Closing Bell - Closing Bell: Are Rate Hikes Working? 3/3/23

Episode Date: March 3, 2023

It’s a big week ahead for investors with the jobs report looming – a key read on the state of inflation. That critical piece of data comes as some on the Fed wonder whether rate hikes are working to slow things down.  Professor Jeremy Siegel of the Wharton School gives his take on what it means for your money. Plus, Fundstrat’s Tom Lee is forecasting a strong bounce for stocks. He makes his case – and explains the level he thinks we could hit in the next two months. And, can Tesla continue its strong run? Bryn Talkington of Requisite Capital Management gives her take.

Kelly thanks so much welcome to the closing bell I'm Scott Wapner this make or break hour begins with stocks looking to end their long losing streak and they're on pace to do just that here's the scorecard with 60 minutes to go in regulation that nice bounce around this time yesterday as you can see is continuing into the final stretch rates importantly as you can see at the bottom they're backing off a little bit bit, too, taking a bit of a breather. That certainly seems to be helping things. Apple and Meta are as well. They're leading the charts for tech. Pretty good day for the Nasdaq, too. And that brings us to our talk of the tape. The big week ahead, that jobs report looming large one week from today. Another critical read on the economy and very much the state of inflation. All this as some on the Fed are wondering whether their rate hikes are working

to slow things down. Jeremy Siegel, professor emeritus of finance at the Wharton School, is going to be with us momentarily to kick all of that around. Let's first bring in our new CNBC contributor, Malcolm Etheridge of CIC Wealth, along with Bryn Talkington of Requisite Capital Management, also, of course, a CNBC contributor. Good to see you both. Malcolm, congratulations. Welcome to the fam. It's good to have you.

So the markets felt a little bit dicey lately. We had this nice pickup yesterday. We've got a continuation today. Rates have taken a breather. How do you feel? Yeah, I'm actually a little bit on edge right now watching where the markets have gotten to. If you just look at how strong we started out January and how great we all were feeling. And then February, the last three weeks, I think, of February, the S&P ended in negative territory.

I'm actually a little bit loathe to get too good or start feeling too good or too bad until we really start to hear what the Fed has to say. And hopefully next week they're going to start to shed some light going into the F start to hear what the Fed has to say. And hopefully next week, they're going to start to shed some light going into the FOMC meeting toward the end of the month. Bryn, you got the jobs report looming large, right? I know the professor's thinking about that, and he's going to tell us to what degree he thinks that's going to impact everything that we're talking about now. But how about this? We're going to break a three week losing streak for the S&P. What do you think? We bounced right off the 200 day on the S&P, just like clockwork. And so I think that set us up for technically to bounce higher here, probably going into next week. But, Scott, we remain dependent on this economic data, which is really frustrating for investors,

because when you're looking to try to analyze individual companies, the overriding theme is the inflation data is still front and center, and that means the Fed is still front and center. And so I think that there's definitely a ceiling on stocks in general because you can't have the Fed still behind, possibly behind now, inflation. You have the two-year at 480. And I still think it's really incredible that the market is ignoring what the bond market is saying. I know Marco talked about that on his piece earlier this week, but I really agree with that,

that historically the bond money, the bond market money is a smart money. And so you continue to have an all-time high in the two-year, but the market just doesn't care. And so you have to respect that as an investor and as a trader, but also understand that things could change very quickly if we get another hot read on the jobs report and that we'll see what the Fed comes out on the 20th and 21st if they're going to do 25 or 50. So I think this month is going to be another dicey month with definitely a ceiling on stocks. Yeah, but Malcolm, I mean, you tell our producers now's a good time to be buying individual names. You really feel like it's a good opportunity here to add some risk? Well, I think now's a good time to be buying individual names. If you've been

watching companies for a while, you feel really strongly about that particular name. And like we just said, the S&P has been on your side coming into this week. It's going to end in positive territory. But the trend was our friend through the end of February. If there was an individual name you wanted to snap up. But I think to Bryn's point, if you look at just what the short-term Treasury, the 6, the 12, the 2-year, you could just hide out in Treasuries for the next couple of weeks here until we get some direction on where the Fed is actually going to go. And if I can push her point a little bit further, we're really out there in trouble right now

with the fact that we don't have earnings anymore for cloud cover. So the next couple of weeks of economic data are definitely going to drive us really hard in one direction or another because it's the only thing that the markets have to focus on. Yeah, we got, I mean,

earnings expectations are declining, but let's bring in Professor Siegel now. Professor Emeritus of Finance at the Wharton School. Welcome back. It's good to see you. Good to see you, Scott. I feel like we always have some

incredibly important moments to discuss. And we have another one coming a week from today that I know you are keenly looking towards. And that's the jobs report. And the last one seemed to have upset the story a little bit on where inflation was going from here, where rates were going. What do you think? It upset it more than a little bit. And the initial jobless claims have been so strong. This has really shifted the story.

If we get anything like January, believe it or not, 50 basis points would be on the table for that March meeting. If we get less than 200,000, we get 100,000 or less, I still think the case could be made for 25. But when I look right now at Fed basis point for 25 basis point Fed hikes. So with the strong data that we've seen on the job front has really changed the picture over the last three weeks. Wow. Has it changed your view of the stock market as a result? Well, at the same time, the interest rate goes up, which is not good for stocks, the economy looks so much stronger. The number of CEOs that see a recession coming has been more than cut in half. Remember, at the end of last year, I mean, we had a record number of

forecasters forecasting a recession. Never before a recession had we had so many. That has been cut in half because of the strength of the job market, the strength of the first quarter. Now, I'm not saying that the second half of the year couldn't be a lot weaker, but what now people are saying, you know what, that 220 earnings, that might actually come in. I actually think we're going to see a big slowdown of the rate of reduction of those future earnings. And I think a lot of corporations, by the way, are positioning their guidance very cautiously because they are still worried that there might be a big downturn. I think we may get a lot of beats in the second half of the year rather than

shortfalls, as we saw in the fourth quarter. Really? So, I mean, you think we have sandbagging going on? I mean, margins are coming down. There are a whole host of issues that would lead you to believe that the earnings trend is going to continue to come down. I think we're at $222 officially now, according to estimates. And there's no reason really to think that they're going to start reaccelerating from here. Why would they? Well, we're looking at two percent. You know, for the whole year, the Fed predicted a half a percent GDP growth. Well, it looks like the first quarter is going to be two percent plus.

So therefore, this economy this year, remember last year was the whole year was less than 1%. So if we can actually have, you know, if we don't get that decline in employment and we get GDP at 2% or 2.5%, I really think that those earnings figures at 220 might be even conservative. That is why the stock market has held up yesterday and today, despite the 10-year going above 4%. It's that earnings, why, they may not be anywhere near as bad as we feared. So you have that struggle between what we call the numerator and denominator. Numerator is the earnings, denominator the interest rate, and I think actually both of them have risen over the last two or three weeks. Did you read Jason Furman in the Wall Street Journal?

I figured you did because he makes the argument that forget waiting for the lag effects. Just hit it hard now. Like do 50, go to 6 percent. You got to go at this thing really hard right now. And he points to the fact that the data continues to be really strong. Why is that wrong? I think he's I think he's he's got it wrong. He implies we've made much less progress against inflation than in fact we had. If you look at the on-the-ground price indexes, commodity indexes are all bumping along the bottom. Case-shower index, we saw six consecutive decline in home prices.

Rental prices are stable or going down. Shipping prices have collapsed. Some of them are back to the level of pre-pandemic levels. I think he's overstating the pessimism on inflation. I think we've made a lot more progress on inflation. But the problem is, is I thought the job market would be certainly weakening by now. I think almost everyone did. And it isn't. And that's why the forecasters are looking towards a stronger one. I do not think we need to get to six. Now, there is an argument, an argument that has been made by some of the Fed people is, listen, we want to get to the low fives. We're at 458 right now. Let's do it quicker rather than later. But Furman is actually

saying we need to get to six. Jim Board says I'd rather just get there sooner. But the question is, where is the terminal rate? I feel like you want your cake. I feel like you want your cake and you want to eat it, too, professor. You say, admittedly, I was wrong on how strong the labor market has remained. Oh, but the Fed doesn't need to do as much anymore. And they're not going to do that. All the ones who say they need to be tighter, they're wrong. Well, let's let's put it this way. I actually thought that they shouldn't be going as high as they did. So I don't think they need to go to six. I actually think maybe the upper fours are very low fives, which they maintain. However, right now, the Fed funds market says that they

are going to be above between five and a half and five and three quarters. I don't think they need to get so high. So I have bumped. Yes. I mean, I looked at the facts and, you know, I look at the facts all the time. And, you know, my I have bumped up my curve, but I'm not bumping it up to six. I'm not bumping up as high as Jason. And I think we made a lot more progress towards the inflation front than he put down in that article. I don't know. I mean, Christopher Waller is even suggesting, you know, gee, is this really working? The efficacy of the rate hikes that we've already done, is it really working? I mean, was the hot data just a blip? Do we need to do more, even higher and even longer than some people suggest? Well, now, remember that the hot CP, the CPI data, and we've talked about this,

it's so backwards looking. And we've talked about the problem with the rental. We've talked about the problem of the home price. There's other things. And by the way, the experts have looked at the seasonal adjustments that that's what bumped up the year over year on the PCE deflator. And they actually said by the end of the year, that's going to put downward pressure in. So the data is nowhere near as bad as those backward looking indicators.

I pointed out the on the ground indicators, which are have markets every day, have not shown that they're going up again. In fact, they're scraping against the bottom and home prices are still falling. And take a look, Scott, you know, mortgage rates are back above seven. We had a little respite there. Good. Yeah. I mean, you know, when they went down to six, a little bit of stability, a little bit of an increase in that homebuyers index. Well, let's take a look at what people are saying about March with rates above seven again and maybe going higher. You're going to see softness in that in that area also. So I think to say we haven't made a lot of progress on the price front is wrong.

To say we haven't made a lot of progress on loosening up the labor market. That is that is correct. But what would you rather have? I would rather have lower inflation and a good economy and a good labor market than I would have a falling labor market and no progress against inflation. And I definitely don't think that's what we're seeing. Are you still confident enough to suggest that we're in the early stages of a new bull market? I predicted 10 to 15 percent on S&P this year. And I said it might surprise people to come in the first half, which everybody was bearish on. I'm still maintaining that that is possible, even with a higher path of interest rates,

because that would be associated with a higher path of GDP and, in my feeling, a higher path of profits than certainly what we feared at the beginning of the year or late last year. Wow. All right. Well, let me bring in the panel who is still with us, Bryn and Malcolm, because I know they want to have at this as well. Bryn, you've been a don't fight the Fed person all along. So Professor Siegel just left us with a very provocative thought about where stocks can go, despite everything that we're seeing now. What do you say? I mean, Apple's already up 15 percent for the year, the Nasdaq up 12 percent, the S&P is up five. So could the S&P go up another five% by the end of the year? Sure. But I don't see it possible that we're in the beginning

of a new bull market to that question you asked, because you have the Fed is still raising rates. You have an inverted yield curve. You have multiples are high. And not like in 2009, I get the numerator denominator equation, but I'm just saying multiples are high. And not like in 2009, I get the numerator denominator equation, but I'm just saying multiples are high. And to me, those are not the ingredients of a new bull market. I think we are have a ceiling right now on equity prices because the Fed doesn't know the terminal value. We don't know the terminal value. And I think it's really important when you talk about the real economy. You know, what's important is that money is changing hands and like the velocity of the money is changing hands. Cost of capital is very sensitive with small cap stocks, is very sensitive in real estate.

And in the real estate market, you are just not seeing that velocity of money happening. And so that's really impactful for the U.S. economy. So I'm still into the into the camp that we have a big lag and the Fed is going to end up over tightening because this lag is is taking longer. And then all of a sudden, this cost of capital cannot be ignored. So I think people are hiding out in the apples, in the companies where cost of capital isn't as is not relevant. But I do think that ceiling is there and that we are not in the beginnings of a new bull market at this point. Professor, you really think the market's fairly priced here?

We'll call it 17 times based on where rates are and where earnings projections are. OK, well, let me I just did a study over the last 60 years. If you take times when the long in long term interest rate, the 10 year bond is under 6 percent and as pessimistic as you can become, no one expects it to be over there. In the last 60 years, the average P-E ratio has been 18 times. You know, when the 10-year long bond was 12%, 13%, 14%, we had 8, 9 P-Es. Take out those higher interest rate periods, and everyone agrees we're not going to get anywhere near that, you have an 18 PE. And Scott, you just quoted, you know, we're probably at 17 PE, 17 and a half PE. So I don't think the market is expensive at the present time. And in fact,

I think the long term trend of PEs, and I've written about this, is upward. I actually think fair market value for PE is around 20, not 18, for various reasons over time. So I'm not in the camp that thinks that it's overvalued. And certainly, if we hit the 220 that is projected for this year on S&P earnings. Malcolm, what do you think? Yeah, I'm in the camp with the professor that I do think that it's possible we're seeing the signs of a new bull market. But I think where he may have lost me is in the sense that going to six percent and the Fed deciding to get even more hawkish from here and using rates as the tool that the only tool they have left to try and bring down inflation from here even further, even faster, because they're

not satisfied with what they're seeing. I think that that would have the intended impact on the labor market at some point. And the labor market has been the only saving grace we've had here, keeping the markets in positive territory to start 2023. So I think if the Fed decides to go six% plus, the professor loses me a little bit because I think that takes the wind out of the sails that gets us to that 10% by the end of the year. Professor, he was with you before he was against you, but you need to answer to that. Well, I don't think the Fed is going to 6%.

As I said, the market is looking for four more hikes. So that's five and a half to five and three quarters. And by the way, all we need is a few, a week, a weaker February number. I mean, January number was just an unbelievable number. Can't be repeated. A weaker number, a little bit of an increase in initial claims. I think the whole conversation at the Fed, that's what they're looking for. Just don't be as drumtight on that labor market. They see that relief. I think that they see what's going to be happening to the CPI.

We already have Powell acknowledging that the housing sector is a lag sector in the CPI. It's going to, by the middle of the year, begin to add downward pressure. Seasonal adjustments are going to add downward pressure. And by the way, what's the rush to get it down to 2%, you know, right away? I mean, is it worth an extra 1%, 2% unemployment just to get wages and prices down together? By the way, when we talk about, you know, cutting inflation, it's not how we're keeping wages the same. It will affect both of those. I think that that's not a good tradeoff. The Fed is supposed to look at employment as well as inflation, and it's not just supposed to look at one. And so therefore, when we see that lower growth in that labor market, the conversational change back to a quarter, maybe only have two and three increases up to the low fives. And then if the labor market gets weaker, I still think there's a possibility of a drop by the end of the year.

Professor, I'm going to leave you with a question that Elizabeth Warren raises, and I want your input because you've been critical as much as anybody else of the job the Fed has done on the front and the back, really, missing the transitory issue to begin with and now what they've done to try and make up for their mistake. Senator Warren writes, if the Fed keeps pushing these extreme interest rate hikes, they can tip this whole economy off an economic cliff, says the senator. She wants the new vice chair to be a counter to Chair Powell, not an enabler. Scott, I never thought I would ever agree with anything that Elizabeth Warren would say.

But I do think that the Fed is just monomaniacal about inflation. And I don't think and ignoring the labor market now, it hasn't loosened yet. But I do not think two, three points higher of unemployment. It is all worth to get inflation down six, nine months earlier. I think you've got to do a tradeoff. And I think the Fed did swing from not paying attention at all. We talked about that to swing too much on the other side. Like inflation is the only issue. Inflation and wages, by the way. It's not just inflation

and wages are the only issue. Unemployment should be discounted. That's not in the Fed mandate. Professor, we're going to leave it there. You have a knack for leaving us with very good soundbites, and you've done it again. Thank you for your time. We'll see you soon. Thank you, Scott. That's Professor Jeremy Siegel at the Wharton School. Bryn, we're going to see you in a little bit. Malcolm, you as well. We look forward to that. All right. That brings us to our Twitter question of the day. We want to know, with the Nasdaq up 2% this week, can you trust the rally in tech? We talked about Apple moving higher today. Meta is a huge winner. Head to at CNBC closing bell on Twitter. Please vote. We'll bring you the results coming up a little bit later on in the hour. We're just getting started, though, here on closing bell. Up next, bracing for a big rally. Fundstrat's Tom Lee is back. He's forecasting a strong bounce for stocks,

maybe over the next two months. We're live from the New York Stock Exchange. Closing Bell is right back. Stocks continuing to rally as we head towards the close here. Rates pulling back a bit, and that is helping things as they ease off their recent highs. Our next guest says equities are going to continue to climb higher, rallying strongly, perhaps, over the next eight weeks. Tom Lee, he's the co-founder of Fundstrat Global Advisors. He's

with us now. Welcome back. Thanks, Scott. Eight-week rally. What gets us there? Well, first of all, I think this was an important week because the market was testing key levels and we had some hot data, but we held the 200-day. But now we're entering what I think is a very strong seasonal period. The next eight weeks, the S&P could rally as much as 7%. It has a lot to do with the strength shown in January. I think it's going to coincide with the Fed sort of dampening those hawkish tones. And I think people may start to hear the Fed say 25, even though the data has been hot. And we get some inflation data

starting next week that I think will sort of take people off the edge that inflation and the growth is accelerating. And I think that combination plus the market at 14.8 times XFANG means you got good risk reward. And if VIX falls, yeah, I think it's going to be, you know, maybe S&P 4,200 or something by the end of April. Wow. Are you unnerved at all by the move that we've seen in rates now? I mean, you know, over the last day, they've taken a breather. But we were above 4% on the 10-year yesterday, and the 2-year was marching towards five. Yeah, I mean, rates is a big deal because, you know, the rates market affects how you want to value equity. So seeing the 10-year at 4% is pretty alarming. And, of course, the bond market is quite smart.

It does seem like it's been overly reactive to inflationary data. So I think next week it'll be interesting to see how it reacts to Powell's testimony on the 8th and to the jobs report and then to the inflation print starting to come. But I, you know, we're expecting a lot of this sort of hard data and soft data to soften. And I think yields and bond volatility is going to fall. So you need you need I know you need volatility probably to fall, but you need bond yields to fall to get to your 42.50 by the end of April, don't you? Correct. I think if inflationary data is stronger in February and the jobs data, let's say it's over 250,000 jobs, then it makes it harder to argue for equities to rally because it puts more pressure on the Fed to do more. So all the marbles come down, just like Professor Siegel was saying.

Everything comes down to next Friday's jobs report. Yeah, but I think we do have to be mindful. We had over 500,000 for January. So something even in the 250, which is above consensus, would be considered a significant improvement in the pace of jobs growth. Not that I want the economy to lose jobs, but growing faster than the employment force is growing is bad news. What do I do with the fact, and I know you think about where earnings are, expectations, estimates are coming down. So as long as estimates are coming down,

how can we have really any kind of sustained move higher in stocks? Well, I think two groups to really watch are industrials and technology, because they are very sensitive to financial conditions. On the tech side, I think many have noticed tech earnings estimates have actually been flattening. Seven out of the 13 groups have actually seen estimates for this year increase. So the industry is actually seeing stable to possibly rising earnings forecasts for this year. But overall now, as I was saying with Professor Siegel, we're at $222 from a high water mark of 250 yeah there's no indication that that trend is going to just stop going down at the at this current time we're still waiting for lag effects from the fed tightening to to take uh that's right hold aren't we yeah scott you're talking about 2023 earnings

though and you know the market's really going to key off 2024 and I think that all the things that we're seeing, especially regarding inflation, aren't taking away from 2024 as much unless the dollar is strengthening. And right now, the dollar has been stable to flattening. So you're telling me the market is going to be anticipatory enough to look towards next year and ignore where earnings are now you think we're close to troughing? Because you think we're close to troughing? Because you have to be close to troughing if the market's going to have the ability to look towards the other side, right? Yeah. I mean, I would say 2022 is a great example. 2022 earnings were up, but the market was down because 2023 earnings are down.

So the path of the markets this year is going to be a lot of what rates do, what volatility does, but it's really 2024 eps which hasn't been hit as hard as 2023. and you're still a believer in the the fang trade i'm looking squarely at apple got back over 150 today uh interesting level meta has been rallying as well and that's where you think the money still is going to go uh yeah i mean you know one if you look at it from a technical perspective these have all broken the 2021 downtrends. I mean, so they're actually now in new uptrends. And then these are groups where, look at meta, earnings estimates have actually been going up.

So after getting cut for a long time, they're actually starting to rise. So I think you have a fundamental and a technical case to be long-fanged. All right, that's good to see you right here at Post 9. Tom Lee of Fundstrat joining us up next. Some more big stock moves you need to watch as we head into the close. And later, we're weighing the bounce in Tesla. Take a look. It's trying to bounce back after its investor day. Does it have more room to run? We'll debate that. Closing bell. Be right back. Got about 25 minutes to go until the closing bell rings.

Let's get back to Christina Partsenevelis now for a look at the key stocks to watch. Christina. Well, the maker of Skippies and Spam, Hormel, is having a tough week, almost down. Look at that, almost 10%. The CEO is blaming persistent inflation, supply chain inefficiencies, more specifically with turkeys, and weak snack nut sales. For the lower than expected sales volume, the food processor is actually having its worst week since 2016. Shares are down about 2.7 right now. And you'd think the top and bottom line beat would help Zscaler's stock price, but investors are more focused on

billings weakness. Management pointing out customers are paying closer attention to their budgets. Sales cycles are getting longer, resulting in lower deal close rates, and they saw a lower contribution to revenue from new customers. The stock down over 10% just today alone. Scott? Well, all right. Watch ZS between now and the close. Christina, thank you. Coming up, our next guest is flagging a major market opportunity she says we haven't seen in a decade. She makes that case next. Closing bell. We'll be right back. Treasury yields falling today with the 10-year dipping back below 4%. My next guest says higher rates could provide a terrific entry point and opportunity in fixed

income that hasn't been seen in over a decade. Let's bring in Tina Biles-Williams of Exponence Asset Management and Investments. Nice to see you. Welcome back. Good to see you again, Scott. You run a multi-asset firm, but you truly think right now bonds are the best place to be. Tell me. Well, look, we're at a terrific entry point. While bond yields have obviously come down since the beginning of the year, but they started the year at the highest level of the broad market since late 2007. And given that most of the rate increases are behind us, we think that market conditions are in a much healthier place where income can actually contribute to total return over the course of the year. We also think that this will lead to a great sort of reset of non-corporate funds asset allocation, whose bond allocations are

at historic lows because they were the primary funders of their alternative portfolios. Now, you know, we recognize that rising rates, rising inflation isn't really the best time for bond prices. And so we would keep duration tight at benchmark levels and wait to see a more significant deterioration in the labor market to increase duration. And you think that's going to happen? I mean, there is a notion that the Fed's going to be even higher and stay even longer than most people expect. Are you one of them? That's why I wouldn't, you know, go out there on the duration curve. In fact, the benchmark or shorter. You have an interesting quote that I want you to expand on, if you would.

Institutional investors, you say, need to recognize that we're undergoing a fundamental shift that will require them to reevaluate current investing assumptions into 2023 and beyond. Tell me exactly what you mean by that. Over the last 30 years, the market has been on the assumption that, look, you know, we're in, we have inflation under control, we've had this kind of environment over the last 30 years of rates that drop or stay the same. And on the line that are some conditions that have reversed. The biggest one is the cost of labor. The demographics that led to low wages have changed. You know, the baby boomers were leaving the workforce, and they tended to, well, either paid less than subsequent generations, and they were less willing to leave jobs to increase their income. In the post-GFC period, you had an onslaught of part-time workers that dampened wage pressures.

And then you have deglobalization. unique labor costs a lot more sticky than they have in prior cycles, which is why I think the Fed will have a challenge getting back to its 2% target without causing a lot of dislocation in the labor market. You know, Tina, before I let you go, it's Women's Heritage Month. And I had Sally Krawcheck sitting next to me recently, who's literally done it all on Wall Street. And granted, we've seen the, quote unquote, face of Wall Street change over the years. You now have a woman running one of the major banks on Wall Street, right? Jane Frazier over at Citi. And I asked Sally what she thought about the glass ceiling and whether it's been been shattered. And she emphatically said no. And I wanted your input on that question as well. I would agree with Sally. Let me let me point to two things.

One is the hollowing out of the pipeline for C-suite positions in corporate america according to the october lean in report for every woman at the senior manager level who gets promoted to leave because they're burnt out discovered that having it all can really be a euphemizing for doing it all at home and they feel undervalued and undercompensated. The second thing is in the VC business or venture capital business, we're seeing this continued meritocracy where successful investors select essentially facsimiles of themselves or like one venture investor quip I can be tricked by anyone who looks like Mark Zuckerberg and this largely explains the poultry flow of venture dollars to entrepreneurs that are women and people of color my

story challenges the fallacy of this meritocracy. My firm was funded in 1997 through an SBIC led by a white man from the South. But more importantly, the return of almost three times his fund's invested capital in seven years exposes the foregone return possibilities of the meritocracy that undergird venture capital investing. It's good to have you today. I appreciate your insight and certainly your expertise on the markets. We'll see you soon. That's Tina Biles-Williams joining us once again. Last chance to weigh in on our Twitter question. We want to know, with the Nasdaq up 2% this week, can you really trust the rally in tech? Head to at CNBC Closing Bell on Twitter. We'll bring you

the results after this break. Let's get the results now of our Twitter question. We asked, with the Nasdaq up 2% this week. Can you trust the rally in tech? The majority of you said no, you cannot. 68.5%. Back up next, speaking of tech, shares of Tesla up 60% so far for the year. And our next guest says now is not the time to chase it. We'll explain when you should get in coming up. That and much more when we take you inside the Market Zone. All right, we are now in the closing bell Market Zone. CNBC Senior Markets commentator Mike Santoli here to break down these crucial moments of the trading day. Plus, Bryn Talkington is back on whether Tesla can continue its run. It's been a big one this year. Malcolm Etheridge here, too, on CrowdStrike as we look

ahead to next week's big earnings there. But, Mike, I begin with you first. Professor Siegel, not backing down from his 10 to 15 percent call for stocks this year. Despite the fact that he no longer, I guess, thinks the Fed should have stopped or maybe he does and maybe it should restart. But I think it's it's fair, but for different reasons now. Right. The economy being much stronger than expected. This idea that that might make inflation stickier. I think it's pervaded the market for weeks right now. We've now got back about two weeks worth of grinding declines in the S&P in a day and a half. You sort of recovered it. So some equilibrium there between the yield effects and the economic effects. And as you said, markets up the last nine, 10 months. Yields are a full percentage point higher.

He still says all the marbles maybe come down to next Friday and the employment report. I want you to listen to what he said about what it might mean for the Fed. Listen. The initial jobless claims have been so strong. This has really shifted the story. If we get anything like January, believe it or not, 50 basis points would be on the table for that March meeting. OK, I mean, that would be a little bit of a game changer, wouldn't it? Well, it would, although the markets already put it on the table. I would have to say not saying it assumes that's going to be the case. But yes, another I mean, 200000 is the estimate for next month's next week's payroll report. Yeah, if you get 300 and you have the no no downward revisions to January, it might do that. We don't know if the Fed is resistant to re-accelerating to half point increases from 25 basis points

the way they seem not to want to pause altogether and then resume tightening. I don't know if the stock market has put that on the table, though. That's been the greatest disconnect in the market to some respects. Oh, it's been a disconnect, but the market's up for when Fed funds was below 1 percent. Right. So, I mean, you can't necessarily say on a real-time basis, you know, which one is ignoring reality. Okay, that's a fair point. Bryn, Tesla, I'm looking at it today. Nice bounce back, 3.2%, 197 and change is where it is.

It had a huge run into the investor day. Now what? Yeah, I mean, I think the ceiling on the stock, it's well below the 200-day, Scott. The 200-day is 221. Investors need to know that. I think that you've had such a big run off the low, that 110, back up to close to 200. I think the highs in this stock are in over the next few months. I think where people are going to play it is it continues to be one of the top stocks of the option traders, most heavily traded stocks in the option market.

So I think you'll continue to see option traders trading around the volatility. But I think it needs to digest from here because it's had such a big move off that low. And I think now it's like now you've got to show me what you're doing. Now you've got to improve. Now you've got to grow. And so I wouldn't be adding to the position at this point. I would wait to see if the broad market pulled back to then take the opportunity to add at a lower level. What's amazing is, is that you've had an incredible amount of individual investor money already this year go towards Tesla.

I mean, nearly nearly as much as through the entire 2022, which is something to keep an eye on. There's the stock. Bryn, thank you very much. Year to date, up 60 percent. Speaking of stocks that have moved a lot, but this one in the opposite direction, CrowdStrike as we look ahead to next year, or next week, excuse me. Malcolm, Malcolm, Malcolm, the stock was at 242. It's at 126. Palo Alto delivered. Is this one going to? Yeah, so I'm actually thinking based on Palo Alto delivered. Is this one gonna? Yeah, so I'm actually thinking based on Palo Alto's strong results and the fact that Palo Alto is trying really hard to get to where CrowdStrike is being on premise today, but moving its way to cloud. CrowdStrike is already cloud native. And so I think that Palo Alto's recent move, where they 40 percent almost year to date, is a good signal

for CrowdStrike. And I'm also thinking in tech, where are the places 40% almost year to date, is a good signal for a crowd strike. And I'm also thinking, in tech, where are the places where I can expect to see at least not to lose a ton of money if we do get a hot CPI number and the market starts to sell off in the next few weeks here? I think cybersecurity specifically is the place that I want to be, especially when you consider all these different data breaches that we keep seeing, ransomware attacks and the like from the U.S. Marshal's office, LastPass, places like that.

They're actually starting to to increase at a time when the tech sector is telling us all they really can do is cut headcount and hang on and hope to just ride out the storm. So I think cybersecurity is the way to the way to play it. All right. One of our newest CNBC contributors, Malcolm Etheridge. Thank you very much. You have a good weekend. We'll see you on the other side as we march towards the close here. We're about to get the two-minute warning. That means we're at Santoli's last word.

What is it? Well, look, we've had a pretty broad move here. You can definitely make the argument that it really was just a little bit of a relief pop we've gotten in the last couple of days. But still, the themes that have remained in place, which is smaller cap outperformance over the course of the last few weeks, cyclical areas of the market doing better than defensive ones. You know, if you want a stronger economy, the stock market's saying you should position for one. We just don't know the breaking point on yields. And again, 4% was not necessarily the end all last year when we hit there in the fall.

So, you know, we'll see what we get. Very much depends not just on the jobs number next week. We've got Powell speaking on Tuesday. Oh, right. I want to see in Congress and see how he characterizes where they are in this whole process. I went back and looked at the press conference from the first rate hike meeting last year, almost a year ago, and he was very careful to say, look, it's only in 23 and 24 where you're going to see the effect of anything we do on rates.

They have very much built in this idea that they've done so much and it really doesn't happen in real time. So you shouldn't be reacting to two-month-old data that we got in the job support last time and saying that somehow you have to top up the Fed funds rate from there. So we'll see if he has a sense of urgency or a sense of kind of calm about where they are. I know who has a sense of urgency, Mr. Faster Farther Furman. Jason Furman. He's coming up on overtime, by the way, to lay out the case that he made in the journal today about, hey, go big. And to be clear, he was very early in being somewhat

alarmed at the path of inflation. In other words, he thought it was going to be stickier. He didn't think it was going to come down magically. And he still thinks employment is too strong to get poor inflation down to a comfort zone of the Fed. So this is a very fair debate. We've got to hash it out. And that's why, really, you can only be as confident as the next inflation number that comes along. Yeah, we've been on a three-week losing streak for the S&P 500, which thankfully is going to end today. Getting a bit of a respite today from bond yields,

which have pulled back a bit as we head to a weekend. I hope everybody has a good one. I'll see you on the other side as we send it into overtime with Morgan and John.