Closing Bell - Closing Bell: Critical 48 Hours Ahead 6/12/23

Episode Date: June 12, 2023

The next two days are critical for your money … so, what might it mean for this resilient rally? Gabriela Santos from JP Morgan Asset Management, Stephanie Link of Hightower and CNBC’s Steve Liesman give their expert market takes. Plus, the FTC is preparing to go after Microsoft’s acquisition of Activison Blizzard. Malcolm Etheridge of CIC Wealth – a Microsoft shareholder – weighs in on what this could mean for the stock. And, where investors can find opportunity in the energy space amid the oil slide. 

Kelly, thank you very much. Welcome to Closing Bell. I'm Scott Wapner, live from Post 9 here at the New York Stock Exchange. This make or break hour begins with this winning streak for stocks and how it is suddenly more than just tech pulling the markets along. The Dow on pace for its best month since November, just as this critical week gets underway with tomorrow's inflation report. And then, of course, Wednesday's Fed decision. Here's your scorecard with 60 minutes to go in regulation, discretionary and tech. The leaders today, several cruise names are getting a big boost. Intel is the big winner out of the Dow this hour. Oracle leading tech ahead of its earnings tonight in overtime. Pay attention to both of those names.

We certainly will. Leads us to our talk of the tape. The critical 48 hours ahead and what it might mean for this resilient rally. Let's ask our panel. Gabriela Santos is global market strategist for J.P. Morgan Asset Management. Stephanie Link, Hightower's chief investment strategist and a CNBC contributor. Our own senior economics reporter. He is not a strategist, but he is nonetheless.

Steve Leisman. So let's begin the conversation. So, Steve, what a time. What a time for a Fed meeting. We have a new bull market allegedly started. I just wonder what they must be thinking about this now as they sit down at that table starting tomorrow. Yeah, I'm not sure how happy they would be about the bull market. I think there's a wealth effect issue. I don't think that's the top of the issues that they're concerned with right now. I think what happens, Scott, is unless you get a massive upside surprise on the CPI report, that they do take this pause. They want to see what they've done. I think the chairman

has some concerns about the banking issues that are out there. I think he has some concerns about the lagged effects of policy. I think they also may want to give the Treasury a chance to rebuild its coffers, and that creates some stability for the money market funds to perhaps fund that new issue. And so there's three good reasons for the Fed to pause. And he's going to try to dance this dance that's going to say, look, we're not taking it off the table. It's not a skip, because a skip implies we're definitely going to hike. I mean, what he said late last month, Scott, was this is the only forward guidance we're giving you really is that we're looking at the data and that's where they're at right now. They're going to take a look at it

and see if if all the things that we talked about just a minute ago are going to be things that are going to help bring inflation back down to the two percent target. All right, Gabrielle, I'm taking a look at the data and what I see is a NasdaQ one and a quarter percent. I've got the Dow Jones industrial average over 34,000 as we speak. And I have the S&P 500 up one half of 1%. We're more than 20% off of the lows. I think it surprised you probably that we've been as resilient as we have been. What now with these critical events looming? And I think as it pertains to the macro data, what's been really interesting to see is this month's big cyclical rally, right? Cyclical is up 5%. You see that going down the market cap

spectrum. So small caps up 7%. And you also see that in rates as well with a two-year yield up 56 basis points over the last six weeks. So I think the prevailing macro narrative going into these data prints is higher chances of a soft landing, slow disinflation in the super core, higher for longer on rates. And the U.S. is doing so much better than everybody else. And I think all of those narratives are a bit fragile. Whether they break

this week already or it takes a little bit longer remains to be seen. But ultimately, we see disinflation picking up speed. We see soft landing as unlikely to be a steady state and recession risk is still elevated. And we see the rest of the world not doing as badly as the headlines suggest. So really a critical time here. Steph, is it time for those who have been, I know you're looking at me like it's a loaded question, and I'm not saying that you've been extraordinarily negative, but is it time for those who have been to put the bear suits back in the closet? Well, yeah.

I mean, it's not going to be an easy, even ride between now and into the end of the year, let's just call it. But the economy is holding up a lot better than expected. And it's holding up because the consumer is doing really well. We talk about it all the time. Look at the Carnival Cruise bookings numbers today. They're off the charts, right? So the consumer is doing well. The job market remains very tight. Wages are still there. It's been the same narrative all year long. And the economy is holding up. And that's helping at least the earnings picture, not collapsing. Right. So and that's helping the everything picture. It's helping. It's helping the everything picture. The stock market picture would not be as pretty as it looks today without what you said.

But what's really interesting is how much growth is outperforming value year to date. Talk about mean reversion, right? I mean, it's incredible. Growth is up 28%. Value is up one. And the exact same thing happened last year. Value, except it was reversed. Value outperformed growth.

So something's got to give, Scott. I think that some of these moves have been really big. I hope we're going to see a broadening out, but we haven't seen it so far. Steve, you know, I wonder if Mark Zandi is on to something. And I'm sure you saw the same tweets that I did this morning where he said that, quote, odds that a downturn is dead ahead are receding. The idea that maybe this time is different, Steve. And we as market watchers and the Fed as policymakers need to look at the fact that maybe this time is different. You have a tremendous amount of excess savings. You have labor hoarding. You have low leverage. You have all of these things that

were in place that have made the mattress like five stories tall for the Fed to maybe pull this off at the end of the day. I'm not saying they're going to, and neither is Zandi. But we're at a much more cushioned place today than many thought we'd be. Yeah, I mean, Scott, I've been calling this the Godot recession, the one we wait for but never comes. And as you'll see in our CNBC Fed survey tomorrow, the respondents have pushed ahead by another two months when they believe the recession will begin. But they're darn certain of it. I want to answer this in two ways, Scott.

One is sort of intellectually. The other is emotionally. Emotionally, I'm afraid to take my eye off the ball and say there won't be a recession because I'm afraid it'll happen if we do that. You know that it's the moment that you get the most bullish that all of a sudden it rocks you but but intellectually i i see the case the case is that um we have this very high level of employment there was an extraordinary bank of america uh note over the weekend that said that their low income uh clients are doing better than their high-income clients, and they're not using credit cards as much, and they don't seem stressed, which I thought was extraordinary. So there's a lot of things pointing, and that's why for my money this week,

the two most important pieces of detail are come Thursday with the retail sales report, because I want to see how good the consumer is doing ex-auto, and I also want to see the jobless claims number, because we had that tick up last week that caused some concern out there. Could have been a seasonal adjustment issue, but I want to see if there's indeed some weakening in the jobs market. You know, Gabriella, the idea that the economy has surprised a lot of people is not lost on the likes of David Solomon. Runs Goldman Sachs. He was on the network earlier. Here's what he said. The U.S. economy has been incredibly resilient, and I would say that I have been surprised, you know, over the course of last year. I certainly predicted, given the economic tightening we've seen, you know, a bumpier ride than we've had so far.

You know, I still think we're at an uncertain moment. OK, we're obviously still in an uncertain moment, but have we gotten a little bit more certainty to this point? And when does that start to translate into, you know, your view that, okay, maybe we're not going to have the kind of landing that I thought we might, and that it's time to get more positive on the stock market? I think it's a matter of timing. I think what we've learned is that indeed that mattress was really, really large

in terms of all of the stimulus that consumers had received, how low credit was going into this year. But the mattress is getting thinner and thinner, right? Consumers have spent excess savings. Debt service as a percentage of disposable income is back to normal. Student loan payments are going to resume at the end of August. And businesses that are critical time now as their profits are shrinking and credit is tightening to make some tough decisions around capex and labor. So really, just because it hasn't happened yet to us still maintains the risk elevated that this all eventually ends in a mild recession. In tears. And I think the biggest conviction call for us is

rates are too high right now. And this is a golden opportunity to use this backup in yields to extend duration. To me, it does not make sense that we've fully taken out rate cuts by the end of the year and that rates for next year are expected to be at 3.6 percent. So really, this is our main conviction call around this view of a little bit less resilience in the economy going forward. I know, but you know what might happen if you get a better than expected CPI tomorrow? You know, rates may soften. The Fed does nothing on Wednesday. Rates may soften more. And then at some point, it may be, Steph, deemed that this great alternative that you've had for the first time in forever isn't so great anymore. No. And that equities are the place to be. It's entirely possible. And then I would say go to cyclicals because they're cheaper. The valuations

are really depressed. And if we can have a soft landing, then the growth is better than expected. And the companies have done an amazing job in terms of margins and keeping them elevated via cost cuts, via pricing power. So I mentioned the consumer before, but you know, the core bank lending actually is up 5% annualized basis. So, so much for the bank kind of debacle, right? I'm not saying that we're not going to have some more problems, but I think we kind of blew that out of proportion. And of course, let's think about housing. I mean, housing has actually been really strong. We're seeing a revival there. So there's all parts of the economy that are doing well. We're going to slow down for sure, but maybe we can avoid a hard landing. And that's very good for risk on assets.

Steve, I mean, Powell, I'm assuming that is going to lean real, real heavily on data dependent. Not that he hasn't in the past, but it may be more apropos than ever because they are taking a meeting off, so to speak, if in fact that's what they do. Yeah, I mean, I think for sure where he's he's really talked about changing the guidance regime right before we could be pretty darn sure what he was doing. And now I think for sure he's really talked about changing the guidance regime, right? Before, we could be pretty darn sure what he was doing. And now, I think we can be pretty darn sure he's going to pause this time around because, remember, he made those comments late May,

sent out Jefferson to kind of underscore or maybe redirect policy to that place. So the key is that now he's in the data dependence guidance regime, I guess is the technical way you might want to put it. And it's going to be meeting to meeting. But remember, they're not just looking at the data. They're trying to understand the cumulative effects. And Stephanie is absolutely right. I came armed with this data. The lending data is up from the H8 and the deposit data step is also up, which is interesting, too. So this banking thing, which is something I'd stayed Powell's hand, I don't know, not so much. I've got 7%, by the way, year over year on loans and leases from all domestic banks

being up. So it's not really feeling like a bit of a bank. The banking crisis looks like it's really uh a calm down quite a bit from what it was so we'll see but you're right Scott it's a data dependent guidance regime right now and we're just gonna have to follow the data along with Jay Powell and the rest of the fomc Mary Franksters I mean the fact the matter is you know it's not like Powell lives under a rock Steve I mean he goes to concerts you know as we as we've learned recently as well. My question to you is when David Solomon says that, I know I know you're happy that he was at the concert that he was at, too, because you're a fan, too. But the U.S. economy has been incredibly resilient is what I played Solomon saying. Do you think Powell is is heartened by that or is he discouraged by that?

Well, I think he wants to see some softness. He wants to see, look, he has this equation, Scott. The equation is very simple. That core services, ex-housing, which is ex-energy and food and ex-housing, that service sector is about 61% of the CPI. And he thinks that that is driven essentially by the labor market and wages and the only way to keep labor market and wages from driving that portion of inflation is to loosen up the job market he doesn't want a recession he doesn't want massive unemployment lines he wants to see

a labor market that's not as tight as it is and so so if it went up to 4%, if it was a 4.5%, we'd have been pretty happy in prior times if it was 4.5%. It's a lot. But the question is, can we get there? And to Gabriella's point, which is really interesting, which is I will point out as the mattress savings have gone down, you still have this surge in employment. So you do have wages that kind of offset it. So that's the whole case right there in a nutshell, Scott, of this soft landing, that you have wages and jobs be replaced by the issue of the savings replaced by wages. The only other thing I saw, which is really interesting, is the Morgan Stanley call this weekend for a sharper decline in earnings, and that could be the Achilles heel of the economy.

Is this, Gabriella, a soft landing in the market now? That's why we are in a new technical bull market, why stocks continue to ramp up, why maybe it's broadening out finally a little bit. Is that what it's about? I don't think the market was taking aside soft landing, hard landing before June, really because it was driven by tech, AI, cost cuts. But I do think since June, the chips that investors in the equity market are putting is much more on the soft landing camp. So we will be watching claims, retail sales, and the slow burn of higher rates and credit tightening to challenge that view. We would stick to the quality factor and to a more defensive tilt. I feel like, Steph, I know you want people to take a look at the value that exists in cyclicals because that's the game that you play.

You feel like it's hard to make that case at the current time because of the still uncertainty that David Solomon suggests exists. You just go where the gains are. Why make it more difficult on yourself if, in fact, there still is a recession to come? Because the gains are expensive. Those stocks that have led the market at the top 10, I'm going to count for the entire performance of the overall S&P 500 year to date. If the earnings projections have been somewhat reset, and not just NVIDIA,

for the space as a whole whole doesn't that change the expensive equation a little bit for sure but there are a lot that are still very expensive and extended too so i'm not saying don't own some growth don't own tech you know i've been buying tech all year long i'm still underweight because it's 35 of my benchmark but i i so but i think there's other pockets in the in the market that are just so compelling, especially when you look at some of the industrial companies and you think about onshoring, reshoring, China stimulating. I mean, that is an interesting cyclical sector that I find really very compelling because those estimates are going higher, too.

All right. We're going to leave it there. Steve Leisman, thank you so much. Ladies, thank you as well. It's great having you both here at Post 9. Stefan, we'll see you back in just a bit. Let's get to our Twitter question of the day. We want to know, are you starting to get more bullish on stocks? You can head to at CNBC closing bell on Twitter to vote. We'll share those results coming up a little later on in the hour. In the meantime, let's get a check on some top stocks to watch as we head into the close. Christina Partsenevelos joins us as always with that. Christina. Let's start with NIO jumping as the Chinese EV maker says it's cutting the prices of its vehicles. This comes just a few days after the company delayed some projects to improve cash flow. Shares, though, are tracking for their best days since January.

You can see up over 9%. And as you all have mentioned, analysts are getting on board with the cruise lines. J.P. Morgan's exciting continued demand momentum as it upgrades Carnival to overweight and raises price targets for Norwegian as well as Royal Caribbean. Bank of America also upgrading Carnival to buy and raising price targets of all three. Each of those names hitting 52-week highs today. And let's signal out Carnival because that's up 13 percent. I still have yet to go on a cruise, Scott. Yeah, you and me both. Maybe someday. Oh, I didn't know that. Now you know. One day when you get old, right? You never know what you don't know on a cruise, Scott. Yeah, you and me both. Maybe someday. Oh, I didn't know that. We'll see. Now you know. One day when you get old, right?

You never know what you don't know. Older, sorry. All right. Christina, thank you. Christina Parts of Nevelos. We're just getting started. Up next, Microsoft and Activision Blizzard under fire. The FTC setting its sights now on that highly anticipated merger plan.

We'll hear from a Microsoft shareholder with his take on what it could all mean for the stock and later AMD's big AI event. The chipmaker already seeing positive analyst chatter ahead of its event tomorrow. We'll bring you a rundown of exactly what to expect. You're watching Closing Bell on CNBC. We're back. Take a look at stocks here. We're at the highs of the day. Got a nice day going here for the Dow, which is in the midst of its best month since November. We're trying to close above 34,000 as well for the first time since May 1st. We are about 44 or so points above that level now. We'll keep our eyes peeled on that over this final 40 minutes or so of trade. In the meantime, the FTC preparing to go after

Microsoft's planned acquisition of Activision Blizzard. Our Steve Kovach joins us now with those details which broke a few hours ago, Steve. Yeah, and we're still expecting, Scott, the FTC to file that injunction in federal court to block Microsoft's $69 billion purchase of Activision. Now, that's according to a source familiar with the situation. If the judge approves the FTC's injunction request, it'd stop Microsoft from closing the deal before the FTC's lawsuit can play out. Now, the first hearing in that case is happening in early August. But if the judge rejects the request, then Microsoft has a slam dunk and will likely prevail in the lawsuit overall. That's why Microsoft President

Brad Smith sounded positive in his statement about the FTC's action. Microsoft thinks it'll have a better chance convincing a federal judge than an administrative law judge in the case. Meantime, Microsoft in the middle of its appeal with the UK's Competition Markets Authority, which rejected the deal already. That first hearing happened today. This new injunction, though, from the FTC could give Microsoft a narrow path forward to get the deal done here in the U.S., Scott. Have we heard, Steve, from the Activision CEO, Bobby Kotick, yet? I don't believe we have, but I might have missed it. No, nothing yet from the Activision side, though. I'm told they will have some kind of response likely after this injunction gets released. Yeah. And you can see that the stock is for the most part hanging in there

as all of this legal wrangling still may lie ahead. Steve, thank you. Steve Kovac with the very latest there. For more on what this means for Microsoft, let's bring in CNBC contributor Malcolm Etheridge of CIC Wealth, Microsoft, one of his top holdings. What's your initial reaction here? Are we surprised? I am a little bit surprised. I actually thought that this merger was acquisition, I should say, was pretty much dead in the water. And so I'm actually surprised to see that Microsoft has managed to breathe a little bit more life into it. But I don't know that it's going to be all that additive as a shareholder of Microsoft in the near term anyway. I think everything GPT related, everything generative AI related and everything open AI related is going to be what really drives the story for Microsoft through the end of this year and pushing into next year. And so I think losing out on the Activision acquisition could have been one of those things that Microsoft looked at a decade later and said, man, there was our opportunity. But I don't think near term shareholders are going to really feel much of a difference,

regardless of what direction this actually goes. I mean, this still might be dead in the water. I mean, in fact, I think expectations were somewhat low that this would get through the Biden administration's FTC. Well, the Biden administration's FTC is obviously trying to make sure that they prove that they do have teeth. There were probably a few of these deals that shouldn't have gone through earlier in Khan's tenure that did go. And so this is kind of the one that we're sticking with, even though it has looser restrictions, looser, realistic issues with monopoly. So whether it goes or not, I don't know. I think this is a place where she wants to plant a flag and say, I did that. But as far as,

again, as far as being a Microsoft shareholder, I don't know that it matters to you one way or another as far as the share price is concerned. So what do you do now in terms of the share price that you speak about here? I mean, it's up 36% year to date. It's 53% off of its 52-week low. How do you view it here? Has it come a little too far? Are you reassessing the size of the position you have as a shareholder? Like I know, by the way, you've been doing with other stocks in your book. So I did reassess and I did trim my position at Microsoft a couple of weeks back. And my concern was exactly what you just laid out. It got way too hot and I think way too far over its skis for where we are in the market right now.

I think there's definitely going to be an opportunity to come back, come and buy back in somewhere in the 200s, 250-ish range. I think we might even get a significant pullback to that degree in those larger cap tech names. And so I didn't completely blow out of it completely because, you know, who knows where the market could actually run to. But I think for folks who are holding a name like a Microsoft, an Apple, a Google, things like that, that are holding 50 plus percent returns year to date, there's nothing wrong with taking a profit here. I think it's definitely an opportunity to get out of the way, let the market do what it's going to do,

and at least trim that position by maybe 20, 25%. You must be negative then overall in the market if you think big tech is going to have some kind of pullback, unless I'm wrong and you think something's going to pick up the slack. No, I actually do think the market's going to continue to power forward. I think the conversation that you guys had earlier on the network about CalPERS deciding to jump in and say, hey, look, we missed that tech trade and we want to make sure we don't do it again.

As you know, a lot of other institutional managers tend to follow what CalPERS does. And so I was looking at data from Jeffries that shows that 9.1 percent of large cap growth managers right now are underweight tech, I think they get their second quarter print that shows that they're underperforming the market once again. All of a sudden, you have a lot of institutional managers that are having to buy back into tech positions that they sold out of this time last year, expecting that the tech trade was dead, and they were wanting to rotate into whatever they thought was going to come. So I think that we're definitely going to get a second wave of buying in these seven or eight tech names that are leading the way. But I also think that with the headwinds coming from the Fed,

inflation, the regional banks and everything else, it's unlikely that the market's going to continue going up and to the right. And so I just want to make sure that I get out of the way for whenever the inevitable happens. And I do think, again, just from a positioning standpoint, I'm going to get an opportunity to buy back some of my favorite names for a little bit cheaper in a few weeks here. I find that so interesting that you think the chase is on, so to speak, and yet you want to get out of the way of it rather than try and, you know, ride every last bit out of the incredible gains that we've already seen. What if, though, the worst is really behind this market? I mean, do you believe that the bulls are back in control

or are you not convinced? I think that the bulls are back in control. I think that, as I mentioned, institutional investors are going to follow what retail investors have been doing and what retail investors obviously have been in control of through the course of this year. And it's that mega cap tech trade. Once again, I think that we're going to get some market breadth. It's going to broaden out. It's not going to be the same seven or eight names. be because that institutional money has defined what are the other 10, 15 stocks that we can rely on to get us NVIDIA-like returns, Microsoft-like returns, Apple-like returns. And that's where the broadening of the market is going to come from through the back half of this year and into next

year. But I also, to your point, Scott, am just smart enough to know nobody ever went broke taking a profit. So I think there is the opportunity to have it both ways and just not get crushed trying to be too greedy here, sitting on a 50% year-to-date return. Yeah, no, of course. Of course. That's well articulated, too. So I'm looking at your top 10 holdings. UnitedHealth is in there.

It's obviously been a disappointment. And so much of the conversation goes around the others that you have. The Amazon, Apple, Microsoft, CrowdStrike, which had a great year. Alphabet, Intel, as we mentioned, is one of the real big winners today. How do you view something like United Health and health care in general, frankly, when some say it's time to get a little defensive? So United Health Care specifically is one of those that it's really hard to find the right time to buy it. It reminds me a little bit of NVIDIA. But the difference between them is UnitedHealthcare has a lot more power in it than just one particular thesis and one particular story.

And so UnitedHealthcare is that name that as we're seeing the COVID unlock, right, you have a lot of people who delayed elective procedures and all those things during COVID that are finally getting out last year and this year and getting those types of things done. That's been the real catalyst for UNH stock share price to go up. There hasn't really been a great opportunity to buy in as a shareholder. You just have to kind of hold your breath and buy into strength. But it's certainly been one of our best holdings as a firm. It's one of the largest holdings among all of our clients. And as we continue to allocate that way,

it definitely has benefited us to be in the right place, I guess, at the right time. Well, last year, no doubt about that. I guess this year remains to be seen. Malcolm, thank you. We'll talk to you soon. Malcolm Etheridge joining us once again on Closing Bell. Up next, oil tanking today.

Our next guest, though, still sees upside in the energy space. we'll find out how she's playing the downturn after the break and throughout the month of june cnbc is celebrating pride sharing stories of corporate leaders with you here is folks health ceo liana guzman i often get asked what why do lgbtqia people need different healthcare? And the reality is that our lives are completely different by virtue of who we are and who we love. You know, we are more likely to suffer from heart disease and mental and behavioral health needs. When we build our families, it is a completely different experience. And so I think in a world where people like to think that maybe things are more equitable,

and we've certainly come a long way, The reality is our experiences are still very different. So I would invite folks that are not members of the community to really elevate the voices of those who are and to listen when we tell you why it is different and we have different needs. We're back on Closing Bell Oil, tumbling today, taking energy stocks with it as well. West Texas crude now falling below $68 a barrel after Goldman Sachs cut its forecast on the higher supply out of Iran and Russia. But Stephanie Link is still a believer in energy stocks. Back with me now to share how she's playing it. It's ugly. Why are you in it then? Because I think there's value, right? I mean, I think that you're going to see this

balancing act between excess supplies from Iran and Russia versus Saudi Arabia cuts in terms of production. It's going to lead to volatility in the commodity, but I think it remains elevated because I think there's still enough demand from emerging markets. And you now have the U.S. refilling the SPR very, very slowly, by the way, but at least they're not going to be flooding the markets with the SPR. So I think if oil crude can stay above 50, which I think it can, then these companies, these stocks, they're minting money. And it's all about free cash flow in the energy sector. And again, it's the valuations that are super cheap. Look at crude right there, down more than 4%. It's ugly. And China hasn't been nearly, speaking of emerging markets, as strong as I think you or anybody else

suggested or hoped or figured that it would be at this point. China's hard. I think China's services and the consumer are doing a little bit better in terms of the reopening versus the industrial part of their economy. But that doesn't mean that, I mean, they might actually have a stimulus, right? That's all, there's all kinds of speculation. And if they do, and it can grow a little bit better, 5% GDP, I think that's plenty for the crude markets to stay. Again, above 50. We're at 68. It's going to be painful if it gets there, but I still think these companies do very, very well. Yeah, but you can't tell me if 50, let's say crude's 55. These stocks aren't going to do anything. You know that. They're at 68. It's going to be painful if it gets there, but I still think these companies do very, very well. Let's say crude's 55. These stocks aren't going to do anything. You know that. They're not going to do anything, right?

But they are going to generate value creation because they are going to have a lot of free cash flow. Think about how much Chevron has, $15 billion in free cash flow. They're buying back $15 to $20 billion of stock. Okay, so Diamondback Energy, another name I own, they have $2.1 billion in free cash flow. Right? Schlumberger, they have a whole bunch of free cash flow that they don't even know what to do with, and they are plowing it into technology. So these companies are doing stuff underneath the scene or underneath the surface that I think eventually gets rewarded.

Are you overweight energy? I am. So just to refresh, you're overweight energy, you're underweight tech. Okay. At what point do you say my scale is out of balance for where this market is and the writings on the wall for where it's going? Right. Well, so oil in the S&P 500 is 5%, so I'm 7%.

And technology and comms services is 35%. I'm 31% weight. So I have a 31% weighting in my portfolio that's technology. So kind of on a risk-adjusted basis, I absolutely have more exposure on the technology side, which I think is the right thing. But you know me, I kind of like to barbell it. I'll have a little bit of growth, a little bit of value. I am a little out of sorts right now. I know, but you don't want the barbell. You'd like to barbell it. I'll have a little bit of growth, a little bit of value. I am a little out of sorts right now. The barbell you'd like to have reasonably even in terms of where things are going. You want to end up like this? I think that's kind of how you make money over the long run, right? I mean, I try to be a contrarian. I try to look for quality companies that are truly on sale. These stocks are definitely on sale and they're doing the right thing. Who do you like

the best? Schlumberger or the former Schlumberger, SLB? I know, I always call it Schlumberger. Diamondback, which is Fang, and then Chevron, as you mentioned. I mean, I like them all. I think SLB is the most exciting, just given digitization. And talk about technology, that's what they're doing. And they have a goal of getting EBITDA margins to 25% over the coming years, and they can do it because of the technology and innovation.

All right, thanks for sticking around. Sure. Thanks. All right. That's Stephanie Link. Up next, we're tracking the biggest movers as we head into the close. We do have about 20 minutes or so left. Christina Partinevalos is standing by once again with that. Yes. Well, Novartis is looking to expand its kidney disease pipeline with one blockbuster acquisition, and shares are jumping.

I'll have the details and more next. We're less than 20 from the close. Let's get back to Christina Partsenevalos now with a look at the key stocks she is watching. Christina. And I'm watching toast because shares are jumping over 5% right now on news of a new partnership with Marriott International. Toast is a point-of-sale system for restaurants,

and its technology will now be available for food and beverage outlets within select Canadian and U.S. Marriott hotels. The stock is up just about 33 percent in the last three months. Shares of Novartis, though, are moving the other direction, down about 1 percent after announcing it would snap up Chinook Therapeutics for $3.5 billion, which is roughly a 66% premium to Friday's closing price. Novartis could end up paying a little bit more, at least $4 per share more, if the late-stage kidney disease drug reaches certain regulatory milestones, which I'm sure a lot of people would hope for. Chinook's stock is up almost 58% right now.

Scott? Okay, Christina, thank you. Another mover we are watching today is Illumina. Shares are rising after the company announced its CEO, Francis D'Souza, is stepping down effective immediately. It's seen as a win for activist investor Carl Icahn, who launched a proxy fight at that company back in March. He's been pushing for the removal of the CEO. Charles Dadswell, senior vice president and general counsel at Illumina, is going to serve as the interim CEO while the board begins its search for a successor.

Mr. D'Souza will stay on as an advisor through July 31st. Last chance to weigh in on our Twitter question now. We asked, are you starting to get more bullish on stocks? You can head to at CNBC closing bell on Twitter. The results are right after this break. Dow is up 200 points. Let's get the results now of our Twitter question. We asked, are you starting to get more bullish on stocks? The majority of you said yes. Yes, I am. 56.4%.

Up next, your earnings rundown, Oracle. It reports in just a few minutes in overtime that stock has been on fire. Again today, too. Look at it, up 6% as we speak. We'll tell you exactly what to watch for just ahead. That and much more when we take you inside the Market Zone. We're now in the closing bell market zone. CNBC Senior Markets Commentator Mike Santoli here to break down the crucial moments of the trading day.

Plus, Christina Partsenevolos on AMD ahead of its AI event tomorrow. And Frank Holland on Oracle and reports earnings in overtime today. That stock has been on fire lately. Speaking of stocks on fire lately, we've got a pretty good day here. Yes, it's become pretty tough, I guess, to resist chasing and therefore you're seeing some chasing. The market continues to kind of eat through all of these potential fears and headwinds that are put in front of it. And I think today, very much unnoticed, the Treasury issued $200 billion worth of new securities today. OK, people were worried about, oh, no, they're going to have to reissue $800 billion to a trillion over the next few months. It got through it today. Now, who knows if it's going to

ultimately prove to be something for this market? But you have that. You have all these different levels that the S&P has blown through, including, I think, one of the last barriers that the bears were putting up there, which is this Fibonacci level. It's like 43.20 or something like that. Look, all that being said, the market has earned more of the benefit of the doubt, but in the very short term. Seems a little bit chasey, and it seems a little bit too cute to be kind of running into the highs as you get probably what's going to be a benign CPI report and then the Fed,

when eight months ago to the day was the peak inflation report from the CPI and the bottom of this market. So we'll see if we have any symmetry. That's right, the closing bottom of the market. Yeah. Eight months ago today. Absolutely. And, you know, everything is kind of lined up in that direction. So you did have the peak inflation right before the midterm election year, right before all these things that should happen. Now you're up 21 percent. Now you've rebuilt the valuation. Now the biggest stocks in the market look like they're getting a little bit extended. And so we see how the first pullback goes.

But overall, typically, I don't think this is the kind of thing where you just sort of tag this level and unwind it all. Got to see how many bears fall by the wayside, too, as you take these steps higher. I mean, people like Jonathan Krinsky are still holding on there. The death of the bear is greatly exaggerated call. And I get it. It's not an unambiguous message from this market because you are still seeing some of the economic concerns register in the market. It has not necessarily been a real kind of in gear move with credit lining up and with small caps lining up and all the rest of it. So there's more to prove. I totally agree with that. But at this point, it seems like it's also like, OK, if it's a new bull market, what do you do? Well, what you do is maybe you let equity

exposures drift up a little bit. Maybe they don't get too underinvested. Maybe the dips are for buying and not for getting out. And so I think that's the kind of tactical and behavioral change that might come. So you got, Christina, this AMD event looming. As I look at a stock that over the last three months is up 56 percent and it's up 82 percent in six months. It's definitely riding that AI train. But when you compare it to NVIDIA, it's not necessarily as high. But like you said, AMD is hosting this AI and data center event tomorrow. It's going to be their first. And it's expected to shed some light on whether AMD is ready to compete with NVIDIA's AI hardware, considering NVIDIA already controls 60% of that

AI market. NVIDIA's three-month chart you're seeing on your screen right now just shows that difference in stock price, 71% versus 55% just in the last three months. But with AMD's upcoming combo CPU, GPU chips, so central processing and graphics processing chip, it's called the MI300. It certainly has a shot, but there remains a lot of unknowns like how it will perform with AI applications. Because it's not just about the chip, Scott. It's about how the chip works within the entire ecosystem and the software. Nonetheless, the street likes it a lot. Wedbush increased its price target by $50 to $145 a share.

UBS went even further to raise it to $165 a share, citing a potential $1 billion in that MI300 revenue for 2024. Microsoft is already said to be a customer, but the bears worry about AMD's margins if it's going to have to be price competitive to NVIDIA. Good news, though. Tomorrow, I'll be interviewing CEO Lisa Su at 4 p.m. on Overtime,

and we'll go over all of that. Scott. Awesome. Yeah, we look forward to that. And speaking of the Wedbush Note, which I'm looking at right now, I mean, they talk of AMD as if it's a two-horse race between that company and NVIDIA, with AMD being the closest competitor to NVIDIA in a critical part of that market. Which would be a wonderful spot for AMD because it was a two-horse race with AMD and Intel in the CPU market.

So if it's going to be a two-horse race in now the GPU market, that puts AMD in a good spot to be, you know, one of two players in both of those large markets. NVIDIA's not like that. Intel's not like that. Yeah, well, we'll see. And we look forward to your interview. Thank you. Christina, thank you very much. You have a comment? I was just going to be interested to see when the earnings estimates for AMD are going to budge,

because they really haven't done much, either for the quarter or for the full year. We remember how NVIDIA, I mean, really, you didn't see a lot of acceleration earnings forecast before they had their huge upside surprise on guidance. They do get a little bit apprehensive when you see the market grabbing for the next player to kind of mimic a move from the leader. So if you're giving these companies that are not as leveraged to the big, exciting trend more credit than they might be ready to deliver on. Not every guide is going to look like NVIDIA's at this point. And by the way, we're going to talk about Oracle.

This is another company all of a sudden being cast as a direct AI play. So what do you say about that, Frank Holland, with a stock that's had an AI-like burst? Yeah, you know, I don't know if it's a direct AI play, but Oracle has certainly been a low-profile and low-valuation AI play, turning it 21 times forward PE compared to NVIDIA more than 51 times. It's also outperforming the NASDAQ 100.

So here's what everybody's talking about. Oracle Cloud, or OCI, it has a partnership with NVIDIA. It's a small player in cloud infrastructure. Just to be fair, it's about 2% of the market when it comes to being a hyperscaler, but still seeing large and accelerating growth. That's really the key, the accelerating part. Oracle is guided for 49 to 51% growth this quarter, but Cowen's forecasted 70% growth. Clearly, this is a metric to watch in this report. Also, any announcements related to AI startup Cohere. Oracle and NVIDIA, partnership there,

invested in the startup last week. During earnings, the information is reported the company will detail plans to offer access to large language models to their cloud customers. Really a move designed to help Oracle compete with the Azure OpenAI tie-up and, of course, the other big hyperscalers. Yeah, you know, Mike, I mean, guidance always matters, obviously. You could make the case that it matters more than ever for this select group of stocks, the 7 plus or 10 or whatever number

you settle down to. Because now, as you said, NVIDIA changed the whole game. Yeah. And they changed expectations for everybody to some degree. Right. And the premise of that is that there's this urgent, almost indiscriminate investment boom going on right now as companies try and build capacity in this area. And, you know, Frank's right. Oracle looks like the inexpensive way to get at this at about 20, 21 times earnings. But it's worth noting Oracle itself hasn't traded at

21 times earnings except for five minutes at the end of 2021 and before that in the mid 2000s. So it has been this kind of cheaper, free cash flow, slow and steady type play as opposed to one that's kind of harnessing itself to this huge new trend. Thank you, Frank Holland, as well. We'll see what the numbers are. I thought that was Broadcom, though. Yeah, it's both exactly the same exact idea. Same narratives about different stocks that are the cheaper way to play X. Yes, and it'll work for a bit,

and maybe if there is genuine earnings upside beyond what we thought before, sure, let's price it in right now. I do think that the AI source of energy in this market is not to be dismissed, even if the stocks themselves look like they've run ahead of themselves and maybe longer term the returns aren't that great. Just because, as I said before, you do kind of need a reason for optimism. That's not just, hey, maybe we won't slide into recession and maybe it's not more of a defensive move. So it's certainly part of the story

of why the market has gotten to this point, along with some of the consumer stuff that hasn't really quit, hasn't really given way just yet. I'm going to look over the, we have barely 30 seconds left, but where's Tesla? I mean, what is this, the 12th straight day?

You want to know why discretionary has done well? Thank you. Yes, and it's also a grab for beta, which is what's going on, too, in hedge fund land and retail. So the muscle memory gets you to those same stocks, even if it's way below the highs. It's a streaky market right now. We'll see if we're running into a little bit of a block. Big day for stocks. I'll send you to overtime.

I'll see you tomorrow. I'll send you into overtime. I'll see you tomorrow. I'll send you into overtime now with Morgan and John.