is Terry Haynes of Pangea Policy. Terry, give us your take on, first of all,

how you think this changes the equation for investors when it comes to either probable outcomes in November or just the policy issues that are in play. Well, good to see you, Mike. And a couple of things. One is I expect Harris to be immediately competitive, and my instinct is probably more than that. Biden was much closer in a lot of polls

than Democrats who were talking him down wanted to admit. Now they're switching around immediately to, hey, we're competitive and maybe more. But there is a lot of enthusiasm and a lot of money pouring in. You know, people want energy in the campaign. They want energy in the executive. They weren't getting that with Biden. Second thing, the assumption is that Trump somehow has wrapped up the Republican Party and they're all united. I think that's still not true. You've still got some Republicans who would rather not have him. Think of him as the Haley wing. Plus, he's still underwater with independents.

And I think Harris probably changes that, particularly with her focus on social issues, which are going to get hammered again and again and again. And a really good ground game inherited from the Biden campaign. So what I would look for if I'm an investor is push back on a lot of this stuff. What's out there today is very knowable. You know what Harris is. Harris is Biden to the sequel, by and large, with a little sharper edge. Trump is who he is, and people are already trading on that. But really, the makeup of Congress matters the most. And your previous segment, there was a lot of talk about 2016.

That wasn't a Trump reaction. That was a Trump plus all Republican Washington that made tax reform in 2017 possible. Today, we've got a different situation where the Congress is very much likely to be politically split. And for that reason, you're going to see a lot more status quo in Washington than kind of bold action on either side, I think. Well, and Terry, when it comes then to tax policies, status quo, does that mean that the Trump tax cuts expire because that's what's already sort of law at this point? It does. Yeah. The because if you're going to have, you know, politically, you know, my analysis, but a political people's analysis is that there's a split Congress. There's a next year there will be a barely Republican majority

Senate, barely Democratic majority House. That split in a world where Democrats are already calling 2025 tax Armageddon means that there's not going to be the likely scenario. The base case is that there's not going to be extension of the 2017 tax reform. Only if you get an all Republican sweep, which I think is less likely today than it was yesterday, will you have that? Gotcha. And in terms of the other issues, I mean, as we watch the market trade, you know, there's a sort of instinct that there's a certain playbook, if you actually believe in red sweep, another playbook, if you think that's highly unlikely, but also just the idea of a tighter race that leaves markets in suspense and it gets something closer to the near coin toss we thought

it might be several months ago is something that could hold markets in check. Yeah, before the you're absolutely right. Before the before the Biden Trump debate, this race was going to be very, very tight. And even after the Biden debate, it remained fairly tight. You know, and I think that Harris is in a position to be able to make up ground. So what you're looking at is a real photo finish, both in terms of the presidency, but as I say, very importantly, in terms of the Congress. Right now, you get a situation where the House probably swings on Republican seats that were picked up in 2022 in New York and New Jersey that Democrats were already targeting to get back. And in the Senate, Republicans are all but assured of a majority after Jim Justice was nominated in West Virginia.

They only need basically one other pickup in order to have a majority there, net on net. So, you know, all this is quite more knowable than I think a lot of markets people understand. You say that, you know, a Harris campaign is essentially going to be Biden to or a continuation of the current administration. When it comes to something like, I mean, we know that the sort of tariff story, the differences there between these two likely candidates. But what about something like health care? Because those stocks have moved around quite a bit, whether it's about reimbursement rates or negotiating drug prices or things like that. Is that in play as well? Well, under a Harris administration and the regulatory apparatus that she would control, all those

things will continue as is. I mean, she may end up having to work with the Congress on some aspects of Medicare and Medicaid. But drug price and all the rest is going to remain as is. You're going to have all the usual plays, green stocks or all the rest. The thing I would look for in markets, though, is that regardless of who becomes president and almost regardless of what the Congress is, you're going to see a continued ramp up in supplying the defense industrial base. There's going to be much more put not only into defense, but in adjuncts like semis. And that's going to continue. It may be a matter of degree compared between Harris and Trump, but there's going to be more defense and the like spending. And that's a response to the geopolitical situation about which there's a great deal of bipartisan agreement here.

Yeah. And I guess we have to throw out the standard disclaimers that, you know, you just sort of never know how events will overtake because energy has been basically the best sector under Biden because of other things happening in the world. You wouldn't have necessarily thought so beforehand. Right. So, Terry, thanks for the time. Appreciate it. Appreciate it, Mike. All right. Up next, your tech earnings playbook, the XLK tech ETF gaining more than 15 percent over

the last three months. Deepwater's Doug Clinton will tell us where he's putting his money to work in that space and what he's expecting from the mega caps looming reports. That's after this break. Closing bell. Be right back. Less than 28 minutes until the closing bell. Let's get back to Seema Modi for a look at the key stocks to watch. Seema. Hey, Mike. Mattel rising as much as 20 percent. The stock was halted earlier for volatility after Reuters reported that buyout firm El

Caterton has approached the toy maker with an offer. El Caterton is a private equity firm backed by luxury goods giant LVMH. Mattel will report earnings tomorrow after the closing bell. So we're waiting for any potential news. Stock up 15% at this time. And Chinese tech giants rebounding today after Beijing lowered short and long term borrowing costs, raising hopes that it will spur business and consumer activity. Both Alibaba and Baidu are higher by around 2 percent right now. Keep in mind, Baidu still

down about 22 percent so far this year, Mike. All right, Seema, thank you. Up next, navigating the tech trade, Deepwater Asset Management's Doug Clinton is back and breaking out his playbook for the sector this earnings season. He'll join me after this break. Closing bell. Welcome back. Second quarter earnings season shifting into high gear this week as investors brace for results from mega cap tech and the Nasdaq rebounds from its worst week since April. Alphabet kicks things off tomorrow after the bell. Joining me here at Post 9 is Alphabet shareholder Doug Clinton of Deepwater Asset Management. Doug, good to see you. Good to see you, Mike.

So we had this crack in the Nasdaq 100 and all the related names. And in retrospect, everyone could say, wow, they really were crowded. They really did dominate the market oxygen for a long period of time. This was an important reset. I guess, what do you do right now? Is there been a more fundamental rethink of what's behind these names or not?

We're sticking with tech to make it clear and simple. I think the reality is this. If you look at what's happening now in the AI era and you compare it to the dot-com era, popular comparison, but I think it's apt. During that dot-com era, 94 to 2000, we had 11 corrections of 10% or more in the NASDAQ. And so as we think about this technologically driven boom that we're in right now, one 5% shift really over the last two years, 18 months, let's call it, since AI broke out, is not that much to speak of in that context. And we still think the AI thing is just getting

started. So these pieces and these corrections along the way are just part of the puzzle. Starting to hear a little more chatter questioning just exactly how long the CapEx boom in AI is going to last. Obviously, it's well financed. It's by the biggest companies in the world. They have tons of cash to spend. I mean, this is very solid as a source of demand. But the question is, if you start to see maybe not as quick a payoff monetization of a lot of these initiatives, do they just dial back? We don't think they will. And I mean, I think that's going to be one of the prime topics as we think about Q2 earnings is what do all the mega cap tech companies say about their CapEx plans? That was the highlight, I think, last quarter, really.

Yeah. They were more aggressive than people realize. And I think we're going to see that same messaging. And the reality is if you think about AI and the mega caps, they sort of have to invest. They can't stop. We think of it as sort of this Pascalian wager, right? Believe in God. Don't believe in God.

If you don't believe in God, you're destined to purgatory. And if these companies don't invest in AI and their competitors get it right, they're in purgatory because they're no longer a mega cap company. So they have to behave as if they believe it, whether they do or not. And I guess the question is, I mean, you mentioned last time CapEx plans last quarter were higher than expected and the market rewarded them for the most part for it. Does that dynamic continue at this point? I don't know that they'll reward these companies.

I think it's to be expected, though. And I think where it may play out is when we think about these hardware companies, and they've seen some of the most severe correction the last couple weeks here, I think we may get some renewed interest in those companies because they're still the prime beneficiaries of this CapEx spend. Where does that bring you with regard to Alphabet at this point? It has been a little bit more of the slow and steady to some degree, I guess, recently. It has been. It's been maybe quietly one of the better performers of the MAG7 group this year. It's still our favorite mega cap tech name, period. And I think if we think about two

things, one is valuation. It trades at the cheapest multiple of the entire Mag7 group, right? And we also think on top of that, they trade at this cheap multiple, but they have the best story, I think, around who could really win big in AI. They've got a foundation model that's competitive with Gemini. They've got their own infrastructure, their own compute that they're building with TPUs, and they have huge distribution. I don't think any other company in the Mag7 group can really say that other than Google. Do expectations for Google in particular seem like they're reasonable heading in, or is the bar high?

I think they're reasonable. I think that's a good word to use here. I don't think the bar is excessively high, particularly you look at, again, the multiple on it. If the multiple were much higher, you look at a multiple like an NVIDIA or maybe a Microsoft. I think expectations are a little bit higher there. For Google, I think they're sort of reasonable, and I think the quarter will be fine. I'd love to get your thought on CrowdStrike.

I know you have owned it in the past here. It's a third off its highs. Follow through selling today. Where's your stance on it? It deserves to be a third off its highs. I think after what happened, I mean, that goes without saying. The reality for us is this. It's a great company. I think it's going to take a quarter or two for them to work out what does this look like for the business going forward. I don't know that they're going to lose a lot of customers. They're

not going to lose a lot of logos over this. But I think there's going to be a lot of pricing discussions as customers come back to Renew and say, hey, take care of us. You know, it was a big problem here. And I think that's going to take some time to work itself out. Yeah. And for a stock that's, you know, richly valued as it is right now for lots of growth. All right, Doug, good to talk to you. Thanks so much. Thanks, Mike. All right. Still ahead, NVIDIA shares on the rise today after a rough run last week. All the details behind today's bounce and how it could impact the rest of the semi space.

Plus, Zions Bancorp reporting earnings in overtime. We'll run you through the key themes and metrics to look out for coming up. Closing bell. Be right back. We are now in the closing bell market zone. C-Mimodi is back, digging into the bounce in NVIDIA shares. Plus, Mizzou host Vijay Rakesh looking ahead to NXP Semiconductor's earnings out after the bell, and Leslie Picker on Truett's latest quarter and what it could mean for Zion's reporting in overtime. So Seema, nice bounce in NVIDIA gets it back to, I guess, where it was about four days ago.

Yeah, that's exactly right. And there's those two bullish reports out this morning, Mike. One from Piper Sandler, raising its price target on NVIDIA to $140, suggesting around 13% upside from current levels, citing NVIDIA's upcoming Blackwell release, which is slated for fall of this year. And Citi has opened a 30-day upside call on NVIDIA as analysts there eagerly await a fireside chat between CEO Jensen Wang and Meta CEO Mark Zuckerberg. Both leaders are expected to talk artificial intelligence and potential collaborations. Analysts there also add that the geopolitical risk that weighed on

chip stocks last week presents a good buying opportunity. Now, with today's price auction, today, a stock is now less than 10% from its recent high, trading higher by around 4.6 percent in today's trading. Seema, thank you very much. Vijay, NXP Semiconductor, obviously in a different part of the industry. What's the setup here as they try to contend with a cycle that's been a little bit tough? Sure. Thanks for having me on, Mike. I think if you look at the analog group as a whole, including XPI,

what we're seeing is probably two years of underperformance. And so we think now what you're seeing is the analog group has finally gone through a significant inventory correction, and we should start to see inventory across the supply chain start to normalize. And that sets it up for a nice uh you know nice out performance over the next six months two years um what we see also is automotive uh in in the

june quarter has been fairly strong uh both global lvp has been up three percent sequentially and china where they have a big footprint has been up 12 percent sequentially on the automotive side so that should be a tailwind for uh for an xpi here in the june quarter in the report um so we we see that analog analog group actually start to catch up uh after a period of relative underperformance and start to actually outperform the group so what would you expect uh the street would need to see in the way of guidance at this point what seems to be priced in yeah I think what the speed would be looking for is definitely modest acceleration on the top line, plus also inventory starting to flatten out or come down, especially as a lot of these suppliers, chip suppliers, putting utilization

fairly at low levels. And so as demand picks up up an automatic translation from that would be lower in renties and that obviously is very positive for the entire supply chain. You do mention this sort of overhang of increasing fab capacity. Is that something that is going to be sort of worked off as a concern gradually? Yeah, there's definitely a concern over the last nine, 12 months. But what we've seen recently is almost every chip supplier has been cutting back utilization. So that obviously takes out some of the concern on overcapacity. But you're still seeing, you know, definitely concerns of capacity building out in some other segments of analog like silicon carbide on the EV side, especially in China. And so that continues to be a little bit of a headwind. But obviously,

XPI does not play on the silicon carbide side. They are primarily on the silicon side. And there you have gone through a significant adjustment across the supply chain. I know you upgraded NXP a couple of months ago, I guess, not too far from current levels, but you prefer it to other names in the group like Texas Instruments? Yeah, we actually think NXPI, Microchip, etc. should all start to do well over the next six, 12 months. TI obviously is a global leader in analog, but where they have some challenges is they're bringing on a lot of capacity, obviously bringing on multiple fabs and they also have a little bit of a headwind in china where there's a lot of pricing pressure a lot of capacity coming on domestically but what you what you see typically

in a market that's kind of starting to go uh you know starting to roll back is some of the lower end names start to outperform and that's what you're seeing when it takes place. But we do see some challenges there, given the capacity and the capex levels that they have. Got it. Vijay, thanks very much. We'll see what the numbers are in just a bit. We are getting some news out of Warner Bros. Discovery. Alex Sherman is here with that story. Alex.

Yeah, so this has been somewhat long awaited, but Warner Brothers Discovery making it official that they intend to use their matching rights to match one of the three packages that have been submitted from that the NBA has crafted with what it wants to be its new media partners, meaning Disney, Comcast, NBCUniversal and Amazon. I'm told by a person familiar with the matter that Warner Brothers Discovery is in fact matching the Amazon package, which is a $1.8 billion per year package. I'm going to read you a little bit of the statement here, Mike.

It says, In an effort to continue our longstanding partnership during both exclusive and non-exclusive negotiation periods, we acted in good faith to present strong bids that were fair to both parties. Regrettably, the league notified us of its intention to accept other offers for the games in our current rights package, leaving us to proceed under the matching rights provision, which is an integral part of our current agreement and the rights we have paid for under it. We've reviewed the offers and matched one of them. As I said, I'm told that's Amazon.

They will allow fans to keep enjoying our unparalleled coverage, including the best live game productions in the industry and our iconic studio shows and talent, while building on our proven 40-year commitment for many more years. Our matching paperwork was submitted to the league today, and we look forward to the NBA executing our new contract. I'm also told the NBA is preparing a response statement to come, so we will see exactly what

the league says in response. But the news here is that Warner Brothers Discovery is not going quietly into that good night. They are using their matching rights to try to stay in the game here and perhaps come away with a package of TV rights for both TNT and for Max at streaming service. I was going to say, Alex, if in fact they were to get this Amazon package, the one Amazon has bid for, would it be a smaller package? Would there be fewer games than they currently carry on the Turner and Max? All three packages actually have fewer games because they've split two packages into three. So the answer is yes to that. And the reason that Warner has targeted this package is that the Disney package is $2.6 billion per year.

The Comcast NBCUniversal one is $2.5 billion. So this one at $1.8 is the cheapest of the three. So it is more of a you can make a better sell to investors in terms of what Warner Brothers Discovery Management is saying in terms of not spending as much and still coming away with a good-sized chunk of the NBA games if, in fact, the league allows them to use their rights. And that is the we don't know yet. So we'll see what the league says. Right.

Not as simple as just saying, yeah, raising your hand and saying you match. Alex, thanks a lot. Appreciate it. Thank you. Leslie, Truist actually up today on its results. Yeah, more than 3%, Mike. Even though the quarter itself was pretty mixed, the trends for commercial real estate and broader credit quality are improving,

and the outlook is stronger than expected. It's really a continuation of a theme we've been seeing from regionals this season, one that's bolstered Zion's leading into its earnings in about 10 minutes time, 15 minutes time. That stock is outperforming the S&P by about 12 percentage points this month alone. In focus will be credit pressures there as well as expenses and analysts view Zion's net interest income outlook as conservative, which may bode well for further upside to that profitability metric for loanmaking. Consensus is expecting slight declines in EPS and revenue on a year-over-year basis, though, Mike.

Zion, Leslie, just as you observe this group, it's one of the stocks that seems to move the most when it comes to, you know, whether it's moves in yields or something else. And I assume that's the net interest sensitivity that it has displayed. That's right. It's kind of like a lot of these banks. This one is one that comprises seven community banks. very much that net interest income sensitivity, as well as the regulation sensitivity, as well as just the overall health of the economy sensitivity. So it's pretty much as simple as that. Yeah.

And of course, with the regional differences as they as they apply. Leslie, thanks very much. We'll see what they deliver after the close. As we head into the close, you see the S&P 500 up a bit more than 1 percent. That's after a roughly 3% pullback from an all-time high. The Dow is up a quarter of a percent, holding right near the 4,400-level NASDAQ, the big outperformer, up a percent and a half on the day, coming back from roughly a 5% pullback. And then the Russell 2000 has actually increased its outperformance

over the course of the hour. So this is not a pure rotation into mega cap from small cap and six clubs. You do have regional banks and others also participating with semiconductors among the leading groups. If you look at overall market breadth, you've got about three stocks up for everyone that's down on the New York Stock Exchange. And notably, the volatility index down 1.7 points, down below 15 again after closing the week last week well above 16. That does it for Closing Bell. We'll turn it into overtime with Morgan and Gunn.