Closing Bell - Closing Bell 8/18/26

Episode Date: August 18, 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.

Kelly, thanks so much. Welcome to closing bell. I'm Scott Wapner, live from Post 9, here at the New York Stock Exchange. This maker breakout begins with stocks down, yields up. That really is the story, as the market grapples with the move and interest rates, here's a scorecard with 60 to go in regulation. I'll show it to you there. Fair amount of red led by the NASDAQ, which is not surprising either, given gross stocks tend not to like rising rates. Chips are lower. The momentum trade cooling certainly today. There is NVIDIA off by more than 2%, but, micron down substantially, as is S.K. Heinex. Some strength and software, though, led by Salesforce and service now. Pretty good gains there. We'll track all that. Away from tech, we're watching Home Depot following its earnings reports. It's kind of been all over the map today. It's currently green, and we'll see how it does too. The home builders, their red mortgage rates, they continue to rise right along with yields. And that takes us to our talk of the tape, the move in yields, and whether it's finally starting to get the attention of stocks. Let's welcome in, Adam He's Trivariate's founder and CEO and a CNBC contributor.

Welcome back. Hey, good to see you. So what about this backup in yields? You know, this bare steepening, the, you know, the long end, rising faster than the short end, is continuing to be a story. What do we think? I think it's fleeting. I think it's fleeting. I mean, in the really short term, you can get a sell-off, especially with tech stocks up a lot in the last few years.

But ultimately, when you study the long history of the change in rates versus the change in equities, there really isn't a standard. discipline. Because usually, ultimately, if yields are high, it's because growth is good. And if growth is good, tech stocks, then the stock market can do well. So I think it's fleeting, honestly. Is this, does this have as much to do with growth prospects as it does these other, you know, issues like the issuance of all of this paper, Fed communication, more focus on the deficit and debt and things like that? Is this really about growth prospects because the most recent economic data doesn't actually scream like, hey, rip-roaring economy.

I think the economy is in pretty good shape. I mean, look, I guess the challenge always has been, you know, if you would ask me once a year for the last 15 years, am I worried about U.S. government deficit? Or sometimes the way you ask it, are you at all worried? And then I feel it ages like milk if I say no, right? But the question is like, should I change my portfolio positioning today for the inevitability that that finally matters right now when it's been obvious for 15 years? I don't think so.

I think ultimately the economy is strong enough. I think the earnings and cash flows from these big companies are strong enough that they'll power through any kind of scare that happens around this. One of the things I learned in the past is whenever you see people make the argument that bond yields will back up because demand would be weak, they're wrong. That's happened zero of the last 100 times that I've heard that call from the big bullish bracket firms. Because when people get afraid and there's truly a gross care, then the 10-year yield goes lower again. So I'm not that worried about that.

I think this is more positioning and a little bit short-term profit taking after a pretty big rip from lows in some of the tech stocks. Not a longer signal. When you ask the question, should I be changing my portfolio as a result of this? I mean, that is a relevant question. Yeah. I don't think so. If you think that the longer duration assets are going to, you know, have an issue if yields continue to back up. So maybe the momentum trade does have a little bit of a problem for a bit.

Who knows? I mean, you don't know what yields are going to do. You also got to wait to hear from Kevin Worse coming up. The Fed share in Jackson Hole's not that far away. And, by the way, In Vidia, next week, too, sure. There's a lot. There's a lot of variables. In a 3, 6, 12-month view, I'm not worried about it.

In a two-week view, I don't know. Right. I mean, and you can see people being a little bit, you know, afraid of this backup. in a shorter term view. That's why the home builders are down, et cetera. But are you saying, you know, if the question is, is the trajectory of corporate earnings impaired, is going to be a real growth scare about that? I don't think so. No. Margins are good. Pretty good shape. I think growth is pretty strong. And also, I think if I'm looking at the distribution of outcomes to say 2028 or 29 earnings, I think they're skewed wildly to the positive because I still don't

think people truly get the impact that AI is going to have on productivity for a lot of the big companies. Well, interesting. I mean, are you thinking about what the Fed chair may say next week? How are you thinking about Nvidia, which is probably the biggest issue right in front of us? Now, you also have to put into context, that stock's had a really nice move. It's had a nice bounce off lows. Look, you know my view is that by the time this AI cycle is over several years from now, this stock will be probably twice as high as it is now, probably $10 trillion,

is the ultimate destination. not higher. And the reason is they're going to grow at a really strong rate for a really long time. They have less cyclical earnings than, say, Micron or others. And I think they're the prime example of where the skew to the upside is out in 28 or 29. So near term, I think the challenge is everyone knows the quarter strong, and the hyperscale cap-backs has remained strong in their primary beneficiary. I think if you look out any meaningful period of time, this company is just going to generate a ton of cash flow. So I'm, bullish on both Micron and Invidia.

And the moving yields doesn't make you want to like the financials maybe a little bit more. I mean, look, you can be a little tactical, too. I'm not talking about, you know, 12 to 18 month trades necessarily, but or investments, you know, whatever. I'm thinking of things that are going to continue to work well, for example, if yields continue to remain elevated. I mean, financials have been on this, they're up like 10 or 11 weeks in a row. It's a longest streak ever.

Not by accident. Yeah, you've gotten a nice bounce off the low from the alts, you know, all you saw with KKR. The insurers have lagged. I mean, some things have lagged. But, yeah, sure. If I'm trading, I probably buy some regional banks for a little bit of a trade. Usually they can capture some net interest margin when that happens.

But in the medium or long term, I still think you want a healthy amount of AI revenue exposure. And the transition that will happen, the S&P, is that transitions to AI productivity exposure. And so I like health care and other stuff that will be primary beneficiaries of that. If you're not worried that much about rates and you still think that the economy is pretty good, And you, by the way, you've come around a bit on your view on the consumer and some of the discretionary related, discretionary related names, which you were pretty dower on in the past. Yeah, we had a really good call. We had a really good call to be underweight for a long time. We went to market weight right as I thought some of the Hormuz stuff was starting to settle in a little bit and looked like you'd get a little bit.

And to be honest, I think this whole case-shaped economy thing, people have pumped the brakes on it because it's really not an income statement. I think it's hard to have a big problem when unemployment's this low. It's a balance sheet thing. So people aren't getting rich on the balance sheet in the lower end of the consumer the way rich people are. But they have jobs if they want them and wait is they're okay. And so when you look at things like 90-day credit card delinquencies, they're actually low and declined from a year ago. You're not seeing the kind of financial stress that you would normally see in what people think is late cycle. And that keeps me somewhat optimistic that the consumer will hold up in the fourth quarter.

But then doesn't that mean that you should? change your portfolio a little bit? I mean, if you were, if you came in here and you were thinking, I want to be overexposed or overweight to tech, but now I've had a market broadening. And then I hear, you know, Adam Parker kind of talking pretty positive about the consumer and maybe the case-shaped economy or the so-called is over. And we just have a pretty decent economy. And the general consumer is doing pretty well.

Top's doing better. But still everybody seems to be doing okay. Employment is what it is. what are we, four one on the unemployment rate? Yeah, it's low. Yeah. Yeah, so I think you can buy some, there's tons of stuff to buy, but I think ultimately when we started the top of the hour with Nvidia and Micron, I think they're going higher and meaningfully higher over the next, you know, one, two, three years.

Because the way I'm thinking about the world is AI started in May of 2023 with NVIDIA's first upward sales revision, three years, three months ago, okay? And it's an eight to 12 year spending cycle. We're not even halfway done with what's going to happen in the spending there. And so the total amount of cash flows on earnings that are crew to compute is just going to be massive. Oh, wow. So then you think the bull market's got a really long runway. I do, yeah.

I mean, I think 28 and 29 earnings could be very big, and I don't think it's all in the price yet. So that's the North Star that we've been talking about for years, about semis being the North Star. And you've got to hedge it because when you get diversify it, when you get big pullbacks, it's sharp. And you see businesses that really isn't a gross scare, and all of a sudden Nebius isn't half for no reason or whatever. You can get pullbacks that are meaningful, so you have to diversify. Maybe you buy some diversified consumer. Maybe you buy health care services. Maybe you buy oil stocks because the prices.

I mean, you've got to have a portfolio, but the North Star is still semis win. Okay. You hang out. We'll come back to you in a little bit. I do want to talk about mortgage rates. If you want to see where the impact of rising yields is having maybe the greatest impact, it is mortgage rates. Diana Oleg's been tracking this, of course.

And, you know, the numbers you had today were more. not pretty. No, they were not, Scott. The average rate on the 30-year fixed mortgage inched up again to 6.75% this morning, that according to Mortgage News Daily. And, you know, rates have been hovering around the higher end, highest levels in over a year, in fact, and that's hitting affordability again. We got the numbers on pending home sales this morning, and they were well below expectations. These are based on signed contracts on existing homes, and the realtors noted higher mortgage rates specifically. Now, we also got July single family housing starts, and that was an even bigger drop, down 10% from June and down 16% year over year. Now, stocks of the builders were not loving that.

The builder ETF, ITB, that one's in the red so far today. We do get quarterly earnings later today from luxury builder toll brothers. Toll has been performing better than its peers because, of course, it's on the high end and the high end is doing better. Now, in the report on builder's sentiment And yesterday, the NAHB noted that custom builders, again, more on the high end, were also doing much better than the production builders. So again, it's about higher rates and affordability, Scott. All right, Diana, thank you, Diana Oleg, Home Depot, CFO, declaring the housing market today, quote, frozen, in part because of rising rates, high mortgage rates.

Pippa Stevens has more. Hi there. That's right, Scott. So as rates stay stubbornly high, Home Depot, saying housing turnover is at historical lows and that it's never been lower as a percentage of the housing stock. adding they don't see any type of inflection point at this moment. That means that larger discretionary projects remain under pressure. The consumers are turning to smaller repair and maintenance projects, including painting.

Now, overall, the company topped estimates posting its strongest same store sales growth in almost four years and said $730 million in tariff refunds helped to partially offset higher costs related to fuel, energy, and other product inputs that weren't in the company's plan at the start of the year. But the stocks not doing much today after Home Depot did not raise guidance for the second straight quarter, despite revenue beating expectations by nearly $1 billion in the fiscal first half. The decision to stick with guidance first issued back in December, seemingly pointing to the company entering the back half of the year with a note of caution. Scott? Bipa, thank you. Pippa Stevens. The move and yields certainly makes next week's Jackson Hole speech by Fed Chair Worse.

All the more interesting, CNBC's Matt Peterson joins us now. Good to have you on the program again. I mean, how do you think this backup in yields is playing inside the Federal Reserve and how might it impact those comments next week? That is exactly the right question. I wish I knew the answer, but Kevin Warsh has left us all scratching our heads about exactly what he thinks about this rise in yields. This is one of the big confusing points that came out of the press conference he did in July,

was that he sort of said he thought that it was good, that yields were rising on the long end. He's also, on the other hand, said that he's worried about the housing sector where you wouldn't want to see yields rising, right? So we're left to kind of figure out what exactly does Kevin Warsh think about the bond market, and that I think may be something that we learn a lot more about at Jackson Hole. I mean, he wants the market to, you know, sort of figure it out, if you will, on its own. Is this proof of be careful what you wish for? Yeah, I think that's exactly what this is, right?

You're seeing the long end now accommodate all of this uncertainty about exactly where the Federal Reserve lives. You know, it's not reacting to the ball, as he said. You know, it's playing the umpire. Kevin Warsh, you know, wants to get this sort of undiluted market signal, but it's really not clear that we're ever going to get one. You know, there's been this concern about a sort of hall of mirrors thing that he now seems to be trapped in. And, you know, again, he's got a chance to explain himself and we'll see if he avails himself of that. I mean, if he takes a more neutral stance, so to speak, out in Jackson Hole, what do you think that would do to interest rates? Could that take them off the boil a little bit so he can accomplish a lot by saying even just a little?

It's possible. I mean, I'm sure he would hope to achieve that. But I think the question now is whether interest rates are just going to keep moving regardless of what the Fed says here, right? The Fed actually needs to act in order for people to believe that it's going to step in when. inflation is rising. I mean, inflation picture is mixed, so it's not, you know, an obvious call one direction or another, but that was the upshot of this confused meeting was that folks just don't really know how the Fed is going to react at the moment. I mean, he does sort of get the benefit, if you want to use that word, from the fact that some of the economic data of late was on the weaker side. So the market now less expects a move in September. So I'm not sure exactly what

that leaves him thinking he needs to say in what is typically a pretty consequential speech. I mean, I remember thinking back to Chair Powell right before the Fed started raising rates. It was eight minutes of pain, remember? It was just an eight-minute speech, but it didn't need to be anymore. That's right. I mean, you know, the Fed Chair can move markets pretty far with just saying a little, and there will be a lot of attention to this speech. That said, you know, he could take this opportunity just to give us his,

sort of grand vision of how regime change works, right? How would markets react to that if we didn't actually get a really close read of the economy? You know, we might see yields continue to rise at the long end because people continue to say, well, you know, we just don't know how the Fed is going to react, right? He's got a lot of different ways that he can play this. You know, I think the safest way is to go in and do a kind of Jerome Powell reading of what the economy is looking like to Kevin Horsch, but he's really resisted doing that at every chance that he's had so far.

And it's hard to see him breaking with that pattern. See what happens. We'll probably talk to you again, too. Matt, thanks. Appreciate that very much. Matt Peterson. So welcome in our panel. Schwab's Kevin Gordon, Newberger's Shannon Sikosha.

Of course, Adam Parker is still with us. Kev, it's good to have you here. So you tell me what you think about the market, the reaction to yields rising, if you think that there's a cause and effect that the market actually is reacting to what we're watching in the bond market. I mean, it's hard to say because you still have Brett that's net positive today for the S&P. So outside of tech and a lot of. of the weakness associated with the mega caps. There's not that much of a negative market story.

You know, the whole discussion around yields, it's interesting because this is so much more focused and centered around the level and not the rate of change. Typically, when you have a spike in yields and it's aggressive over a shorter time frame, that's when you get these bigger ruptures in the market. That's when you sort of raise the correction risk. But that's not really what we're seeing right now. The move has been modest. I'll be honest with you. I am referring to the move, not necessarily the level. The level just says, well, it's the highest since 2007. That doesn't mean anything.

Right. But if I tell you that as I sat here, while Chair Worse was giving his news conference, after the most recent meeting, we were below 520 in the 30 year, and we watched it tick above that level as he spoke and that it's just continued to move higher, albeit 10, 11, 12 basis points since. Yes. And I think, you know, but from here you would need sort of an extended move. So I'm sort of backing this out, you know, two to three months.

if you continue to see and you were on the pace that you had in the reaction to Warsh's press conference, that's when you would raise the bar more for, or you would raise the risk more for corrective activity. So still even from that point, it's not that aggressive relative to history. I don't want to dismiss the move since then because you've had sort of this, what I've been calling a twist tantrum where the long end has been rising, the short end has been falling. That clearly has been the market, you know, losing a little bit of not outright confidence and what the Fed's going to do, but just maybe questioning more around the inflation fighting credibility side of their mandate.

Shan, Mark Newton of Fundstra. He's the technician there. What works with Tom Lee was out with a note today suggesting that it was just a matter of time before the equity market was going to start paying attention to the backup in yields and maybe this is the moment? Yeah, well, this is typically when the equity market starts to look around is at the end of earnings season. P.E. have been compressing already, Scott, over the past six weeks or so.

And now what you're seeing is that you don't have that stronger earnings growth to fill the void and distract from these yields. The other challenge here is that we're talking about the strength of the AI buildout, and that's what's driven these extraordinary earnings numbers over the course of the last several weeks. When you look at the debt that is being issued, not only kind of above the line and, you know, in the public market, but also in the private market, and you think about the potential for that to be cannibalizing demand for treasuries, all of that compounds some of the fiscal concerns and the sustainability and reminds everyone that while we have so much enthusiasm around the earnings growth, we still need to finance

a significant amount of cap-X, and that is going to be competitive to Treasury. So I think there's just a lot happening, not only here in the U.S., and you pointed this out yesterday, globally we're also seeing the long end of the curve rise. And I think that there are questions on fiscal sustainability, but also there's just a lot of additional credit and debt being issued. Who's going to fund that? And where is that capital? going to come from? Yeah. Oh, there's paper flying all over the place.

So I'll ask the same question I want everybody's answer. Kevin Gordon, I'll start with you. Is it true that as long as earnings remain as strong as they are, as long as AI spending remains as robust as it is, and as long as the Fed doesn't do anything for a while, then the market's just going to continue to go up. Is that a fair statement? I think the runway is certainly, you know, it's not completely smooth,

But I think the right way is... Sure, and the move in rates is noise. More noise than anything. Yeah, I mean, well, I think here's the difficulty in talking about sort of this whole backdrop with yields where they're at right now. Clearly, you have parts of the economy that continue to struggle. Diana was just laying out all the issues with housing. You clearly have some parts of the consumer that do struggle under higher interest rates.

The problem is that that doesn't really necessarily show up, if at all, in S&P 500 earnings. And that's what the market is ultimately going to key off of. Plus, you have an environment where nominal GDP growth is six and a half percent year over year. That in and of itself is suggestive of treasury yields sort of continuing to drift higher when you have that robust of economic growth. But you also have stickier inflation. You put that together with a geopolitical risk premium that's clearly rising. And you have that sort of pulling and acting as that force, sort of anti-gravity force for yields and moving higher.

So I do think that the runway for the S&P 500 in that scenario is relatively fine. But again, not to, not without risk if you go through these sort of catalyst moments where you do get a spike in yields, or if you get the opposite and you do get a significant drop, in this environment of a negative correlation between bond yields and stock prices, that can really exacerbate an equity market moves. I think that's just something worth pointing out in terms of a risk. It's the same kind of question, I guess we could ask about rising oil prices, Shan, right? I mean, the market was able to, excuse me, shrug that off, so to speak,

just because the earning story is too compelling. The AI spending story is too compelling. And by the way, if you get eventually some sort of, resolution with Iran and oil does actually go back to 70 or below, then you would figure that yields would come down as well. So the market was able to look past the oil, Iran war story for the most part, and maybe it's going to do the same with rising yields for all the reasons that we just said. Well, I think that has more to do in terms of the lack of clear transmission to other parts of the economy, though, Scott, I mean, aside from airline fare is up 25 and a half percent on a year-over-year

basis. We really haven't seen that energy price pass through, except really in refined product. I do think that what the market is looking through, though, is exactly what Kevin noted in terms of just the breadth of the earnings growth that we have ahead of us. And the reality that if you're looking to invest capital over the next six months, the alternative to U.S. equities to probably be equities elsewhere, just given the robust earnings growth that's being generated in XUS in small caps. So, you know, whenever you look for an alternative to U.S. stocks in this market, even if you want to dilute some of your AI exposure, there's a lot of other areas that are also exhibiting strong earnings growth and don't have this

long-end duration concern that you potentially have to grapple with if you are trying to play the long end of the curve. I'll give you the last word to sum it up. I think your oil analogy is perfect for rates. It's self-correcting, right? When oil gets too high, then demand slows and it corrects. It's the same rate. Like if you get a gross scare, then the yields will come back lower. So it'll be cyclical, but the train is still headed in the same direction. The way I'd pitch it to you is earnings are going to grow probably 40, 50 percent over the next three years, some number like that. The market's not going to be 40 or 50 percent cheaper in three years. It'll be 20 percent cheaper or something, and the market will be up materially when you do that math.

All right, we'll leave it there. Thanks, everybody. Appreciate it very much. All right, we're just getting started here. Coming up next, Meta on Trial, the company facing explosive claims. It designed its platforms to hook kids. profits ahead of safety. We've got the very latest on a landmark case underway as we speak. We're live with the New York Stock Exchange. You're watching closing bell on CNBC. Welcome back a developing story this hour, what some are calling the most consequential case yet over child safety

issues on Mehta's platform. Now underway inside a California courtroom. Julia Borsden joins us now with the very latest. Hi there. Hi, that's right. Scott, at a federal courthouse in Oakland. The attorney representing META, Paul Schmidt, just laid out META's defense, saying that META works to improve its policies, and he asked the jury to consider whether Mehta's features, like the ability to have multiple accounts, its time management tools, and its effort to block users under age 13 are unfair. This after this morning, the lawyer representing the state suing META, Megan O'Neill, said META prioritizes profits over the safety of children, and that meta's financial success depends on keeping kids on its apps and that it knowingly developed

features to take advantage of them. Now, the 29 states involved in the lawsuit are asking for META to pay monetary damages and also for changes to its business practices, including the likes of Infinite Scroll and AutoPlay videos. Now, that's what makes this trial the biggest and most impactful yet. Unlike the personal injury trial, the Spring in Los Angeles, and the trial in New Mexico, which focused on whether meta violated state consumer protection laws and enabled child sexual exploitation. This lawsuit attacks META's design as addictive, and it's doing so on a federal level. So this is considered a bellwether for a consolidation of lawsuits. So a loss here could pressure META to settle remaining cases around the country. Scott? Is that, Julia, why, the number of potential

damages? I've seen reports of potentially a $1.4 trillion being tossed about. Yeah, that's right. So META said, that the states are looking for as much as $1.4 trillion in damages. But then the attorneys representing the state said, no, we're actually looking for more like $200 billion in damages. And META, effectively, they said META was exaggerating in order to get attention. So there's certainly a lot of debate about this number. $200 billion is a lot, though not as much as the $1.4 trillion that is close to META's market cap. But what's important here is that these states really want to address the core of the issue. It's not just that they want those damages paid, but they also want to see changes to the algorithm that makes META so successful, and they would say changes that would

benefit kids and teens. META is saying we're following the laws, we're abiding by the laws, the likes of the Children Online Privacy Protection Act, and they say they're making a valiant effort to protect kids on the platform. And that's what we're going to hear play out in court over the next seven weeks. Interesting. Julia, thanks so much. That's Julia Borsson. For more, let's bring in Gene Munster, managing partner with Deepwater asset management. Don't own the stock. You don't personally. Deepwater doesn't either, but I know you have views on this. What's your take on what, as we said, leading into this segment is the most consequential case on this issue to date?

Well, Scott, before, I need to preface my comments that I'm a big believer in AI. I think it's going to make the world a much better place, longer term. but I think what we're seeing here around the courts is minimal. I think it is the tip of the iceberg of what is going to be a sea change in terms of the influence that these platforms are going to have on teens and how they see the world. And so it was kind of two different lenses to look through, you know, the setup that Julia did right there, you know, the impact on meta. Let's say ultimately they're probably going to pay somewhere around 25 billion in fines over the next five years,

just rough numbers. When they're at a steady state of cash flow, they're going to be generating after they get through this KAPX burst here, probably 40, 50, 60 billion a year. So they can definitely afford $5 billion a year and losses. But that's not the point. The point is that Zuckerberg in his manifesto back on August 10th basically said they're throwing out the old playbook, the playbook being the Instagram playbook where you get things kind of fed to you. And they're moving to a superbot playbook based on super intelligence. This playbook is going to be agent-based. Zuck said on the call that they want easy-to-use agents for billions of people. And he talked about this fundamentally changing their revenue models. And so why that's so important relative to this conversation is the potency of what is going to come

down the pipe from meta around agents and the influence that they're going to have on people under 18 is going to increase exponentially. And my sense is this is going to probably move at first at the speed of a glacier and then a fast glacier. But what meta is going to be set up for in five years from now is probably lawsuits that are dramatically bigger because if Zuck makes good on talking about or fulfilling this promise of superbots, what we're seeing right now today is really chump change. Is there any legitimate algorithm risk? here, do you see? Because to me, that's sort of the holy grail of the whole conversation, the money's. The money, as you suggest, you know, at the kind of numbers that you were talking about,

it's reasonably inconsequential to the company's overall business. But the change in the algorithm would have a dramatic impact. It would, and that would matter. So yes, there's algorithmic risk here, the legislation at the federal level, as Julie talked about, changes how these bots worth. But if you take the approach that there's basically a, really, renaissance going on with how they're doing their business. And I'm going to read the quote that Zuck had on the call. He said the foundation of our next wave of products and revenue lines will change fundamentally in the months and years to come.

And so as far as the algorithm, like in some ways, he's going to throw it out in the next two or three years. They are fundamentally moving to an agent-based world. Now, the agent is going to have some look and feel to it relative to Instagram. All the things you love about Instagram will be there. But this agent piece of it, I think, is going to be some. that he believes there are large revenue lines. And so any sort of change to the algorithm really needs to be put in context to whatever their revenue model is going forward. And I think

that's going to be squarely built on the back of superagents. I've mentioned you don't own the stock, nor does deep water. What do you like most right now? Which company do you like the most of the hyperscalers? Well, I'd say maybe of the mega-caps. If you kind of take this conversation and say that yes, there's some truth about how AI is going to impact personal and agents are going to be a bigger impact of our world. If you believe that's true, which I do, probably one of the biggest underappreciated companies is Apple. And in their case, you know, they're not going to have that same risk related to what's going on here from the machine. Apple's going to take a more conservative approach in terms of how they build rails around this. But what we're seeing in

Siri right now with the beta. What I've been testing for the better part of the past month is they finally got it right. I mean, I think that this is something that right now, based on our research, it's shockingly, less than 20% of iPhone owners in the US use Syria on a daily basis. That is going to become the foundation of personalized AI part of this conversation. And Scott, I think that the shares of Apple are going to get re-rated. The earnings might go up a little bit, but I think the multiple is going to go up measurably in the next year. Wow. I mean, so in an environment where, you know, AI was viewed as this company's pain may now ironically be its gain. Interesting. Gene, we'll talk more. Thanks, Gene Munster.

Thank you. Yep. Still ahead. Full court drama, the family feud playing out over the future of the Los Angeles Lakers, what it means for one of sports's most valuable franchises and others following the money next. Welcome back, CNBC's Alex Sherman. report that Jeannie Bus, the governor of the Los Angeles Lakers, will contest the potential sale of the family's remaining stake in that team with the very latest. We're joined now by CNBC's senior sports reporter, Michael Ozanian. It's good to have you back. This is the drama that everybody's talking about in the sports world. Scott, great to be on your show. Yeah, Jeannie Bus is saying, not so fast. As Alex reported, she's saying her and her siblings do not have to sell their stake in the Lakers unless she wills it. And her attorney put out a letter with

referencing a court order from 2017 saying saying that. So it looks like if Iger and Kushner want to buy out Mark Walker's 65 percent, that's all they're going to get for now. So this seems like it could head to a court, not a basketball court, but a legitimate court. Can you speak to, though, The run that the Lakers had with any level of bus family involvement is one of the greatest in the history of team sports. There's no question about that. Dr. Jerry Buss buys the team for $67.5 million in 1979. They get Magic Johnson, obviously, in that year's draft. They win 11 NBA titles as long as the bus family was involved in this team.

Yeah, it's not just what they did for the Lakers, Scott. It's what they did for the NBA. You know, you mentioned magic. I mean, the rivalry of Magic and Bird, the Lakers and the Celtics brought back the NBA, brought them back. Don't forget, in the late 70s, the playoff games for the NBA were on tape delay.

So you look at now the deals that they're getting on television and think back to, they used to be on tape delay prior to bus zoning the Lakers and Magic and Bird rivalry. I mean, it's totally different today. I mean, I was thinking also about, you know, sort of your wheelhouse. you know, for us, no doubt about that. And what you've made a substantial part of your career on is trying to figure out what teams are worth. And I look at the $12.5 billion that we're talking about

here and wondering, is it a one-off? Because there was the right buyers in the right place at the right time and a seller who needed maybe, apparently, a liquidity event to happen. So it worked as this did. and does that reset all valuations for not only the NBA, but for all of sports? It definitely does for the NBA. Yeah, no, Scott, you're on to something. This is not a one-off, in my opinion. In fact, analysts who follow MSG sports,

which owns the Knicks and the Rangers, when this deal was announced, they were immediately putting out new research reports raising the value of MSG based on a higher value for the Knicks off of the Lakers. This is not a one-off. I think in an arm's-length transaction, should Jeannie Bus decide to auction the Lakers,

like the way the Seahawks were auctioned, where you had a competitive bid, she could very well get better than $12.5 billion. I think this definitely not only raises the value of all NBA teams, should this deal go through, but it also raises the value significantly of the two expansion teams that the NBA has, from around $7, $8 billion to probably close to $10 billion.

Well, why not in other sports, too? I mean, what does this do to the value of the cowboys, for example? Weren't they number one in your list? Yeah, a little bit with the other sports. So, you know, the economics of each league is different. So what's happening in the NBA doesn't necessarily translate to the NFL, but certainly, I will tell you, there was an owner of an NFL team that when this deal was announced, said, how much are we worth now?

Set me a text message. But mostly the NBA, because of the NFL. because of the way their CBA is, and specifically the premier brands like the Lakers. I'm sure all owners everywhere are falling all over themselves, reaching out to Ozanian. Hey, redo the valuations, pal, because they've changed. So you'll let us know if you do.

We'll talk to you soon. Thanks, Scott. All right, that's Michael Ozanian. We're back in two. All right, we're 10 to the bell. Back to Julia Borson now for a look at the key stocks to watch. What do you see? Well, shares of Amalik's pharmaceuticals popping over 50,

after its experimental drug successfully reduced low blood sugar episodes for patients who underwent weight loss surgery. The company plans to submit an application to the FDA by year end. The stock is pacing for its best day since 2022. Klarna shares slumping on weak guidance for the third quarter and full year. The payments company also abruptly announced its CFO and CMO will leave their roles early next year. Executives blame the updated guidance in part on softer discretionary spending in Germany. And shares as a software firm CCC intelligence solutions and Copart moving in opposite directions after a Bloomberg report that Copart is said to be among the suitors for CCC. That headline follows a July Reuters report that CCC was exploring a sale. Scott? All right, Julia Borson.

Thanks so much. Up next, Bullish Options Action on one mega cap tech stock bucking today's drop. The market zone is next. All right. We're now in the closing bell market zone. Mike Santoli and Northern Trust, Joe Tenios, are here to break down these crucial moments of the trading day. Plus, Oliver Renek, standing by live from the Sibo of global markets in Chicago. Michael, your big thoughts for this day. What are they? Yeah, I mean, obviously all the attention on bond yields near the highs, if not making new highs on yield. But I think really the story within the market is semis bounce kind of ran into a little bit of friction.

They've sold off hard. Part of that started in seven. South Korea. The rest of the market couldn't quite overcome that. So we kind of remain in this rotational world with a little more pressure on the index level. You know, tried to hold 7,700 on the S&P all day. It looks like we might close a little below that. Still holding last week's breakout, but maybe a little more tenuous than it was yesterday. Yeah, how are you going to look at this in about five minutes? Bonds and stocks. We have preemisera from JP Morgan's Strategist, Fixed Income, as well as Liz Ann Saunders, to surround it from the equity side. Oh, great. Okay, good. see you then, as I said in overtime in about five minutes time. Oliver at the CBO. What do you see

there? We saw more bearish options flow in SMH today, Scott, after that massive $130 million put purchase we highlighted yesterday. The two biggest trades in the sector fund SMH today were part of what looks like a multi-million dollar bearish put spread. Someone bought 22,000 of the 545 strike puts expiring September 4th for $24 million and sold the same. number of 515 strike puts against them for a net $15 million bet. The SMH will drop 9% the next two and a half weeks. But it's a totally different story if you look at the hot memory ETF DRAM. Bulls continue to aggressively buy the dip there with almost twice as many calls bought

versus puts despite today's 8.5% drop. And if you're looking for a single winner, it's Apple up 1.5% percent. today uniquely calm and bulls think it can hold more than 700,000 calls traded. Most of them bought versus under 300,000 puts, Scott. All right, good stuff. Oliver, appreciate that. That's Oliver running the Cibo up in Chicago. The momentum role, Joe, that Oliver was just talking about because of rates backing up. What do you think?

I think a large part of it has to do with rates. I mean, let's just be clear. You still look at the S&P 500. You see the year-to-day returns. There have been some encouraging data points when we take a look at earnings. You think about the underlying fundamentals. We can continue to point to how resilient the U.S. economy has been. But again, this issue with rates is just not going to go away.

And I think it's something we have to be focused on. Sure. But as Oliver also suggested, the activity in the options market suggests buying the dip, that people are not going to let these kinds of stocks get too far away from then. That the overall story, whether it's earnings or AI spending or whatever you want to point to, hasn't changed. Yes, rates are backing up, but they're not changing the story. I agree with that 100%.

The story is not changing as a result of higher interest rates. I'm not so sure that even if interest rates continue to move higher from here, it's going to derail the AI narrative. I think that's here to play. That's here to stay. However, when you have interest rates move up like this, you have to start asking yourself, what does this mean for the underlying economy? What does it mean for the consumer? It doesn't necessarily derail the stock market.

But I think you see once again more of this bifurcation, more of this K-shaped economy, this widening gap, if you will, between AI and everything. everything else. When you suggest stay selective in the market, what does that mean? Where, how? It means this is no longer a story of a rising tide lifting all boats. I think we saw that play out at the very beginning of this year. Really? And you'd be very mindful and selective. I think what's working very well just for the S&P 500 and for passive investors is that technology continues to dominate the overall index and everything related to AI is working out relatively well. I know, but aren't we in sort of a rising tide lifts all boats market now? I mean, we've

this incredible broadening, the rising earnings tide is lifting all earnings boats. And we're seeing that play out in the market. Are we not? You only have two negative sectors over the last month. What are they? Utilities and comm services, and that's almost idiosyncratic based on a stock or two. So I think we're getting there, right? We're getting there. The story of earnings broadening out is certainly something that we take some comfort in. And I think we want to continue to see that moving forward. But we have to see, Scott, AI start to benefit other sets. sectors in the economy. We're seeing an industrial, certainly, this data center build out, and a lot of this CAP-X is ultimately leading into industrials turning into revenue, but I want to see more sectors.

Well, you're telling me you're not seeing it in health care? Health care is up 5% in a month. It's up 25% over the last 12 months. It's got to be one of the key beneficiaries of all of the AI that we're talking about every day. And I think the market's finally figuring that out. The market is seeing it, but I want to see more comfort. I would like to see profit margins across the board, outside of tech, outside of mega-cap tech in particular, continue to move higher. And by the way, we are constructive on the market at these levels, and we think there is continued opportunity, but I am a little bit nervous about higher interest rates. I mean, we did. I mean, there was a stat the other day from bespoke on how gross margins are

the beats that they have or the growth rate was the highest that we've seen in some period of time. You're getting that. We're getting that. We're getting it now. I don't know. I don't know. I don't know. I don't know that we're there quite yet. I think you're still seeing the largest companies in the S&P 500 really bring up the overall index. There are still sectors outside of technology that haven't necessarily seen gross margins come up to these levels.

Look, I think we're moving in that direction. But in order to have more confidence, more conviction in this, we have to see the rest of the economy start to benefit from this AI near. All right. We'll leave it there, Joe. Thanks for clapping. And the market on the claps for certain. We'll be read, obviously, today.

Not by all that much outside of the NASDAQ, the Russell. The two places more acute, clearly in the reaction to a backup in years, a 30-year, 10-year, remit.