Closing Bell - Closing Bell: Countdown to Netflix Results 4/18/24

Episode Date: April 18, 2024

Our all-star panel of Odyssey Capital’s Jason Snipe, Big Technology’s Alex Kantrowitz and Virtus’ Joe Terranova explain what they will be watching from Netflix’s numbers in Overtime. Plus, Blackrock’s Rick Rieder weighs in on where yields are going and when the fed might actually start cutting interest rates this year – if at all.  And, Ankur Crawford from Alger tells us the haves and have nots of earnings season. 

All right, welcome to Closing Bell. I'm Scott Wabner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with the countdown to the first major earnings report for well-known growth stocks. It is Netflix, and it is at the top of the hour at 4 o'clock. A lot riding on that as tech has teetered lately. We're going to ask our experts over this final stretch what to expect and what's at stake. In the meantime, a look at the scorecard with 60 minutes to go in regulation. Another bounce attempt for stocks today, but yet again, not much momentum behind that. And speaking of tech, the Nasdaq down more than 3% week to date. It is now pacing for its sixth down week in the last seven. The backup and interest rates weighing on that space and

the markets overall, that remains a big story. And speaking of rates, we have a big interview coming up in just a little bit. BlackRock's Rick Reeder with me from London today on where yields are going and when the Fed might actually start cutting interest rates this year. If at all, it takes us to our talk of the tape, the road ahead for the markets and that closely watched earnings report in overtime. Let's bring in CNBC contributors Jason Snipe of Odyssey Capital Advisors, Alex Kantrowitz of Big Technology, and Joe Terranova of Virtus Investment Partners. It is good to have everybody with us. Jason Snipe, you are the shareholder. What are you expecting?

Yeah, Scott. So obviously, we've been talking about net flows for the last couple of weeks. I mean, it's been quite a run this year. I mean, the stock's up 25 percent year to date, 82 percent over the last year. I think for me, and we talked about this on the half yesterday, I'm closely following paid sharing. They're coming off of this will be the last easy comp for them. Again, paid sharing came online in May of last year. So it will be an easier comp. But I think going forward is where the waters can start to get a little bit tumultuous for Netflix. But I like the stock. I likely wouldn't be adding here. But we're expecting about 4.5 million new subs and about 15% revenue growth this quarter.

It was about 7% last quarter. So I expect this quarter to be strong, and we'll see what the next ones look like from here. You say you wouldn't add to it here. Is that in part because the chart that we just had on the screen, and we could put it back up, I think that was a one-year chart that shows the rise in this stock. Is that the biggest problem for you right now, is the fact the stock's just done incredibly well? Well, you know, I thought paid sharing, obviously, in the ad-supported tier, which has been a lot slower in growth compared to the paired sharing. They added 30 million new subs in 2023.

And if I look forward, again, they have 60 percent penetration here in the U.S. and Canada. There's opportunity. Again, the U.S. and Canada. There's opportunity. Again, the U.S. and Canada is the most high-margin business. There's opportunity in Latin America and other emerging markets. But those are more lower-margin business. But I think as we go forward, and this seasonally is not the best quarter in terms of adding subs. But as we go forward, again, the price action, we've seen a lot of run-up into the print, and you know generally what that means. So I think the print

will be okay, but as we go forward, I'm a little bit concerned throughout the rest of the year. All right, Alex, what are you watching more than anything else? Yeah, I definitely am looking at this paid sub number. Sorry, excuse me, I'm looking at the subscriber growth number. Now, consensus- Five, we're looking for five. It's around five million, but look, all the looking at the subscriber growth number. Now, consensus. We're looking for five. It's around five million. But look, all the analysts are talking about it should be six, seven or eight. So we're talking about this run up in the stock.

And we have this pressure on Netflix to hit this, not even a whisper number, a number that's been spoken out loud by analysts. And if it misses that, it could be trouble. They're saying the quiet part out loud on this stock because the stock's done so well. So now there's even more to live up to. Double the pressure. Yeah. The password sharing crackdown certainly helped last quarter.

And you think it will continue? Yeah, it will definitely help. They had 100 million people, 100 million households that were using passwords that were not paying. And the fact that we've gone through not even a year of this means there's a lot of room to run. Is that going to slow down eventually? It definitely will. But that, I think, is what's bolstered these predictions for 7, 8 million subscriber ads, is the fact that this password sharing is still not complete.

There are segments where they're still poking at to be able to find growth, and I think they will find it this quarter. What about the ad tier uptake, which has been slow, and I think slower than the company would have wanted, but they continue to believe that it's going to happen. Yeah, well, the ad tier, we're looking at 23 million people that have signed, 23 million households that have signed up on that. It's making up 30% of Netflix's growth. So that is a meaningful amount of people that are using the ad tier. The thing is that they haven't been great at monetizing that.

And even like this year, we're looking at maybe $1 billion in terms of revenue there. So they have to get that ad engine underway and make sure to take the money that should be flowing from TV to Netflix and actually bring it home. Because this is becoming a bigger part of their business. These users matter, and Netflix is going to have to find a way to make money from them. Now they're making subscriber money, but the ad money really is going to matter for them. That's why they cost lower.

Joe, turn it over. You bounced this thing in 21? Yep. I think so. It's been a minute since you've owned these shares. You know, look, you run a specific strategy. Yes. People would look at this stock and say, what do you mean it doesn't have momentum?

Oh, it has the momentum. It has momentum. Oh, it has the momentum. Can it keep it, and how much does tonight hinge on that momentum? I think it'll keep the momentum. First of all, the options market is pricing in an 8% move in either direction. The last quarter was the strongest quarter since the pandemic for this company. We've already cited the reasons why. I think

you're going to have a really strong earnings quarter here. I think the margin expansion is the story. And it's the return of revenue growth once again. The balance sheet improvement is there. And Scott, remember something. This stock is 13 percent, 13 percent off. It's 21 high, 20, 21 high. There's a lot of room to run to get to that high. And I think it's going to get there. That was 700. You know, we remember that when the stock plummeted after a dreadful earnings report.

Because I remember the day that Bill Ackman, who had made a new position in this stock, ended up selling it. It was such a disappointment. Jason Snipe, oh, how far this stock and company seem to have come. By the way, viewing trends have been going straight up since November. We had an analyst on the network earlier today who said Netflix now accounts for 8% and 8% share of total TV consumption. That's muscle. A hundred percent, Scott. And I think Joe just made a great point too on just the financials. You know, their free cash flow has grown quite substantially. They have about $7 billion of free cash flow. You know, the content spend, the content spend is down 20%. And that was from last year, obviously the strike that happened last year.

But they've done a large amount of content licensing, which is really benefiting the stock going forward. So there's a couple of catalysts that are here for the stock. And that's why, again, like I mentioned earlier, I think this print will be strong. Yeah. Content costs. Are you thinking about that? You know, because that was a knock on Netflix for a while. Man, they're spending all this money on content, but how do we think about that today? The crucial part for Netflix is they're profitable. And if you look at all these competitors, Disney, Amazon,

this is a money loser in a lot of different areas that Netflix is competing with. And if we have rates that are higher for longer, and Netflix is able to make that money, they can actually press the gas pedal down and push their competition where everybody else is going to have to be cutting back to ensure profitability and better margins. Netflix having those margins is good, not just because it's good fundamentally right now, but because it gives us this edge over the competition that it can exploit. What about the sports aspirations that the company has? You got the Tyson fight, which is obviously, you know, garnering a lot of interest.

And I'm sure they have other aspirations to Alex Sherman, you know, mentioned potential NBA interest and things like that. How significant and serious do you think this is? Is it a needle mover for you? It's super important and it is a needle mover for me. And I think we're going to see the future of streaming really be determined by who can take sports, pay for the rights, and make money off of it. Because we are seeing this transition of, or even a dipping a toe in the water from streamers trying to take that sports from linear television. And it's worked well so far. And now look, what are you going to do with the money? You're going to take it and you're

going to buy sports rights and again, press that advantage. So we're seeing these little things, okay, Tyson against Jake Paul, but we're going to go bigger, no doubt about it. Maybe we're going to look at NBA. We have MLB on Apple television and the MLS on Apple television. So Netflix will have to make a big move here. And I think they're just trying to figure out, just like you would in a fight, right, figure out where they throw that punch. Yeah, Joe, I saw you nodding, I think, in agreement with where Alex was taking those comments as to sports in the future for Netflix. I think it's going to be a critical component of what Netflix is going to be offering to its instilled customer base. The customer base wants it. The balance sheet is in the right position to do it. And that's where the real growth opportunity comes domestically. I wouldn't

bet against them succeeding there. Let's talk about the market broadly. I mean, we can zero in on tech. Not that, you know, we don't consider Jason Netflix to be one of the mag seven stocks. Its market cap doesn't measure up to some of these other large cap technology names. But nonetheless, it is the first growthy stock of interest to report. And this space seems to be teetering of late. So the importance of this report leading into a week next week, that's going to be especially critical. A hundred percent, Scott. I mean, next week is going to be very important, but guess what? I mean, if we look back to the Q1, tech was the seventh best performer out of 11 sectors. So the

price action has been difficult. And we've obviously, you talked about at the top of the show that NAS is down 3% this week. It's down six out of the last seven weeks. So next week is going to be very important. We're going to hear about AI. We're going to hear about use cases. We're going to hear about application. That's going to be very important.

We're going to have to hear about continued momentum in the cloud business from various stories. So I think as this shift and discussion that we've been had as of late on inflation and interest rates, tech reporting next week has an opportunity to shift the narrative. And that's going to be very important. Alex, dare I say you have your eye on Apple more than any of the other mega cap names here. The stock, by the way, earlier today hit a low for this year. It was 166 and change. It's teetering right around 167. Looked like it had a nice bounce back last week. And here we are once again talking about what's

going on. Yeah, the pressure is on. We've already gotten a few negative reports about where Apple's going to sell in terms of the iPhone this year. They've also fallen behind Samsung in certain areas. And of course, China remains a very big concern. So we're talking about a stock that's been down four to the last five quarters. Do you really want, in terms of revenue growth, do you really want to make that five out of six? I don't think so. And we have the economy right now where we see the companies

that have really leaned forward on AI, Microsoft, even the Alphabets, Meta, they're rising. Companies that haven't fully gotten that story together, Apple, Tesla, they're sinking. So this is an opportunity for Apple to really shift the story and get itself some momentum heading into WWDC in June, where we're expecting some big announcements. Joe, how do you view this stock here? Momentum would be nice for Apple because it certainly doesn't have it. If we explore back over the last six months, we know what the market has done what is Apple done Apple is actually close to its six month low which is 165 67 so I think

embedded in the price action over the last week is the concern surrounding China and the fact that maybe China is not going to deliver the rebound that many have expected for this stock I think it's surprising because one week ago we sat here and we were excited about the fundamental news surrounding AI inclusion in a Mac refresh. We thought maybe that could pretend something in June for the iPhone 16 itself. And clearly that's been washed away. It's a concern. But let's keep in mind what's going on also with Apple is a lot of algorithmic selling.

And the lower that it goes, more algorithmic selling is going to enter. At some point it exhausts itself. Hey, how about this nice move in meta today, up one and three quarters percent, this new AI model that they're talking about, image generation, want to keep up with chat GPT, partnership with Alphabet. How significant is it? The market obviously likes it. Alphabet's up and meta's up on this news. Yeah, it's big. I was on the phone with them yesterday. So this new model has 10 times more data and 100 times more compute that they've used to train it. And it just goes to show you that the incumbents have this advantage in terms of resources, right? And they're learning to exploit them.

And why is the market excited about Meta today? It's not necessarily that it built this model that could be on par with GPT-4 from OpenAI or Cloud from Anthropic. It's the fact that it was able to take that model and build it directly into the products right it's live today in the my ai bot that they have within messenger and whatsapp and they're able to do that on day one and so there's been all this talk who's better gpt4 or claude or whatever gemini model that you want to have the key to growth here the credo key to making money here is how you Productize these models and meta shown that it can't it can only cannot only build the model it can put it into products And I think that's why the market is excited

So we're looking at meta we could throw up alphabet to shares of Google because I feel like Jason the market wrote this stock in This company off way too early you look at the 12-month performance between Alphabet and Microsoft, most people probably would think that Microsoft has the better position over the last 12 months. No. Google's up 50%. Microsoft's up 40%. Yeah, no, the price action has been very impressive with Google. And obviously, I mean, the arms race for AI continues. It's nice to see that some of the partnership deals that Google has obviously put in place, they've done a deal with Apple. Now they're looking to do a deal with Meta.

So I think this is exciting for their business, obviously, YouTube business, the search business. And then obviously, the other big part for me is they've been improving their operational margin significantly. And then you're starting to see Google Cloud has recently become profitable. That's obviously not a story that we talk a lot about, but I think there's upside there as well. All right, Joe, you get the last word. Well, the S&P is in retreat right now, and it's going back to that February NVIDIA gap. $49.83 is the bottom of that NVIDIA gap.

You got down to $ 5,001 today. I'm going to put on the hat of someone who is short the market right now. What else are you waiting for to do a little covering? You're going to wait till it gets exactly to 49.84. Profit margin expansions here. Adam Parker talks about that all the time. Earnings have been strong. The prevailing bull trend is still in place for the market. I don't know. I think we're getting pretty close to a point where the market might find a bottom. Oh, OK. That's a good last word. Joe, thank you. Alex, thanks to you as well. Jason, Sniper, thanks. We'll see what happens with Netflix in overtime. In the meantime, let's send it over to Christina Partsenevelos now for a look at the stock she's watching

into the close. Christina. I'm back. Digital marketing firm Ibotta surging over 30 percent on its debut on the New York Stock Exchange. In a year of IPO rebounds, the Walmart-backed company opens now with a valuation of $3.55 billion. CEO Brian Leach telling CNBC this morning the firm hopes to further invest in what? AI-enabled technology. Go figure. You can see shares up 19% right now. Now to a Morgan Stanley pair trade on e-commerce. eBay shares jumping after Morgan Stanley double upgraded the stock to overweight from underweight, noting that the firm's well positioned to further its generative AI positioning.

You can see eBay's up over 1.5%. And then you've got Etsy shares moving the opposite direction on a downgrade to underweight as Morgan Stanley remains worried about the firm's growth trajectory. We will see you soon. Christina, thank you. We're just getting started here. Up next, BlackRock's Rick Reeder is back. We get his take on where yields are going from here. Plus, we'll get his rate cut forecast and what all of it means to your money. He has an interesting take on the equity market as well, and we're going to get it next. We're live from the New York Stock Exchange. You're watching Closing Bell on CNBC.

Welcome back. S&P 500 trying to snap a four-day losing streak today as investors grapple with first-quarter earnings, rising bond yields, and pushed-out rate-cut expectations. Joining me now is Rick Reeder. He is BlackRock's CIO of Global Fixed Income and head of the Global Allocation Team. It's good to see you. Welcome back, Rick. Thanks, Scott. Thanks for having me on. Yeah, I'd like to start by just getting your view with rates having backed up and now these rate cut expectations having been pushed out. Yeah. So, firstly, it's a pretty when you think about what 2024 has been, we came into this year. I think the markets were a bit overzealous, to say the least, about the Fed. You know, the discussion was, can they go in March or are they going to go in March?

I heard people say definitively they're going to March. You know, you had six or seven rate cuts priced in. Now we're down to less than two cuts priced in i think the markets markets tend to overshoot like they did at the beginning of the year i think you could still overshoot a bit until you get inflation data that is you know gives you some sense for we're going to see core pce which is a feds metric closer to a more stable two and a half percent rate so you can still overshoot a bit. I think managing your interest rate exposure makes some sense. But I think you're getting close to the level pricing in. I still think the Fed would like to get one or two cuts done this year, but we need the data

to help us. So I think in the interim, you've got to let the market do what it's going to do. You've got to be a bit conservative of your rate exposure. We could still back up a little bit more. But I think you're finding levels, particularly in the front to the belly of the yield curve, that are making some sense. Do you think there's real risk that they don't cut at all this year? Fed speaker after Fed speaker certainly sounds like patience is the word of the game. John Williams of the New York Fed again today, quote, I definitely don't feel urgency to cut interest rates. Do you think there's a chance they don't cut at all this year? I absolutely think there's a chance they don't. I mean, listen, the inflation data has been

surprisingly durable and particularly it's not goods inflation. Goods inflation is running three months, six months moving average negative one point three percent goods inflation, which, by the way, is the one that's influenced by the by interest rate much more profoundly. Service inflation is still well too high. By the way, it's very hard for the Fed to bring that down. You think about insurance, you think about health care, you think about educational costs. So will the Fed sit there for a bit longer, let it come down? I think that's definitely a possibility. Our gut said we're more than our gut. Our analytics and our data would suggest that you're going to start to get numbers point to type of month on month inflation readings that will give the Fed the window to do it. And listen, I'll say something pretty provocative

around this that I'm not sure it's clear to me today in a new modern economy that's a service oriented economy that the interest rate tool doesn't does does really do much today. I mean, we've moved 500 basements on the upside. You still have an unemployment rate that's under four. And quite frankly, there are parts of the economy that operate really well that have higher level of income because where rates are because where rates are. I think the Fed should get the rate down about 100 basis points. I think they'd like to get it there. But listen, can they wait before they do it? Given the data? Yeah, they can certainly be patient. And they will. And I think that's what you'll hear next week. Are you making the

argument that, you know, whereas we once thought we, quote unquote, needed rate cuts, that we don't necessarily need them in the way that the economy is responding now? So I think the Fed should cut rates. And the reason why I think they should cut rates is because what happens is much of the U.S. economy today is not interest rate sensitive. You think about who spends on R&D today. We have a digital economy, service economy. The R&D spend is not financed like it used to be. It's often financed through free cash flow. You have many people who have already locked in their rates.

Companies have already termed out their debt. It's not that interest rate sensitive. What is interest rate sensitive? Low income, small banks, small business, real estate. And so what's happening, you create a pernicious impact on parts of the economy, and it's not really influencing the other. And then arguably, for higher income, for a lot of the economy, when you keep rate this high, you're providing a lot of income. Deposits at our extraordinarily high levels. What's happening is you're getting a lot of income flow through the system that recycles into parts of the service

economy. So listen, I think if you've got the rate down to still what is a restrictive level, then you have what is a more normalized economy or more normalized discount rate for this economy. Listen, I don't think they're going to do it, though, until you start to get those point twos. But I think unequivocally they should get there. The longer they wait, do you fear that it increases the risk that they make a mistake and stay too high for too long? And by the time they react to something that gets broken, it's too late. So it's a tough question. I'll say I'll say in two parts. One, I think the U.S. economy is the most resilient, adaptive, innovative economy in the world. I think U.S. economy terms of energy independence. Very, very reflexive, adaptive economy that I'm not that worried about the broad economy. The mistake that I think is the reason why I think you could move the rate

down, the mistake is the areas that are sensitive, the banks, particularly small regional banks that clearly have an issue in terms of net interest margin, commercial real estate exposure, small business, and lower income. You're seeing this in all the earnings numbers, and you see this in credit card charge-offs, loan delinquencies, auto loan delinquencies. It's creating a pernicious effect on part of the economy, that in aggregate, the economy can still move along okay, but it's creating too much pressure on part of it. And that's the mistake that I think is out there, including you've got to be careful about residential real estate, which is obviously a huge part of the wealth in this country. So part of why I think at the margin, bring that rate down. You can keep it higher than it historically has been.

But I think today it's a pretty for a lot of the economy or for interest sensitive parts of the economy. It's the rate is too tight. You called the recent inflation prints a quote unquote setback. It sounds to me like your your view is a bit shaken by those most recent reports that you were surprised. And I'm wondering if in the same light, you're surprised to the degree that rates have backed up now. So I would say two parts of that. One, you know, we're running, we're running our interest rate exposure. We have been running our interest rate exposure lighter because quite frankly, you can generate income and fixed income in so many different ways. You don't have to take long end interest rate exposure. I was looking at the aggregate index today. The aggregate index is down after today. It'll be down three and a half percent the long end of the curve will be down

about eight percent the front end because of the carry in the front end is still actually the front is actually moderately positive on the year total return basis because you're carrying so well so anyway our view is always has been certainly this year keep your yield keep your income in the in the front end just carry really well it can actually still throw off return in that. That being said, your question about, listen, when you got this last CPI report and you looked at the areas, the pervasiveness of the service level inflation, insurance, health care, education, transportation services, that is just so sticky high and hard to bring down auto insurance using the interest rate tool. And those are sticky and they're just hard to bring down.

And so, you know, this I think anybody who's looking at it would say, yes, that's a setback because we want to get in the Fed would like to get right down. But it's, you know, these numbers, can you be a bit more patient? It seems like it. Yeah. I mean, some are suggesting that the 10 year could go to five percent by Memorial Day. That's been a couple of calls from firms this week. When you read that, what's your reaction? Given the depth of some of these markets, it feels like that could happen. You don't need to wait that long. Listen, it's going to have a lot to do. We're in a market today. And I think when we think about positioning and you think about we're in a market today, you've got geopolitical risk. And think about that can happen two different ways. It can

shock oil, which is adverse to interest rates. And the other side of it, you've got to have a big flight to quality, depending on how pervasive or the risk is perceived around the Mideast. Listen, I think that markets tend to overshoot. And could the bias be towards you hit a higher rate for where it's not that far from where we are today? It's certainly a possibility. Like I say, I think the way you generate, the way you sit in fixed income today, stay shorter on the yield curve and keep your interest rate exposure low, but keep your income high. By the way, I want to say one last thing about it. I'm always amazed, the equity market, like there's always a level on the 10-year note that determines a good market or not a good market. When you look at the S&P 500, it's not nearly as interest rate sensitive as it used to be. The interest rate is obviously

the great discounting rate for the markets, but it's a very different. Look at the S&P 500, which is 20, 30 years ago, where those companies borrowed hard asset, borrowed to finance. The interest rate was a really big deal. Today, we look at the top seven, the mag seven or any of these companies. They're not doing a lot of financing. So I'd argue it's much less acute for the equity market than it's been historically, although people follow it very closely. It's just not nearly as interest rate sensitive equity market as it used to be. I hear you then then suggesting that your bullish view on the equity market, which you've shared with me on the last couple of times that we've visited here on television, is not shaken at all by this back up in rates.

Do I hear that right? You definitely hear that right. Listen, I think we, like others, when you've got this big, dynamic out there i.e geopolitical i think you've got to manage manage your risk alongside of it including going into this volatility was incredibly low where the vix was we do a lot we trade a lot of equity options volatility is really low you could manage your risk using volatility really effectively and so what happened that allows you to de-risk. So we are running less risk, considerably less risk,

largely because of volatility and because of some positioning around that. The equity market's going higher. You know, we said, do we wait a little bit in terms of getting through this cloud over the market? The S&P 500, I use this stat a lot, the return on equity, the average return on equity of the S&P 500 is 18.5%. And actually, if you're tilted more to tech, it's closer to 20. Even if you believe the multiple is a turn or two too high, when you accrete, you compound book value of that sort of level. And even if the economy moderates a bit and you bring it down a little bit, that is incredibly powerful. At the same time, there's over a trillion of equity buyback and the IPO calendar is small. So your demand, your buy versus sell is clearly skewed. And then just normal salary and wealth creation

drifts into the equity market. And you've got eight to nine trillion of cash sitting out there. So, yes, I think I'm pretty confident equities are going higher. This is not to say we see, you know, we don't see a headline or what have you that presses us down a bit first. And I think you've got to manage your risk around that. But yes, I'm confident the equity market is going higher. Do you want to continue to lean into mega cap tech, big stocks? Do you believe in the broadening? I know you like energy. You want to lean into sort of that comeback, if you will. So how does that play out? Your actual allocation, right? I mean, you are head of the global allocation team. So tell me where to lean in now. So first of all, I still think technology is going to take us to a different level. And I

think the amount of investment in R&D, the amount of investment in digital is extraordinary. Where do you lean in? I still think, you know, without going through individual names, I still think that the MAG-7, there are parts of it that are incredibly return generative and will continue to throw off those type of returns as the world becomes more digital. I think the companies that have data and can exploit the data, and there are other companies around that are not in the MAG-7, are the ones that are going to win. My biggest overweight today is what we call the quality part of the market. There is, you mentioned energy. The companies that are throwing off stable, consistent, free cash flow,

generally aligned with digital, are the places where we like to be. Energy is, you know, while we could debate what the price of oil is going to be, when you throw off 10% free cash flow, and including some other refiners, those levels are pretty attractive. So we're tilted to tech, health care, parts of health care. But there are also some great free cash flow generators. And there's some opportunities in this market. Press down some of the valuations in some really good companies in the last couple of weeks. I think some of the autos, some of the European autos are interesting. It's interesting to say today watching some of the casinos come under pressure, I think there's a couple of names there that we're looking at that are pretty attractive today.

And one thing that's wild about the equity market today, the dispersion is incredible. And so it's presenting some pretty neat opportunity across it. Always enjoy our conversations, Rick. Really valuable insight from you. Thanks for spending time with us. I appreciate it. We'll see you soon. Thanks, Scott. All right. That's Black Rock's Rick Reeder there joining us today. Coming up, the haves and have-nots of earnings season. Aldridge Anka Crawford is back to break down the big names that she is betting on this quarter. She's with me at Post 9 Next. all right welcome back nasdaq lower again today as big tech earnings are looming large the index

on track for its fourth straight down week and longest negative streak since december of 2022 my next guest believes this earning season will come down to the haves and the have-nots joining me here at post nine to explain is Alger Zanker Crawford. Welcome back. Nice to be here. Who are the haves? The obvious ones? The mega cap tech names? Well, not all mega cap tech. So I would say last time we were on, we talked about a mag four. Okay. I think we're still there. We have this mag four and a bifurcation in our magnificent seven. Google has caught up a little bit, but we still think that the existential risk to search is something that's not going away. So you're less bullish that name relative to the others?

Relative to Microsoft, Nvidia, Meta. Because earlier we were having this conversation about this new announcement from Meta Today and its partnership with Alphabet. And I read that stat. You go back over the last 12 months, say, well, Alphabet's up 50 percent, Microsoft's up 40 percent. So maybe the narrative that developed was exaggerated and people were writing that company and that stock off too soon. Maybe. That could be. But they have to. Look, I believe that Google can produce some sort of AI capability that is astounding. But so can a lot of other people.

They're going from a market where they were effectively an oligopoly, perhaps, in the digital advertising market to a market that is much more fragmented. And I just have a rule of thumb. I won't buy market share losers, in part because when you start losing market share, there's a lot of negative things that start happening to the business model. Even when your market share is so incredibly elevated that losing a couple points of market share is not necessarily going to make a huge difference? Well, I think once you start losing market share is not necessarily going to make a huge difference? Well, I think once you start losing market share, you don't lose just a couple points of market share. And an example is I use Perplexity AI every single day.

It has changed the way I search. And this is just the beginning of the changing way we're going to search on a go-forward basis. So Perplexity has nothing to do with Google. And the more people I tell about perplexity that use it, the more love using it and come off of Google. So, I just think it's complicated. Okay. Do you feel like because of the increased volatility now and the backup in rates that now these tech earnings, which start next week, have that elevated importance that we've been debating for seemingly forever? Oh, for sure. But I do think it's a bit

of a blessing for the market and for the stocks that they have come in as they have into earnings. And in part because like we were just talking about TSM, you know, TSM was had run into earnings, very strong expectations. They come in, you know, the numbers don't change that much. You know, find a little bit of margin because of power. They gave up and a little bit of squishiness on the industrial side. But the story is really about how they're ramping in AI and they are the vendor that will provide everyone a chip. It trades at a 25% discount to the market. If it's down 4%, that's okay because it's a relative discount that is unwarranted.

So let's talk about the market at large. We're down, say, 4% for TSM. S&P is about 4% or so off of its high. I hope you heard the conversation we just had with Rick Reeder, who said the equity market is going higher. And now I'm paraphrasing. That was a direct quote, that the market's making too much of this back up in rates. And it's still going higher because equities can move up even if rates remain at this level. Yeah.

You agree? I think, again, it's going to be a bit of a bifurcation. So higher rates have implications for the economy. Economically sensitive stocks. We saw this broadening of the market over the last month, month and a half, where everyone like small caps and everything started to rally. Before the backup in rates. Before the backup in rates. Rates back up, it means choppier waters. It means you go back to the secular growth. And so I think that's what's going to start to happen as rates go up. And until we see what happens in the economy

and the impact it will have in the economy, you get a narrowing of the market, led again by kind of secular growth, which is today it's AI, I mean, where it will affect is biotechs. You know, groups like biotechs, which are long duration assets that don't have that, you know, implicit secular growth that's here and now, they probably suffer more than tech. So we're back to where we were. We're back to where we were.

You're not a believer today in the broadening trade so much as a result of what's happened with rates, and especially if rates stay where they are, or even, as some firms are suggesting, you know, 10-year goes to 5%. And as Rick said, I mean, that could happen at any time now. It's not like we're that far. No, I think the 10-year could go to 5%. I actually think it's really bullish, to be completely frank, that the economy is as resilient as it is as when the Fed has normalized a two decade long

hiatus on ridiculous rates and and our economy is still resilient and the consumer is still showing this resilience I think it's quite bullish for for our economy because now we have a lever. When we do need it, the Fed can react. I personally thought that if they did cut, the market would go down anytime this spring. So I'm actually quite pleased that they're not going to cut. All right, we'll make that the last word. Enjoy our conversation as always.

Ankur Crawford, thanks so much. All right, up next, we're tracking the biggest movers into the close. Christina Partsenevelos is back with that. Christina. Well, the largest chip manufacturer in the world that you just talked about says AI demand is growing, but warns about all those other non-AI business segments that may not be doing as well, and that's impacting the entire sector. I'll explain next.

We're 15 from the bell. Christina Partsenevelos watching the key stocks for us today. Christina. I want to bring back Taiwan Semi because those shares are down roughly 5% even though Q1 earnings were a beat. Investors are instead focused on lower growth outlook, the capital expenditure remaining unchanged, weaker Q2 projected profits due to you have the earthquake as well as inefficiencies when it comes to the three nanometers. And then also the slower than expected recovery in smartphones and a drop in auto sales,

when originally TSMC thought it would be up on the year. So that change is weighing on the sector. AI definitely not the saving grace today. And that cautious tone from TSMC weighing on the chip sector as a whole, including memory maker Micron, even though it's going to get $6.1 billion in chipsack funding to continue building a hub in Idaho and New York fabs in New York, or I should

say twice New York, which the company said will eventually require more than $100 billion in investments over the next little while. That leaves at this point, out of all the chipsack funding, just over $10 billion left to be dispersed for firms in the United States. Scott. All right. Christina, thanks so much. Christina Partsinevolo still ahead. Shares of Tesla slipping yet again in today's session. That is a new 52-week low, and it follows a bearish call from one key Wall Street firm. Why analysts are seeing some risk in that name now.

We'll talk about it. Closing bell. Be right back. Next, Netflix is the big name to watch in overtime tonight. We have your full setup, a breakdown of what is at stake for the streaming giant when we take you closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of this trading day, plus Phil LeBeau and why Tesla hitting its lowest level in some 15 months. Steve Kovach looking ahead to Netflix results. They are out, as you know, in overtime as we continue to take you right up to that. All right, Mike.

So we're pressing it here on the S&P. We're getting close to where, you know, 5,001 I think we got down to today. Yeah, each day has been a little bit of just this low energy decline off the highs. 5,000 is sort of sitting there. I've been focused on 20 points or so below that, which is that gap from the NVIDIA earnings day on February 21st. I think there's also a certain type of logic, people talking about checking back

to the previous all-time highs from early 2022, which is 4,800 and change. I don't think you have to get there, but the market's starting to get short-term oversold. You're starting to see people do a little more hedging. Some things are lining up here to where you'd say take a shot and you get some relief to the upside, some kind of relief rally. Maybe not a fat pitch just yet. Yeah. I'll get back to you in just a second. I want to talk to you more about what Rick Reeder told me. But first, we do have some news on Nordstrom. Our Kate Rooney has that for us.

And maybe here we go again. Yeah, Scott. So shares are surging right now and reports from The Wall Street Journal that Nordstrom and the family that owns Nordstrom is considering taking that company private. This is according to The Wall Street Journal, citing sources familiar with the deal. Members of that family, Eric Nordstrom and Pete Nordstrom, this is the company's CEO and president, respectively, told the board, according to this report, that they are interested in exploring that deal for the company. It comes as Nordstrom and rival Macy's are under some pressure. As we've talked about on air here, Nordstrom did, according to this report, form a special committee of independent directors to evaluate the potential proposal. It says here that they are working with bankers from Morgan Stanley and Centerview Partners.

No guarantees that this is going to result in a transaction. Of course, shares of Nordstrom down about 50% over the past five years. The company's got a valuation at this point of about $3 billion, but shares popping on that report. Scott, back over to you. All right, Kate Rooney, I appreciate that. We'll watch that. Phil LeBeau, we're certainly watching Tesla because it's a new low today,

a new 52-week low, and the lowest, what, in 15 months? Lowest in 15 months and another day where an analyst says, what's the case here? What are you buying into? Are you buying into full autonomy? Because that's what the indication is from Tesla. That's why the stock sliding down to the 150 range here. Yes, it's a 52 week low. And as we mentioned, probably the lowest in, I think, 15 months. Deutsche out with a note today where they cut the price target. They also moved it down to a hold, essentially saying, OK, there's considerable risk pursuing autonomy because nobody's quite sure, A, when it's going to happen. And B, if it's going to happen within a time frame that you can say, yeah, I buy into that payoff.

And as a result, investors are saying, let me see what you've got, Elon. And we'll find out next week after the company reports its Q1 results. That's really the first time that we'll hear from Elon Musk in more detail about where this company is headed. Yeah, it's going to be a big day for sure, Phil. We know you'll be all over that, obviously, Phil LeBeau. Now to Steve Kovac on Netflix as the countdown continues because we're not that far away from this key earnings report. Yeah, just about two minutes away. Look, what we're going to be watching for here, Scott, is momentum from the password sharing crackdown that helped them smash those expectations last quarter on subscribers. This quarter,

looking, Street's looking for 4.59 million new subscribers. That would be more than double a year ago quarter. Also looking for revenue to be up 13 percent. And some other stuff we're looking for, just some stuff on their advertising business, any commentary there, how revenue is going, and gaming, whether or not that is keeping people stuck to their Netflix subscription stock. Appreciate it. We'll see in just a little bit. Steve Kovach, thank you. Back to Mike Santoli. As we are under two minutes now,

so Rick Reeder saying, quote, equities are going higher. He said the market is not what it used to be. It can handle these higher rates. The Fed's going to cut. It wants to cut. Okay, they may be pushed off, but... Well, certainly the S&P 500 is not what it used to be in terms of interest rate sensitivity,

and that's been proven out. You have the biggest companies, the biggest source of cash flows are actually not really harmed on the net basis by higher rates. We know the secular themes have been very much still in place. He's been pretty consistent about basically saying corporate America these days is just built to be a bit more profitable, certainly the way the index is skewed. It does make sense. It doesn't say much about the next little while here in terms of the market trying to reset expectations, trying to drain off some of the over-optimism

we had three weeks ago. We're far along in that process, I think, in terms of just kind of recalibrating exactly where we should be fundamentally and technically. There has been this unwind, too, of very, very long, systematic kind of hedge fund-type positioning. I think we're kind of working through some unwind, too, of very, very long, systematic kind of hedge fund type positioning. I think we're kind of working through some of that, too. Tomorrow is an options expiration.

We may have a cleaner view in general with lower, slightly lower prices into next week. All right. Yeah, Netflix coming up in just a matter of seconds here as the clapping begins. Really kicks off the growth earnings parade. We'll see what happens there, what it means for the Nasdaq, which has been dicey, to say the least. So we're going to go out with the Dow green. The other is not so much. I can't wait to see what Netflix delivers. And we'll see you on the other side in that OT now with Morgan and Johnny.