Closing Bell - Closing Bell: Consumer Staples & Cutting Through the Fed Tape 8/30/24

Episode Date: August 30, 2024

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

And welcome to Closing Bell, everybody. I am Brian Sullivan, live from Post 9 here at the New York Stock Exchange. And the hour begins with what could be a fourth straight month of gains for Dow, the S&P, and your money. Let's take a look at the scorecard with 60 minutes left of trading, not only in the day or the week, but for the month of August. And we are seeing not a lot of move. S&P at four-tenths of 1%. NASDAQ outperforming. It is up five-tenths of 1%. NASDAQ outperforming.

It is up five-tenths of 1%. Dow down literally, caught unchanged, down two-one-hundredths of 1%. Hey, it is a Friday in the summer, heading into a long holiday weekend. The market's steady, but there are some very big single-stock movers. You got Intel stock popping.

Listen to this. Reports that Intel could be looking to sell part of itself. Intel. We've got someone who says the name could be even a bigger takeover target now. It's a mixed picture on the consumer side. On one hand, you got Ulta Beauty, more like the beast. It's down 4%, hit on the back of earnings. But Abercrombie & Fitch getting a boost. Citigroup upgrading the stock to a buy from a neutral. And if you haven't been paying attention to the teen or tween retailer, Abercrombie ANF is up 65% so far this year.

It has been one of the hottest stocks of all. All right. This all talk takes us to our talk of the tape, how to play stocks into the year end. And you're not to answer that question or questions because I guarantee it'll be more than one. We've got Cordy Garcia of Payne Capital here with us at Post 9 and Malcolm Etheridge of CIC Wealth joining us remotely as well. That looks like D.C., Malcolm, if that's I recognize our beautiful capital in the background. Both are CNBC contributors.

Courtney, I feel like we just did this last night. We did just do this last night. On fast money. So, you know, I kind of got an idea of where you stand. But for any of those, shamefully, who may have missed that program, how do we forget about today? How do we read the markets after Labor Day, going out the last four months of the year? Yeah, and I mean, August and September, I mean, specifically this week in August tends to be a pretty low volatility and low volume trading. But we're heading now into

the end of the year, and you're starting to see some really good data on the economy, right? We just saw GDP revisions went up. You got the PCE numbers coming out. They're showing inflation's coming down. The Fed is set to lower interest rates starting next month. And all of that is really setting up as a positive backdrop for the stock markets. The big question is, how much is the Fed going to lower interest rates? It's pretty likely it'll be a quarter point next month and then maybe a couple more times this year. But all of that will be supportive for the markets. And especially the fact that NVIDIA is not necessarily dependent on the markets doing well is a good sign that that rotation can continue yeah malcolm you know listen i maybe we should

take a page from fast money and play a game you know they always do these games on fm5 would you rather whatever what do you think is more important for the macro market is it the federal reserve or is it nvidia i i actually think uh the Federal Reserve is going to be the big winner here. And I think sort of to Courtney's point, that rotation that's going to come, I think all traders have basically capitulated to the idea that the Russell 2000 is going to be the big winner the moment that we get that first rate cut. So I would actually look for September to be a little bit more active than it usually is. But I also think that realistically, financials are where that rotation happens simply because the cut, the first cut in interest rates is going to impact M&A activity more than a lot of people have probably paid attention to. Fair enough, Malcolm, fair enough. But I'm going to go back to you to ask you a question that I

asked on Squawk Box this morning because we're working. We're in, which is. Does the Federal Reserve matter that much right now, given that the bond market appears to have already done the work of the Fed and bullied longer term rates in the 10 years at 386? So it feels like the bond market already knows what the Fed's going to do and has moved ahead of it. So I wonder what any rate cuts the next couple of meetings will actually do for the yield curve and for the markets. So I will say just the one caveat to what you just said is if we don't get a quarter point raise like Courtney and all the rest of us are anticipating, if it's something larger, that could signal to the markets that maybe something's wrong here. The Fed has eyes on something that we maybe don't see. And I think that would be the one thing that makes what you just said a little bit different. Courtney? Yeah, and I think to add on top of that, the big thing

is how it's going to affect the consumer, right? Because we are a consumer driven economy. And when you have credit card debt that's, you that's high right now, you're seeing mortgage rates that are high. It's really putting pressure on the consumer. And that really is kind of keeping a cap to a certain extent on where the economy can continue to grow. But as rates come down, you're going to start to see some of that pressure come off. That is ultimately going to be a good thing for the consumer, which is a good thing for the market. So you're right. Bond markets price it in. But I think it's what it's going to mean to that spending going forward. Well, OK, let's have some fun. It is Friday, right? What if and we didn't with the PC today, right? The Fed's preferred

inflation measure. Everything looks like it's softening. What if we got some kind of semi reacceleration or stop in the drop in the inflation rate? What if the Fed, if we suddenly became, maybe they'll hold off the rest of the year? Not sure it's going to happen, but what if it did? What then for stocks? Yeah, and I do think that's something that people should realize is a realistic possibility. The short-term rates are very likely coming down,

but longer term, there are still some inflationary forces in the economy, and especially depending on what happens in the election and any tariffs or things that could potentially be inflationary forces in the economy, and especially depending on what happens in the election and any like tariffs or things that could potentially be inflationary, rates are likely coming down, but probably not to the rate that it was at over the last decade. So we could still be at a more elevated rate than we have been. I think that's something people do need to realize, where I think it's what's going to happen next year. That's the big question right now. Malcolm, what is the biggest question or questions your clients are asking you right now? Well, one of the big ones is whether money market funds and CDs are going to hold up much longer.

Right. I read in Bloomberg earlier this week that something like one hundred and six billion dollars have flowed into money market funds in August alone, which is amazing to me. We're sitting north of six6 trillion with the capital T sitting in money market funds. And I understand that for the last couple of years, it's been very attractive to sit in cash and wait it out. But I think that we're now having to develop a strategy for where do we go from here? How do we get this money off the sidelines? And it's unlikely that it's going to be another 10% plus drawdown that brings people back into the markets. I am always amazed at the amount of money that's just floating, sitting, whatever you want to call it, stirring in the trillions of the team. Malcolm Etheridge, Courtney Garcia, thank you both.

Have a great Labor Day weekend. All right. Meantime, we've got a news alert on Goldman Sachs. Here with that is somebody else who's been working since 5 a.m., Pippa Stevens. Hey, Brian. Well, Goldman Sachs is reportedly laying off over 1,300 workers, according to The Wall Street Journal. Now, this is part of their annual review process that does call their low performers, and Goldman typically cuts between 2% and 7% of its workforce annually. But according to this report, this year's layoffs will be will be between three and four percent of the workforce, which is thirteen hundred to

eighteen hundred people. And this will be across the bank's various divisions. And the cuts have already started and will reportedly continue through the fall, according to the Journal. Brian. Wow. Thirteen hundred on a Friday news dump heading into a long Labor Day weekend on a stock that, by the way, has been red hot. Pippa, thank you very much. I know we'll see in a couple of minutes the cool story on cooling. All right, see what I did there? All right, switching gears, check out shares of Intel. Intel, this is a big story, folks. Intel is up 8% right now. There are reports that it is looking at possible strategic alternative, including the possible sale of parts of the company.

It's a big story. I'm going to stop talking, go to somebody who knows more about it. That is Seema Modi. Seema, it's a big deal. It is, Brian. Intel executives are working with outside advisors to reshape the business. That's according to sources familiar with the situation. We're told that Intel CEO Pat Gelsinger is looking at all options. to reshape the business. That's according to sources familiar with the situation. And we're

told that Intel CEO Pat Gelsinger is looking at all options. Morgan Stanley among the banks engaging with Intel on different strategic moves that could include splitting or selling certain parts of the business. Unclear if that would include the foundry business. Remember, Intel is building five fabs in the U.S. Capital from private equity players Brookfield and Apollo has helped Intel's expansion efforts. But it is a very expensive project to go under. When Intel did announce its cost-cutting efforts in August, I asked the company's CFO whether foundry plans would be impacted. And he said no, that it continues full steam ahead. The weakness in Intel's core business, though, does raise questions as to whether that is

a realistic goal. I'm told that the company is trying to come up with a few solutions ahead of its internal board meeting next month. We're looking at the stock higher. You pointed to it, Brian, but still has a lot of ground to make up, down about 50 percent this year. Anything in the report or maybe wild speculation or chatter, Seema, that suggests to you that, honestly, that Intel could be sold? I mean, the whole cut, not parts. Just somebody buys Intel. None of the discussions I've had or have I seen in other reports about a situation that would involve a full sale. But again, it does seem that they're in this type of process right now where they're having discussions with advisors to look at a potential restructuring, maybe selling or splitting parts of the business. And again, they're trying to put together some

decisions into a short list ahead of their internal board meeting next month. Brian. Seema Modi with a big story in Intel. Seema, thank you very much. All right, let's talk more now about Intel and bring in King Lip of Baker Avenue Wealth Management. He is an Intel shareholder. King, welcome. What do you make of that report as a shareholder? Hi, Brian. Yeah, happy Friday. Yeah, you know, we have a small Intel position. Our initial thought was the AI chips that the company would have would look attractive

in terms of an open platform relative to NVIDIA's chips. That being said, the company is stuck between a rock and a hard place. The company is running out of options. The costs are ballooning while revenue is falling. We think there's still a lot of value embedded in a company. So a breakup on the company honestly makes sense to us. Innovation has been lacking at the company. So if the company is smaller, it can sort of invigorate whatever's left of the company after a split up. It really is a story when you look at Intel and those of us of a certain age remember when Intel was one of the biggest and arguably most important and most covered and most coveted companies in the world, a lot of good people at the company.

It's really they missed it. Somewhere along the line, they made some strategic mistakes that they've just wiped out a lot of shareholders or at least cost them a lot of money. King, why are you taking, I know it's a small position, why are you taking a shot on Intel? Just because, you know, we do believe the parts of the company are actually worth more than the whole, if you would. For example, the foundry business actually makes sense to us from a geopolitical reason, not having all chips manufactured overseas. Now, that's a little bit of an about face if the company spins off its foundry business. But I think part of the reason why

it's run into some issues is it's really had a handful a handful of customers and i think the reason for that is you know competitors are looking at intel's do we really want a competitor manufacturing our chips so a a spin-off of the foundry business actually makes sense maybe the company will retain a stake if there's a restructuring where it would actually allow it to be more competitive relative to its competitors and i I would agree with you. I've been long enough to know that at one time, Intel could have crushed AMD at any time. And now it's two times greater than Intel. Amazing.

And I'm not going to bring the dirty world of politics into this, King, but I'm going to bring the dirty world of politics into this because Intel has been a huge beneficiary of what they call the CHIPS Act, right? It's received billions or will receive billions in taxpayer dollars to help build this out in Ohio factory, etc. And I'm not bringing it up for political reasons. I'm bringing it up because you do wonder if there is a little bit of a taxpayer put, for lack of a better term, on Intel, meaning the government has sort of singled out Intel in a good way to receive money. And you wonder if there is a little bit they don't there's no way the federal government wants Intel to have any more problems. And as a stockholder, you kind of wonder what the federal if the federal, you know, the federal government has a company's back, so to speak.

Does that mean I should, you know, have the the companies back as well? I think you see what I'm getting at. I do. And I think there are political reasons, there are financial reasons that Intel can come out of this. I think the timing is just really bad for them. I mean, the earnings report recently was dismal. But as I mentioned, there's a lot of reasons why the company can come out of this ahead. If you look at this year's earnings, it's awful. But looking into 2025, actually, the company's prospects look a lot better. But they really need a bridge to transition to 2025.

And as you mentioned, there's federal tailwinds. And if the company can get over this tough spot here, I think the company will be fine. Kinglip, Baker Avenue Wealth Management. Fascinating story around Intel. See where this goes, because it is one of the most storied American companies in tech. King, thank you. Have a good weekend. Thank you, Brian. You too. All right. We have got a long way to go.

And on deck, Roger Altman of Evercore ISI will be here to give us his take on the real cause of inflation. Plus, what is critical for your money in the weeks ahead? I may even ask him about Intel. As always, live at the New York Stock Exchange. Dow's down 13. NASDAQ's up nicely. See what happens in the next 45 minutes. We're back right after this. All right, welcome back to Closing Bell, everybody. Lots of talk around insurance lately, mostly over sky-high rates and cancellations, but all that is leading to something else, big gains for insurance investors. The sector is topping the broader market this year. So let's dig in, find out a little bit more and why.

Joining us is Contessa, call me Tessa Brewer. Am I supposed to now call you Tessa? Are we friends? I don't know why you've moved on from Big Money Brewer. I mean, you coined that one. I like Big Money Brewer. I coined it you coined that. I like Big Money Brewer. I coined it. We should stick with it.

Stick with what we know, Brian. Listen, here's what I know. What's bad for consumers in the form of higher premiums is good for insurers and their shareholders. The latest CPI report showed that July auto insurance went higher by almost 19% from the previous year. This month, Progressive has gained the shares 16%, up 87% over last year, over the past year rather. Allstate is up 10% this month. Those auto insurers are finally catching up on premiums after they've been losing money the last couple years, paying out higher claims on more frequent and more severe accidents. Other standouts in the insurance space,

Arch Capital up 18% this month, broker W.R. Berkeley up 9%, reinsurer Renaissance Re is up 10% this month, and then its global competitors, bigger competitors, Munich Re, Swiss Re, Hanover have even bigger gains this month. Insurance ETFs, the IAK, the KIE, and KBWP, over 12 months, they have gained between 30 and 40 percent, mirroring performance of many of the individual companies over the past year. With inflation moderating, repairs and replacement costs moderating, we may see some premium growth moderating as well, but rate changes, Brian, are slow to work their way through the system. And one other point, we should watch what happens with the Fed, because if the Fed cuts insurance rates, what we could see is some moderation

on the return on equity that the insurers have seen as well. On a more serious note, I know you and I have talked about it. I've tweeted about it. I want to dive a little bit deeper in it down the road if I can, which is the home insurance numbers. You know, you're seeing people posting and they're sending me their statements that they're getting 30 and 40 percent jumps in home insurance. They try to shop around. There's nothing available. If there is something available, it's even higher. Is there anybody saying where does this go? Like how far can we go down this road? Because at some point these insurance rates are simply going to break people's budgets. The insurers will point to a couple of things. When regulators don't allow rate changes that

go along with what they're actually, what the insurers are paying out in claims, they fold and they leave the market. We've seen that in Florida. We've seen that in California, that they have to get paid to take on the risk. They're not going to do it as a nonprofit. It's not a charity. Two is that lawsuits are expensive. And we've seen insurance paying out soaring costs because of litigation, settlements and verdicts. And what they will say is, if regulators continue to allow this unabated, who's going to pay for that? Everybody who's paying insurance. And if one state has a particularly amenable policy toward plaintiff's attorneys, it still is going to end up trickling out to people who don't even live in that state and people who are paying

their premiums. So that's two things. The third thing is insurance is a regulated market. So regulators in every state are going at it and looking at the rates and are they commensurate with what the insurers have to pay out in claims? Houses, as you know, are more expensive now. Home values are more expensive. So if someone has a total loss to their house, replacing it is expensive. So, yeah, I hear you. I think litigation, the lawyers we know, Contessa, Tessa, always win. But I thought I think you get the broader point. I just you just wonder how far this is going to go. I just don't know. Some people say I can't do it and I'll leave it there. But I'll say this. Some of the rich, you and I both get to do this job, get to know some wealthy people. All these wealthy people I know are just they don't owe a mortgage on their home. So they just drop insurance. It's like the new luxury. They don't

have to have insurance. Yeah, that's self. They are self-insured. Yeah. Self-insured. Maybe they have a small umbrella policy in case, you know, Sullivan slips down the stairs. Something like this. It's happened. Big money, Brewer. Thank you. Sure. All right. The S&P 500 looking to close out volatile August. Mostly good, though, in the green investors, though, bracing for what has been a seasonally tough September. You've also got a ton of economic data coming out, including a jobs number, which I don't know if it's critical because they just keep getting revised. Let's talk about all that with Evercore founder and senior chair, former deputy treasury secretary, Roger Altman. Roger, appreciate you coming on, especially on a hey, especially on a Friday heading into a holiday.

Let's put August in the rearview mirror. Let's focus on going forward. And what do you see as the one or two things that are the most important to Roger Altman over the next couple of months? Well, I don't know how you could have overall a more favorable macroeconomic environment given where we were three years ago than the one we're seeing, including captured in this morning's economic data. Look at what we saw. The economy is the growth rather is resilient. Looks like real consumer spending is going to

be up about four percent for the quarter just ending tomorrow. That is remarkable. Personal income was a touch softer than expected, but still OK. It looks like the next monthly jobs number, you just mentioned that, probably going to be around 200,000 positive. Overall, a very resilient, solid picture. On the other hand, inflation is progressing in the direction everyone wants it to. You saw this morning that core PCE and BCE both running around two and a half percent, getting closer and closer to the Fed's long term two percent target. So you have the soft landing playing out quite vividly, Scott, Brian, right in front of us. Yeah, I do wonder, though, I know.

Listen, again, we always talk about the jobs. I get it. It's a big deal. But then when they revise it down $818,000, you kind of wonder, why are we paying so much attention to the jobs number, Roger, when they keep revising it down or up? However they revise it, they change it. But that said, I hosted Squawk this morning, and we had former Fed official Jim Bullard on. I don't know if you caught it. And I kind of dove in with him, and I asked him, all this debate about inflation. You know, people blaming price gouging, whatever. How much the 2021 spending package and PPP loan money impacted inflation? Here was his answer. Listen and respond. March, April 2020 response to the pandemic was big, and it was meant to be big, and I

think it avoided a financial crisis. But then you got another package passed by Congress at the end of 2020 in December, bipartisan, very large. That was because of the Georgia election. And then again, when the Democrats came into power, as probably any party coming into power, they wanted to do something. So they passed another package. It's those two last packages that were overdone. And that's what led right after that. We got a whole bunch of inflation and we're still keeping the policy rate very low in

that environment. And then we had to scramble in 2022 in order to bring the Senate control. Roger, do you agree? Well, not not entirely as follows. that the total of the three stimulus packages that were passed legislatively in response to COVID, in retrospect, were too big, especially the last one, which you mentioned, the American Rescue Plan. But were they the main cause of the inflation surge we saw, Brian, in the midst and coming out of COVID, the answer to me is no. The pandemic and all the supply chain impacts and others is the primary cause of that inflation. Did an overly large federal response contribute to that? Yes, but it wasn't the main cause. Yeah, but when you sprinkle all that money from the sky, right, whether it's stimulus, whether it's PPP or whether it's indirectly ultra low rates that just basically drive people to borrow money combined with all those pandemic level shortages, that would seem I would imagine that that was at least gasoline on the inflationary fire

yes it did contribute but it wasn't the main event when you step back and remember uh americans were stuck at home they were receiving checks from the government they were actually quite liquid they couldn't spend on a series of categories they typically did, like going out for a meal or travel, and they spent, therefore, on items they could spend on, and initially that was durable goods, a new bike, a new grill, home renovation, and so forth. The demand for those durable goods skyrocketed. Supply chains, which were disrupted already by COVID, couldn't keep up.

There was a surge of inflation in durable goods. And then when the economy began to reopen and people could start to enjoy certain services they'd been blocked from, then that bled over into services inflation. But it was all those disruptive effects of COVID that were the main cause of this inflation, which we're now coming out of happily, at least in my view, Brian. Well, maybe, yeah, some of the policy decisions we'll see. Roger, we got to leave it there. I wanted to ask you about Intel as a banker, whether you thought they get bought, but we'll save that for another interview on a different day, heading into a three-day weekend. Appreciate your views as always, Roger. Have a great one. My pleasure.

Take care of yourself. Take care. All right. Up next, top technician Jonathan Krinsky says there's one sector that you really, really need to pay attention to right now. All right. Happy Friday, the S&P 500. It is higher today. It is tracking for another positive month. And today, when you go to maybe like a cocktail party, somebody says, how many months has the S&P 500 been up? You're going to say it's been up nine in the last 10 months. Amaze your friends. But your next guest says September setup looks more treacherous, he said, for stocks.

And he spies one sector that could be vulnerable to a pullback. Let's find out what that is. Jonathan Krinsky, chief market technician at BTIG, joins us now. Jonathan, suspense is killing me. What is that sector? Hey, Brian. So the sector is the consumer staples sector. It's been really strong of late and so much so that the weekly rsi which is the relative strength index a gauge of momentum is above 74 it's the highest it's been in 10 years and so we look back since the year 2000 whenever the xlp that's the etf for the consumer staples etf whenever that weekly rsi has been 73 or higher like it is right now, the average return looking out one to eight weeks has been pretty negative. Two-week returns on average have been

down about 2.4%, down seven of the last 10 times. And that's not a big move. It may not sound like a big move, but for the consumer staples, which is a lower beta, lower volatility group, that's a decent move. And so I think structurally, the Staples chart looks still pretty good. But I think tactically, as we head into September, it's a group you may want to pump the brakes on here. Does it look like it's just like too red hot in a short term and it's still a solid long-term setup or probably most of the gains have already been made? No, I think like that's a point structurally. I think it's a point. Structurally, I think it's still fine. This is more if you've been a little more nimble, a little more tactical,

you know, and you've been in the staples trade for the last couple of months, maybe take some chips off the table and look to reset it as we pull back. I think, you know, there's been a lot of, we'd call it pre-trading, the rate cut move. And so I think, you know, they may be benefited from that. But we actually think as you get into September, rates are actually set to move higher. And that could also be a headwind for the staples sector. OK, what about you got a view on the macro market or any other sectors? I know all we've been talking about is AI and NVIDIA and everything like this. But there's some other things that technically,

at least to my semi-untrained eye, look at biotechs. There are things that are in the market that we've kind of been ignoring. Yeah, I mean, biotech's been kind of consolidating for the last couple of months under key resistance, so that's poised to potentially break out. Industrials have been very strong, both equally and cap-weighted. That's a sector that just hit

new all time highs this week. So there's things that are making new highs, even though the S&P itself continues to struggle sitting just below those those prior highs. Actually, the equally weighted S&P 500 also did make a new high. So things are happening below the surface, even though the S&P itself just kind of looks a bit stuck here. Yeah, certainly is. You know, I know you're a technician, obviously, so you're looking at charts, but you've got the fundamentals that are sort of layering on top of it. How much are you following the Fed and bond yields, if at all? Yeah, no, that's definitely a key part of our work. And we think, you know, what was interesting is when stocks rallied off the August lows, a big part of it seemed to be that the economic data was improving.

And we've gotten into an environment where good news is perceived as good news. So that made sense. But what was notable is that bonds also rallied on that perceived better news. And if they were rallying during the August volatility on the bad economic news, it didn't really make sense to us that they would also rally on the good economic news. And so we've been saying to fade the strength in bonds, especially as we get into September, which is September, October are the two worst months for bonds, surprisingly, maybe. October has been down eight of the last nine years for bonds.

September, pretty much the same. So we think bonds are a fade here. And I think some of the buying in bonds was, again, front-running and anticipated Fed rate cut. So you could see a sell the news there. We think stocks probably hold up better. You might have to wait until the back half of September broadly before volatility reemerges there for the equity market. Do we care about the seasonality of september anymore jonathan or

with the algos is that kind of all the old maxims you know do they go away or do they still matter no the seasonals have have been acting very um on point over the last really 18 months or so um you know last two years we had strength into July. We got some volatility in August. You know, the thing about September, though, it's notoriously a weak month. It is the worst month on average, but it's really a tale of two halves. The first half tends to be more choppy. It's really that back half of September into October when, you know, the weakness tends to persist. And we always say with seasonality, it's kind of like hurricane season.

When you're in hurricane season, it doesn't mean you're guaranteed to get one, but the odds do go up. So that's how we view this part of the calendar. Jonathan Krinsky, do appreciate you always, especially on a Friday heading into Labor Day weekend. Jonathan, thank you very much. Have a good weekend. All right, you too. All right, up next, there is an arms race heating up in cooling, heating up in cooling. I feel like it's a Jeopardy trivia question. Pippa Stevens standing by with that story. Pippa. Well, Ryan, it is getting hot in here. So data center cooling stocks are taking off.

All the names to watch coming up next. all right what is it 19 and a half minutes until the closing bell. And get this, the liquid cooling industry is heating up and it looks like the boom in the semi space could be to thank. What are we talking about? The cooling space heating up. Pippa Stevens here with the details that I suspect, Pippa, that this segment will probably mention the word water at some point. Yeah, Brian, well, traditional air conditioning systems are no match for Gen AI chips like those from NVIDIA, given how much heat they're generating.

And as they hit the market, the liquid cooling industry is taking off and companies are vying for a piece of the pie. Vertiv, Envent and Schneider Electric are all key players here, alongside the traditional HVAC companies. Now, none of them have made a big splash in liquid cooling, but it's a natural extension of their business model, and names like Train, Johnson Controls, and Carrier have all pointed to the opportunity. Now, on NVIDIA's earnings call, CEO Jensen Huang said the number of data centers

that want to go to liquid cooling is, quote, quite significant. Right now, about 5% of data centers have liquid cooling, according to RBC, with the firm anticipating a 40% compound annual growth rate ahead. So, Brian, this is a huge growth opportunity that's really only now starting to take off. So we're seeing a lot of interest here. Okay, so no water yet, but you get my point. The water, these data centers, and this is what you and I cover, and people don't really get this. The amount of energy needed to power these data centers, not just run them, but to your point, cool them.

Air conditioning. Take like the entire city of Phoenix and double that, and that's probably roughly, on a very rough basis, what we're looking at. They're going to take water. The point is, the resources needed to accomplish these dreams sometimes blow my mind. I mean, and the forecast for just how much power they're going to require are just kind of astronomical at this point. But it's even the sense that now traditional HVAC, traditional cooling systems aren't even sufficient to cool these chips. And as the racks become more and more dense, you just cannot extract that heat, which is why we are moving to liquid cooling. And there's different types. There's immersion. There's

direct-to-chip. There's rear-door heat exchangers. And so there's all these different solutions that companies are trying to do in order to be more energy efficient. And while it is a higher CAPEX spending up front, they say that it does lead to lower operating expenses longer term. And of course, Brian, all these tech companies building these data centers have net zero goals. And so, you know, this does this does not look very good. Need the power, need the cooling, got to keep them cool. Pip Stevens, cool story. Thank you very much. All right. There's a company out there. It's called Alnylam, and it's kind of a pharmaceutical biotech type play. And that stock is down almost 10 percent. We'll talk about why that stock is down nearly 10 percent.

The rest of the markets, though, looking a lot better, heading into long holiday weekend. Fifteen minutes to go. We're closing bell. We're back right after this. All right, beginning next week, CNBC is digging into NFL teams soaring valuation. CNBC's own Michael Ozanian will reveal all the details. Who's worth what? That's going to kick off Squawk Box Thursday, not Tuesday, Thursday, 6 a.m. Eastern, official team valuations.

All right, up next, one of my favorite named companies of all time, MongoDB. Mongo angry. Share surging today. The CEO revealing how he thinks AI could impact this company's bottom line. We'll tell you what the CEO of MongoDB said, all that and more right after this. And we are now in the closing bell market zone for the day, for the month, for the week, whatever. CNBC Senior Markets commentator Michael Santoli here now to break down sort of maybe these critical moments today, but more looking forward. You got Seema Modi on momentum today and some key AI names, Angelica Peebles, major movers in the biotech space as well.

And hi, I'm Brian Sullivan because Scott is off today. Mike, let's start with you on the market list today. Friday heading into Labor Day, whatever. Why don't we look ahead? Friday, month end, pre-holiday. They're just kind of drifting higher. Typical thing. You want to make sure you don't have too much cash.

Who would do anything with cash over a long weekend looking forward I think what we've done is rebuilt some confidence that we have this soft economic landing scenario the earnings have come through fine the next thing is let's have the jobs number up next Friday either confirm or refute that idea that the labor markets hanging in there I do think that we're elevated in terms of price we're right near the. Let's say we're half a percent from the all-time highs from six or so weeks ago. But most sectors have outperformed the index in the last month or so. But four or five sectors are at a record, equal weight at a record. So you have a kind of a firm foundation here.

I do think that we're operating at a high level, but with a net. Valuations back above 21 times. Why do we have a net? Because the Fed has told you they have two percentage points to cut if they need or want to. We're going to get a first one in September. The thing that I would worry about is basically everybody getting utterly convinced of that bullish scenario that I just laid out there, pricing accordingly, positioning accordingly. And then every direction you look is potential disappointment if there's any variation in the data. And that's what happened in mid-July. out there, pricing accordingly, positioning accordingly, and then every direction you look is potential disappointment if there's any variation in the data, and that's what happened in mid-July.

I believe they call that priced to perfection or near perfection. Something close to it. See, Mamodi, it's been near perfection for many AI investors, in most stocks, not all, this year. You've still got some momentum. What do you see? There's some interesting names moving on this AI trade, Brian, or it perhaps is expanding a bit. MongoDB shares surging to the top of the Nasdaq 100 after earnings beat the

street. The database company cut its guidance last quarter, then raised its guidance this quarter. I asked the CEO what changed in the span of three months, and he said the macro uncertainty around the economy is less of a concern for him. MongoDB does count Amazon as a customer. And the company says AI is becoming a bigger tailwind. I think AI is going to be a big boon. It's coming. We haven't seen the deployment of tons of AI workloads today

because people are still experimenting. There's lots of investment going on in the infrastructure layer. MongoDB stock up about 18% today. And then there's Dell. Quarterly sales beat, a big jump in AI server orders. The company's operating chief said, we are competing in all the big AI deals

and are winning significant deployments at scale. It is, of course, a supplier to NVIDIA. Citigroup raising its price target on Dell shares from $155 to $160, Brian. Was I wrong? I mean, is that the best named company in America, MongoDB? It's the best performer today. Is that what you said? Best named company. Any company named Mongo. Best named company. Got it. Yeah, it's definitely up there. It's got to be. Again, great wordle starting word, Mongo.

Wouldn't have worked out. Don't want to give it away. Wouldn't have worked out this morning, though. Just throwing that out there. Angelica Peebles, what is your wordle starting word? And what big movers are we seeing in biotech today? Well, I guess L-Nylum could be a wordle word. And that is one that we are focused on today. And there's a lot of moves in companies going after a type of heart failure called ATTR cardiomyopathy. That could also be a word of word. Alnylam today releasing the full results from a

closely watched trial of its drug, Vutriciran. And it looked like the company had a lock on this market when they shared high level data earlier this summer. Remember, that day, the stock went up about 30 percent. But today's closer look suggesting it might not be the grand slam that Alnylam made it seem. Bridge Bio's drug already under FDA review, and that decision is expected in November. Now, Alnylam is still confident in these results, and they plan to file regulatory applications by the end of this year. But these questions are weighing on some of the other names taking similar approaches. Look at Intelia and Ionis, for example. Brian. Yeah. Looking at these names, there's so many in the biotech space. We'll leave it to you to figure out because I honestly couldn't tell you what 90 percent of them do. That's why we have

Angelica. Thank you. It says here in the teleprompter, Santoli's last word. Not ever. Not ever. Just today. Not ever. Not wordle words because I don't actually play the game. But what's wrong with you? I know. I don't like games. I don't like games where you need tricks. You talk about the stock market. Exactly. What do you mean? This is the world's biggest game. No, it's one of those things. I don't want to have to learn all the tricks and all the little shortcuts. I will teach you. I'll be your sensei. Crossword, puzzle word, doesn't make sense to me. Okay, move on.

Listen, what I think, Matt, first of all, we're walking the market up. It's up 1% right now in the S&P 500. The never short of dough market rule has applied once again. And 56.70 or so is the record intraday high on the S&P 500 from July 16th. So if you really want to widen out the frame, you say nothing happened to disturb the overall uptrend. Everyone was concerned about the market being a little bit too concentrated. That has helped. That sort of ameliorated itself because you've broadened out to some degree. You do have the underpinning of earnings. And I think it's all about the race between inflation coming down, allowing the Fed to cut rates, credit staying very, very strong, which it is right now.

And it's going to be an enormous amount of corporate debt issuance next week into a receptive market. And does the economy hang in there? Are we seeing labor market softness in a benign way or is it something worse than that to me that's sort of the whole game we did have the news at the top of the show that the wall street journal is reporting goldman sachs is going to lay off 1300 people again it's just a report it's just the journal sure we don't know if it's accurate 1300 it's goldman i'm guessing it's accurate because it's also framed in in the context of it's pretty much the annual culling of, you know, of junior employees and others. And so I don't necessarily see that as something extraordinary. But there has been a wave of bigger company restructurings that has put a dampener on, you know, things like job

opening indicators and stuff like that. So we have to be cognizant of it. You have to be aware of all of it. There is a productivity boost happening based on the data, simply because. Because there's two different things, right? There's layoffs. Yeah. And then there's companies just not hiring. Well, I don't hear a lot. I don't hear a lot about companies hiring. No, the hiring has dried up, but layoffs have not surged to a point where people are very concerned. That's been one of the kind of positive spins on the last jobs report, which was, yeah, sure, unemployment rate is higher, more people looking for work. The hiring rate has slowed down. But it's not as if you've seen weekly jobless claims uptick. So all that, I think, is probably going into the mix again. Everything is sort of soft landing ish until proven otherwise. You have the volatility index, by the way, peaked earlier this month above 50,

and it's going to close the month. It was at 82 for five seconds. Yeah, but it was still a crazy day. It's going to close the month below 15, which is usually that marker of a super calm market below 15. Okay, smart guy. You don't play Wordle. What is the only major index that's going to end the week higher?

Well, define major index. S&P 500. Yeah. It's up two-tenths of one percent. No, it is. The Dow will too, I think. Today, though, a lot in the green. Long holiday weekend. The bells are ringing. We're off for three days, hopefully. Everybody, thanks for watching. Have a great holiday weekend. Overtime with Morgan and John now.