Closing Bell - Closing Bell: Bull Market Intact? 5/24/24

Episode Date: May 24, 2024

What does the road ahead for this rally look like? Wharton Professor Jeremy Siegel tells us what he is expecting. Plus, Hightower’s Stephanie Link breaks down the latest moves she is making in her portfolio. And, venture capitalist Rashaun Williams tells us how he is putting his money to work in the tech sector and reveals his new sports investment. 

This make or break hour begins with the bull market, whether it is intact and capable of even more gains. We will ask our experts over this final stretch, including the Wharton School's Jeremy Siegel. He will join us momentarily. In the meantime, take a look at the scorecard with 60 minutes to go in regulation. Got a pretty decent bounce back for stocks today following some revisions to inflation expectations. That sent yields reversing lower, stocks higher. Technology, one of the best groups today. And by the way, the NASDAQ right now is above a new closing high.

So we need to track that over the final stretch. As many of the mega caps, including Nvidia, see nice gains today. Pretty good day, too, for discretionary stocks like Decker's surging after its earnings. It does take us to our talk of the tape, the road ahead for the rally. Let's welcome in Wharton Professor Jeremy Siegel. He joins us now. Professor, welcome. It's nice to see you again. Happy to be here, Scott. So how's this market look to you now, Professor? We got through NVIDIA, knocked the cover off the ball again, and we had a turbulent day yesterday and a nice bounce today at least in parts of the market

by the end of the meeting so we are almost back to all the oxygen after the wrong so no one else could read uh... yesterday uh... i think they settled down and then what i think what disturbed people yesterday was that little chatter in the f o m c meeting minutes about minutes about some people saying, hey, are we done raising? I mean, that would drive a stake into the heart of the bull market. So any talk about that brings a lot of fear. Now, I absolutely do not think that that's

going to happen. I think a little settling down right now. I actually think the forward-looking data that we're going to be getting and really even are getting is going to look much better on the inflation front. So it is a question of how many cuts and not a question of whether there'll be another rise. When's the first cut coming, if at all, this year? I mean, that remains the most sensitive debate within the market. You know, if the economic data comes in too good, then the market thinks we're getting no cuts. If it starts to look a little dicey, then the market says, OK, well, maybe they will cut.

But what do you think? Well, you know, you have to understand, you know, people say we will welcome cuts. But there's a good reason for cuts and a bad reason for cuts. I mean, the good reason for cuts is we see a slowdown in inflation, and that would cause this bull market to keep on going and going strong. The bad reason for cuts is that we see a big slowdown in the economy. And despite cuts, you're going to have a declining stock market in that case. Now, fortunately, we had sort of weak data last week. This week, the data looks a little bit better to me. I'm calmer about it. And I think that, I think this, you know, GDP, most of the, I think Atlanta, Goldman Sachs,

all the others are calling for the low threes for this quarter. And that is certainly good enough to keep this bull market and the economy rolling. Wow. So I think that's why, you know, some make the argument that cuts don't matter. Earnings matter and earnings are good enough to continue to carry the market higher. Had an interview with Rick Reeder, BlackRock, right? Watches a lot of flows and he is in charge of a lot of assets. And he says, Professor, you could get 10 to 15 percent more this year out of this market. Absolutely. I mean, one thing we're going to get the second revision of first quarter GDP next

week and it's going to go down into the low ones. Now, think about it. Low ones, and we have such good earnings with three GDP this quarter. Earnings are going to be so much better. You think earnings are going to just continue to be better, right? Because, I mean, NVIDIA is sort of a perfect example, Professor, where, you know, the critics would say, yes, the earnings were good and they were better than, you know, continuously lower expectations. But all of the really good earnings are coming at the really top of the stack, right? The mega cap stocks. There is no. You know, Professor, I'm going to, I got you.

I'll take care of you. Why don't you grab some water? I've got some other guests here that I can ask some questions to as well. And you let us know when you're ready. Professor Jeremy Siegel, back with us in a minute. Christina Hooper's here of Invesco and Stephanie Link of Hightower Advisors as well. Ladies, good to see you. So you want to pick up where I was talking, Christina, with the professor?

I mean, he's obviously bullish. When I said 10 to 15 percent that Rick Reeder suggested, he didn't say, oh, that sounds ridiculous. What does it sound like to you? It sounds like it can very well happen this year. I mean, clearly the trajectory is going to be up for stocks because we are going to see rate cuts. And it's not just about the Fed. We've got major central banks around the world that are going to be cutting this year, probably starting very soon. And so I think that that momentum is going to be a real positive for the stock market and will be

supportive of. And of course, with yields higher, I think we're going to be a real positive for the stock market and will be supportive of, and of course with yields higher, I think we're going to be able to get some nice money coming from bonds as well. And this is an environment that I think is almost the antithesis of what I would call the anus horribilis of 2022. I mean, we've learned this week yet again

that we're still sensitive to higher rates. You know, the Fed minutes, while backward looking, were hawkish, right? And, you know, yields didn't necessarily like that. And we had this big sell off yesterday. So we're still really sensitive to the fact that rates are elevated. We're just going to brush all that off and just continue to move higher, like you suggest, and like the professor thinks we can, too? Well, we know that it's coming. It's just about timing. You know, if you think about college acceptances, it's the difference between someone who gets in early decision and someone gets in off the wait list. They'll all wind up at the same school and they'll all graduate,

presumably. And so I'm not so worried about the timing. I'm focused on the direction. And the good news is we've got momentum forming by having rate cuts coming from the ECB very soon. And I think the Bank of England, the Bank of Canada, that will provide some positive momentum. Well, what if the direction, let's focus on that. What if the direction leads you to a dead end, right? There's the assumption that you're making that, well, the direction is lower for rates because the direction for the Fed seems to be cuts. What happens if we're wrong?

I'm not suggesting hikes, but what happens if the cuts don't come for longer than we think? And I mean well longer than we think. Well, then that's a time when investors should probably look to add to exposure in UK equities, European equities, areas that will benefit from those rate cuts coming more quickly. Also, of course, there's quite a robust carry trade that is going on right now because of bets around when we're going to see central banks start to cut. Steph, how do you assess this week? How does it color your view on where you think we may go in the weeks ahead? Well, I think yesterday it was a couple of different things. It was profit taking. We were up six percent in the S&P 500 in a month. So there's that. Then it was also this Fed speak all week long that really was more hawkish in terms of what they're going to do on cuts and the timing and maybe get pushed out and whatnot.

And then I think the icing on the cake was the S&P Global PMI data that came in yesterday stronger than expected, but also had higher prices paid index in it as well. So that gave fuel to the inflation staying stickier for longer. You know, I have been talking about I don't think that that we do need to do cuts and I don't expect Fed cuts this year. And that's because the growth rate in the economy here is running stronger than expected. We're above trend. The Atlanta Fed tracker is at three and a half percent. We also have global growth that's picking up.

And I do think not only are we seeing the broadening here in the states in the S&P 500 and other sectors, but you also are seeing other places around the world that are offering opportunities. You know I have been buying the Indian ETF, INDA. So I think you add it all up, and in a 3%, even in a 2% GDP world in the US, that kind of translates, Scott, into about mid-single digits on the top line.

But if the inflation continues to come down, which it is coming down, it's just slower than expected, then the margin story can stay intact. And you just did 10% earnings growth in the first quarter. You're probably going to do 8% to 10% earnings growth for the full year. That's very healthy. Earnings are going higher, not lower, and stocks follow higher earnings. So I'm pretty encouraged. I do not think we're going to be up another 15% from here, but I do think we are going to, not lower, and stocks follow higher earnings. So I'm pretty encouraged. I do

not think we're going to be up another 15 percent from here, but I do think we are going to be up. OK, Professor, you're back with us. Are you OK? Thank you. All right. I'm going to repeat like what Stephanie said. Think about it. Ten percent earnings growth in the first quarter, which is probably going to be revised down to about 1.2. Now, this quarter is 3.2. You know, can we have another 10% or 12% or 15% earnings growth in that environment? The answer is yes. So with this economy moving as it is, and, you know, and the cash on the sidelines, as long as it's not the bad cut because of a real slowing economy, it's a good cut because of slowing inflation. This bull market is absolutely still on track. It just feels like, Professor, that and even some of the data would suggest it from the likes of Bank of America, you know, with their flow shows and things like that, where they track their private client movement. And you have had a fair amount

of money come out and go into cash. What am I to make of that? I mean, some people look at what's happened since the April bottom and say, you know what, it's maybe it's actually better to lean a little out than lean more in. Well, you know, people, you know, kept on talking about how great 5% is in cash. Well, take a look at the S&P. It's up 10% this year. And we're only, what, one third of the year over. So, you know, let's put it this way. Even if the stock market does nothing for the rest of the year, you're ahead in stocks twice the return that you get in the full year on Treasury bills or other short term assets. So the stock market is already dominating the fixed income market. Christina, this is what I was referring to. Private clients rotating into

cash, the biggest inflow since December of 21, the biggest outflow from equity since December of 2023, and the fourth largest outflow over the past 20 years. Now it's a specific cohort, obviously, that they're referring to, but nonetheless, it does speak to a little bit of nervousness that we've gotten a lot of gains in a really short period of time, right? Just we're talking the mid third week of April lows, and here we are in the third period of time, right? Just we're talking the mid-third week of April lows,

and here we are in the third week of May, and we've come a long way. Well, someone probably read a meme that said, sell in May, go away. Well, that hasn't worked. And it hasn't. And I think that the reality is we are going to see skittishness, especially since as much as I was very happy with earnings season,

a significant portion of that earnings growth can be attributed to one stock. And so we need to see a broadening, but I do think we will see a broadening of the market when we feel that rate cuts are imminent. When we start to get those rate cuts, I think that will certainly alter the landscape and make it a far more, a market in which many more stocks are participating. Steph, what do I want to do with some of the sectors that are lagging on the week? You know, financial stocks like Goldman and J.P. Morgan have done well. Financials down 2% on the week. Utilities down more than 1%. I think we're seeing some of the sectors where you saw

some of the most sizable gains are the ones outside of technology, obviously, that are getting hit a little bit this week. Yeah, I mean, I think it's normal. The XLF was up about 12% at its highs. So taking profits makes some sort of sense to me. But the stocks are still very, very cheap. I mean, you're looking at an overall market that's trading at something like 19, 20 times earnings. And yet the banks are trading at something like 10, 11, 12 times earnings and one to one to one and a half times book value with very good capital levels and very good dividends. And so I skew within financials on capital markets because I think that's definitely on, we've seen a trough already.

I think we're seeing on the rise, especially in the IPO market and also in M&A. In terms of utilities, I mean, I think they ran really quickly on this whole notion of the grid, right? And clean and green energy and all that, which I'm a total fan of. However, they have challenges.

They are regulated. There's only so much they're going to be able to see to the bottom line. So if you're gonna play that theme, I think you wanna play some of the industrials. You know where I'm at in that. So I think it's okay to see some pause here. Tech had a pretty good week.

Nvidia was amazing. But I do think that there are other ways, if you think Nvidia was amazing and you believe in the hyperscale CapEx numbers that are going to come this year, you can own a whole bunch of tech, too. So I think it's really healthy to see a little bit of give and take in various different sectors week in and week out. But I like the broadening out that we have been seeing. Professor, I just like your, you've seen so many markets and so many you know stocks that have carried a lot of weight over the years and there's been a lot of hoopla about when you look at nvidia and you

see what that stock continues to do and what the earnings suggest it may still be able to do what do you think about uh it's absolutely astounding and i don't even think I saw a stock like NVIDIA. I don't even think Cisco back in the late 90s has matched what NVIDIA has done over the last two or three years. And by the way, what Christine was saying and Stephanie is saying, I mean, it's true. We had 10% increase in earnings, but it was concentrated at the top. Mid and small caps did not share in that earnings gain. In fact, earnings were down for many of them. And it probably will take rate cuts to really begin to turn around the small and mid caps so they can challenge and outpace those large caps, which we want to see in the broadening out of the market.

Oh, so you wouldn't lean into those areas of the market quite yet. Right now, honestly, I mean, for a long-term investor, yes, because it is going to come. But right now, you know, I've been saying since the beginning of the year, and listen, I'm a value man, so, you know, in a way, you know, I've been a kind of quiet sufferer here in terms of, you know, when is it going to turn around? But I have seen nothing to tell me

that the trends of growth outdoing value are yet to turn around. They will. But in the near term, the trends are still towards those growth stocks. Well, that's not what you want to hear, Stephanie Link, is it? Value investor extraordinaire. No, no. It's not what I want to hear, but it's the reality. I think we talked. I think I think we talked. We have talked about I look at the Russell 1000 growth versus the Russell 1000 value. And in February 9th, the spread was 900 basis points growth outperforming value. And that spread narrowed up until last month to about 400 basis points. And now it's widened back up to 800. So, you know, it's absolutely true. It's being led by technology because those earnings have been coming in better than expected. But I do think that there are still

really good other areas to own, maybe not for necessarily the long term, Scott. I think you want to be diversified. I mean, we just talked about financials. I think industrials, there's a lot of places within industrials that are exciting, especially in what I was talking about before in terms of the grid and that sort of thing. I think some discretionary makes sense. I do think that housing is totally out of favor and hated at this moment in time. And, you know, I'm a big fan that I think we're going to see a recovery. So I think that there are definitely places to be adding to beyond tech. But I recognize, obviously, in the last month that tech has certainly, and growth, has made a comeback.

I'm going to ask you in just a second about these new positions that you have because they're interesting. But I want to get Christina's view. The idea what the professor said, it's too soon, small, mid-cap. I've gotten a lot of calls on this program that said, nope, now's the time you got to do it. Now's the time you got to buy those stocks. And they've had, you know, periods of outperformance, but very small periods of time. Do you agree or disagree? Well, I would say that there's a very close correlation between expectations around rate cuts and the performance of value, the performance of smaller caps. I'm still in the camp that there's a chance the Fed will cut in July. I think there's a very good chance the Fed

will cut in the third quarter, which would mean by September. And so I would argue that sooner rather than later for smaller caps and value getting into them, because I do think we're going to see a bout of outperformance, or at least they're going to keep up a lot better with tech. And that could be very sustainable if we get those rate cuts. Okay, Steph, so we're going to end this with you. We discussed yesterday, I saw this news of a DuPont split, and I said, that's Stephanie Link. And then I asked you about it yesterday, and you said, well, not yet, it's not Stephanie Link. But I'm going to look at it. Well, that was quick. You did your due diligence quickly quickly and you bought the stock. Yeah, I mean, the power of your conversation with me,

it got me thinking. I did a lot of homework on it. I have owned DuPont in the past. I know Ed Breen very well as the CEO of DuPont, who's now exiting, but he's going to oversee this transition into them splitting into three different companies and i i think it's not it we don't have to wait until they actually split for these stock for the stock to work because i think you're going to see multiple expansion as they break down these businesses and you can get and you can use comparisons within each business to other companies and other multiples and these companies are really under undervalued, I think. And so I like the story. I like splits. I'm now into another one, Scott. So I think I'm done now. I mean, I think I'm

tapped out with the amount that I have, but they do work over the long term. And I think they're definitely creating long term value. All right. You also added to Lamb Research and Broadcom and Freeport this week. You know, copper's had a rollover of sorts after being one of the hottest areas. Professor, let me end it with you. And I'll just pick up where Steph was going, right? She likes splits. GE, 3M, this one in DuPont. It says they work over time.

I can't imagine you haven't looked at this or studied this and taught about it. Does it work? Very, very little. In the short run, it really excited. Take a look in the video. It did split 10 for 1. I think that helped the gain.

I don't mean stock splits. Forgive me. I'm sorry. I should have been more specific. Company splits, right? GE splitting into different businesses and 3M and now DuPont announcing it is as well. Okay. I didn't understand um you know what you know there was the age back in the 60s of conglomerates

that's the way to go and then they found out that one ceo can't handle all those different uh uh you know industries and sectors and all the rest and then we find out we can create value through splitting up. I mean, there's some people think if the government ever splits up big tech, some of those companies might be worth more separately than together. So, yeah, I absolutely agree. Get the expertise funneled in one, two, three managements and CEOs. You can outperform. All right, Steph, that sounded like the professor gave you an A on that trade. Two thumbs up. I appreciate everybody's time. Professor, we'll talk to

you soon. Steph, thank you. Christina, thanks as well. Thank you. Let's send it over to Pippa Stevens now for a look at the biggest names moving into the close. Pippa. Hey, Scott, well, Workday is sinking as a narrow miss on subscription revenue guidance outweighs a beat on the top and bottom lines. The human resources software giant noted lower than expected headcount growth among its clients, especially in Europe. Those shares are down 15 percent, shifting to apparel where Decker's Outdoor is jumping after handily beating earnings estimates. The company also reported stronger than expected HOKA and UGG sales, lifting those shares by 13 percent. And Ross Stores is also higher after a strong earnings beat. However, the discount retailer cautioned that ongoing uncertainty in the macro and

geopolitical environments are putting pressure on customers purchasing power. Those shares are up eight percent. Scott? All right, Pippa, appreciate that. Pippa Stevens, we're just getting started here. Up next, Rashawn Williams is back. He's going to tell us where he's putting his money to work in the tech sector these days. Also, his latest big sports investment. He will tell us after the break, live at the New York Stock Exchange. You're watching Closing Bell on CNBC. Welcome back. An interesting story this week from the world of international soccer and a name very familiar to investors here in the United States. Oak Tree seizing control of the storied Italian soccer club Inter Milan.

And that after its Chinese owners defaulted on a 395 million euro loan payment. Collateral backing that debt? Well, it was majority ownership of the club. Inter won the top Italian league title last year, was runner-up as well in the Champions League final. And not the first time Oak Tree has captured control of a troubled European team. It did so with a French club back in 2020. So that makes both Inter and AC Milan now owned by American investors.

Redbird took control of AC Milan back in 2022. More proof that investors here continue to believe global soccer is a key investable asset. You see on the board there American owners of major global soccer clubs. Well, there are many and some of the biggest and most prestigious and valuable for that matter, clubs over in Europe. Well, from investing in soccer to investing in football, we're joined now by one of the newest limited partners of the Atlanta Falcons, venture capitalist Rashawn Williams of Value Investment Group. Welcome back. Good to see you. Hey, it's good to see you. Thanks for having me. Yeah. Congratulations. As one of Arthur Blank's newest limited partners, you just

talked to me about what that means to you to be involved in the NFL. Yeah. Look, investing in the Falcons and the NFL just makes great business sense. I think that's common knowledge. But also to be a part of the Falcons, something that's so special in the Atlanta community. I went to college here. I'm raising a family here. It means so much to the community and the city. I'm just very extremely happy to be a part of it and appreciate and grateful for Arthur Blank for even giving all the LPs this opportunity. What about just the idea of sports as an investable asset? something we've been talking certainly more and more about. And you definitely have seen many, whether it's venture capitalists or investors in

general, private equity, heads of firms, buy into teams, buy teams, the idea in general. Yeah, I think the reason why private equity and venture capitals like myself are so attracted to sports in general is there are a lot of similarities. I noticed that it's not obvious, but a lot of similarities between sports and the venture space. So first and foremost, the leagues are broken down into two different categories. You have the capital call leagues and you have the distribution leagues. Capital call leagues are the unprofitable ones that you have to chip in capital every year or raise money to fund losses. Distribution leagues are the profitable ones, right? So in my world, in venture capital, you have early stage companies that are pre-revenue, just an idea, no traction, no growth, no customers. And you have growth stage that

are growing really fast, but unprofitable. And then of course you have late stage, which is my favorite. That's starting to pop up and become a lot more pronounced in sports as well. For example, early stage sports is like pickleball. Everyone's talking about it, right? Or selling or cricket in the United States, even though it's super popular in India. Growth stage will be stuff like major league soccer in the U.S. Doing well, still growing really fast, but not as dominant and profitable as like the NBA and major league baseball, which would be considered like late stage leagues in

addition to the NFL. So a lot of similarities and, of course, different risk return profiles in each. But it's a very, very exciting space. And I'm happy to be a part of it. And you're seeing a lot more private equity and VCs jump in. Jumping off what you talked about, late stage venture investing being your favorite, obviously segues into what we're going to see in terms of IPOs over the second half of the year. What's your outlook? Well, I think the world is still bifurcated. I remember I was on here last time and we were talking about the tale of two tech IPOs, right? So you have the profitable unicorns that are being rewarded that can go public right now, just like big tech. And those guys can access the capital markets. They don't need money.

They can raise money from anywhere. If they decide to go public, they will be welcomed with open arms, right? But then you have the unprofitable growth stage companies, which are struggling to go public and even struggling to raise capital in the private market to a certain extent, which the market is largely closed off for those guys. And as you know, I'm a very active growth and late stage tech investor. And I have some of my favorites, some of which in my portfolio are going public. But the dirty little secret is most VCs don't want our growth and late stage companies going public at these multiples unless they're getting that premium that only the most profitable and the biggest companies get.

So we're not in a huge rush. Of course, we want liquidity, but we're definitely not in a huge rush to go public when we think if we just waited a little bit, interest rates drop, people are then rewarded a little more, have free access to capital, and we'll get higher multiples and valuations. What are the favorite ones in your portfolio now that you think are going to go public sooner rather than later? I have them up on my screen at all times. Literally, they're screensavers.

My all-time favorite is Epic Games. I've been talking about Epic Games for years. I remember seeing Travis Scott perform live in Fortnite, and it just changed my whole outlook about the metaverse. I wasn't totally bought in at that time, but when I saw what was happening with Epic Games and Fortnite, I just couldn't resist. So Epic Games is my favorite. You also have Stripe. You have Chesty. You have Klarna, Arctic Wolf. So if you find companies in the AI industry, in the cybersecurity industry, in the quantum computing or quantum protection industry, those are the industries driving a lot of growth right now in tech. But my favorites that I think are going to go public in the next several months to quarters would be those five. Yeah. When you look at tech investing in general, we can take the public markets just to get your perspective on it. When you see an NVIDIA

do what it's doing, and then you see mega cap stocks that are really heavily focused on AI doing what they're doing, it's still the game. I mean, the game is all being played in those stocks for the most part. Does it continue that way? Well, I was telling my team this morning in our daily meeting, people eat more at buffets. I think that's the only way I can sum up what's going on right now. You're seeing a feeding frenzy for big tech companies for a reason. Revenue growth is looking more like venture capital.

You're seeing 15% to 30% revenue growth on big tech, where the average revenue growth for S&P companies is usually around the 5 percent. That's kind of entering into my venture capital world. So, of course, you lay out all of this food and and you have all of this variety of people are going to eat. But how long will it last? I think that's only a person with a crystal ball could determine that. But I absolutely think valuations are warranted. I absolutely think these companies have a lot more room to grow and the proof is in the pudding look at the revenue growth look at the earnings they're beating expectations and i think it will continue for the short term all right uh it's great talking to you be well we'll see you soon and congrats once again on the entree into the uh the nfl that's a big deal rashaun williams

joining us once again up next a summer of strength on the horizon the nasdaq on track for a record closing high today top technician ryan dietrich banking this could be a big summer next. With this economy moving as it is and, you know, and the cash on the sidelines, as long as it's not the bad cut because of a real slowing economy, it's the good cut because of slowing inflation, this bull market is absolutely still on track. Well, that was Professor Jeremy Siegel earlier in our program today outlining his bullish case for stocks. Our next guest says this is setting up to be one of the hottest stretches for the market.

Joining me now, Carson Group Chief Market Strategist Ryan Dietrich. Good to see you again. Why do you think so? Yeah, thanks for having me and happy Memorial Day to everybody out there. And 13 years ago, we lost Mark Haynes. So let's remember him, right? But listen, I came on a few weeks ago, Scott, and we said, don't sell in May, go away. Usually May does pretty good, especially in an election year. And sure enough, that's happening.

So we've been on record. We think we could have a surprise, we'll call it, surprise summer rally. And you look at June and August, usually not that great of months. On average, those months are up 1.3% for the S&P 500, Scott, much better than expected. So we can get into some of the other weeds of this, but the bottom line is we had that washout that we saw back in April. And we think, again, kind of like Professor Siegel, I'm not one to go against Professor Siegel. We think the upward bias is still alive and well. Let me ask you a question. You know, this week we got scared for a minute. The minutes of the Fed were hawkish, right? Even though they were backward looking, it still had an impact on the market. What happens if at the Fed meeting, if you're looking for a

summer rally, what happens if at the Fed meeting, if you're looking for a summer rally, what happens if at the Fed meeting, which is not backward looking, okay, in a couple of weeks, what if Chair Powell is more hawkish than maybe we really expect him to be? Does that upset what you say? I think it would, Scott. I mean, I think it would. I mean, we think we're seeing some better news

on inflation with CPI. We've all talked about this a lot. It's all about shelter. We finally see rent prices starting to go lower, so that should lead to OER. Those are some positive signs. If they come out hawkish, yeah, that could upset it. But let's be honest, we hear all these different Fed speakers. We still know what Chairman Powell's been saying. He wants to see the data. I know we've got PCE coming out soon. So we'll cross that bridge when we get there. But I do think, we don't expect that I guess is what I'm going to say here. Okay.

What gets us or what powers us towards this summer rally that you suggest is likely? Yeah, well, it's probably some of that conversation we just had. Some better inflation data, obviously. We just look at the last two days. I mean, some of the economic data that we've seen, this economy is not slowing down. That Atlanta Fed GDP now over 3%. I mean, these are strong. but here's what to think about. Yesterday was 100th trading day of the year. After 100 days, this is the best start to an election year ever. Now, what in the world does that mean? Scott, I found 20 times the first 100 days were up at least 10%,

double digits. The rest of the year has been higher, 85% of the time, with a median rest of the year return of another 10%. What I'm getting at, strength usually begets strength. With some better inflation day, with the economy still strong, those are all reasons. We've been overweight equities for a long time, and we're still in that camp. Okay, so if strength begets strength, does that mean that internally I want to continue to lean into the mega cap tech stocks? We don't think so. I mean, we're more neutral mega cap here when you look at mega cap tech, when you look at it. Why? Well, because we look at valuations, right? We look at valuations and look at a 20-year valuation, two standard deviations above their long-term trend. So

again, that's pretty pricey. And again, under the surface, I mean, just for year to date, 10 out of 11 sectors are higher. Real estate, yeah, it's lagging. But we are seeing more broadening out this year. And to us, we've been adding on any weakness, industrials and financials. I know the discussion before I came on, great panel discussion there. They kind of talked about that. And I agree. I mean, those cyclical areas to us still look good, especially if you get a rate cut or two. We think that can help kind of juice the economy just that little bit more. And we like those cyclical areas, specifically industrials, financials, the rest of this year. Shouldn't you be paying a premium? And I mean, look, it's not like all of these stocks are trading at some crazy premium. You've got balance sheet, you've got cash flow, you've got buybacks, you've got dividends,

you've got AI, you've got safety, alleged. But you know what I'm getting at, right? You should be paying a premium of some sorts for all the things that I just'm getting at, right? You should be paying a premium of some sorts for all the things that I just ticked off, right? Oh, you're right. You've got earnings, too. I think last I checked, that's where a lot of the earnings are coming from. So again, we're more neutral. I'm not saying we're bearish, that group. We have large cap exposure. I mean, but again, when we look into it the next six months or so, I know everyone's just before I came on, you talked about these small and mid caps. We mid caps have been our largest overweight bet, right? The Jane Brady group, if you will, slowly doing really or quietly doing really well this year. And again,

small caps, we've got a slight overweight there. And we, again, the whole theme I just came on with earlier, if you start to get a little better inflation data, we think small caps can do well. One final thing on small caps, they gained 24% the last two months last year. That's one of the greatest two-month rallies ever, Scott. I looked the last 10 times they had that. A year later, higher, like 20% a year later. So I know they're sideways the first five months this year. We're not giving up on them yet.

That's funny. I mean, you say you never go against the professor, but you are in that one. He suggested it's too early for small and mid-caps. You need rate cuts. Well, hey, this is TV. Let's make it interesting. I will go against the professor, but you are in that one. He suggested it's too early for small and mid-caps. You need rate cuts. Well, hey, this is TV. Let's make it interesting. I will go against the professor in this one. I mean, yes.

I mean, we do think that that's still an area. And the professor, he's on my podcast in two weeks. So I'm not one to go against the professor again. But in small and mid-caps, I'm going to bring that up to him. We do like those still, even if he doesn't. All right. Fair enough. We'll talk to you soon.

Ryan, thanks. Ryan Dietrich. All right. Up next, a double dose of biotech movers. We're going to tell you what's behind some big moves today, and we'll do it after this quick break. Closing bell's coming right back. I think 40 years ago, growing up in a small town in Long Island, I don't think I could have ever imagined that I would be running the oldest retailer in America and such an iconic brand, a brand that's dressed 41 out of 46 Presidents and invented many of the trends that we see in business and retail today If you can see me you can be me and I think what makes America so special is that there's plenty of opportunity for everyone out there We're 15 from the bell tracking a pair of movers in the biotech space today.

Angelica Peebles is here with those details. Angelica. Hey, Scott. Yeah, shares of Maris are soaring today after impressive phase two data from its experimental drug for head and neck cancer. Maris in a statement last night also suggesting the results have gotten even better in the months since this cut of data. And that promising news is leading this stock to go up about 36 percent today. And we'll hear more from them next week. And Immunocor on the other end is down today, despite promising data from a phase one trial

of its experimental melanoma drug. Canaccord blaming the move on the market pricing in close to a best case scenario, putting the stock at risk even with perfectly acceptable data. That stock down about 3% today. Scott. I appreciate that. Thank you, Angelica. People still to come. Cooking up gains.

Fast casual chain kava jumping in today's session. We're going to tell you what's behind that move and what to expect when it reports earnings next week. Closing bell. We'll be right back. Do not miss a special edition of Last Call. Live tonight from the Indianapolis Speedway, featuring an all-star lineup of guests tonight, 7 o'clock.

That is ahead of the Indy 500 this weekend. And Brian Sullivan's down there and excited about what he's going to bring to you tonight. I hope you check it out. Coming up, Lucid shares are slipping today. This has the company revealing some key restructuring plans. We'll give you the details and what the move might signal about the EV space overall in the market zone next. We're going to take you inside the closing bell market zone, but you may hear some applause as we're doing that because it is Fleet Week in New York, a wonderful tradition here in the city.

And we have the men and women of our military here to ring the closing bell. You do have Rear Admiral Wesley McCall, Brigadier General Omar Randall are here as well today with Blue Star Families and the company next door. So I just wanted to let you know what that clapping is that you hear in the background. One of the great things that happens here on the floor of the New York Stock Exchange. I've got Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day. Phil LeBeau on today's move in the EV makers and Kate Rogers on why Stiefel is getting more bullish today on Kava. All right. What are you going to take into the weekend? Well, we regained our balance. Pretty much a flat week for the S&P 500.

We've been hesitating around this 5300 level. That minor shakeout yesterday is a reminder that while the trend is healthy, the market is not on the longest leash. A lot of things have to stay in the right zone for things to continue to progress, including yields staying tame, including economic growth not seeming like it's going to reheat too much at this point. Also, we lost some of that eclectic leadership we had going into the week. I was talking about that a week ago. So you had these big reversals in commodities, copper and gold. And so that reflation trade unwound, utilities and banks also reset lower. So it's narrowed out again. I mean, the NASDAQ 100 is back at a new relative high versus

the average stock. And so that's healthy enough if that's how we play defense in this market. But it shows you that yields have to cooperate in order for the broadening to happen. We're on track for another NASDAQ closing high. That tells you everything you need to cooperate in order for the broadening to happen we're on track for another nasdaq closing high that tells you everything you need to know thank you nvidia pretty much yeah um phil abo evs what's going on today well we're in cross control mode that's not new we've known that's going to be the case and we're seeing some specific moves by specific ev companies as you take a look at the u.s ev EV company, we're talking about Tesla, Rivian, Lucid. You see two of them are up, one of them under pressure. Now they're all up for the day. Let's go through the stock specific modes here. You've got Tesla news out of China that

the company is cutting its Model Y production down about 26 percent April versus March. Not a huge surprise. We know about the pressure over there with pricing when it comes to EVs. Also, remember, that is a base, Shanghai, where they export to other countries. So you've got some EV pressure around the world. They're just being judicious in terms of Model Y production right now. And then when you look at Lucid, Lucid announcing today it's cutting six percent of its U.S. workforce as it continues to wrestle with a soft EV market that put some pressure on shares of Lucid earlier today, though it reversed direction late in the day. And then finally, take a look at the Chinese EV companies. We point this out only because this is a case where you're going to see these stocks moving up and down,

sometimes separate from what you see with the U.S. U.S. EV companies related, but separate in terms of how they're trading lately. Scott, I appreciate it, Phil. Thank you, Phil LeBeau. You saw Kava. That's because we are getting more bullish. At least Stiefel is. K. Rogers, tell us. Yes, Scott, that's right. Stiefel out with a new price hike and reiterating its buy rating on Kava, going from sixty six dollars to90 ahead of earnings next Tuesday. The firm writing this morning for our view of mobile location data suggests the company saw visitation improve sequentially throughout the quarter, and we would not be surprised if there was upside to our 2024 comp projection of 5%.

We believe the sales momentum is sustainable, especially given the plans for a meaningful new product rollout in grilled steak later this year. Kava stock up more than 90 percent year to date. It's one of the more expensive for consumer names that seems to be outperforming fast food so far this year as consumers perceive these companies to have better value for the price tag. Sweetgreen, which is the top performing sector stock of the year, also recently rolled out steak. So we'll see. But Kava reports Tuesday same store sales expected to increase 1.6 percent for the quarter. Scott, back to you. Good stuff. Kate Rogers, thank you very much. Micah, turn back to you. Be careful which stock you look for when trying to make a determination as to the health of the consumer, because you could sort of cherry-pick your way around. There's no doubt about it. I mean, if you looked at Kava and Chipotle, where basically they have pricing power, they have a huge runway in terms of further growth,

they can hold up and they can command a premium. And also some travel related still holds up. So it's the consumer cyclical group has actually really had some wear and tear on it in terms of relative performance. But I don't think it's because in aggregate consumers can't spend. It's because they sell more goods and you're starting to lose some of the pricing pressure I think that's just one of the worry points that we're trying to get beyond in the market we see if we can I don't think by any means the overall market is priced for perfection but it's still priced for things to stay in this in this sort of central expectation of further disinflation the

Fed can keep rolling ahead the first ease, but it can't be forever. So NVIDIA kind of closes the door almost officially on earnings season. We'll get some retailers next week, which are going to be important. But the other catalysts are what? Waiting for inflation data? I think Friday's PCE and yields. And we do have some some treasury supply to come next week. We'll see if we can absorb that. You know, the two-year Treasury yield is within about eight basis points of the highs above 5% from May 1st. So it's not as if the market stayed up here because we think we're getting cuts anytime soon. So far, we've been able to handle it with a strong economy. Good luck weekend to you.

You as well. All of you at home or wherever you're watching see the bell ring ahead of this Memorial Day as we honor those who serve and we remember those who have fallen serving this great country. See you on the other side in a little bit.