Closing Bell - Closing Bell: Alternative Investing, Energy Sector Declines & Chipmakers Drag Tech Lower 10/15/24

Episode Date: October 15, 2024

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

All right guys thanks so much welcome to Closing Bell I'm Scott Wapner we're live today in Beverly Hills we're at the Case Alternative Investment Summit where we have some big interviews coming up this hour. Case founder Matt Brown he wants to bring alts mainstream and he's going to be with us in just a bit along with Franklin Templeton CEO Jenny Johnson whose firm is now one of the largest in that fast-growing space. We'll show you the markets here with 60 minutes to go and regulation we've been given a little bit back today after yet another record-setting session One of the largest in that fast growing space. We'll show you the markets here with 60 minutes to go in regulation. We've been given a little bit back today after yet another record setting session. NASDAQ's the worst today.

Dow's being dragged lower by UnitedHealth and that's following the earnings report. Goldman Sachs higher after its beat. It's been fluctuating positive, negative, but we'll watch that over the final stretch. I mentioned NASDAQ today. Well, it's a big day for Apple, which had a new all time high and it is helping to offset weakness in NVIDIA shares. There is the big drag on tech today, down about five percent. It does take us to our talk of the tape, the road ahead for this rally. Let's ask our panel. Ayako Yoshioka is senior portfolio manager with the Wealth Enhancement Group. Liz Young-Thomas, SoFi's head of investment strategy, and Bryn

Talkington, managing partner with Requisite Capital and a CNBC contributor. Ladies, good to have everybody here. Aya, I'll turn to you first since you are sitting here at Case. I love your notes. I mean, you say what's not to like in this market. That's really how you feel? Absolutely. We're at all-time highs here in the markets.

The economy is doing really well. We had a great jobs report. Inflation was a little warm last week. But, you know, all in all, you have the Fed cutting rates. The Fed focused on growth. And the biggest issue is probably just valuation. All right. So let's kick this around more, Liz.

You know, is that how you see it? What's not to like in this market? Because we've heard a lot of concerns from people. The market's been thrown a lot and it's dealt with everything. Yeah, it has dealt with everything. I think there is a lot to like, obviously, in the optimism that we're hearing from investors and that we're seeing in the stock prices. I think the biggest thing to like about it right now is that tech isn't necessarily the one that has to lead the way in order to raise prices. I remember not too long ago asking a lot, can the market go up without the Mag 7?

And now I think we're proving that it still can go up. The difference in this period right now is that investors just have to get used to a different clip of how quickly it will go up. So perhaps we're not going to see double digit returns every few months like we've been seeing, maybe more normalizing in the size of returns. But I think that's OK. And with earnings growth normalizing as well, I think this sort of period where we're coming back down to earth, both in inflation, in demand, in earnings growth, in stock price returns, is healthy for this economy. Bryn, you know, it really has been a resilient market. I feel like, you know, you'd have a big day, you'd set a record, you'd take a breather, you'd say, well, you know, what happens if this happens? And then the market just deals with it and keeps chugging higher.

Yeah, I mean, the market continues to punch above its weight, right? You think that after all we've been through the past few years, we wouldn't be where we are now. But I think that we've had earnings resiliency. You know, I'm a big proponent of don't fight the Fed. I think the direction of rates are lower, the speed and the velocity, not so sure about. I think today's a good example.

You have like a hiccup in energy for geopolitics, a hiccup because of ASML, but I don't think those two even remotely derail anything. And I think that at the index level, until the election is over and we can confirm gridlock, I think at the headline number, we're not going to do much. But I think underneath the surface, we're going to see the haves and have-nots. Obviously, ASML is a have-not today. But I think we're going to see a lot of volatility on both sides as these companies announce earnings across sectors. How are you, Aya, thinking about positioning within this market? You know, we're sitting here.

I feel like we have this debate conversation every day. Where best to position in the market? Stay with the mega caps overweight, or do you believe in the broadening? Do you go small? What's your thought? I think you've got to have a little bit in everything. So I don't think you can, you know,

not have some of those leaders. Tech has been a leader and it's likely to continue to be, but having that broader participation across markets is always really helpful. And, you know, the economy is strong. And so you want to have those forces that reflect that strengthen the economy. When you say the horses that reflect that, I mean, I think we'd hear from people, well, that means stay large in the cap space. How would you address that? So I think when you look at the economy, you know, over 40% of the economy is still sort of small businesses. And so I think you want to

be able to have that reflected in some of those small cap names that, you know, everybody knows the quality of some of those small caps aren't what they used to be. But I think having some exposure there is really helpful. And then same with international and emerging markets. You want to have some of that exposure just in case leadership does change at some point. Liz, how would you address that? We're best to be positioned now as some have tried to make this small caps call for a while. It hasn't really worked all that well, except for this week. But we're only two days in. Yeah, I mean, small caps have done this sort of fits and starts and these attempts at making new

highs, and they've failed every single time. So today we're seeing some life out of them, and I think that's important to watch. But there is a really big correlation between small caps and the labor market. So as long as the labor market can stay strong, or at least stay exactly where it is right now, small caps do have room to find more strength. What you want to see from small caps is you want to see them confirm the move that we're seeing in large caps. So you want to see large cap stocks rotate into more cyclical sectors if the economy is going to stay strong.

And if that holds, you want to see small caps also pick up and confirm that move. If small caps again fail to break out here, I think that's a signal to still be cautious and make sure that the portfolio is positioned with things in it that are defensive. And honestly, one of those things continues to be health care for me. And I think it can be offensive and defensive in this environment. Okay. so Brynn, play offense and defense for me. Give our viewers a way to play sort of both sides of the line of scrimmage. Yeah, sometimes, let me tell you what I don't want to own. I don't want to own China.

I don't want to own international. I don't want to own small caps, and I don't want to own Intel. Okay, so take those out. What I do want to own is I want to own the Qs. I like the S&P. We own the equal weight. And I think that what we like still is this free cash flow yield, which you can screen across sectors. So to Liz's point, there's a ton of great names in healthcare that have high free cash flow yield. I still like energy. I think with this energy

pullback, you're getting three to 5% sell-offs just today because energy broke 70%. That's just geopolitical posturing. Nothing's changed even remotely fundamentally with these companies. And so I just think take out, know what you don't want to own, and then from there, build a portfolio. And I do agree you want to own quite a few different things, but I still think RSP and the free cash flow yield help you own things outside of just the MAG-7 or the other big cap tech names that we always like to talk about. Do you want to respond to that where, you know, no China, no international, no small caps? Because, you know, there are a couple of places in there where you think our

viewers should have more exposure. Sure. I mean, I think positioning is important. So having some exposure, again, you never really know. I mean, China just went through and when they provided all that stimulus, you had those stocks up a lot. And I don't think you want to be completely naked there. It may not be like a long-term holding there, but I think having some exposure allows you to just capture some of that upside when it happens. I think, Bryn, the idea is, you know, I don't know what you think, you know, overall returns are going to be going forward, but, you know, I think there's a level of optimism that you can get better. Maybe you have to take on a little more risk,

but with that risk comes better returns in some of these international areas of the world. Well, I mean, maybe there's an individual name like Novo Nordisk, right? That's an international name. So we're looking at the index level. The reason why like international equities like the EFA, there's a whole group of people that like, these companies are cheaper than the S&P. Well, they're cheaper than the S&P for the last 14 years because there is no Silicon Valley in Europe. There's definitely not a Silicon Valley in China. I mean, if there is, they squash it down. And then, you know, like in a country like France, you can't fire anybody. And so you have these structural issues where these companies are not able to grow and innovate as quickly as the U.S.

And I just think, you think the U.S. has a lot of regulation. There is so much regulation in Europe. And I just think that is the reason why the multiples are lower. And I think if you buy the S&P, know that, what is it? I mean, Liz or Ayaka probably know better than me. 55% to 65% of revenues of the S&P know that, what is it? I mean, Liz or Ayaka probably know better than me, 55 to 65% of revenues of the S&P come overseas. And so I think also if you own large cap tech in the US, you actually get China exposure, you get international exposure. And I don't want to deal with the currency, which always can whip everybody around. So I like to do probability

investing. So I also want to stick in the U.S. and look for my value in like a free cash flow yield, which has some of the characteristics of an international, but I'm still here in the U.S. All right. We'll leave it there. Ladies, thank you so much. Aya, it's good to see you here in Los Angeles. Liz Brin, we'll talk to you soon. And we look forward to doing so. Let's go to Leslie Picker now for a look at how the banks are faring in today's session. The financials, Les, are in the green today. Tell us more. Yeah, it's a bit of a mixed picture for those that reported this morning. Citi shares taking a hit. So far, the only one of the large banks in the red on earnings, at least those that have reported so far. By most measures, Citi had a strong quarter. Revenue gains and positive

operating leverage in each of its five divisions and beats on the top and bottom lines relative to consensus. However, net income declining 9 percent due to higher cost of credit, the combination of net credit losses and an allowance bill contributing to a 45 percent jump in that cost of credit year over year. The firm also saying net interest income, the profitability metric for loan making, would be flat in 4Q. Bank of America getting the opposite response with CEO Brian Moynihan reiterating his view that NII bottomed in the prior quarter in Q2. And Goldman seeing the most modest move today of the three, despite a sizable bottom line beat and a profit jump. CEO David Solomon saying that he believes they still have some, quote, tailwind dynamics around investment banking activity. And Solomon added that even though banking revenue has improved, they're still below 10-year averages.

Scott? You know, Leslie, you left it in such a perfect place because I had a conversation a little while ago with Todd Boley here, who, like David Solomon, is pretty optimistic, actually, about what's about to happen in M&A and capital markets. I want you to listen to what Todd told me in our exclusive interview and get your take on the other side of that. I think we're in the process of having lots of M&A get started. I think we're seeing more and more activity. I think we're seeing people want to transact. People have to kind of get back to the transaction business.

So across our portfolio, we're seeing lots of kind of merger and consolidation discussions going on. I think some of them are in their earlier days, but I think the animal spirits are coming back and people want to get back to it. Leslie, what do you think? It's been a while since we've heard the animal spirits. Yeah, but we have heard about green shoots for quite some time. And I think most CEOs of these big banks would have thought that that resurgence in capital markets would have taken off in full force by now. One of the things that I hear when I talk to private equity executives, though, is that they needed to get inflation under control so that those portfolio companies could

do some forward planning before they sold stock to the market, before they sold the company to a strategic or another private equity buyer. All of those things were really important, not to mention the cost of financing needs to come down, which we are starting to see now that be the case. So a lot of consensus around early 2025 as a true revival here. But in the meantime, you already see shares of some of the bigger investment banks, Goldman, those that are much more exposed to this activity, as well as some of the boutique firms really taking off this year in anticipation of that. Got a lot of private equity folks wandering around the lobby of this hotel today, hoping that Mr. Boley is going to be correct. Yes. Leslie, it's good to see you. Thank you for your perspective.

That's Leslie Picker. Although it's been a great couple of years for returns in the stock market, growth in alternative assets continues to soar as investors look to diversify their portfolios. Joining me now is the CASE founder, chairman, and CEO, Matt Brown, the host of this event, which is now in its third year. Welcome. It's good to have you back. Scott, so great to be back. So I don't think I'm oversimplifying it by saying that you're looking to make alts more accessible. And what sort of growth are you seeing in now your third year of this conference?

Well, I think this summit here actually is quite, you know, telling of the demand and the interest in alternative investments. So we have now in our third year doubled every year in attendance from the advisory community and also the asset management community that's focusing on alternative investments. It's pretty incredible when you think about the growth that assets are expected to hit more than $18 trillion in alternatives by 2027. Why does so much money continue to flow here? Well, I think what you're seeing is the, in our conference anyway, our summit, the financial advisor, which has quite low allocation rates to alternative investments, are now really seeing the benefits of adding alternatives into a complete portfolio. You know, forever it's been the 60-40 model, and now it's quickly moving to the 50-30-20, where 20, of course, is alternative investments, primarily

private markets. So expand on that a little bit, because you think that's going to be a lasting change, that as you try and help democratize, if you will, alternative investments, that more retail investors are going to be able to add exposure and invest alongside some of the largest names in the institutional investment world in ways they were never able to add exposure and invest alongside some of the largest names in the institutional investment world in ways they were never able to do. That's exactly right. When you take a look at the allocations that in many cases financial advisors have been quite limited to what they've been able to do for their end clients. Now with this democratization of alternative investments and some of the biggest alternative asset managers actually serving the wealth

community and focusing on them. Now, of course, we're making alternative investments more available to financial advisors and then, of course, to their end clients. And the reason for that is that the performance and the impact of alternatives in a portfolio over long periods of time has been proving out. It speaks to something you announced today. It's called Case Advisors. Correct. It's a model portfolio of sorts. How does that work? So our platform is a technology company.

We're a technology platform that really helps for the workflow, if you will. But now we're taking the next step and really saying, you know what, if we can actually add value on the advice side, on how you actually put funds together in a portfolio, how they work with your traditional 60-40 portfolio, that's really the next step to helping advisors unlock the power of alternative investments. They also have the opportunity, I guess, to be a multi-manager, to get exposure. I don't know, you have 60 some odd institutional investors here, private equity firms, as I said, are walking all over this hotel. So they can get the diversity

of asset manager too. Correct. So many advisors are just getting more familiar with alternative investments. And maybe the difference between Apollo or Blackstone or Reverence or Blue Owl may be kind of hard to understand. But if they're all generally in the same category, why not buy a basket of all four? And if we can do that with an easy click of the button, that gives instant diversification. And then you match that with their broader portfolio. It's, again, back to the theme. We're making it easier. We're leading with education and we're leading with knowledge. I was going to ask you that. So as you lead with education, do you think we're moving beyond the question that an investor would ask of why do I need alternatives? And it's now morphed into how can I better utilize them in my own portfolio?

You know, when I started Case 15 years ago, we were dealing a lot with why alts. Now it's moved completely to how alts. So that question, I think, has been kind of well answered. And now everyone wants to know, how do I do it easily, simply, and make sure, you know, traditional alternative investments work with my portfolio? Lastly, I saw a study today by the ProSec partners that really sort of details how the institutional side is reaching out to retail. You talk about the process of educating people who may not be that familiar with assets, frankly, that are a lot less liquid than they're used to. But how are you thinking about the risk as well that comes along with these types of investments? All the investments on the platform, of course,

need to be due diligence independently. And leading with education and educating the advisors so they can understand that there is an illiquidity premium that you receive, but these are illiquid assets, is very important. But on that ProSec report that you mentioned, something quite interesting about branding and marketing. We did a recent survey of the top 10 largest alternative asset managers. There's been an 850% increase in their budgets to serve the wealth community. And these aren't firms that

spend money in the wrong places. So they see the opportunity. All right. I appreciate your time very much. You're actually going to come back with us in a bit with a special guest, and we look forward to that. Thanks, Scott. That's Matt Brown of Case, the host of this conference here. We are just getting started on Closing Bell. Coming up next, I mentioned it at the top, Apple hitting an all-time high today, and that is despite analysts' chatter over demand concerns for the new iPhone. We'll discuss what's at stake after the break.

We're live from Case today in Beverly Hills. You're watching Closing Bell on CNBC. We are back. NASDAQ continuing its slide today. There it is, down by more than 1%. Apple, though, going the opposite direction, hitting an all-time high today. Let's bring in Steve Kovach for more. What's happening today that's causing this? Oh, it's all about iPhone demand, of course, Scott. And we got a little more color today on what the iPhone demand looks like, but a bit different than what I've been talking about so much recently. This time, we're focusing on the September quarter. IDC yesterday, that's an analyst firm,

they put out estimates that 56 million iPhone shipments happened last quarter. That would be up 3.5% from a year ago. And our friend Eric Woodring over at Morgan Stanley today highlighted that report and saying 3.5 million iPhone shipments above his estimates, and that would represent six million above consensus. So shaping up to be a better September quarter than previously thought. Now, what this really means here is that iPhone 15 demand remains strong, along with the first few days of iPhone 16 sales that will be reflected at the end of the quarter. And the story, though,

overall with this iPhone 16 line, still the same here, waiting for the Apple intelligence launch later this month, probably about two weeks, and more details on what the rollout is going to look like after that over the next several months. Still tons of analysts chatter about the muted demand for this iPhone 16 cycle, Scott. And by the way, a new iPad mini was announced today. It's also going to get Apple intelligence and will get earnings here in just over two weeks. That level, though, the all time high level to thirty four eighty two off a little bit from that. But it did hit it earlier today, Scott. Part of the point here, Steve, is that it feels like we're going to have to wait a good while now to really see what the demand picture is going to look like specifically due to Apple intelligence and what that really is going to mean for the upgrade cycle.

Yeah, and that's exactly it. And also just note today in that iPad announcement and for all the other devices that have been coming out recently, the marketing around this is Apple intelligence. That's the thing you see when you walk in the store. But what they don't tell you is it's not there yet and it's going to take some time to get there. So it's unclear how many people even understand that, Scott, that what they're being marketed and advertised, all these cool new AI features that we've been talking about since last June, we just don't know when that's all going to come to fruition and hit these devices. So you're right. It's going to take several more months before we see if this really is that AI-driven catalyst that the Dan Ives of the world really think we're going to see soon.

Yeah. Also means we're just going to have to cycle through these analysts' notes as they try and get a better handle on what's happening so they can sort of advise where they think all this is going. Steve, thank you. We'll hear a little more on the 31st. All right. Look forward to that. Thank you very much. Joining me now here at the Case Investment Summit is John Kadunas. He's Calamos Investments President and CEO. Welcome. It's good to see you here. Good to be here, Scott. Thank you. Let's just get your take and your temperature, if you will, of what you think this market is going to do from here? Well, I think we're going to continue to get a lot of volatility given what's happening around the world. I mean, we've got wars that are happening. We've got

an election that's going to be very close either way. And so the markets are going to be going up and down. And, you know, one thing we have to look at, you know, a lot of equity markets are still in you know almost all-time highs and you look at S&P we've got potentially around 22 percent you know price earning and you know a forward price learning so I think it's almost fully baked at least given where history's been yeah so a lot of allocators have to look at that when they make decisions going forward are you are you surprised at the resiliency of the market, given how you started your answer? All of these things have been in the face of this market.

And then new ones pop up. And yes, they may take a toll for a day or so. But for the most part, we've been able to consistently bounce back and hit these record highs that you reference. Our markets have been very resilient, especially the United States has been very resilient. And we can't confuse the markets with the economy either, and that's what a lot of people do. I mean, there's still issues that are underlying in the economy. We had a good, better-than-expected jobs report, but then inflation came in really hot as well.

So people have to look at all of that. But I'm not surprised. The U.S. economies and the world economies have been pretty optimistic. And I think we're going to continue to see that. So was 50 basis points a mistake? I know you had urged the Fed to do something because you thought rates were too high. Was 50 too much? No, I don't think it was too much. I think they should have started earlier. I think given the information, they probably won't do another 50. I think it may have sent some bad signals as to why they thought they had to do 50 rather than do it earlier and 25 at each time. But at the end of the day, they're going to get where they want to go. And I think it's not going to be that substantial.

Okay. So we start out talking about the stock market. We are here at an alternatives conference, which you have made a bigger part of your business too. Sure. Why? Well, look, it's part of our DNA. Our founder, John Calamos, is basically the founder of Convertibles. He's read a couple of books.

We've been in business for over 47 years. Alternatives has been in our DNA. Convertibles, we're the biggest convertible buyer in the country, number two in the world, and in liquid alts, we're top three behind JP Morgan and BlackRock. So it's in our DNA and we're going from liquid to more privates. And so we've launched some interval funds in private credit, you know, and we're incubating a couple more with our partners at Axia, which has been very successful.

Yeah. So what do you say? I know you just mentioned private credit, which has me thinking, where are we in the cycle of this kind of stuff? Where people here, and we've had conversations as I referenced earlier, is private credit a bubble? Are we at peak alts? Because now everybody wants alternative products to offer to retail investors.

How would you answer that? Well, if you look at all the allocations, they continue to increase their allocations in a lot of these portfolios in alternatives. And we're not seeing that go away. We're starting to see a blend between public and private markets and that's something that's been very very interesting especially with the instruments and wrappers that you have now that are giving you a little bit more liquidity, giving you returns right away and so I think the markets are the private markets especially private credit and private equity are clearly here to stay. And you don't have any concern that retail investors who are looking at this and hearing

about the prospects of better risk-adjusted returns going forward don't know enough about what they're being invested in as these products are made more available through the wealth advisor channel. Well, especially here in the RIA channels, that's increasingly growing versus some of the wire houses that have been the traditional way to put products into retail. Look, it's a continual education process, but the democratization of these products to mom and pop, and this is a lot of what we do, is a real big thing, and it's a great thing.

When you can invest with as little as $2,500 and be side by side with some of the greatest private investors like Apollo, Carlisle, Blackstone, it's something that's unique and has not been done in the past, and I think there's a lot of appetite for that especially as education grows where they can get the returns traditionally that only professional investors and really ultra high net worth individuals have had. Right it used to be if you don't have I don't know you pick a number out of a hat five million dollars minimum of investable asset minimum it's like don't even bother knocking on our door. You couldn't get into these funds. It's changing now. Big time yes. And you think that's just going to continue to go that direction? I think the market's changing

completely. I think that these interval funds, especially the liquidity that you have, some are like 5% per quarter, which is better than no liquidity or 5-10 year lockup, is a big deal. No K-1s, which has been something that a lot of people don't want to deal with. So that's a great thing as well. And being able to get return on your assets from day one and not waiting for a drawdown two, three, four, five years. So I think a lot of the market's going to go to these products. We're starting to see a lot more issuance in these products. And the true privates are going subject we probably hold for the big institutions that one allocations to have an s m a in a particular sector

with a good five six a billion dollar increments were of a manager will just invest for that we appreciate your time so very much thanks for being with us thank you very much i should have had stocked in the south alamos joining us right here at case of next franklin Templeton, president and CEO. Jenny Johnson is going to join us right here on set.

She'll tell us where she is finding pockets of opportunity right now in these markets. We're live in Beverly Hills. We're back on the bell after this. All right, welcome back. We're live from the Case Alternative Investment Summit today in Beverly Hills. Joining us now, Franklin Templeton, President and CEO, Jenny Johnson, along with Matt Brown of Case, who's back with us now. It's good to see you again. Welcome. Great to have you on our program. You know, I have to admit, I didn't know and I don't think many people out there watching would know that Franklin Templeton is now a top 10 alts manager.

Yes, it is. It sort of happened under our noses here. And you've done a number of what you've called bolt-on acquisitions. Why? Oh, I mean, there's definitely a secular change into alternatives. I mean, companies are waiting much longer to go public. We've seen there's half the number of public companies. You know, as a traditional asset manager, you have to address that secular change. And so we bought Lexington Partners, which is a secondary manager.

We have Clarion Partners, which is a real estate manager. And private credit, honestly, banks aren't able to lend like they used to lend because of the capital requirements. And so it has created this massive corporation around private credit. We felt we needed to be there for our clients to offer that diversity. So today we have about 260 billion in alternatives. Wow Wow. What does the runway look like to you? You just feel

like, as I've discussed with almost everybody here, they don't think that we're near the end of the runway, that there's a long way ahead of us where assets are going to continue to flow here. Well, I think, again, I don't think people are rushing to be a public company CEO. I think that they are happily staying in the private markets as long as there is the ability to be funded. And so, you know, you see it. I mean, the average company used to go public after three years. Now it's 10 plus years. So as long as that's happening and you have this increase in it, you're going to have more and more investments there. And I think what's happened so far is it's only been the accredited investors. Now it's about, this is what

CASE does. It's about democratizing so everybody has access. Because think about those early growth years of a company. It used to be post-IPO. Everybody had an opportunity to invest in it. Now you have to be an accredited investor. That's why Matt created CASE. So as we hear more about this, I have heard some people suggest, Matt, peak alts. Now, everybody's talking about alts. And everybody's talking about every part of alts. How would you counter that? Well, I would say that many years ago, no one was talking about alts. Those were very lonely days, especially as an entrepreneur building a business around alts but uh look it is it's definitely the topic uh you've

seen really a transformational moment in how investors are thinking about getting the best returns creating portfolios that have true opportunity i think as jenny mentioned in the private markets many companies are not going public so how do you really participate in the private markets. Many companies are not going public. So how do you really participate in the growth of private companies and its private markets and private market investing? And firms like Franklin Templeton that have been focused on marrying their traditional business and expanding it with alternative investment capabilities really make them the ideal partner to be on our platform. They have the DNA, they understand the advisor community. They've been doing that for decades

with their traditional business. And now with this additional added alternative investment capability, we're really excited to work with Franklin's Appletons. How do you bridge these two cultures of sort of investing in private markets versus public markets, educating your clients, educating your advisors.

Yeah, no, this is actually a huge part of this because traditional private alternatives managers would go into a pension fund, you sell the pension fund, they know exactly what their cash flow liabilities are for the next 20 years. But you go into a financial advisor, you know, some clients should have zero allocated and some clients maybe should have 40% of their portfolio allocated. And so that tip of the spear of that financial advisor

who is determining what is suitable for the client, because again, these are illiquid assets. So number one, it's education. And we've built a alternative by Franklin Templeton, which is education. Actually, CASE has a great education platform for advisors. We also built a team of specialists who can sit down with advisors and talk about what's appropriate because the challenge the advisor has is if they put the client in the wrong

vehicle, they will get in trouble from a suitability standpoint. And so they have to be really careful. How are you thinking about the future of what the typical or modern, let's use modern, portfolio is going to look like in the future, where we only ever talk about 60-40. Now we're entertaining the idea of some have suggested 50-30-20. We talked earlier. How are you thinking about that? I think the technology now enables people to manage portfolios to a goal or to a solution, right? So if you were doing a retirement portfolio, you know, target dates were kind of the first solutions in there. I think that naturally will be added to have privates in that.

And as you get closer to retirement, you have less illiquid assets in there. But you get the excess returns early on and you get the benefit of compounding. So I think portfolios are going to be much more managed appropriately to whatever the end goal is with the risk and the time frame of that end goal. Of all the alts that we've been talking about here and that are being discussed in the ballroom behind me, what's your sense of which is the fastest growing part of it? Well, there's about $10 trillion that's anticipated to be allocated to alternative investments over the next decade. So as we think about as a platform, we get to see the flow of the capital. Where it's going right now is predominantly in private markets, largely private credit, private equity, private real estate. But of course, some of the more semi-liquid and liquid strategies are also picking up steam as well. It really is about a

diversified portfolio of alternative investments, taking a portfolio approach. And that's why Jenny and I really are aligned in thinking education must be first, making sure that financial advisors and their clients understand the benefits and the risks of including alternatives in an end-client portfolio. I know you're trying to do your part. Both of you are. I appreciate you spending time with us.

Thank you again, Matt and Jenny. It's great to have you on our program too. Jenny Johnson, Franklin Templeton. Up next, we're tracking the biggest movers into the close today. Pippa Stevens is standing by with that. Hi, Pippa. Hey, Scott.

While one struggling staple stock is having its best day in more than a decade. The name to watch coming up next. Just about 15 minutes before the closing bell. Back now to Pippa Stevens for the stocks that she's watching. Hi, Pippa. Hey, Scott. Walgreens is surging after earnings. The pharmacy giant reporting a beat on the top and bottom lines and announced major cost-cutting measures,

including plans to close around 1,200 stores over the next three years, shutting 500 in fiscal 2025. The stock, though, is still down more than 60% on the year. And Enphase Energy is shutting 9% after it was cut to sector per forum by RBC. The firm is expecting a slower rate of growth than the current consensus estimates suggest. That stock has shed more than 30 percent year to date. Scott. All right, Pippa, thank you. Pippa Stevens still ahead. ASML is dragging down the chip sector today. We'll tell you exactly why when the bell comes back after this bell.

And do not miss an exclusive interview with Interactive Brokers Chairman Thomas Petterfie. He's coming up in overtime today. Market Zone is Coming up next. All right here we go we're now in the closing bell market zone CBC senior markets commentator Mike Santoli here to break down these crucial moments of the trading day.

Plus Sima Modi on the big moves in the chip space today we'll tell you why. And Philip oh looking ahead to United Airlines out in overtime Michael though. I'll start with you. What's on your mind today what's the standout for you. Well Scott a proper

little shake out at least at the index level and especially from the- intraday highs it seems of a few things moving together one is. This kind of reflation trade the China revitalization trade. Did have a little bit of a switch back and

it seemed to upset some short term crowded. Positioning- we do also of course it was as we're going to discuss you know semis look like they were on the comeback. And they're heavy- heavyweight on the index. You also have this overlay of and I

was mentioning this yesterday. What's become typical of a sloppy initial earnings reaction even though. Num numbers have been good. Outside the banks, it seems like there's a little more room for disappointment or a reflex sell the news than not. All that coming together, I think, after five straight weeks higher and the market looking just a little bit short term stretch. It has us in recent. But by the way, more stocks up than down.

So this is not a washout. It's much more just a little bit of churn. How do you think we'll assess the banks now that they've all reported? You know, Citi is an eyesore today, Mike. It's down, I was just looking now, from 5% in an otherwise, you know, reasonably good market for those stocks. Yeah. I mean, Citi is the one that always is held on the shortest leash it obviously has the biggest discount to book value. In general I think if I'm looking at the macro message from

the bank results it's a positive almost across the board you can check off the boxes and say you know consumer credit corporate demand sales and trading capital markets seem like they're moving in the right direction. The stocks did have a little bit of a run coming into today. So I can see them wanting to consolidate a little bit here. But in terms of what it means more broadly for the economy, for the markets, I think it's a plus. It's everything else where everyone assumes we're going to beat the published estimates, and maybe that's already priced in. That's where we might have a lot more back and forth.

Yeah, Seema, I know it seems like it, but NVIDIA is not going to go up every day. And maybe the culprit today was not NVIDIA at all, but another chip name. Yeah, that seems to be the case, Scott. ASML earnings leaking early, and the story wasn't great. Its 2025 outlook came in below Wall Street consensus. Their CEO, Christophe Fouquet, says while AI demand remains strong, other market segments are taking longer to recovery.

They're also seeing weakness in China. ASML is one of the only companies in the entire world that makes lithography machines used to manufacture chips. Main customers being NVIDIA, TSMC, Apple, Intel. One chip stock, though, moving the opposite direction is Wolfspeed after securing $750 million in chipsacked money, an additional $750 from private equity from Apollo and a consortium of investors. CEO Greg Lowe telling us that the fresh injection of capital will speed up its fad production in North Carolina. And we are watching

shares surge today. But keep in mind, short interest is a bit high at around 31 percent in this name, Scott. All right, Seema, thank you. Seema Modi. Phil LeBeau, tell us what we need to watch out for more than anything else with United. Scott, three things we're going to be looking for. First of all, did the airline see positive revenue per seat mile growth? We know that it's improving as the industry is taking out capacity. What are they seeing for the holiday book early August. The expectation is to earn 317 in the third quarter. And Scott, tomorrow morning on Squawk Box, don't want to miss our exclusive with United CEO Scott Kirby. But before all of that, in just a few minutes, we'll have the Q4 numbers. Back to you. All right, we'll look forward to that and we will see you once those numbers cross. Phil LeBeau, thank you very much. Mike, you know, I was struck by my conversation today with Todd Boley,

who is about as optimistic as I've heard anybody about the idea of animal spirits coming back in corporate dealmaking, M&A. And it's about to happen, maybe not today and maybe not tomorrow, but it's going to be soon. Yeah, you have everything lining up in that direction. I mean, arguably, you have for a little while. But it seems as if we've had this huge kind of corporate capex boom. That is one way of companies expressing confidence in the future. Of course, a lot of that is very much focused on the data centers, but even in general. And so I do think that the next steps in all this Are probably take advantage of extremely generous credit markets. The fact that everyone has a pretty

inflated equity currency. And the fact that you know you have to figure out where you're going to sit. In this kind of economy in transition time. I get it it all does make sense. I don't know if it happens. You know sort of in a straight line

but the makings. Are there for it sometimes that means. That's how you get a little bit of an overshoot to the upside in the market. We're already up five months in a row in the S&P 500, five weeks on the tail end of that. So I think we've priced in some good scenarios,

and a little more corporate action makes some more differentiation among stocks. B of A talking about that today, that basically it's become a little more of a stock picker's market, as much of a cliche as that is, because you do have some companies really active on the deal front and others not so much. So we'll see if that flowers in here. All right. We will see the markets go out red after the Dow hitting an all-time high earlier in the session. Tough day for tech, obviously, with the NVIDIA rollover. But we'll follow it, and we will see you tomorrow. That's it for us out here in Beverly Hills.

And overtime with Morgan and John.