Closing Bell - Closing Bell 9/11/23

Episode Date: September 11, 2023

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

Welcome to Closing Bell. I'm Mike Santoli in for Scott Wapner here at Post 9 at the New York Stock Exchange. This make or break hour begins with stocks recapturing close to half of last week's losses as buyers reach for those familiar huge cap growth stocks. The S&P 500 nosing back above its 50 day moving average after the path was cleared by pullbacks in the dollar and oil prices as Treasury yields hover below recent highs. That's ahead of the big Apple iPhone launch and CPI report coming in coming days. And coming up, find out why the CEO of one of the biggest banks, J.P. Morgan, the biggest bank by market value, is saying he would not be buying bank stocks right now. Those details are straight ahead. But first, our talk of the tape. Will this week's crucial catalyst tilt the

advantage toward bulls or the bears with the S&P 500 stuck in a sideways range since mid-July? Here to help sort it all out, our CNBC contributor Bryn Talkington of Requisite Capital, JPMorgan's Jordan Jackson and Citi's Scott Cronert. Welcome to you all. Bryn, you know, you would have thought perhaps that on Monday of this week, with a lot at stake in terms of these announcements coming, maybe the market would just sort of idle and not do much. We're making a little bit of upside progress. What's your read on the action and whether, in fact, implicitly the market is in the soft landing camp? The market right now is definitely, it has been in that soft landing landing camp i think that

at the beginning of the year consensus that we were going to go into a recession and as that has obviously come off um as a probability this year then we've had a huge re-rating and so i think that unless we see the 10-year firmly go above four and a quarter, the two-year go firmly above five, as we still bounce around those levels, I think the market remains in the soft camp landing. But I do think that as we get further into the end of the year, next year, there's still so many cross-currents between the consumer balance sheet running low, consumer credit defaults kicking up, while at the same time, Mike, the Atlanta Fed is saying we're going to have a close to a 6% GDP print at the end of the year. So lots of cross-currents for us to debate, but right now the market is definitely in that soft landing camp.

But I do think September and October, as is relevant or as is typical for history, will still be bumpy. Yeah, well, it's working out that way, although the bumps haven't been all that uncomfortable, at least not yet. And Jordan, you know, Bryn mentions a bunch of these headwinds that do sit out there. You know, you have a potential disruptive UAW strike. We talk about a government shutdown. We talk about student loan repaintment restart. And then, of course, a little bit of stress showing up in have a potential disruptive UAW strike. We talk about a government shutdown. We talk about student loan repaintment restart. And then, of course, a little bit of stress showing up in pockets of the consumer. At the same time, the economy seemed to have a lot of momentum through July.

So maybe all that boils together to be a relatively comfortable growth rate. And of course, we have the Wall Street Journal over the weekend pointing out that the Fed seems like it's very patient and is willing to keep rates here for a while. So how does that all net out to you, Jordan? Well, you know, I think you've highlighted all the dynamics pretty well. There's a lot of cross currents at play. We could be entering into a period in which, you know, the consumer starts to come under pressure. But businesses have already done a good job preparing for this

pending recession. And they've shored up their margins. They've shored up their balance sheets. And so as the consumer potentially comes under pressure, you may see business investment beginning to start to pick up. You're now seeing Inflation Reduction Act and CHIPS money beginning to flow through into the private sector, and that's supporting the investment spending. Housing can't really get much worse at this stage. And so you're probably seeing a little bit of a bottoming out and a slight reversal, especially if we get a bit of a reprieve in mortgage rates. And so while the consumer may be coming under a bit of pressure, you could see other parts of the economy doing OK. And that

allows growth to kind of slide down to maybe a subtrend pace over the first half of twenty twenty four. But we don't dip into a recession. And I think that's what all risk assets, most risk assets are hoping for, pointing towards when you look at equity valuations, when you look at credit spreads as well. And so, you know, again, markets are trying to balance the risk and thread the needle between a soft recession and a soft landing. Yeah, that is generally reassuring. And, Scott, I guess the question would be that if you agree that markets largely are now positioned for that type of relatively benign outcome, how does the risk reward look? In other words, is the direction of surprise to something nastier or something more positive?

Well, I think to the earlier point, we've been pricing in soft landing since the first part of June. And so the more you run that cyclical component of the market, the more you set up for a change in sentiment around this. So I think we have to consider this like through a more balanced lens. We're still approaching the high end or the peaking of the Fed rate cycle. We think earnings are going to continue to show through pretty resilient. But to the earlier point, I do think there's going to be some dispersion in terms of how economic impacts are felt through the market. So I think all told, I think the balance is still to the upside into the end of the year. And we're going to kind of

fall back on our ongoing view that the fundamental underpinnings for the S&P remain pretty, pretty positive at this point. Yeah, I mean, the earnings cycle, it's interesting because, you know, I think it's pretty standard to say, well, we're late in the cycle. Got to figure out how much more life is left. But, you know, Jordan, as you mentioned, parts of the economy maybe are at a different phase, maybe even kind of in the early rebound phase. Bryn, how does this all bear, do you think, on the growth stock leadership? Because that's still been a relative constant. Even this month, when you've had some chop in some of those names like NVIDIA, you are seeing leadership today, again, by just the tried and true mega caps. I guess on one hand, it's simply that they're less cyclical. They're obviously huge market weights. But on the other, they have this other energy source, which is AI and other disruption.

I think that if you take them as a whole, what's interesting, if you look at Goldman Sachs, I think they've been really good at looking at earnings this year around 224. I think earnings next year is in 235, 237. Actually, the biggest sector for growth next year from year over year is technology up looking to be 10% earnings growth. But I think that if you parse through that, really what you look at the individual names, I think where you're going to see revenue top line growth is probably from NVIDIA, is from Meta, and Microsoft. The other names like Apple, Apple specifically, have been much softer on that top line and have really just used that bottom line, reducing that earnings per share, reducing that per share.

So I think ultimately, as we're at the higher end of the range, you really want to see with these big mega caps, that revenue number, discreetly by name start to actually improve. Otherwise, I think those individual names would be fairly valued over the next three to six months. Scott, I know you've done some work on the growth versus value dynamic and maybe why there's more resiliency in the overall S&P 500, but also how growth stocks or the companies themselves may be not as vulnerable to a higher yield environment. And this is something I've been trying to isolate for a while. You mentioned they have huge piles of cash at which they're

earning, you know, 5 percent on, let's say, which is an offset, at least to some of the valuation effects of higher yields, I suppose. I think what we're suggesting in here is that the maximum shock to the system was last year going from negative real rates to positive real rates, and that as we move to a higher for longer Fed discussion point, there's an element here where it actually may be supportive of the growth side valuations. Why is that? To your point, Mike, I mean, heck, our growth cluster per hour work is 53% cash to debt. That's much higher than, say, the defensive part of the market or the cyclicals part of the market. So what ends up happening here is that these companies have done a really good job of

extending maturities at low rates over the past couple of years. They got exceptionally strong cash generation capabilities. And so we think as you look forward to a higher for longer Fed possibility, these companies might actually surprise folks by proving resilient on the valuation side. And all of this kind of sets up for what we think is going to be a really important story going into next year. And that's the very strong free cash flow generation coming out of this part of the market. Yeah. And I would note that almost every valuation metric now versus history makes stocks look relatively expensive, I think, except for free cash flow yield. So it does seem like there's something different about, you know, the way that the profitability of companies today that

might be supportive. Jordan, in terms of the CPI number this week, what do you think the market sort of needs to see and hear about that? Where do you think the disinflation trend sits right now? I would point out that, you know, the CPI numbers have been coming in relatively close to forecast. So we're out of that shock mode that we were in last year with inflation. No, I agree. Unfortunately, though, I do think the headline number is going to bounce back a little bit more than maybe what markets are anticipating i mean now oil prices are are up about north of 20 percent since uh the beginning of july and so we could see another move higher in the energy component of inflation i'm seeing uh you know month over month number six seven tenths of a percent increase uh in energy

that could push the headline year over year figure up to 3.5%, potentially 3.6% that we see on Wednesday. So that might not be a welcome development for the market, but I think you will see core inflation continuing to come down, being driven down by airline fares as well as shelter. Shelter has got to start disinflating and potentially outright deflating for us to get that meaningful move lower in some of those core inflation numbers. And in fact, I think over the balance of the year, we could be in an environment where a headline bounces around between 3% to 3.5%, while core continues to march down closer towards the Fed's target.

So I think the markets will take this CPI report in stride. Maybe it's a little bit bearish. We'll need to see what the PPI data comes out on Thursday will signal, as well as retail sales. Obviously, a lot of this, the engine of growth so far has been consumers and retail sales will give us a more up-to-date look on how consumers are spending. Yeah, there's no doubt about that. That's now very much in the spotlight. Brent, I do need to get to you on Tesla today because you got, you know,

this upgrade out of Morgan Stanley. The stock responded to it, which I always think is kind of the first test. You know, it's one thing to have a very bullish long-term call. Another thing to see if the market embraces it. We've been at these prices not too long ago, but I'm just wondering what you think

about the prospects for, you know for this company getting revalued away from whatever, to whatever degree it's still valued as a car company, which is arguable, whether this all makes sense. I think, first of all, you know, Jonas does great work, the analyst, you know, on Morgan Stanley. So, number one, I think he has a lot of credibility. Number two, don't forget, if you look at Goldman Sachs' hedge fund shortlist, Tesla, I believe, is number one on hedge fund shorts. And so I think you have a credible analyst comes out with, we'll say, a re-rating on the potential of Dojo to create efficiencies within the business. And then all of a sudden, you have a short squeeze. And so I think it's definitely an amplified return today because of that heavy short position.

But I think ultimately, Tesla definitely is a hardware company. They make cars. Those are very, very expensive, heavy manufacturing. But in addition to that, they are a software. They've always talked about AI. There is no possible way you're gonna even remotely have self-driving unless

you have a core competency in AI. And Tesla's talked for a while about Dojo, and they've presented it before about the efficiencies and the dollars it could create. So I think you're now having an analyst did his own work, dug in there, and also agreed that, hey, this could create some real value long-term. But I think ultimately today is more about short covering because the hedge funds, once again, shorting Tesla has been the consistent widow maker trade for years and years and years. Well, that's true in aggregate dollar value of the short position just because it's such a huge market cap. But it's only three percent of the float is short. It's less than one day's worth of volume. So to me, it has to be people getting you know, getting excited, correctly or not, about this idea that you said,

which is that there's an AWS inside of Tesla. I think, to me, the argument is, who says it's not OnStar inside of GM? I mean, we don't know if this is going to be, you know, a profit stream that we want to put a huge valuation on. Yeah. I don't think you can remotely compare GM and Tesla at all, by the way. I mean, so the and I also think you have, you know, Walter Isaacson's book is going to be coming out tomorrow on Musk, which is going to create even more more frenzy. But listen, this is a very Elon is so innovative. He's an engineer. He's a creator.

So I'm just saying that I do think you have a short squeeze. I think you have a very credible analyst putting some math around Dojo. And so I just think you constantly have this give and take about Tesla bulls versus bears. And today the bears are winning. Ultimately, we'll probably go back to the margin story when their earnings come back, come out next quarter because we know their margins are going to come down. And so maybe the stock sells off, you know, going going going into that. Sure. Now, without a doubt, we've seen many, many, you know, turns of this bull bear cycle in this stock. And as I mentioned, it was a two hundred eighty one dollar stock not that long ago.

It's in the mid 270s. Do you want to get Jordan real quickly to how you bring things down to a bottom line in terms of how investors should be positioned in terms of risk assets. You know, we talked about how the market seems to be positioned for something relatively friendly. Do you think that that's that's truly going to be what we get in markets or price? Right. So I think tactically, right, when I say tactical, I'm thinking over the next three to six months. I'm probably looking at a 50-50 stock bond split. You know, I think the risk reward here by owning a little bit of duration in an environment in which, you know, inflation, particularly core inflation, will continue to moderate. Growth is going to slow. You know, obviously the Atlanta Fed's GDP Now tracker calling for boomy growth in the third quarter but i think that's going i think it's overstating still the underlying momentum in the economy especially uh... no one met in the labor markets

uh... when you look at non-farm payroll growth that three-month moving average now down to about a hundred fifty thousand opera per month so you know how you balance that out maybe the feds that stays on pause i do think november is still alive meeting for another hike but that that that the chorus from the Fed is next year, they're going to be cutting rates. So you combine this. I do think there is scope for yields to move lower. That means bond prices moving higher. And then in that environment, you get the other side, the other 50 percent stocks. That's good for valuations, right? Lower

yields are supportive for valuations. So I think it'll be a little bit choppy over the next couple of months here. I think growth will lead the charge bit choppy over the next couple of months here. I think growth will lead the charge in the market rally once the Fed signals a pause to potential cut. But then after that, the Fed's not going to zero, right? So you're going to want a good balance between value and growth stocks. And I think at the beginning of next year, that's when I'm flipping back to that 60-40, maybe 70-30 split. Gotcha. Okay, yeah, it's not these days a zero-sum game between

stocks and bonds. And Jordan, we won't make you answer for your boss's views on the bond market, even though you like the duration right here. Jordan, good to talk to you. Scott, Bryn, you as well. Thanks very much for the chat. As I was mentioning, J.P. Morgan, CEO, Jamie Dimon, sounding off on the regulatory headwinds for bank stocks, along with thinking that yields are going to be going a good deal higher. Leslie Picker here now in Post 9 with the details. Hey, Leslie.

Hey, Mike. I'd be hard-pressed to find a bank CEO these days who is not lamenting the regulatory headwinds these days. But Dimon spoke at the Barclays Financial Services Conference a short while ago in a fireside chat. The conversation quickly moved to the topic of regulation and the new Basel III endgame rules, which Dimon called, quote, hugely disappointing. He said tighter rules risk moving more business outside the regulated banking sector and widens the gap between the U.S. and European firms. Then he jokingly posed the hypothetical question about what regulators think these higher capital requirements mean for bank investors. Honestly, like, say, do they want banks to be investable again?

You know, I, you know, look at my money. I'm not going to sell my stuff like that. I think we're going to navigate it. I wouldn't be a big buyer of banks. Look, I'd be no better than Equal Way, whatever you call it. Obviously, some laughs there. But since the details of the Basel III rules were revealed in late July, the six largest banks have traded lower in part due to concerns that regulation will dent profitability, move business outside the traditional banking sector. We've seen that already with private credit, mortgages and the like. And so it's a real thing. For sure. It's a real thing. And the market is definitely sort of taking that to heart to a fair degree as they valued these companies. On the other hand, for regulators, just to answer Jamie's initial point, it's not really in their mandate to make these bank stocks

investable. They want the system to hold together okay. And obviously, ultimately, you want them to be viable and you want to make sure that shareholders don't lose everything because that would mean bad things for the system. But they don't necessarily want to ensure huge profitability. Right. And then I think the question is, and Diamond touched on this in the fireside chat, is do they want no bank to fail ever? In which case, higher capital requirements, you need to do something other than just increase the capital requirements on some of the largest banks to ensure that. But, you know, he and others have really pointed to what is the problem that they're ultimately trying to solve with this. Because as we saw with Silicon Valley Bank, it wasn't necessarily those that are the most capitalized that had the issues. It was the ones that were in that middle tier that weren't subject to the greatest extent of regulation that did see ultimate failure. And those are the ones that are

now also subject to these rules. But the big six, you know, the those systemically important banks are. Yeah, they held up fine. They held up fine. And it's almost like, you know, like the destiny of they're going to be utilities. And that's kind of the way that they've been treated to some degree. On the other hand, regulators not going for the potential fix of just increased concentration, allowing a bunch of mergers to happen. So it seems there's some ambivalence there. Yeah. And that's creating a challenge, especially for some of these regionals and especially for the super regionals that are really in that spot of being too big to merge with others, but too small to really absorb some of these capital requirements.

And so a lot of this requires bigger risk controls, you know, more in the way of a capital buffer. So all of these things affect their balance sheet. And, you know, merging could be a solution for that. But they're not able to do that in this current environment. No. Seemingly kind of trapped in the middle, as often is the case. Leslie, thanks. All right.

We're just getting started. Up next, the final countdown. We're less than 24 hours away from Apple's latest product event with a new iPhone and possible price hikes expected to take center stage. We'll break down what investors should be watching. That leads us to our question of the day. How will Apple stock react to tomorrow's iPhone announcement? Head to at CNBC closing bell on X to vote. We'll share the results later in the hour. We are live from the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. Qualcomm shares are higher today after a new agreement with Apple. Christina Partsenevelis joins us now with those details. Hey, Christina.

Hi, Mike. Well, Qualcomm will continue to supply Apple with modem chips until 2026. As well, the patent licensing agreement stays the same. So that means two separate streams of revenue from Apple to Qualcomm. And shows Apple still hasn't figured out how to make those same modem chips as Qualcomm. But you can see that the stock has given up earlier highs in the day. It was up about 8 percent. There's two possible reasons for this.

Firstly, the terms of this new deal are similar to the last deal, but some analysts suggest Apple continues to get favorable pricing, so may not be as lucrative for margins. Secondly, Apple is still working on its own modem chip. So that means eventually, possibly in two years, that seems to be the rumor, it will get it right. And there goes Qualcomm's largest customers. So for now, the two are working together, putting aside their differences. And I say their differences because there were some lawsuits back in 2017 or Apple ditching Qualcomm for Intel back in 2019 in the middle of your screen in July there.

Their current deal right now lasts until 2026, but even in 2026, Qualcomm says it will provide 20% of Apple's 2026 iPhone chips, not 100% raising concerns about exclusivity. I can't say that word for some reason. Gotcha. Yeah, Christina, so maybe a reprieve for Qualcomm, but not fully in the clear longer term when it comes to the Apple relationship. Thank you very much. Well, tomorrow, Apple will hold its most important launch event of the year.

It's expected to unveil the new iPhone 15 and Apple Watch models. Joining me now to discuss is Tim Long, Managing Director and Senior Research Analyst at Barclays. Tim, good to have you here. I guess, first off, what do you expect out of the product launches? And then how much is this going to move the needle? I mean, one of the storylines with Apple has been how, you know, the upgrade cycle has been kind of elongated and smoothed out over time. So what do you expect from this generation? Sure. Thanks for having me. I would say in general, we're looking at this cycle that we'll hear about tomorrow more as the traditional S cycle. So we think there'll be

some iterations around design. The usual battery, camera, processor, things like that should get better. I think a lot of the discussion will come around two things. One is pricing. We do think, particularly on the pro models, given some of the new technology in there and inflation, that we will see some increased pricing. And the second will be availability. We picked up, number one, some weakening demand, but number two, some supply chain issues. So we do think availability might be a little bit of an issue that people might read into as far as how demand is going for this new cycle. And what do you think the price sensitivity really is for, I guess,

the higher end phones? Are they pushing the limits? Do they feel like, you know, installment plans mean that people will just get the new one when it's out there yellow i think apple has proven a lot of industry folks wrong over the years uh... by showing that they have really strong the last this city i think the the asps on average are up four to five percent per year for the last decade that's normally didn't happen in the handset smartphone world. So they are

proving the power of the ecosystem. However, what that does is, particularly in a rough macro environment, on the fringes, it does impact demand. So I think it's for the core base of Apple fans out there that like to get the new products, they'll pay up for it. But when it comes to competing for that mid-tier of the market, maybe with some higher-end Android phones that might be cheaper, it's a little bit more challenging. So I think over time, we do think that somewhat limits the addressable market if they keep moving up market. But in reality, it's worked for them. They've been able to push forward pricing. This might be a little bit more dramatic, again, given the macro backdrop that we're in right now.

Yeah, I guess that'll be the test. I mean, the stock has performed, even with this pullback it's had, pretty severe, a little sharp pullback. It's up almost 40 percent this year. And that's without really any consensus expectations of earnings growth for the current fiscal year. It's unclear exactly how fast they'll go next year, even with services and things like advertising doing well. So how do you view the stock as it's positioned here with all that? Yes, it's a little puzzling. I mean, we're expecting to see December down revenues year over year for the fourth quarter in a row. Our model only goes back 20 years,

and that hasn't happened in the last 20 years. So we're in uncharted territory here from a performance standpoint. We're hearing, you know, picking up a little bit more caution. If you look at what's going on in China, there's been some competitive phone launches, and we've just seen a lower sell-through. So we think demand is a little bit of an issue right now. So we're on the sidelines here. We're showing a little bit more downside than upside. Also, we did talk about this Google-Apple-TAC case that's going live tomorrow as well, Department of Justice. So we do still see some real risk to some of those line items in the service business, which obviously gets Apple a really deep, deep multiple that it enjoys today.

Right. Yeah. So you refer to this case where, of course, Google pays Apple a large sum annually to be the default search provider on iPhone. So how do you think that plays into this thesis here? Do you think there's genuine risk of that revenue stream going away or being diminished? Yeah, I think there is. It's very difficult to forecast what's going to happen in a case like this. There have been two places in Europe and in India on Android, not on iOS, where the government has said it's not allowed to have a TAC that's traffic acquisition cost. So you're not allowed to pay to be the default browser. So we have seen some governments make moves on this. It's a high stakes game. We think it's

$20 billion of revenues to Apple. It's pretty much all profits. So it's about 10 percent of their revenues. Of course, that is a cost item for Google. There's a lot of moving parts here. Ultimately, maybe Apple wants to do their own advertising and monetizing search themselves. So that might be something in the future that they vertically integrate into. But for now, this partnership is a meaningful one for both parties. And any risk to it is a material hit or at least risk to Apple service numbers. Yeah. Even for Apple, $20 billion is a lot of money in a given year. Tim, thanks very much. Appreciate the time. Tim Long.

Thank you. Straight ahead, green shoots starting to sprout. While a top technician is flagging three charts, he says could signal more upside for stocks and the key levels that investors need to know. He'll make his case coming up next. Stocks in the green across the board to kick off the week of trading. My next guest says there may be some downside risk ahead for the S&P along the long and winding road to 4800. Though he adds technical green shoots are starting to sprout.

Let's bring in John Kolovis, chief technical strategist at Macro Risk Advisors. John, it's good to see you. I assume if you think ultimately that it could be a long and winding road to 4800, that's basically the old all time highs. Question being, do we have to have some kind of a further pullback along the way? What's the current evidence suggesting to you? Well, thanks, Mike, for having me on. Great to see you as well. What I'm seeing right now, like I said earlier, is that 4800 is approximately where I think the S&P should get to by the end of the year. The primary technical green shoot that I'm seeing right now, besides trend just being positive, right? From a very simple standpoint, there's a series of higher highs and higher lows well in place since the October bottom.

So trend is positive, right? But now we're finally oversold since the market peaked in July. We were going to get a pullback. It didn't matter if we were a bull or a bear. We got it. since the market peaked in July. We were going to get a pullback. It didn't matter if we were a bull or a bear. We got it. Now we're oversold with only 30% of the Russell 3000 above its 50-day moving average. And that should be oversold enough,

assuming that we're still in a bull market. Yeah, exactly. Assuming we're in a bull market, these are the kinds of conditions that are pretty good entry points or places to buy the dip. I guess the question is, how do you make sure or at least get the odds in your favor that it's still a bull market when you do see some kind of signals of late cycle conditions developing? Right. So a couple of things. So, yeah, so it's a mosaic,

right? So if equities lived in a vacuum, I think it's a relatively easy call to be quite frank with you. Seasonal weakness aside, that's quite normal. It's looking more at the macro that it makes things a little bit more challenging. The dollar's too strong. Rates are too high, right? But what's interesting here, though, Mike, is that the volatility of that is well behaved. So yeah, dollars going wrong way, rates are going wrong way, but they're not explosive moves yet. That's a good reminder. Last year, the extreme bond market volatility was something that really the stock market

could not really kind of come to terms with for most of the year. I know that you also have some work about what happens after the final Fed rate hike in a cycle. What does that mean for the current moment? Right. So typically what happens after the Fed is done hiking rates, equity market has a tailwind for about seven months or so, because on average, around seven months after that final hike is when they start cutting.

Right. It's typically a tailwind. And if you do my math real simple, I think that gets us to about February of when the market should start to wobble a bit. But what's interesting is that if we look at data going back to 1929, where we include other inflationary regimes or higher interest rate regimes, there's only about a two-month window, right, where the markets have a tailwind. And That's kind of right where we are right now. So when I go ahead and I look at where the dollar is and where rates are and now this technical green shoot, I really do think that Wednesday is going to be a huge, huge catalyst for the market, not just for the rest of the quarter, but for the rest of the year. So basically, anything deeper and have an oversold condition is going to start signaling to us that, hey, maybe we are just in a cyclical bull within a secular bear.

OK, so maybe it can actually be a swing factor on on Wednesday. Just quickly on the dollar, you mentioned it, you know, kind of going in the wrong direction, although it is pulling back the U.S. dollar index, pulling back today. Some, you know, Asian countries trying to defend their currencies. How is that situated? Yeah, so my call is this. Dollar peaked late last year at 114. We're going to continue to push lower down to around the 95 area. So it's a longer-term downtrend.

But to be honest with you, from a technical perspective, the rally since July has been a little bit too strong for my comfort. But do note at the chart where it is. While it's a strong rate of change, the trend is still intact. So you really have to see it break above that 106 level to change the character of the dollar. So what would that mean, Mike? That would either mean that the dollar put in its low and it's going to make new all-time highs, or it just may mean that we just need to extend this rally to the 110 area. And the way I'm seeing things and that would just perpetuate this decline in equities. Forty three hundred is an important support level that has to hold on this pullback. Otherwise, we're going to have to look at an even windier road to forty eight hundred with a test of the 200 day.

So this forty three hundred areas is key to hold over the next week or so. Yeah, seems like a pretty delicate balance. It's just a few percent down to 4,300 from here. John, thanks very much. Good to catch up with you. Good to catch. Thanks. John Clovis. All right, up next, we're tracking the biggest movers as we head into the close. Christina Partsenevelos is back with those. Hey, Christina.

Well, does Smucker's Jam and Twinkies sound like a match made in snack heaven? Doesn't matter if you like it or not. The merging of both those brands is worth billions. I'll explain next. 17 minutes until the closing bell. The index is still sitting on some decent gains. Let's get back to Christina Partsenevelos for a look at the key stocks to watch. Thanks, Christina. And that stock is Carvana because it's higher after S&P Global

upgraded its credit rating, saying the company's debt restructuring has reduced its burden and temporarily improved liquidity. But S&P still has a negative outlook, saying Carvana's capital structure remains pretty unsustainable due to its weak earnings profile. You can see, though, shares are up about 8.5% right now, trading at $15.94. And now for that food story. J.M. Smucker is buying Hostess for $34.25 a share in a cash and stock deal valued at around $5 billion. Shares of Smucker's are down on the news, while Twinkie Maker Hostess hits an all-time high of about, let's see, Hostess. It was $33.58. It's already come down, but still up 20% right now. And for who would have thought, I should say, Twinkies and HoHos were this valuable,

over $5 billion, the merging of these two brands. I don't know. A lot of people probably place great value on those things. The market's saying maybe it's a full price, though, based on how Smuckers is trading. Thank you, Christina. Last chance to weigh in on our question of the day. We asked, how will Apple stock react to tomorrow's iPhone announcement? Head to at CNBC closing bell on X. We'll bring you the results right after this break. Almost as many, 32 saying a sell-off and about 31% say no impact at all. Very balanced setup, it appears appears going into that news.

Up next, a major test for the IPO market as Instacart kicks off its roadshow with a newly discounted valuation. Plus, Oracle set to report quarterly results in just a few minutes. We have a rundown of what to watch when those numbers hit in overtime. That and much more when we take you inside the market. We are now in the closing bell market zone. Julia Boorstin is here to break down the deal that ended Disney and Charter's dispute. Here, Drabosa brings us the latest on Instacart as it prepares to go public. And Christina Parks-Nevelis shares what to watch out of Oracle earnings after the bell. Welcome to you all.

Julia, bring us up to date on this deal that was announced just hours ago. Well, Mike, just in time for Monday Night Football. The TV bundle will live on thanks to this deal that Disney and Charter call transformational. It will deliver a huge boost for the reach of Disney Plus ad-supported tier. It will be included for a Spectrum TV Select video subscribers packages. Now, Charter will pay a wholesale fee for all of its video subscribers, and they're also gonna be paying for ESPN Plus

for all of its Spectrum TV Select Plus video subscribers. Now, when ESPN launches its direct-to-consumer flagship service that's in the works, Spectrum will offer it to its select subscribers and pay Disney for it. Plus, Charter says it will sell all of Disney's D2C services to its broadband-only subscriber base. Now, sources described this deal to me as a win-win and Guggenheim writing that this positions both Disney and Charter to drive value amid this shift towards streaming in a digital future. Mike?

You know, Julia, you mentioned, OK, that the bundle lives on, maybe only slightly exaggerating what the stakes were here. It did occur to me, though, while this dispute was live all this month, it was both the media companies, the traditional media companies that provide these networks, as well as the cable distributors. Both their stocks were on the weaker side and underperforming. So it seems that the market felt as if there could be a lose-lose outcome if it went a different way here. Well, it could be lose-lose, but also the question is, if people want to watch live sports,

where are they going to go? Who are they going to pay for it? Disney has said explicitly it is working to bring its ESPN channel as a flagship direct to consumers as a streaming service. Once that happens, everybody understands that's going to change the game, no pun intended. And I believe that that's really what precipitated the heated nature of this battle between Charter and Disney. They figured out a way to effectively bundle together, not to overuse that word, but to bundle together the linear experience and the streaming options to make sure that Charter is a distributor of both and that if you're paying for pay TV,

that ESPN will still be part of it. I do think this is going to really set a precedent for the kinds of deals Disney is likely to make in the future. Yeah, it would absolutely seem to be a template there as everything kind of, I guess, blends back together in some fashion. Julia, thank you very much. Deirdre, Instacart, we have some ballpark numbers as to what the valuation might end up being.

What's it all mean? Well, it speaks to this idea of valuation disparity. So that ballpark number at the top of the end, that's less than $10 billion. Consider that a few years ago, Instacart did a funding round in the private markets that valued it at nearly $40 billion. So this is a far cry from that. And it means that a lot of other startups that may be in the IPO pipeline are thinking, should we go or shouldn't we go, are going to have to come to terms, come to reality. Instacart is taking this huge down round in its IPO, and they may need to as

well, especially if they put off funding or put off an IPO. So whether or not this could open the floodgates and see more IPOs come down the pike, that's very much up for debate because you're going to look at startups that have not taken that medicine, mark down their valuations and see Instacart go just a fraction. And by the way, Mike, it's not just Instacart, it's Klaviyo as well, which is a software company that is also expected to IPO below its last valuation in the private market. Arm, though, is a different scenario, right? We hear about how it's oversubscribed. It's a little bit different because it was owned by SoftBank. But investors and other companies are going to be putting all of this together for clues as to if they'll go or if they should push

their companies to go public. Well, for sure. I mean, you have here the IPO ETF, but also just based on when that peak valuation in the private market was given to Instacart, you know, two, two and a half years ago. If you look at publicly traded comps, whether it's DoorDash or Shopify or Etsy, generally e-commerce, I mean, their public valuations are down just about as much. So maybe this is just mirroring that reality. Yeah. And you know what? I think that bankers would say this is why you go public. So you get this real time feedback. But in the private markets, you don't actually have to mark down your valuation. It's not mark to market, right? It's whenever you raise another round of money or as Instacart did, they did it themselves internally.

But you're seeing the private markets lag the public markets because a lot of CEOs, they want to believe that their company is still worth more. Maybe not the peak of 2021, but that's why Instacart is so interesting. It's nowhere near the peak. That's right. And I mean, I guess the other dynamic here is it's been a pretty successful private company as these things go. For a while now, you have employees that have a ton of equity struck at various values. It seems like there's an imperative to get this public mark and create some liquidity, but it could be kind of painful along the way. Absolutely. I mean, this is one of sort of the last holdouts, right? One of these companies that was born in the gig economy shortly after the 2008-2009 financial crisis and sort of missed its chance back in 2021. So now it has to go out the gates. And you can debate whether or not that

was a good thing or a bad thing. But you take a look at maybe its closest comp, which is DoorDash, right? Still trading below, well below its IPO price. It's actually trading at a premium to what this valuation implies for Instacart, about three and a half times EV to sales. Instacart is around two and a half, and that's lower than even Uber, which is at three times. All right.

Dee, thanks very much. Christina, Oracle on deck, kind of has the slate to itself today. What do we expect? Yeah, it's quickly turning into the cloud player number four, and that's why growth expectations are pretty high going into tonight's print. Oracle is also getting a shout-out from NVIDIA

on its latest earnings call. NVIDIA lumping Oracle Cloud with the bigwigs, like AWS, Google Cloud, Meta, Microsoft Azure. Oracle is a much smaller player than all of these guys I just listed, so making this shortlist is a huge testament to Oracle's GPU capacity. That VIP access to NVIDIA GPU chips,

especially during this current shortage, will only help its cloud segment, which has been growing 50% year over year for several quarters. The Oracle Cloud Infrastructure business, or OCI as many call it, may be a smaller portion of revenue, but it's seen as a big driver of growth,

especially since it caters to AI. And recent commentary from competitor Workday suggests back office software spending remains pretty strong, which should bode well for Oracle. Overall, though, the valuation of this company is 22 times forward earnings or forward price to earnings, which seems not overly demanding, according to Barclays analysts. Oracle shares, as you can see, are up about 55 percent year to date. But the majority of analysts on Wall Street, about 52%, still think this company is a buy, even with this run up in the stock. Yeah, and certainly 22 times earnings is maybe not demanding for a pure AI company.

But I tell you, this reminds me a little bit of a Broadcom or maybe a Dell, which is a kind of an old tech player that has some exposure to this new trend. The question is whether the market is really going to give it more credit for having that leverage to AI. The Dell comparison is spot on, especially as Oracle tries to take its legacy customers and move them into the cloud. That process hasn't been smooth for them over the last three years, but OCI, that business I just told you about, seems to be their future bread and butter to do so. Absolutely.

Christina, thanks very much for that setup. As we head into the close, you have the S&P 500 still sitting on a gain of about two thirds of one percent, though it is a very top heavy move. Tesla, Amazon, Microsoft, Meta delivering the majority of that. You see the Nasdaq up more than one percent, the Dow up only a quarter of a percent, while the equal weighted S&P is up just about 0.15%. Ringing the bell today at the New York Stock Exchange, Pensions and Investments celebrating the inaugural influential women in institutional investing as Answer the Call charity rings the bell at the NASDAQ.

That's going to do it for Closing Bell.