Closing Bell - Closing Bell: Can Anything Derail the Rally? 7/24/23

Episode Date: July 24, 2023

With the Fed decision and the busiest week of earnings looming … can anything derail this rally? iCapital’s Anastasia Amoroso, New York Life’s Lauren Goodwin and NB Private’s Shannon Saccocia give their expert takes. Plus, star venture capitalist Rick Heitzmann breaks down the under-the-radar tech stocks he is watching ahead of earnings. And, RBC’s Biraj Borkhataria upgraded Chevron last month … and weighs in on the company’s latest numbers.

Yes, it does. And welcome to Closing Bell, everybody. I am Brian Sullivan in for Scott Wapner. Thanks for joining us. All right. This make or break hour begins with a win streak that just won't quit. The Dow on track for its 11th higher day in a row, folks. That is the longest such streak in six years. And we are closing in on the all time record of 13 higher days in a row for the Dow, set all the way back in the halcyon days of 1987. That said, here's your scorecard. Listen, things can still happen in the last hour. The most important hour of the trading day, I'm told, by shows such as this. The Dow up about one half of 1%. The S&P, Nasdaq, and Russell all higher as well. By the way, watch small caps. They didn't do anything to begin the year. They're kind of slowly starting to percolate up. Just something to watch. All right. All that brings us to our talk of the tape. You got the Fed decision on Wednesday. You got a very busy earnings season. Can anything derail the rally? Should all the bears, if there's any left still growling around, should they finally go in to hibernation? All right. Let's ask Anastasia

Amoroso, iCapital's chief investment strategist, who joins us here at Post 9. Anastasia, good to see you in person. Good to see you, Brian. On a Dow 11 days, I mean, to what's happened? I don't understand what changed from two weeks ago. Well, that's the point, is that not much has changed, meaning the technical backdrop is still absolutely constructive for stocks, meaning if we stay around these current levels, we're going to continue to trade above all the key moving averages. We're going to continue to trade above all the key CTA, commodity trading advisor thresholds. And that means there's no

reason to sell. And that's what hasn't changed. There's not been a catalyst to sell. And when I think about this week, you know, we're going to just a monster week for central bank meetings. We've got the Fed, we've got the BOJ, we've got the ECB. But if the Fed does, in fact, deliver the last rate hike, that's supportive for stocks. And if big tech earnings deliver this week, that's once again supportive for what's been driving this market all year long. So now much has changed. But in this case, that's a good thing. Well, we got a lot to you said a lot. We got a lot to unpack that acronym soup with all the central banks. But let's go back to your first point, which is technicals and the CTAs. A lot of people, you know, maybe they're sort of vaguely familiar with these CTAs.

Explain who they are and why they matter so much, particularly for short-term momentum. Sure. Commodity trading advisors. So these are systematic investors that invest based on certain thresholds and they chase trends. And so when the trend is positive, there's no reason to sell against that trend. So they stick with it. And if you think about CTAs in particular, they were sort of the first part of the market. They catalyzed this rally back in even before April. The reason was they're not very long stocks at all, but they were adding length. They were adding incremental beta exposure to the market. And as they did that, that kind of took us higher. And then as long as CTAs keep that length, as long as they don't sell, that's not an incremental seller to the market. And that's a really good thing. Now, you can't solely rely on that one player in the market,

but it's hedge funds, it's retail investors. And I would tell you, Brian, that everybody is sort of in this chasing mode and the animal spirits are back. I mean, the retail trader is back. You know, we're not back to sort of the 2020 levels, but there's definitely some retail exuberance that's creeping back into the market. You know, we always talk about hawks and doves. You talk about CTAs. I know a few of them.

They've got the attention span of another bird, a pigeon, meaning they will turn quickly. Right now, they're all long. They're all buying stocks every day because these technical levels. Yeah. Do you anticipate these levels? We're breaking through some resistance. We're hitting whatever it might be. Yeah. The short term momentum to continue. But when it does turn, could they have the the opposite effect? A hundred percent. Absolutely. You know, for now, as long as we hold above these key critical levels, they're not going to be huge buyers in the market, but they're certainly not going to be sellers. However, you're right, Brian, if there is a catalyst that requires a sell, then you could have some significant selling pressure

come from this particular pocket of the market. How important is the Federal Reserve decision on Wednesday? It's important, but I don't know that we're going to get any big, you know, surprises from that. I think the Fed is going to deliver the rate hike because they sort of said they would. And, you know, then they're going to probably deliver a hike and a hold because they also have this sort of propensity to want to do that right now because of how much they hiked in a short period of time. So I don't think we're going to hear that much new information. You know, Fed Chair Powell.

You're supposed to ramp up the adrenaline and the excitement. This is CNBC. Come on, you're going to be like, it's going to be the most important Fed meeting ever. Well, here's one thing that Fed Chair Powell may say that, you know, we'll be kind of throwing back to the hawks, which is he may try to sound hawkish. He may try to say no cuts in the horizon. Maybe there's going to be more hikes because he does not want the markets to begin to price in rate cuts. So for that reason, he may sound a little bit more hawkish than maybe what people anticipate. Great cuts. We're there again. We're at that point in life again now where the rate cut was mentioned. Yeah, but here's where I would anticipate, Brian, a potential for surprise, and that is Bank of Japan.

You know, nobody's really talking about Bank of Japan, but, you know, the yield curve control is still there, which is 0.5 percent either direction. But by the way, inflation in Japan is 3.3 percent, you know, well above targets. And it's been there for over a year. So to the extent that Bank of Japan surprises us to any extent with potentially widening the ban, could have a knock on effect on U.S. Treasuries. All right. Let's broaden the conversation out. We're also going to welcome in Lauren Goodwin of New York Life Investments and Shannon Sacocha of NB Private. Well, Shannon, obviously also a CNBC contributor. Lauren, you've been sitting here listening to Anastasia. Anything you agree with, you disagree with?

What is your take for clients right now? You know, actually, in our world, everybody's paying attention to the Bank of Japan, not only for Japanese monetary policy. You need to hang out with different people. But also for U.S. long rates. We just had our mid-year investor roundtable where everyone gathers and talks about the things they're looking at, agrees, disagrees. And the number one risk that folks talked about was not recession, but U.S. long rates, in part due to changing supply and demand factors in the long end of the curve, which the Bank of Japan would have some meaningful influence over if yield curve control were changed.

And the reason is that over the past several years, long rates outside of the U.S. have been negative in many countries, which improves demand for U.S. long rates. That's no longer the case in many countries in Europe and may soon not be the case anymore in Japan. If interest rates were moving significantly higher because of a changing investment environment in the U.S., then rates can stay higher sustainably. But if they're moving higher because of a strong fall off in demand, that's a more risky, more volatile situation for investors.

Shannon, though, and I hear all that, and we can dive into the bank of Japan if we want, but it is I'm looking at a Nasdaq QQQ that's up 41 percent this year. Globally, Brazil up, what, 23 percent. I think the Nikkei, it's up as well. Mexico is outperforming the United States, at least the S&P. It's up 25 or so percent. I mean, this is like global stock market inflation. How much longer can it last? Well, Brian, we have a significant amount of money that remains in the short end of the curve. And I think that one of the things that investors were anticipating as we came into this year was that there would be a reassessment of risk. And if we saw movements out of cash and short-term bonds, that those would likely be balanced between equities and perhaps longer-duration fixed income. There's a lot of firms, including ours, that are talking about potentially lengthening duration to lock in some longer

yields. But investors, whether you're talking about retail investors or institutional investors, as well as what I would say are short term traders, have really piled back into equities on the other side of this. And I think one of the challenges right now from an investment perspective is just what you talked about in terms of the rapidity of the moves that we've experienced this year and the multiple expansion coming on the back of continued margin compression. So there are a number of sectors and industries, as well as geographically some global markets, that are very stretched from a valuation perspective. What is the catalyst for that valuation to be realized? Do we anticipate that we've already experienced an earnings trough? Or is there more pain yet to come in the second half of the year?

And I think that's why, Brian, you're seeing such a wide disparity between strategists' expectations for the second half of the year, because it really hinges on the multiple expansion that we've experienced. Is it justified? And I think this week is going to be particularly pivotal in trying to determine that. Yeah, I mean, to Shannon's point, I would actually, Brian, argue that the multiple expansion has been justified because we have managed to avert a recession so far in 2023. And whereas everybody was talking about a hard landing versus soft landing, now more and more people are in the soft landing camp. And actually- Or no landing.

Or no landing. Maybe that's actually the right conversation to bring back up because several notes caught my attention over the weekend is that we're now talking about growth reacceleration and what that may look like later this year or even in 2024. And it's interesting to Shannon's point, we did cut back earnings estimates or consensus did for both 2023 and 2024. And we're now actually starting to see upwards earnings revisions. And that also kind of brings me back to some of the technology names that are going to report this week. And yes, tech valuations maybe have gotten a little bit extended. But when you look at it in terms of price to earnings to growth, and when you account for what is going to be a multi-year artificial intelligence growth story,

those tech stocks are not trading all that expensively. So I like that in this market. Something that I just add to this dynamic is that one of the reasons why we have seen multiple expansion for the last nine months is because financial conditions have improved over the last nine months. Despite the Fed hiking monetary conditions, financial conditions, the way they work their way through the market, have actually been easing. That's a, and the equity market. What does that mean? It means that market conditions, the, and the rate at which companies are. The motor oil of the stock market. Exactly. The, the, the rate at which

they're having to actually absorb those higher costs has not been as profound. And it's one of the main reasons that bolsters the no landing case, this idea that actually monetary conditions aren't tight enough yet to slow the economy. The challenge I have with that story, at least in terms of a medium term optimism for investors, is that if that's the case, then inflation is going to remain sticky and the Fed's going to be more assertive. And that's an environment where in the next six, nine months, you may have an actually more challenging environment for equity markets than if we saw the economic activity slow now. Well, Shannon, listen, if you don't have to live anywhere, eat or drive anywhere, inflation is great. But I mean, and my point there is not to be cynical.

It's that I don't know what the Federal Reserve can do about housing costs. They're raising rates, but so far, no real dent in housing, at least not in some markets. I'm sure there are some out there in the country as well. Energy costs have kind of come back, but they're still higher than they were a couple of years ago. You know, I just don't know. When do we stop with the inflation conversation or do we never stop talking about it? Well, I think I think that we probably don't stop talking about it, at least for the next

several years, Brian, because we're facing some demographic challenges in terms of the labor market. We're facing the fact that we had this explosion of liquidity that benefited consumer balance sheets. Although we started to see the savings rate start to come down, we're actually seeing that rebound over the last couple of months. And so that margin of safety that everyone was talking about that would start to deteriorate for the U.S. consumer really hasn't come to fruition. But we are seeing economic deterioration. I just want to, you know, sort of point that out because we're talking about soft landing or hard landing or no landing. There's a lot of leading indicators in the U.S. economy that point towards a continued slowdown or contraction. I think for us, what we're watching, Brian, in terms of that

inflection point of whether we're coming out of the other side is the pace of economic deterioration. And when that starts to stabilize, you're right. You're going to start to see investors increasing their risk positions, allocating to equity. I think the last thing I would point out is that we're talking a lot about the markets that have done well in the first half of this year. A lot of that has been on a weaker dollar scenario. So going back to the initial question in terms of who's looking at currency markets, I think we all should be

because that weaker dollar scenario certainly has longer legs to it if that continues. I guess if and Anastasia and Lauren, each the same question to both of you, which is earnings are key and I get it. We know that it's like seven stocks sort of drive have been driving the S&P 500. I don't know if any of those seven stocks cares what the U.S. consumer, does Microsoft care about the consumer? Does Apple maybe a little bit with iPhones? NVIDIA probably doesn't. Does Google maybe with advertising? I just don't know if those companies have almost any connection anymore to the macro U.S. economy. I don't know. I think they do, Brian. I think they absolutely do. I mean, you mentioned the social media companies and, you know, through a lot of the analysts notes,

again, over the weekend, going into their earnings for Meta and Snapchat and others, there are positive sentiment there. And the reason being is that as long as the U.S. consumers on solid footing, the U.S. consumer spending and consumer confidence is rising. But Snapchat's not moving the overall market, Anastasia. Well, that's true, but meta does, right? And, you know, the fact that consumer's strong and the online advertising market is picking up, and by the way, the estimates for digital online spend have been upgraded to 9.7% versus 7% year over year just a little bit ago. So you do see that follow-through, and I think that's definitely beneficial for social media companies. And then you're right, though, Brian, if you talk about, you know, the Microsoft's of the world. Yes, there is the consumer component, but there's the there is the enterprise spend component. But

it was all one of the same. You know, it's one of the big consumers are strong. Corporates are going to everybody. So on one side now, although Marco Kalanovic, JP Morgan coming out today and saying he's reiterating his negative bias. But again, it's been very, very positive so far. What if Microsoft misses? What if their guidance is not good? I mean, what what happened? Is the market that it feels like the market could be really at a vulnerable moment? Two really important things with respect to market vulnerability. First, I agree with your point. And one of the most common myths in the market is that the market tends to foresee and price recession before it happens.

That tends to be the case on the way out of recession, but heading into recession, until you see unemployment claims durably rising and earnings falling off, the market doesn't reflect that economic risk. And so there is a risk to the market. There's been a risk to the market. And this is where perhaps Anastasia and I overlap a bit, as though while I have a more

concerned economic outlook, we're holding by the skin of our teeth. You work for an insurer. That's kind of your whole five. The digital science looks deep in me. Your job is to worry about like 3% outcomes. Exactly. Right? What if it gets killed by a hay bale? I mean, you know, you've got to worry about things like that. So I get it.

But from an investment perspective, I think that even as people, or what we're seeing rather, is that even as people have pushed their recession timeline out further, they are not pulling off the sidelines until actually these last couple of weeks. Which I would argue that a durable decrease in inflation has actually been improving the investor sentiment. Even if you expect recession, as I do, to come at the end of this year, that's in some ways an optimistic scenario because it's a milder recession. And there have been changes in the last couple of years, higher quality, high yield asset class, huge investments in infrastructure that investors can be leveraging even through a slow. I like it. The no landing that which is great for the markets, bad for flying. But other than that, Anastasia, Lauren, Shannon, I got to ask you a question before we go. Unrelated to the market. You're in Boston or Massachusetts, right?

Correct. So I got to ask. I just heard about this. Some guy I know ordered a clam chowder to start the meal and then got a chili as his entree. Is that acceptable? It's completely acceptable. Clam chowder is an appetizer at any time here in Boston. But with chili as the entree, can you go from like, is that, I don't know, I don't think, what? It doesn't seem good. It's surf and turf. Surf and turf, Brian. Surf and turf. What's the turf? I guess, yeah, the turf. There you go. Shannon Sacocha, thank you very much. Lauren Goodwood, Anastasia, thank you very much.

Folks, that should be our Twitter poll. Is it okay to eat a bowl of chili if you have clam chowder as your appetizer? No way, but I want to hear from you. Here's the official question of the day. We want to know, will tech earnings derail the tech stock rally? You can head to CNBC closing bell on Twitter or X or whatever it's called to vote. We'll share those results a bit later on in the hour. Now, let's get a check on some top stocks as we head in to the close. Christina Partsenevelis here with that. Christina. No clam chowder. But

Chinese tech stocks rebounding today amid optimism that China's government might be slowing down its crackdown on the sector. Names like Bilibili, Baidu and PDD. PDDs are among the names in positive territory as the K-Web ETF heads for its best day since only mid-May. And Spotify is lower as the company hikes the prices of its premium subscriptions by $1 or $2 per month, depending on the plan that you have. The move comes ahead of Spotify's quarterly earnings report out tomorrow morning. Shares having their worst day since December,

down over 5%. Brian? Christina, thank you very much. All right, we are just getting started here on Closing Bell. Up next, the big return of IPOs. Your next guest forecasting a comeback in the space. We're going to break down what that might mean for the broader market ahead as we are live here at Post 9 at the New York Stock Exchange. All right. Welcome back to Closing Bell. So far this year has been a relatively tough year for investment banking. If you can have a tough year in investment banking with a sharp decline in global dealmaking and a largely frozen IPO pipeline.

But your next guest says there has been an uptick in the second quarter that could signal improving strength in the back half of the year. Joining us now is Leon Calvario. He is the chairman of the institutional clients group at Citi. Good to see you, Leon. So what are some of these positive rumblings under that market hood? Nice to see you too, Brian. It's early days. The positive rumblings are you're seeing some IPOs getting done. We saw the very, very good one for Kava and a few others.

Way oversubscribed. Good investor demand. And I think the reality is the investors are coming back, but the issuers have not yet really fully decided to test the water. So the IPO market is still very, very dormant. Most of them have been corporate carve-outs like Kenview out of J&J. There's going to be some more separation activity. But what you're not seeing is what I would call the high growth, multiples of revenue, no earnings IPO. Well, Kava did the Mediterranean Chipotle or whatever they call it, Kava, the restaurant chain.

It did pretty well. It did very well, but it's won. There was a recent one last week with a company that does Il Makiage. That did very well, too. These are early, early signs from an IPO standpoint, but it's not yet turned into a flood. And I think it's going to take a while. Are there good companies waiting to go? There are a number of companies waiting on the sidelines. And what they want to ensure is that they're good, good investor demand and reasonable valuation. And I think the thing that people are looking at right now is trying to get to valuations that are going to get great investor demand.

But also, as you know, Brian, the class of 20 and 21 and part of 22 was not exactly a barn burner for IPOs. They traded down dramatically. And I think people want to ensure good aftermarket performance and ensure that their investor base is reasonably rewarded and also

their employees because employees have been waiting around a long time for liquidity here does the ipo market matter for the overall stock market performance and if so how much i think it matters somewhat now we're looking today at markets that are getting close to their peaks i was looking this morning going back on historical numbers. The market has come back here dramatically. As you know, the Nasdaq largely being driven by seven stocks. So you've seen that. I think the IPO market is one piece of it because it shows people are willing to take on new issues and willing to price them.

But it's not the overall market. It's only one component. The other, obviously, being M&A, which is starting to come back. What do you mean the market close to its peak? On what level? In terms of you look at the numbers on the NASDAQ and the absolute numbers of where the indices are, they're getting very close to where they were. You know, from a historic peak standpoint, they're all probably 5, 10 percent, depending on what you look at. And again, these are indices. So when you peel it back, not everyone has been treated the same way, especially in the NASDAQ.

Really interesting stuff, especially the market peak commentary. Leon Calvario, City, appreciate it. Thank you. And good to meet you in person. Nice to see you, Bob. All right. Up next, your tech earnings playbook. Star venture capitalist Rick Heitzman is here, and he's going to flag some more under-the-radar's watching this week that is after the break and tomorrow do not miss game

plan high-powered event hosted by cnbc and boardroom bringing together a bunch of cool people across sports across business across money for details you can scan the qr code on your screen or visit cnbcevents.com slash game plan closing bell we'll be right back all right like the overall markets technology is trading higher today it's all ahead of the busiest earnings week of the season you got microsoft alphabet meta all set to report this week but your next guest says he's looking beyond some of the mega cap earnings to determine the strength of this tech rally. He's bringing in Rick Heitzman of FirstMark Capital. Rick, good to see you in person.

Good to see you. So what are, if you're not looking at those names, who are you looking at? Looking at the next level down. Looking at the Pinterest, the snaps of the world. Why? Because enterprise is getting weaker. So, you know, with all the cost cuts, enterprise sales cycles are elongating. CFOs are coming back and cutting costs.

But the consumer remains strong. We're seeing, especially in travel, especially in advertising, those companies are continuing to perform, at least in the short term. I've been given all the brouhaha around Twitter and threads or X and threads, whatever. I've been forced to look at ad data from some of these companies. Happy weekend. But I will say this. I saw some numbers on Snapchat where either their ad traffic

or their ad revenue was up like 170%. I thought Snap was like almost dead. No, they're still there. They're still there. They're capturing a lot of revenue. If you want to see all the Barbie ads, all the Oppenheimer ads, as movies are back, that's where you find people, back to school.

And those ads are working. And they're proving that those ads, whether they be direct response ads and search ads on Pinterest or more broad-based ads on Snap, they're working and folks are buying them. Yeah, and now that Twitter's private, unless they choose to reveal information, we're not going to know exactly what's going on there. But you're also seeing ads come out of Twitter, right? For a million different reasons. We think, right? We think. Again, do we know that? He said that revenue's down, right? So we know revenue's down. It's not like people are leaving the digital landscape. It could just be a lower quality advertiser, right? It's not General Motors. It could be some t-shirt company. And they're paying less. Correct. And they're paying less, and therefore you're sickly going down.

But where does General Motors go if they want to announce the new electric vehicle? They're going to other digital ad platforms, which is benefiting the Pinterest, the Snaps, even the Spotify. Is it really all Facebook? I mean, Facebook and Instagram? It's a lot of Facebook and Instagram. They can only absorb so much. And you can only get certain ROI there, which is why people are looking at that next level of place where you're going to get better direct response, a better return on your investment. Is anybody advertising a newspaper anymore? I mean, I don't want to sound like a relic.

When was the last time you bought a newspaper? Well, in my industry, I subscribe to a lot of papers online. I actually do get hard magazines at home. Oh, you still do? Okay. Yeah, because I realized I wasn't reading them on my iPad. Yeah. If road and track is sitting in front of me, plus I fly a lot, so it's handy on a plane. Yeah, it's easier.

But you get my point. Like, is it just totally dead? Totally dead. Because the media is kind of important, right? Trusted media, the news. Yes. Well, you want to support them and maybe whether it's- Especially now.

How are they going to survive? Well, they're moving to digital, right? New York Times has actually flourished in the digital age. But are they getting ads on the New York Times website or is it just subscription model? Both. Both. So they're constantly playing with what the ad load could be. How does that work? What are people willing to pay to subscribe? What are people willing to pay to subscribe without ads? If you think about where Spotify is, where you think about where Netflix is going, how do you use the mixed media model? But there's still some ads and people are getting direct response in those ads and it's propping up the media stocks. You always wonder what's the actual click-through rate on any

internet ad. I mean, sometimes you do an accidental mouse click on something because you hovered over it too long or it moves around. Getting a little bit off topic, what is going to be the most, if you had to pick one company's earnings this week, the most important? I think probably two. I would say, hey, what's going on in consumer? And is that thesis I just told you going to play out? You're looking at Pinterest and you're saying, hey, is the consumer still strong? Are the advertisers still strong? Are you still driving return on investment there? Because Pinterest is pure consumer. Pure consumer.

So it's both consumption on the user side as well as advertiser strength. Any mega cap. I know the intro was like, oh, look past the mega caps. I get that. But aside from the metas, the Facebooks in the world, is Google a tell for anything? I wouldn't say Google. My second one was going to be Microsoft. Okay, why?

So on the enterprise side, are they, in times of elongated sales cycles, are they able to bundle a little bit better? Are they able to add teams to fight with Zoom? Are they able to bundle some of their enterprise offering and get stronger in the enterprise in advance of some of the things they're doing on the consumer side

with OpenAI and the new Activision. Well, that's it. I mean, how much, because you asked me when's the last time I bought a newspaper. I'll ask people when's the last time they bought Microsoft Excel, but it just comes packaged up. Comes packaged. But yeah, when's the last time we bought a window? When's the last time we bought Windows? Someone buys that for you every year. I know. And clearly something's happening because they've like tripled the value of Microsoft quickly, though. When you look at a company like a Microsoft, how much could AI and they don't own, but they just invested in still 10 billion, a lot of money. How much could I really add to a Microsoft? Or is it over? Is

there any chance AI is overhyped? Oh, yes. There's facets of AI that are overhyped and facets that are underhyped. People are attaching AI to everything now. And, you know, is AI really able to do jobs that could create something that's differentiated? At Microsoft, I think where they could be really impacted is on the consumer side and their ability to use open AI and chat GPT and to really power their consumer side. And whether that's giving Bing a lift or powering their other things that are interoperable to really create something on the consumer side they've been struggling with for 20 years. Well, you'll be busy this week.

And Pinterest is out in a couple days, I think. I think it's maybe next Monday. Yeah, I think it's maybe next Monday is right. We're watching Pinterest. We have interest in Pinterest. Of course we do. Thank you, Rick Heitzman. Appreciate it.

Good seeing you. All right, later on, on a show called Last Call, 7 p.m. Eastern, we're going to talk much more about Elon Musk and the new X and what exactly is going on there with that guy. Walter Isis is going to join us tonight. Last Call, 7 p.m. Eastern. I heard the anchor of that show is really good. Tune in, if anything, just for that. All right. Up next, we are tracking the biggest movers as we head into the close.

Christina Partsenevelis is back with some of those movers. Christina. Well, the power of the FDA drives one medical name higher, and more renters means more money for D.R. Horton. I'll explain all of that after the break. All right, welcome back to Closing Bell. We've got 22 minutes left until that Closing Bell. Let's get back to Christina for a look at the key stock or stocks dealer's choice to watch right now.

Christina. It's always plural with me, many. So let's start with D.R. Horton getting an upgrade to outperform at Raymond James with $160 price target. Analysts are citing what they see as a impressive rebound in home building margins in the company's earnings report. Last week, shares are up just around almost under 2% right now. And medical tech firm Becton Dickinson is at an all-time high right now as the FDA allows it to bring its drug infusion system back to the market. Raymond James also upgrading the stock to outperform,

saying they expect investors to gain confidence with its growing profile. Analysts at Jefferies and Stiefel also hiking their price targets on the stock, and that's why it's up almost 6% right now, trading around $280. Brian? Christina, thank you very much. All right, last chance to weigh in on our question of the day.

No, not the chowder chili thing. We asked, will tech earnings derail the tech stock rally? Go to at CNBC closing bell on Twitter slash X. We're going to bring you the results after this break. All right, now to the results of our question of the day. We asked, will tech earnings derail the tech stock rally? A good majority of you, what is that, 59.4% of them going blind, said no. 40.8%, whatever the number is, said yes.

Still a lot that said yes, but the majority saying no, they will not, which means you're expecting some good numbers. All right, up next, we're going to drill down on Chevron. That stock popping today. You've got earnings and a big management change. We'll talk more about that, energy, Chevron all ahead when we take you inside the market zone. That is next. All right. Welcome back. As the snazzy animation suggests, you are now

in the market zone. I dreamt about it last. I've been waiting all day. We're finally here. Wells Fargo. Scott Renn is here to break down some of these crucial moments of the market zone. I dreamt about it last night. I've been waiting all day, and we're finally here. Wells Fargo's Scott Renn is here to break down some of these crucial moments of the trading day. We've also got Baraj Bokateri of RBC Capital. He's going to give us his outlook on Chevron. They posted some numbers, had a major change. CFO retiring, got a new one coming in. And, of course, Christina P. sharing what to watch with NXP earnings after the bell. Big lineup here in the market zone.

Scott, I hope you are as excited as I am. By the way, before we get into more, how would you have answered that question? The Twitter poll, will big tech earnings, will they derail the big tech rally? Would you have answered yes or no? I would answer no. I mean, we stepped out of technology. But, you know, the earnings risk premium, Brian, and you probably know this, I mean, it's negative on the tech sector. So it's been negative.

So, you know, I don't necessarily think that a so-so earnings season is going to really drag down technology. Is there one name that you're more concerned about than others, like a Microsoft? Like, is there one you're like, that's the big one? Well, I mean, I think that is a big one. And there's a handful of big ones. But, you know, let's face it here, Brian. If people have done their homework and they've listened to what these companies have said and they know what the economy is doing, you know, earnings are a confirmation process. I mean, it's what happened over the last three months. It's history. We need to look forward here. So hopefully for most people, earnings reporting season is just confirmation of what they thought was going to happen over

the course of the last three months. I think there's like 3,500, don't quote me on the number, Scott, like 3,500 publicly traded companies that are not like penny stocks or super micro caps. Is it true? And is it possible? And if it is, is it good that literally $34.95 don't matter or $34.90 don't matter and $5 to $10 do? I think that when the market, usually when you're rising into a top, a meaningful top, it's very narrow. The good thing, Brian, is that over the last five weeks or six weeks, you know, the S&P 500 equal weighted index has been in line to maybe even beating the S&P 500. So the broader market is a good thing. Narrow markets typically mean you're approaching a top. You get my broader point, though, Scott, which is,

let's say I just own like the Russell 2000 ETF or something like this. And, you know, Apple disappoints. Then the Russell 2000 goes down. I'm thinking, what does Apple have to do with the Russell 2000? But we know that's what would happen. Well, that would happen. And so, you know, you have to think about when you think in terms of ETFs and the Russell 2000, you have to think small cap stocks outperform early in a cycle, halfway through a recession or a slowdown, that's when you look to buy the Russell 2000 and ride it for the first half of the cycle. You don't do that really when, you know, the economy is still slowing down. We think there's going to be a recession. You know,

this is not the time to love the Russell 2000. All right, Scott Wren, big week this week. Scott, we appreciate you joining us. Thank you very much. All right, thanks, Brian. Speaking of single stocks, oil company Chevron climbing today on preliminary second quarter results. CEO Mike Wirth talked about Chevron's performance on CNBC earlier today. We've got good business momentum and we're delivering strong results in what's been a turbulent world. You go back to the pandemic and oil prices below zero, the war and prices above $100. We've acquired three companies over the last three years, and we still have the constant discussion about climate and ESG. So it's a challenging environment.

RBC analyst Barrage Bukateri upgraded Chevron last month to an outperform rating with a 180. Target, Barrage, I know it's late where you are in the UK. Thanks for joining us. RBC analyst Baraj Bukateri upgraded Chevron last month to an outperform rating with a 180 target. Baraj, I know it's late where you are in the UK. Thanks for joining us. Should we be concerned also what happened, by the way, the CFO, Pierre Brevet, he retired. Should we be concerned about that if we own Chevron stock? No, thanks for having me on. No, I don't think we should be concerned. So obviously it was a surprise to a number of investors and I'm sure. But this is a company where the strategies were clearly laid out, as Mike just mentioned on his segment.

You have an orderly transition, so PLB around until March 2024. And you have an internal candidate who's taking over as CFO. So you may be concerned if you thought the strategy would change or shift or anything like that. But actually, with a very clearly laid out strategy and a lot of strategic consistency in the last few years, I don't think it's a concern at all. Yeah, the stocks at 161, they've had good numbers. The stock hasn't really moved a lot. In fact, it's down from its highs of about a year ago, although well above where it was pre-pandemic. We keep hearing the macro theme that energy, particularly oil and gas, is, quote, uninvestable, right? Institutions, pension funds, they're dumping it as part of ESG. You obviously disagree. Energy is investable.

But why hasn't Chevron done even better than it already has, given their numbers? I think, well, the environment was also moderated somewhat. I think if you look back at the exceptional environment we saw through 2022, you know, oil prices are lower, gas prices are much lower, refining models are much lower. So in that context, I think the shares have been performing too poorly. Obviously, you could see the multiple creep up higher if you think the ESG concerns and so on moves away. But I think what we're looking for is in these companies, they're mature businesses. As long as you can compound over time, grow earnings, consolidate the sector, which is a mature sector, I think the outlook for Chevron over the medium and long term is actually really constructive. First time we're probably ever bringing a Borat reference to Chevron, but I'm going to do it

anyway because this big Kazakhstan project is a huge deal for CVX. How meaningful is the Kazakh project to earnings, maybe not right now, five years out? Yeah, so this is outside of the Permian. This is the single biggest area of capital that's been going the last few years. And you have two projects ongoing at the moment. One is to extend the life plateau of production currently. The second is to add another 150,000 miles a day net to Chevron. So it's very meaningful. It would probably be the first or second single source of

earning growth outside of inorganic activity in the next few years. So it's very meaningful and it's encouraging to see progress on track and commissioning on track and on platform. You like Chevron. Is there any other oil and gas need to be covered that you like more or as much as Chevron? So our global topic is Shell. I think what you're seeing with the European majors is they've been on a bit of a journey in the last few years, plowed a lot of capital into low carbon areas, maybe not necessarily get rewarded for it to the same extent as they thought. And so you've seen some course correction there. But ultimately, what I look at in the sector in a global sense is these are, broadly speaking, doing similar things.

And so I want to own the ones trading at deep down dollars, and that's where Shell stands out. Yeah, I mean, listen, the new-ish CEO of Shell, Wael Sawan, I mean, I've interviewed him. The guy seems to be laser-focused on making money and avoiding projects that don't make money. Sounds like a sensible strategy, yeah. Yeah, kind of novel concept, I guess, in corporate America. Some areas of corporate America do things that make money, not lose money. There you go. Baraj Bokhtari of RBC Capital Markets.

Baraj, thank you very much. All right, we've got some semiconductor earnings that are out after the bell. It's NXP. Let's find out if Wall Street thinks they'll be A-OK. You see what I did there, Christina Partsenevelos? I see all of your subtleties. You don't like it. You didn't like it. I see all your subtleties. But now we're going to see Dutch chipmaker. That's what we're going to talk about, NXP. Over 50 percent of NXP semiconductors revenue actually comes from the auto sector, a sector that has pretty much offset weakness in other verticals like weak PC sales, weak smartphones. So the street is expecting high single-digit growth year over year, but there are concerns about a slowdown coming to auto.

Today, Rosenblatt, for example, downgraded on Semi for that same reason, weakness in auto, some of that driven by weaker China numbers, which leads me to my second theme for NXPI earnings. As of last year, China accounted for roughly 36% of NXP's total revenue, and the slower than expected recovery could weigh on its guidance going forward. Recall that TSMC warned very recently just last week of a 10% drop in sales due to weak electronic sales, especially from China. That's why Mizuho has maintained a neutral rating for NXP. Lastly, NXP Semi will be one of the first chip names to give us insight into smartphone demand, given it makes radio frequency chips. Reports today say Apple expects iPhone shipments to stay flat year of year.

So will NXPI say the exact same thing? Investors will be looking to this name for any new inventory trends. And you're seeing on your screen right now, NXP actually underperforming when you're compared to Taiwan Semi, the largest chip maker in the world. But both of those, lots of concern about China. Yeah, I mean, especially Taiwan Semiconductor, TSM. Can you give our viewers some insight? We know it's the largest chip maker in the world. Like how, is it everybody else combined smaller than them? I mean, are they that meaningful? Of course they are that meaningful. The entire world would, all the electronics that we need

would essentially shut down. You have Samsung that would step in, fill the void and Intel, but not to the same caliber when you're talking about these extremely advanced chips and the packaging. The advanced packaging is a key success for TSMC as well. So that's a differentiator compared to, let's say, Intel or the likes of Samsung. When do we expect like the Intel? I don't want to put you on the spot. I know you don't probably have the calendar right up in front of you, but you are the honey badger of semiconductor. You just do it. When is Intel?

Thursday. When are we expecting the majority of these names? So Intel is this Thursday, and Texas Instruments is tomorrow. Texas Instruments has concerns about the analog market, so that is a part where NXPI may not have as much exposure. So there's concerns about Texas tomorrow. On Thursday, Intel, it's this big conversation about whether Intel has finally hit the bottom. It's on this right trajectory given all of the changes that Pat Gelsinger has done with cutting costs,

focusing on the foundries here in the United States. It's separate foundry business. So there's a lot of reasons why Intel could step up to the mark. But we may not see that just within this latest quarter. There's a lot riding in a lot of these chip names given the run-up, when really a lot of that run-up in the SOX and the SMH has to do with NVIDIA and the AI trend, which does not equate all chips. We have to remember that. Not all chips make AI advanced tips. Yeah, we like to, it's like we call things a bank, but banks do all kinds of different stuff.

All these semiconductor makers, TI, Texas Instruments, what they're doing is totally different. NVIDIA, not all chips are created equal. Some have ridges, ruffles, others, sour cream and onion. Not all chips are created equal. Christina, we're going to see you. I know you're trying not to smile. It's impossible. I'm always smiling. I like

the dad jokes, the puns. I'm all for that. I am a dad. Okay. Point proven. I scared this kid right here. Banged on a window. Christina, I'm a bad dad. There we go. Hey, guys. Let's get a good cheer. Hey, wave, everybody.

Here we go. All right. Got a huge crowd here. I don't know if you can hear me, but no one's ever said they can't hear me. Heading into the close, the Dow is going to make it 11 up sessions in a row. We are up 179 points, half a percent. NASDAQ up barely 11 in a row. John and Morgan are going to do something with that. I know. I'll see you here tomorrow as well, 3 o'clock. Overtime starts now.